17 -i CHAPTER 17. REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY

CONSERVATION STANDARDS FOR DISTRIBUTION TRANSFORMERS

TABLE OF CONTENTS

17.1 INTRODUCTION ......................................................................................................... 17-1

17.2 METHODOLOGY ........................................................................................................ 17-1

LIST OF TABLES

Table 17.1.1 Nonregulatory Alternatives to Standards ........................................................... 17-117 -1 CHAPTER 17. REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY

CONSERVATION STANDAR DS FOR DISTRIBUTION TRANSFORMERS

17.1 INTRODUCTION

Under the Process Rule [ Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products , 61 FR 36974 (July 15, 1996)], the U.S. Department of Energy (DOE) is commi tted to explore nonregulatory alternatives to standards. DOE will prepare a draft regulatory impact analysis pursuant to Executive Order 12866, “Regulatory Planning and Review,” which will be subject to review under the Executive Order by the Office of Management and Budget’s Office o f Information and Regulatory Affairs. 58 FR 51735 DOE has identified seven major alternatives to standards that represent feasible policy options to reduce the energy consumption of residential clothes washers . It 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 trial standard

.

Table 17.1.1 lists th e nonregulatory means of achieving energy savings that DOE proposes to analyze. The technical support document (TSD) prepared in support of DOE’s notice of proposed rulemaking will include a complete quantitative analysis of each alternative, the methodology for which is discussed briefly below.

Table 17.1.1 Nonr egulatory Alternatives to Standards

No new regulatory action

Consumer tax credits

Manufacturer tax credits

Performance Standards

Rebates Voluntary energy efficiency targets Early replacement Bulk government purchases

17.2 METHODOLOGY

DOE will use the n ational i mpact a nalysis (NIA) s preadsheet model for residential

clothes washers to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to proposed standards. The NIA m odel for both product classes

of clothes washers is discussed in c hapter 10 of the TSD. To compare each alternative quantitatively to the proposed energy conservation standards, DOE will need to quantify the effect of each alternative on the purchase and use of energy efficient clothes washers

. After it has quantified each alternative, DOE will make the appropriate revisions to the inputs in the NIA

models. Key inputs that DOE may revise in these models are:

**•** e nergy prices and escalation factors;17 -2 **•** implicit market discount rates for trading off purchase price against operating expense

w hen choosing transformer efficiency;

**•** c onsumer purchase price, operating cost , and income elasticities;

**•** consumer price-versus- efficiency relationships; and

**•** transformer stock data (purchase of new equipment or turnover rates for inventories).

The following are the key measures of the imp act of each alternative.

**•** Energy use : Cumu lati ve energy use of distribution transformers from the effective date of

the new standard to 2045 . DOE will report electricity consumption as primary energy.

**•** National energy savings : Cumulative national energy use from the base- case projection

minus the alternative policy

- case projection.

**•** Net present value : The value of future operating cost savings from products bought during the period from the effective date of the ne w standard (2016) to 2045 . DOE will calculate the NPV as the difference between the pr esent value of product and operating expenditures (including energy) in the base case, and the present value of expenditures

under each alternative policy case. DO E will discount future operating and product expenditures to 2010 using a 7- percent and 3- percent real discount rate. It will calculate operating expenses (including energy costs) for the life of a product.