APPENDIX 17A. REGULATORY IMPACT ANALYSIS SUPPORTING 

MATERIAL

TABLE OF CONTENTS 

17A.1 BACKGROUND ON MARKET PENETRATION CURVES DEVELOPED 

BY XENERGY..................................................................................................... 17A-2 

17A.2 UTILITY REBATE PROGRAMS FOR RESIDENTIAL DISHWASHERS...... 17A-3 

17A.2.1 Rebate Programs for Residential Dishwashers..................................................... 17A-4 

17A.3 DEVELOPMENT OF CONSUMER TAX CREDITS IMPACT ANALYSIS.... 17A-8 

17A.4 EPACT 2005 FEDERAL TAX CREDIT LEVELS FOR RESIDENTIAL 

APPLIANCES AND APPLIANCE MANUFACTURERS ................................. 17A-9 

17A.4.2 Residential Appliances.......................................................................................... 17A-9 

17A.4.3 Energy Efficient Appliance Credits for Manufacturers........................................ 17A-9 

LIST OF TABLES 

Table 17A.2.1 Rebate Programs for Residential Dishwashers......................................... 17A-5 

LIST OF FIGURE 

Figure 17A.1.1 Comparison of Exponential and Logistic Curves Showing External and 

Internal Influences on Consumers ............................................................ 17A-3 

17A-i 

EERE-2006-STD-0127 COMMENT 64.2
APPENDIX 17A. REGULATORY IMPACT ANALYSIS SUPPORTING MATERIAL 

17A.1 BACKGROUND ON MARKET PENETRATION CURVES DEVELOPED BY 

XENERGY 

Xenergy, Inc. developed a re-parameterized, mixed-source information diffusion model 

to estimate market impacts induced by financial incentives for energy-efficient appliances. The 

basic premise of this mixed-source model is that information diffusion drives technology 

adoption. 

There is extensive economic literature on the diffusion process of new products as 

technologies evolve. Some of the literature focuses primarily on the development of analytical 

models of diffusion patterns of new products for individual consumers or for technologies from 

competing firms.1,2,3 One study records researchers’ attempts to investigate underlying factors 

that drive diffusion processes.4

 Because of the distinct characteristics of diverse new products, 

few studies have conclusively developed a universally-applicable model. Some key findings, 

however, have seemed to gain wide recognition in academia and industry. 

First, new technologies may not be adopted by all potential users, regardless of their 

economic benefits and technological merits. Therefore, a ceiling on the adoption rate exists for 

many products. Second, not all adopters purchase new products at the same time; some act 

earlier after the introduction of a new product, while others respond slowly, waiting for products 

to become more mature. Third, diffusion processes can be approximately characterized by 

asymmetric S-curves, depicting three stages of diffusion: starting, accelerating, and decreasing 

as the adoption ceiling is being reached. 

An important diffusion model, the epidemic model, is widely used in marketing and 

social studies on diffusion. It assumes that a) consumers value the benefits of a new product 

identically and b) the cost of a new product is constant or declines monotonically over time. 

What induces a consumer to purchase the new product is information about the availability and 

the benefits of the product. In other words, it is information diffusion that drives new product 

adoption by individual consumers.3 The model incorporates information diffusion from both 

internal sources (news spread by word of mouth from early adopters) and external sources (the 

“announcement effect” by government, other institutions, or commercial advertising) by 

superimposing a logistic function with an exponential function.1,4 

The relative degree of influence by internal or external sources determines the general 

shape of the diffusion curve of a specific product.1,4 For instance, if the adoption of one 

particular product is more influenced by external sources of information diffusion 

(announcement effect) than by internal sources (word of mouth among earlier adopters to 

prospective adopters), the rate of diffusion at the beginning stage of the diffusion process is 

much higher. This reflects the immediate information exposure to a significant number of 

17A-2

EERE-2006-STD-0127 COMMENT 64.2
prospective adopters brought about by external sources, in contrast to the more gradual exposure 

to internal sources such as news propagation by earlier adopters, a small proportion of the 

population, to other prospective adopters. Graphically speaking, a relatively dominant external 

source of information diffusion gives an immediate jump-start to the adoption of a new product 

in the first years, forming a concave curve with respect to the Y axis (see the exponential curve 

in Figure A.1). Adoption of a new product with a stronger influence by internal sources of 

information diffusion (such as a socially-tightened network formed by prospective adopters) may 

start with a few early adopters and gradually increase as the number of adopters grows, and thus 

form a convex curve (see the logistic curve in Figure 17A.1.1). 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 5 10 15 20 25 30 

Year 

Market Penetration 

Logistic Function Modified Exponential Function 

External Influence 

Internal Influence 

Figure 17A.1.1 Comparison of Exponential and Logistic Curves Showing External 

and Internal Influences on Consumers 

17A.2 UTILITY REBATE PROGRAMS FOR RESIDENTIAL DISHWASHERS 

The following two tables present a summary of rebate program amounts offered 

throughout the U.S. for residential dishwashers. Since there have not been rebate programs for 

conventional cooking products, DOE studied rebate programs for residential dishwashers as an 

analogous product. 

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EERE-2006-STD-0127 COMMENT 64.2
17A.2.1 Rebate Programs for Residential Dishwashers 

DOE found 88 agencies with programs for residential dishwashers. Rebates for this 

product have been offered by electric utilities, gas utilities, and municipal and regional agencies. 

These entities offer rebates for dishwashers meeting efficiency criteria that usually match those 

set by ENERGY STAR or the Consortium for Energy Efficiency. Table 17A.2.2 shows the 

agency names, States, rebate amounts, and program websites. Multiple entries in the table 

indicate that an agency offers two rebate amounts, one for customers with gas water heaters and 

another for those with electric water heaters. The average rebate amount is a simple average of 

the wide range of all of the entries. 

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EERE-2006-STD-0127 COMMENT 64.2
Table 17A.2.1 Rebate Programs for Residential Dishwashers 

Utility or Agency State Amount Website City of Roseville CA $25 http://www.conservationrebates.com/programs/REC/AppliancesProgram.aspx Aspen CORE CO $75 http://www.aspencore.org/sitepages/pid46.php#washer 

Fort Collins Utilities CO $25 http://fcgov.com/water/washer-rebate.php 

Holy Cross Energy CO $25 http://www.holycross.com/ 

$75 

Longmont Power CO $50 http://www.ci.longmont.co.us/lpc/index.htm 

Groton Utilities CT $60 http://www.grotonutilities.com/elec_conserv_resident_appliance.asp Kootenai Electric ID $25 http://www.kec.com/rebates.php Rocky Mountain Power ID, UT $20 http://www.homeenergysavings.net/idaho/dishwashers.html 

Linn County REC IA $50 http://www.linncountyrec.com/cgi-script/csarticles/articles/000003/000334.htm Maquoketa Valley REC IA $25 http://www.mvec.com/index.php?option=com_content&task=view&id=20&Itemid=

Eastern Iowa REC IA $25 http://www.easterniowa.com/ 

East-Central REC IA $25 http://www.ecirec.coop/prod_serv/rebates.shtml 

TIP REC IA $35 http://www.tiprec.com/rebates.html Consumers Energy IA $25 http://www.consumersenergy.coop/residential/products_services/incentives/index.ht

Guthrie County REC IA $25 http://www.guthrie-rec.coop/cgi-script/csArticles/articles/000000/000049.htm 

Farmers REC IA $25 http://www.farmersrec.com/Promotions.htm Southwest Iowa REC IA $25 http://www.swiarec.coop/prod_serv/rebates.shtml Clarke EC IA $25 http://www.cecnet.net/rebates.html 

Chicopee Electric Light MA $50 http://www.celd.com/news.php?id=36 

Concord Muni Light Plant MA $50 http://www.concordma.gov/pages/ConcordMA_LightPlant/appliance 

Mansfield Muni Elec Dep't MA $75 http://www.mansfieldelectric.com/rebateBrochure/billingForm.html Marblehead Light Dep't MA $25 http://www.marbleheadelectric.com/rebate.htm 

Marblehead Light Dep't MA $50 http://www.marbleheadelectric.com/rebate.htm 

North Attleboro Electric MA $30 http://www.dsireusa.org/library/includes/incentivesearch.cfm?Incentive_Code=MA6

e=Rebate&CurrentPageID=7&EE=1&RE=1 

Reading Muni Light Dep't MA $50 http://www.rmld.com/rebates.htm Shrewsbury Electric MA $50 http://www.shrewsbury-ma.gov/light/rebates.asp 

Wakefield Gas & Light MA $50 http://www.wakefield.ma.us/Public_Documents/WakefieldMA_MGLD/rcsprogram.

Lincoln Electric Co-Op MT $10 http://www.lincolnelectric.coop/energy_star_rebates.htm 

City of Anaheim CA $50 http://www.anaheim.net/article.asp?id=992 

Burbank Water and Power CA $75 http://www.burbankwaterandpower.com/homerewards.html PG&E CA $30 http://www.pge.com/res/rebates/dishwashers/index.html 

$50 

SDG&E (Sempra) CA $30 http://www.sdge.com/residential/singleFamilyRebate/docs/rebateOverview.pdf 

Southern California Gas CA $30 http://www.socalgas.com/residential/savemoney/instant.shtml, City of Lompoc CA $50 http://www.cityoflompoc.com/splash/utilprograms.htm 

Glendale Water and Power CA $40 http://www.glendalewaterandpower.com/smart_home_saving_rebates.asp 

17A-5

EERE-2006-STD-0127 COMMENT 64.2
Utility or Agency State Amount Website 

Hercules Municipal Utility CA $50 http://www.dsireusa.org/library/includes/incentivesearch.cfm?Incentive_Code=CA1

pe=Rebate&CurrentPageID=7&EE=1&RE=1 

IID Energy CA $50 http://www.dsireusa.org/library/includes/incentivesearch.cfm?Incentive_Code=CA9

e=Rebate&CurrentPageID=7&EE=1&RE=1 

Lassen MUD CA $35 http://www.lmud.org/rebate.htm 

Lodi Electric Utility CA $25 http://www.lodielectric.com/residential/rebateoffer.php?id=2 

City of Palo Alto CA $50 http://www.cityofpaloalto.org/depts/utl/news/details.asp?NewsID=65&TargetID=12 

Plumas Sierra Rural Electric Coop CA $35 http://www.psln.com/energy_rebates.php?sec=enersol&pag=enerreb 

Redding Electric Utility CA $25 http://www.reupower.com/energysvc/energy-rebates.asp Riverside Public Utilities CA $50 http://www.riversideca.gov/utilities/resi-energystar.asp SMUD CA $30 http://www.smud.org/rebates/index.html 

$50 

Truckee Donner PUD CA $100 http://www.tdpud.org/index.php?cId=34 

City of Gridley CA $25 http://www.gridley.ca.us/documents/appliancerebateapp.pdf 

Imperial Irrigation Districtq CA $50 http://www.iid.com/Media/PubRebApp-En_WEB07b.pdf 

Hawaiian Electric Company HI $50 

http://www.heco.com/portal/site/heco/menuitem.508576f78baa14340b4c0610c510b5b2110VgnVCM1000005c011bacRCRD&vgnextchannel=6558f2b154da9010VgnV

&vgnextfmt=default&vgnextrefresh=1&level=0&ct=article#mainContent%20id 

Kauai Island Utility Cooperative HI $50 http://www.kiuc.coop/co-opportunities/index.htm 

Blachly Lane, Eugene OR $5 http://www.northwestenergystar.com/index.php?cID=183&searchType=state&state=

shers&slSearch=search 

Central Electric, Redmond OR $25 

Ashland OR $30 OR 

$60 

Bandon OR $50 Columbia River PUD, St. Helens OR $25 

Consumers Power, Philomath OR $20 

Douglas EC, Roseburg OR $30 Emerald, Eugene OR $25 Eugene Water and Electric OR $20 Forest Grove OR $30 

Milton Freewater OR $15 Monmouth OR $15 Salem Electric OR $60 

Tillamook OR $25 Wasco, The Dalles OR $25 Cheney WA $21 

$24 

Chewelah WA $100 

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EERE-2006-STD-0127 COMMENT 64.2
Utility or Agency State Amount Website 

Mason County PUD #3, Shelton WA $25 Mason County PUD #1, Shelton WA $60 Modern Electric, Spokane WA $22 

$24 

Snohomish County, Everett WA $35 Okanogan County WA $50 

Coulee Dam WA $60 Wahkiakum PUD #1, Cathlamet WA $75 

Delco ID $15 City of Rupert ID $15 

East End, Rupert ID $15 

Riverside Electric, Rupert ID $50 

Soda Springs ID $15 

Fall River, Ashton ID $25 

Farmers, Heyburn ID $15 

Idaho Falls ID $15 

Northern Lights, Sagle ID $25 Glacier, Cut Bank MT $25 Lincoln, Eureka MT $10 Mission Valley , Pablo MT $50 

Anoka Muni Utility MN $50 http://www.ci.anoka.mn.us/vertical/Sites/%7B213A9A90-C8E1-49AA-AC02- 51D3C4882D33%7D/uploads/%7B93715A51-EA59-4213-BD5E-73A264F5E4F2%

Buffalo Municipal Utilities NY $50 http://www.ci.buffalo.mn.us/Utilities/Electric/EnergyRebate.htm BPA $25 http://www.bpa.gov/Energy/N/projects/post2006conservation/manual/ 

Number of Agencies 88 Average Rebate Amount $37 

Websites last accessed January, 2008. 

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EERE-2006-STD-0127 COMMENT 64.2
17A.3 DEVELOPMENT OF CONSUMER TAX CREDITS IMPACT ANALYSIS 

Because there have not been consumer tax credits for conventional cooking products, 

DOE analyzed Oregon's RETC data for dishwashers as an analogous kitchen product. For 2006 

DOE calculated that Oregon taxpayers claimed credits for 14 percent of Oregon’s total 

dishwasher shipments. DOE did not find data comparing Oregon and Washington’s efficient 

dishwasher sales. To estimate the portions of these tax credit claims that were likely due to 

utility rebates and to market impacts, DOE reviewed a report by Itron on utility rebate programs 

in California. That report compared the percentage of free riders in residential clothes washer 

and dishwasher rebate programs in 2005.5

 Itron found that the penetration rate of ENERGY 

STAR dishwashers (85%) was much higher than that of ENERGY STAR clothes washers 

(40%).a Itron also found that the percentage of free riders was greater for dishwasher programs 

than for clothes washer programs. DOE’s previous estimates showed that the incremental cost 

from the baseline was much smaller for high-efficiency dishwashers than for high-efficiency 

clothes washers,6,7 which could explain the higher penetration rate for efficient dishwashers; an 

incentive program for a product whose market share is already high would tend to have more 

free riders. Similarly, conventional cooking product models meeting the target level have a high 

market share and a small incremental cost for those units not needing electric outlets, indicating 

that dishwashers are an appropriate analogous product. Based on these various factors, DOE 

estimated that market impacts (part of which are due to free riders) were responsible for a higher 

percentage of dishwasher tax credit claims than were market impacts for residential clothes 

washer tax credit claims. 

Itron’s report contained two estimates of free riders for ENERGY STAR dishwashers for 

2005. DOE took the simple average of the supplier estimate of 93% in the self-reported 

consumer estimate of 59%, yielding 76%. DOE compared this to the simple average of free rider 

estimates for residential clothes washers, which were 77% from suppliers and 43% from 

consumers, yielding 60%. DOE assumed that the difference in free riders between the two 

products would be on the order of the difference between these two estimates (16%). 

DOE interpreted the higher percentage of consumers purchasing dishwashers as free 

riders and then claiming tax credits, and the lower percentage of taxpayers influenced primarily 

by rebates, estimating that 49 percent of Oregon's 2006 dishwasher tax credits claimed (6.9 

percent of total dishwasher shipments) were due to market impacts. It estimated that utility 

rebates were responsible for 32 percent of tax credits claimed (4.5 percent of total shipments). 

DOE attributed the remaining 20 percent of tax credits claimed (2.8 percent of total shipments) 

to tax credits. 

a

 Values are from ENERGY STAR website based on D&R International data by state. 

17A-8

EERE-2006-STD-0127 COMMENT 64.2
17A.4 EPACT 2005 FEDERAL TAX CREDIT LEVELS FOR RESIDENTIAL 

APPLIANCES AND APPLIANCE MANUFACTURERS 

17A.4.2 Residential Appliances 

The residential appliance Federal tax credit qualification specifications are: 

• Furnaces and boilers: Annual Fuel Use Efficiency (AFUE) 95 or higher 

• Central air conditioning units: highest tier standards set by the Consortium for Energy 

Efficiency (CEE), which require a SEER of 15 and an EER of 12.5 for split systems and 

SEER 14 and EER 12 for single-package systems. 

o Air-source heat pumps must have a HSPF of 9 or greater, SEER 15 or higher, and 

EER 13 or higher. 

o Ground-source heat pumps must meet the following criteria (the same criteria as 

for ENERGY STAR): 

 Closed-loop systems—14.1 cooling EER and 3.3 COP 

 Open-loop systems—16.2 EER and 3.6 COP 

 Direct-expansion systems—15 EER and 3.5 COP. In addition, groundsource heat pumps must include a desuperheater (which preheats water for 

a water heater) or an integrated water heating system. 

• Fans for heating and cooling systems: fan uses no more than 2 percent of total heating 

system energy use, as defined by DOE test procedure. 

• Water heaters: 

o Gas or propane water heaters—Energy Factor of at least 0.8. The only models that 

meet this standard currently are tankless water heaters and some systems that 

combine both space and water heating. 

o Heat pump water heaters—Energy Factor of at least 2.0 

17A.4.3 Energy Efficient Appliance Credits for Manufacturers 

Each manufacturer is limited to a total of $75 million for all credits under this provision. 

Of that cap, no more than $20 million can be claimed for the lowest tier of qualifying 

refrigerators. The tax credit amounts and criteria for production of energy-efficient appliances 

are as follows: 

• Clothes washers: $100 for models that meet the 2007 ENERGY STAR© criteria 

• Refrigerators (three tiers): 

o $75 for models that save at least 15 percent relative to 2001 Federal standards 

(same as the current ENERGY STAR criteria); available only in 2006 

o $125 for models that save at least 20 percent relative to 2001 Federal standards 

o $175 for models that save 25 percent or more relative to 2001 Federal standards 

• Dishwashers: $32.31 for models that meet the 2007 ENERGY STAR criteria 

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EERE-2006-STD-0127 COMMENT 64.2
REFERENCES 

1 Geroski, P.A., Models of Technology Diffusion. 2000. Research Policy. 29, 603-625. 

2 Hall, B. H. and B. Khan. “Adoption of New Technology.” 2003. Working Paper No.E03-

330. Department of Economics, University of California, Berkeley, CA. 

3 Lekvall, P. and C. Wahlbin. “A Study of Some Assumptions Underlying Innovation 

Diffusion Functions.” 1973. Swedish Journal of Economics. 

4 Van den Bulte, C. “Want to Know How Diffusion Speed Varies Across Countries and 

Products? Try a Bass Model.” PDMA Vision, October 2002. Product Development and 

Management Association. XXVI No 4. 

5 Itron And KEMA. 2004/2005 Statewide Residential Retrofit Single-Family Energy 

Efficiency Rebate Evaluation. 2007. Prepared for The California Public Utilities 

Commission, Pacific Gas and Electric Company, San Diego Gas and Electric Company, 

Southern California Edison, and Southern California Gas Company. Itron, Inc. and KEMA, 

Inc.: Oakland, CA. CPUC-Id#: 1115-04. 

6 U.S. Department of Energy. Technical Support Document: Energy Efficiency Standards for 

Consumer Products and Commercial and Industrial Equipment: Residential Dishwashers, 

Dehumidifiers, and Cooking Products, and Commercial Clothes Washers, November 2007. 

Washington, DC. Chapter 8. 

<http://www.eere.energy.gov/buildings/appliance_standards/residential/home_appl_tsd.html> 

7 U.S. Department of Energy. Final Rule Technical Support Document (TSD): Energy 

Efficiency Standards for Consumer Products: Clothes Washers, December 2000. 

Washington, DC. Chapter 7. 

<http://www.eere.energy.gov/buildings/appliance_standards/residential/clwash_0900_r.html > 

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EERE-2006-STD-0127 COMMENT 64.2