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- i CHAPTER 17. REGULATORY IMPACT AN ALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION

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17.2 METHODOLOGY

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LIST OF TABLES

Table 17.1.1 Alternatives to Standards

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- 1 CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

For “economically significant regulatory actions,” Executive Order 12866 requires Federal agencies to provide “a n assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable non

- regulatory ac tions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives. ” 58 FR 51735, 51741 (October 4, 1993)

. Accordingly, in the notice of proposed rulemaking ( NOPR ) stage, the U.S. Department of Energy (DOE) plans to analyze feasible alternatives that possibly could provide incentives for the same energy efficiency levels as the proposed standards for the equipment that are subject of

th e portable air conditioner rulemaking. In addition, DOE proposes to analyze five feasible policy alternatives to energy conservation standards for the equipment considered in this rulemaking. The policy alternatives are listed below in Table 17.1.1

. DOE will evaluate each alternative in terms of its ability to achieve significant energy savings at a reasonable cost, and will compare the effectiveness of each alternative to the effectiveness of each candidate standard

.

The technical support document (TSD) is prepared in support of DOE’s notice of proposed rulemaking and include s a complete quantitative analysis of each alternative, the methodology for which is briefly addressed below.

Table 17.1.1 Alternatives to Standards

No New Re gulatory A ction

Consumer Rebates

Consumer Tax C redits

Manufacturer Tax C redits Voluntary Energy E fficiency Targets

Bulk Government P urchases

17.2 METHODOLOGY

DOE use s the n ational i mpact a nalysis (NIA) s preadsheet m odel to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to proposed energy conservation standards. The NIA m odel is discussed in c hapter 10 of the TSD. To compare each alternative quantitatively to the pr oposed energy conservation standards, DOE quantif ies the effect of each alternative on the purchase and use of energy efficient equipment

, such as portable AC s . DOE then create s an integrated model, built on the NIA model, in order to make the appropriate revisions to the inputs in the NIA m odels. Key inputs that DOE may revise

are the market shares of equipment meeting the target efficiency levels, which correspond to the efficiency levels set for the mandatory standards at each trial standard leve l

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The following a re the key measures of the imp act of each alternative :

 National E nergy S avings (NES) , given in quadrillion Btus (quads), will describe the potential cumulative national primary energy to be saved over the lifetime of equipment purchased during the 30

- year analysis period starting in the effective date of the policy

. a

 Net Present Value (NPV) , will represent the value of net monetary savings from equipment purchased during the 30

- year analysis period starting in the compliance date of the policy. DOE calculate s NPV as the difference between the present value s of

installed equipment cost and operating expenditures in the base case and the present

value s of th o se costs in each policy case. DOE then calculate s operating expenses (including energy costs ) for the life of equipment.

a The British thermal unit (Btu) is the amount of energy needed to cool or heat one pound of liquid water by one degree Fahrenheit at a constant pressure of one atmosphere.