CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION ........................................................................................................... 8-1

8.1.1 General Approach for LCC and Payback Period Analysis.............................................. 8-1

8.1.2 Overview of LCC and Payback Period Inputs................................................................. 8-2

8.2 LIFE-CYCLE COST INPUTS ........................................................................................ 8-6

8.2.1 Total Installed Cost Inputs............................................................................................... 8-6

8.2.1.1 Baseline Manufacturer Cost........................................................................... 8-8

8.2.1.2 Markups ......................................................................................................... 8-9

8.2.1.3 Overall Markup.............................................................................................. 8-9

8.2.1.4 Standard-Level Manufacturer Cost Increases.............................................. 8-10

8.2.1.5 Installation Cost ........................................................................................... 8-10

8.2.1.6 Total Installed Cost...................................................................................... 8-11

8.2.1.7 Future Product Prices................................................................................... 8-12

8.2.2 Operating Cost Inputs.................................................................................................... 8-14

8.2.2.1 Annual Energy and Water Consumption ..................................................... 8-16

8.2.2.2 Energy and Water Prices.............................................................................. 8-18

8.2.2.3 Energy and Water Price Trends................................................................... 8-25

8.2.2.4 Repair and Maintenance Costs..................................................................... 8-27

8.2.3 Product Lifetime ............................................................................................................ 8-28

8.2.4 Discount Rates............................................................................................................... 8-30

8.2.5 Effective Date of Standard............................................................................................. 8-32

8.2.6 Equipment Assignment for the Base Case..................................................................... 8-33

8.3 PAYBACK PERIOD INPUTS...................................................................................... 8-34

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS...................................... 8-35

8.4.1 Base Case LCC Distributions........................................................................................ 8-35

8.4.2 Standard-Level Distributions of LCC Impacts.............................................................. 8-38

8.4.3 LCC and PBP Results.................................................................................................... 8-38

8.5 REBUTTABLE PAYBACK PERIOD.......................................................................... 8-44

8.5.1 Metric............................................................................................................................. 8-44

8.5.2 Inputs.............................................................................................................................. 8-44

8.5.3 Results............................................................................................................................ 8-45

LIST OF TABLES

Table 8.1.1 LCC and PBP Input Summary............................................................................. 8-5

Table 8.2.1 Inputs for Total Installed Cost ............................................................................. 8-7

Table 8.2.2 Commercial Clothes Washers: Baseline Manufacturer Costs............................. 8-8

Table 8.2.3 Summary of Average Markups............................................................................ 8-9

Table 8.2.4 Overall Markups ................................................................................................ 8-10

8-i
Table 8.2.5 Top-Loading Commercial Clothes Washers: Standard-Level Manufacturer 

Cost Increases .................................................................................................... 8-10

Table 8.2.6 Front-Loading Commercial Clothes Washers: Standard-Level 

Manufacturer Cost Increases.............................................................................. 8-10

Table 8.2.7 Commercial Clothes Washers: Baseline Installation Costs............................... 8-11

Table 8.2.8 Top-Loading Commercial Clothes Washers: Consumer Equipment Prices, 

Installation Costs, and Total Installed Costs...................................................... 8-11

Table 8.2.9 Front-Loading Commercial Clothes Washers: Consumer Equipment 

Prices, Installation Costs, and Total Installed Costs.......................................... 8-12

Table 8.2.10 Inputs for Operating Cost................................................................................... 8-15

Table 8.2.11 Top-Loading Commercial Clothes Washers, Multi-Family Application: 

Annual Energy and Water Use by Efficiency Level.......................................... 8-17

Table 8.2.12 Top-Loading Commercial Clothes Washers, Laundromat Application: 

Annual Energy and Water Use by Efficiency Level.......................................... 8-17

Table 8.2.13 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Annual Energy and Water Use by Efficiency Level.......................................... 8-18

Table 8.2.14 Front-Loading Commercial Clothes Washers, Laundromat Application: 

Annual Energy and Water Use by Efficiency Level.......................................... 8-18

Table 8.2.15 Average Commercial Electricity Prices in 2012................................................ 8-20

Table 8.2.16 Average Commercial Electricity Prices for Commercial Clothes Washers 

in 2013 ............................................................................................................... 8-21

Table 8.2.17 Average Commercial Natural Gas Prices in 2012 ............................................. 8-23

Table 8.2.18 Average Per-Unit-Volume Water and Waste Water Prices in 2012.................. 8-25

Table 8.2.19 Top-Loading Commercial Clothes Washer Annualized Repair Costs.............. 8-28

Table 8.2.20 Front-Loading Commercial Clothes Washer Annualized Repair Costs............ 8-28

Table 8.2.21 Commercial Clothes Washers: Product Lifetime Estimates and Sources ........ 8-29

Table 8.2.22 Commercial Clothes Washers: Average, Minimum, and Maximum 

Product Lifetimes............................................................................................... 8-29

Table 8.2.23 Risk free rate and equity risk premium, 2004 – 2013........................................ 8-31

Table 8.2.24 Weighted Average Cost of Capital for Sectors that Purchase Washers............. 8-32

Table 8.2.25 Top-Loading Commercial Clothes Washers: Base Case Market Shares........... 8-33

Table 8.2.26 Front-Loading Commercial Clothes Washers: Base Case Market Shares......... 8-34

Table 8.4.1 Summary of LCC and PBP Results by Efficiency Level for Top-Loading 

Commercial Clothes Washers, Multi-Family Application ................................ 8-39

Table 8.4.2 Summary of LCC and PBP Results by Efficiency Level for Top-Loading 

Commercial Clothes Washers, Laundromat Application .................................. 8-39

Table 8.4.3 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Top-Loading Commercial Clothes Washers, Multi-Family 

Application......................................................................................................... 8-39

Table 8.4.4 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Top-Loading Commercial Clothes Washers, Laundromat 

Application......................................................................................................... 8-40

Table 8.4.5 Summary of LCC and PBP Results by Efficiency Level for Front-Loading 

Commercial Clothes Washers, Multi-Family Application ................................ 8-40

8-ii
Table 8.4.6 Summary of LCC and PBP Results by Efficiency Level for Front-Loading 

Commercial Clothes Washers, Laundromat Application .................................. 8-40

Table 8.4.7 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Front-Loading Commercial Clothes Washers, MultiFamily Application ............................................................................................ 8-41

Table 8.4.8 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Front-Loading Commercial Clothes Washers, Laundromat 

Application......................................................................................................... 8-41

Table 8.5.1 Top-Loading Commercial Clothes Washers, Multi-Family Application: 

Rebuttable Payback Periods............................................................................... 8-45

Table 8.5.2 Top-Loading Commercial Clothes Washers, Laundromat Application: 

Rebuttable Payback Periods............................................................................... 8-46

Table 8.5.3 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Rebuttable Payback Periods............................................................................... 8-46

Table 8.5.4 Front-Loading Commercial Clothes Washers, Laundromat Application: 

Rebuttable Payback Periods............................................................................... 8-46

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ....................... 8-4

Figure 8.2.1 Historic Nominal and Deflated Producer Price Indexes for Commercial 

Laundry and Drycleaning Machinery ................................................................ 8-13

Figure 8.2.2 Historic Nominal and Deflated Producer Price Indexes for Household 

Laundry Equipment ........................................................................................... 8-14

Figure 8.2.3 Electricity Price Trends...................................................................................... 8-26

Figure 8.2.4 Natural Gas Price Trends................................................................................... 8-26

Figure 8.2.5 Water Price Trend.............................................................................................. 8-27

Figure 8.4.1 Top-Loading Commercial Clothes Washers, Multi-Family Application: 

Base Case LCC Distribution.............................................................................. 8-36

Figure 8.4.2 Top-Loading Commercial Clothes Washers, Laundromat Application: 

Base Case LCC Distribution.............................................................................. 8-36

Figure 8.4.3 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Base Case LCC Distribution.............................................................................. 8-37

Figure 8.4.4 Front-Loading Commercial Clothes Washers, Laundromat Application: 

Base Case LCC Distribution.............................................................................. 8-37

Figure 8.4.5 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Distribution of LCC Impacts for EL2................................................................ 8-38

Figure 8.4.6 Range of LCC Savings for Top-Loading Commercial Clothes Washers, 

Multi-Family...................................................................................................... 8-42

Figure 8.4.7 Range of LCC Savings for Top-Loading Commercial Clothes Washers, 

Laundromat........................................................................................................ 8-42

Figure 8.4.8 Range of LCC Savings for Front-Loading Commercial Clothes Washers, 

Multi-Family...................................................................................................... 8-43

Figure 8.4.9 Range of LCC Savings for Front-Loading Commercial Clothes Washers, 

Laundromat........................................................................................................ 8-43

8-iii
CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 INTRODUCTION

This chapter describes the Department of Energy (DOE)’s methodology for analyzing the 

economic impacts of possible energy efficiency standards on individual consumers. The effect of 

standards on individual consumers includes a change in operating expense (usually decreased) 

and a change in purchase price (usually increased). This chapter describes three metrics DOE 

used in the consumer analysis to determine the effect of standards on individual consumers:

• Life-cycle cost (LCC) is the total consumer expense over the life of an appliance, 

including purchase expense and operating costs (including energy expenditures). DOE 

discounts future operating costs to the time of purchase, and sums them over the lifetime 

of the equipment.

• Payback period (PBP) measures the amount of time it takes customers to recover the 

assumed higher purchase price of more energy-efficient equipment through lower 

operating costs.

• Rebuttable payback period is a special case of the PBP. Where LCC and PBP are 

estimated over a range of inputs reflecting actual conditions, rebuttable payback period is 

based on laboratory conditions, specifically DOE test procedure inputs.

Inputs to the LCC and PBP are discussed in sections 8.2 and 8.3, respectively, of this 

chapter. Results for the LCC and PBP are presented in section 8.4. The rebuttable PBP is 

discussed in section 8.5. Key variables and calculations are presented for each metric. DOE 

performed the calculations discussed here using a series of Microsoft Excel® spreadsheets which 

are accessible on the Internet (http://www.eere.energy.gov/buildings/appliance_standards/).

Details and instructions for using the spreadsheets are discussed in Appendix 8A. 

8.1.1 General Approach for LCC and Payback Period Analysis

Recognizing that several inputs to the determination of consumer LCC are either 

variable or uncertain, DOE conducted the LCC analysis by modeling both the uncertainty and 

variability in the inputs using Monte Carlo simulation and probability distributions. A detailed 

explanation of Monte Carlo simulation and the use of probability distributions is contained in 

Appendix 8A. DOE developed LCC spreadsheet models incorporating both Monte Carlo 

simulation and probability distributions by using Microsoft Excel® spreadsheets combined with 

Crystal Ball® (a commercially available add-in program). 

As described in Chapter 7, DOE established the variability and uncertainty in energy and 

water use by defining the uncertainty and variability in the usage (in cycles per day) of the 

8-1
equipment. As will be described later in this chapter, the variability and uncertainty in energy 

and water pricing are characterized by regional differences in energy and water prices.

DOE displays the LCC results as distributions of impacts compared to the baseline 

conditions. Results are presented at the end of this chapter and are based on 10,000 samples per 

Monte Carlo simulation run. To illustrate the implications of the analysis, DOE generated a 

frequency chart depicting the variation in LCC for each standard level considered.

 The payback period is measured relative to the baseline product. The calculation uses 

average values for the inputs. It is calculated by dividing the change in installed cost by the 

change in first year operating cost for the baseline efficiency level and each increased efficiency 

level. 

8.1.2 Overview of LCC and Payback Period Inputs

The LCC is the total consumer expense over the life of the equipment, including purchase 

expense and operating expense (including energy expenditures). DOE discounts future operating 

expenses to the time of purchase and sums them over the lifetime of the equipment. The PBP is 

the change in purchase expense due to an increased efficiency standard divided by the change in 

annual operating expense that results from the standard. It represents the number of years it will 

take the customer to recover the increased purchase expense through decreased operating 

expenses. 

DOE categorizes inputs to the LCC and PBP analysis as follows: (1) inputs for 

establishing the purchase expense, otherwise known as the total installed cost, and (2) inputs for 

calculating the operating cost. 

The primary inputs for establishing the total installed cost are:

• Baseline manufacturer cost: The costs incurred by the manufacturer to produce 

equipment meeting existing minimum efficiency standards. 

• Standard-level manufacturer cost increases: The change in manufacturer cost associated 

with producing equipment to meet a particular standard level.

• Markups and sales tax: The markups and sales tax associated with converting the 

manufacturer cost to a consumer equipment price. The markups and sale tax are 

described in detail in Chapter 7, Markups for Equipment Price Determination. 

• Installation cost: The cost to the consumer of installing the equipment. The installation 

cost represents all costs required to install the equipment other than the marked-up 

consumer equipment price. The installation cost includes labor, overhead, and any 

miscellaneous materials and parts. Thus, the total installed cost equals the consumer 

equipment price plus the installation cost. 

8-2
The primary inputs for calculating the operating cost are:

• Equipment energy and water consumption: The equipment energy consumption is the site 

energy use associated with operating the equipment. The water consumption is the site 

water use associated with operating the equipment. Chapter 7, Energy and Water Use 

Analysis, details how DOE determined the equipment energy and water consumption 

based on various data sources. The per cycle energy and water use for the efficiency 

levels analyzed here are an input from the Engineering Analysis, as described in Chapter 

5. Since the units selected for tests across efficiency levels varied in tub volume, DOE 

adjusted the annual number of cycles to maintain consistent loading across all tub 

volumes. To make this adjustment, DOE assumed that 50 percent of consumers fill tub to 

capacity instead of assuming that customers would self-select an appropriate sized 

washer in a laundromat. 

• Equipment efficiency: The equipment efficiency dictates the equipment energy and water 

consumption associated with standard-level equipment (i.e., equipment with efficiencies 

greater than baseline equipment). Chapter 7, Energy and Water Use Determination, 

details how energy and water consumption change with increasing equipment efficiency.

• Energy and water prices: Energy and water prices are the prices paid by consumers for 

energy (i.e., electricity, gas, or oil) and water. DOE determined current energy prices 

based on data from the DOE- EIA. DOE determined water prices based on data from the 

American Water Works Association (AWWA).

• Energy and water price trends: DOE used the EIA Annual Energy Outlook 

2014(AEO2014) to forecast energy prices into the future. For the results presented in this 

chapter, DOE used the AEO2014 reference case to forecast future energy prices. DOE 

used consumer price index data specific to water and sewerage maintenance from the 

Bureau of Labor Statistics as the basis for its water price trend.

• Repair and maintenance costs: Repair costs are associated with repairing or replacing 

components that have failed. Maintenance costs are associated with maintaining the 

operation of the equipment.

• Lifetime: The age at which the equipment is retired from service. 

• Discount rate: The rate at which DOE discounted future expenditures to establish their 

present value. 

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating 

cost inputs for the calculation of the LCC and PBP. In the figure below, the yellow boxes

indicate the inputs, the green boxes indicate intermediate outputs, and the blue boxes indicate the 

final outputs (the LCC and PBP).

8-3
Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP

Table 8.1.1 summarizes the input values that DOE used to calculate the LCC and PBP. 

Each table summarizes the total installed cost inputs and the operating cost inputs including the 

lifetime, discount rate, and energy and water price trends. DOE characterized all of the total cost 

inputs with single-point values, but characterized several of the operating cost inputs with 

probability distributions that capture the input’s uncertainty and/or variability. For those inputs 

characterized with probability distributions, the values provided in the following tables are the 

average or typical values. Also listed in the following tables is the section of the technical 

support document (TSD) where more detailed information on the inputs can be found.

Energy and 

Water Use

Energy and 

Water Prices

From Energy 

and Water Use 

Analysis

(Use is a 

function of 

Efficiency)

Installation 

Cost

Equipment 

Price

From 

Engineering 

Analysis

(Price is a 

function of 

Efficiency)

From 

Markups 

Analysis

Baseline 

Manufacturer 

Price

Std-Level 

Manufacturer 

Price

Consumer 

Retail Price 

Markup

Sales Tax

Repair Cost

Maintenance 

Cost

Annual Energy 

and Water 

Expense

Lifetime

Discount Rate

Energy and 

Water Price

Annual 

Operating 

Expense

Total Installed 

Cost

Lifetime 

Operating 

Expense

Payback Life-Cycle 

Cost

8-4
Table 8.1.1 LCC and PBP Input Summary

Input

Product 

Class Average or Typical Value Characterization

TSD Section 

Reference

Total Installed Cost Inputs

Baseline Manufacturer 

Cost

TopLoading 1.15 MEF/8.90 IWF = $532.40 Single-Point Value

8.2.1.2 FrontLoading 1.65 MEF/5.20 IWF = $844.23 Single-Point Value

Standard-Level

Manufacturer Cost 

Increase

TopLoading1.35 MEF/8.80 IWF = $0.00

1.55 MEF/6.90 IWF = $39.63 Single-Point Value

8.2.1.3 FrontLoading

1.80 MEF/4.50 IWF = $0.00

2.00 MEF/4.10 IWF = $0.63

2.20 MEF/3.90 IWF = $19.61 Single-Point Value

Manufacturer Markup Both 1.29 Single-Point Value 6.4

Distributor Markup Both Baseline = 1.37

Incremental = 1.18 Single-Point Value 6.5

Sales Tax Both 1.0711 Single-Point Value 6.6

Installation Cost Both $225.00 Single-Point Value 8.2.1.5

Operating Cost Inputs

Usage Both Multi-Family = 3.0 cycles/day

Laundromat = 4.1 cycles/day

Uniform distribution:

Multi-Family = 1.0 to 6.0cyc/day

Laundromat = 2.8 to 6 cyc/day

7.3, 7.4

Annual Electricity Use

TopLoading

Baseline use*:

Multi-Family = 1,237kWh 

Laundromat = 326 kWh

Variability based on usage

7.3

FrontLoading

Baseline use*:

Multi-Family = 748 kWh 

Laundromat = 163 kWh

Variability based on usage

Annual Gas Use

TopLoading

Baseline use*:

Multi-Family = 6.4 MMBtu

Laundromat = 14.1 MMBtu

Variability based on usage

7.3

FrontLoading

Baseline use*:

Multi-Family = 4.2 MMBtu

Laundromat = 9.1 MMBtu

Variability based on usage

Annual Water Use

TopLoading

Baseline use*:

Multi-Family = 29.6 103 gallon

Laundromat = 40.9 103 gallon

Variability based on usage

7.3

FrontLoading

Baseline use*:

Multi-Family = 15.6 103 gallon

Laundromat = 21.6 103 gallon

Variability based on usage

Energy Prices Both Elec = 10.4 ¢/kWh (average)

Gas = 8.74 $/MMBtu (average) Variable based on location 8.2.2.2

Water and Wastewater 

Prices Both

Water = 3.54 $/103 gallon

(average)

Wastewater = 4.84 $/103 gallon

(average)

Variable based on region 8.2.2.2

Repair and 

Maintenance Costs Both Annualized repair cost =

1⁄2 Equipment price / Lifetime Single-Point Value 8.2.2.4

Lifetime Both Multi-Family = 11.25 years

Laundromat = 7.13 years

Weibull distribution 8.2.3

8-5
Discount Rate Both 6.0% Custom distribution 8.2.4

Energy Price Trend Both AEO 2014 Reference Case Two sensitivities:

High & Low Growth Cases 8.2.2.3

Water and Wastewater 

Price Trend Both Bureau of Labor Statistics:Water and sewerage CPI Single forecast 8.2.2.3

* Annual use based on electric water heating and electric clothes drying

** Annual use provided for baseline product only. Annual use decreases with increased product efficiency.

8.2 LIFE-CYCLE COST INPUTS

Life-cycle cost is the total customer expense over the life of an appliance, including 

purchase expense and operating costs (including energy expenditures). DOE discounts future 

operating costs to the time of purchase, and sums them over the lifetime of the equipment. DOE 

defines LCC by the following equation:

( ) ∑= + = +

N

t

t

t

r

OC LCC IC

1 1

where:

LCC = Life-cycle cost in dollars,

IC = Total installed cost in dollars,

∑ = Sum over the lifetime, from year 1 to year N,

N = Lifetime of appliance in years,

OC = Operating cost in dollars,

r = Discount rate, and

t = Year for which operating cost is being determined.

DOE expresses dollar values in 2013$. 

The following sections discuss total installed cost, operating cost, lifetime, and discount 

rate.

8.2.1 Total Installed Cost Inputs

DOE defines the total installed cost using the following equation:

IC = EQP + INST

where:

EQP = Equipment price (i.e., customer price for the equipment only), expressed in 

dollars, and 

INST = Installation cost or the customer price to install equipment (i.e., the cost for 

labor and materials), also in dollars.

8-6
The equipment price is based on how the consumer purchases the equipment. As 

discussed in Chapter 7, Markups for Equipment Price Determination, DOE defined markups and 

sales taxes for converting manufacturing costs into consumer equipment prices.

Table 8.2.1 summarizes the inputs for the determination of total installed cost.

Table 8.2.1 Inputs for Total Installed Cost

Baseline Manufacturer Cost

Standard-Level Manufacturer Cost

Manufacturer Markup

Retailer or Distributor Markup

Sales Tax

Installation Cost

The baseline manufacturer cost is the cost incurred by the manufacturer to produce 

equipment meeting existing minimum efficiency standards. Standard-level manufacturer cost 

increases are the change in manufacturer cost associated with producing equipment at a standard 

level. Markups and sales tax convert the manufacturer cost to a consumer equipment price. The 

installation cost is the cost to the consumer of installing the equipment and represents all costs 

required to install the equipment other than the marked-up consumer equipment price. The 

installation cost includes labor, overhead, and any miscellaneous materials and parts. Thus, the 

total installed cost equals the consumer equipment price plus the installation cost. DOE 

calculated the total installed cost for baseline products based on the following equation:

MFG OVERALL BASE BASE

BASE BASE BASE

COST MU INST

IC EQP INST

= × +

= +

_

where:

ICBASE = Baseline total installed cost,

EQPBASE = Consumer equipment price for baseline models, 

INSTBASE = Baseline installation cost,

COSTMFG = Manufacturer cost for baseline models, and

MUOVERALL_BASE = Baseline overall markup (product of manufacturer markup, baseline 

retailer or distributor markup, and sales tax).

 DOE calculated the total installed cost for standard-level products based on the following 

equation:

8-7
( ) ( )

( ) ( )

( ) BASE MFG OVERALL INCR STD

BASE BASE STD STD

BASE STD BASE STD

STD STD STD

IC COST MU INST

EQP INST EQP INST

EQP EQP INST INST

IC EQP INST

= + D × + D

= + + D + D

= + D + + D

= +

_

where:

ICSTD = Standard-level total installed cost,

EQPSTD = Consumer equipment price for standard-level models, 

INSTSTD = Standard-level installation cost,

EQPBASE = Consumer equipment price for baseline models, 

ΔEQPSTD = Change in equipment price for standard-level models,

INSTBASE = Baseline installation cost,

ΔINSTSTD = Change in installation cost for standard-level models,

ICBASE = Baseline total installed cost,

ΔCOSTMFG = Change in manufacturer cost for standard-level models, and

MUOVERALL_INCR = Incremental overall markup (product of manufacturer markup, 

incremental retailer or distributor markup, and sales tax).

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the total installed cost for commercial clothes washers. 

8.2.1.1 Baseline Manufacturer Cost

DOE developed the manufacturer costs for commercial clothes washer units as described 

in chapter 5, Engineering Analysis. Based on a manufacturer markup of 1.29, as determined in 

section 6.2 of Chapter 6, Markups for Equipment Price Determination, DOE arrived at a baseline 

manufacturer cost. Table 8.2.2 presents the baseline manufacturer cost as well as the associated 

baseline modified energy factor and water factor.

Table 8.2.2 Commercial Clothes Washers: Baseline Manufacturer Costs

Product Class

Baseline Modified 

Energy Factor

(cu.ft./kWh/cyc)

Baseline Integrated

Water Factor

(gal/cu.ft.)

Baseline Manufacturer 

Cost

(2013$)

Top-Loading 1.15 8.90 $532.40

Front-Loading 1.65 5.20 $844.23

8-8
8.2.1.2 Markups

For a given distribution channel, the overall markup is the value determined by 

multiplying all the associated markups and the applicable sales tax together to arrive at a single 

overall distribution chain markup value. The overall markup is multiplied times the baseline or 

standard-compliant manufacturer cost to arrive at the price paid by the customer. Because there 

are baseline and incremental markups associated with the wholesaler and mechanical and general

contractors, the overall markup is also divided into a baseline markup (i.e., a markup used to 

convert the baseline manufacturer price into a customer price) and an incremental markup (i.e., a 

markup used to convert a standard-compliant manufacturer cost increase due to an efficiency 

increase into an incremental customer price). Markups can differ depending on whether the 

equipment is being purchased for a new construction installation or is being purchased to replace 

existing equipment. DOE developed the overall baseline markups and incremental markups for 

both new construction and replacement applications as a part of the markups analysis (chapter 6 

of the TSD).

Table 8.2.3 displays baseline and incremental markups used to calculate customer price 

from manufacturer cost; Table 8.2.3 presents the values used for the distribution channels 

involving wholesalers and contractors, as well as the national accounts distribution channels.

Because the relative importance of new construction and replacements in total shipments varies 

among the equipment classes, the total markup varies as well (Table 8.2.3).

Table 8.2.3 Summary of Average Markups 

Baseline Markup Incremental Markup

Manufacturer 1.1 to 1.36 (see Table 6.3.1 in chapter 6)

Wholesaler 1.36 1.10

Mechanical Contractor 

(new construction/replacement) 1.42/1.50 1.14/1.20

General Contractor 

(new construction only) 1.31 1.19

Sales Tax (replacement only) 1.07 1.07

8.2.1.3 Overall Markup

The overall markup is the value determined by multiplying the manufacturer and retailer 

markups and the sales tax together to arrive at a single markup value. Table 8.2.4 shows the 

overall baseline and incremental markups for commercial clothes washers. Refer to Chapter 6, 

Markups Analysis, for details. 

8-9
Table 8.2.4 Overall Markups

Markup Baseline Incremental

Manufacturer 1.285

Distributor 1.37 1.18

Sales Tax 1.0711

Overall 1.89 1.62

8.2.1.4 Standard-Level Manufacturer Cost Increases

DOE used a combination of cost data submitted by AHAM and a reverse engineering 

analysis to develop commercial clothes washer manufacturer cost increases associated with 

increases in product standard levels. Refer to Chapter 5, Engineering Analysis, for details. 

Table 8.2.5 and Table 8.2.6 present the standard-level manufacturer cost increases as well as the 

associated modified energy factors and water factors for top-loading and front-loading washers, 

respectively.

Table 8.2.5 Top-Loading Commercial Clothes Washers: Standard-Level Manufacturer 

Cost Increases

Efficiency Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated Water

Factor

(gal/cu.ft.)

Standard-Level

Manufacturer Cost Increase

(2013$)

Baseline 1.15 8.90 -

1 1.35 8.80 $0.00

2 1.55 6.90 $39.63

Table 8.2.6 Front-Loading Commercial Clothes Washers: Standard-Level Manufacturer 

Cost Increases

Efficiency Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated Water

Factor

(gal/cu.ft.)

Standard-Level

Manufacturer Cost Increase

(2013$)

Baseline 1.65 5.20 -

1 1.80 4.50 $0.00

2 2.00 4.10 $0.63

3 2.20 3.90 $19.61

8.2.1.5 Installation Cost

DOE derived baseline installation costs for commercial clothes washers from data in the 

RS Means Mechanical Cost Data, 2013.

1 This book provides estimates on the labor required to 

install commercial clothes washers. Table 8.2.7 summarizes the nationally representative average 

costs associated with the installation of a four-cycle, coin operating, commercial clothes washer 

as presented in RS Means Mechanical Cost Data. Table 8.2.7 provides both bare costs (i.e., costs 

8-10
before O&P) and installation costs including O&P. DOE determined that installation costs would 

not be impacted with increased standard levels.

Table 8.2.7 Commercial Clothes Washers: Baseline Installation Costs 

Bare Costs (2013$) Including Overhead & Profit (2013$) 

Installation Type Material Labor Total Total Material* Labor**

Average $1,250 $149 $1,399 $1,600 $1,374 $225

Average (2013$) $225

* Material costs including O&P equal bare costs plus 10% profit.

** DOE derived labor cost including O&P by subtracting material with O&P from total with O&P.

Source: RS Means, Mechanical Cost Data, 2013.

8.2.1.6 Total Installed Cost

The total installed cost is the sum of the consumer equipment price and the installation 

cost. Refer back to section 8.2.1 to see the equations that DOE used to calculate the total 

installed cost for baseline and standard-level products.

Table 8.2.8 and Table 8.2.9 present the consumer equipment price, installation costs, and 

total installed costs for top-loading and front-loading washers, respectively. Prices and costs are 

presented at the baseline level and each standard level. 

Table 8.2.8 Top-Loading Commercial Clothes Washers: Consumer Equipment Prices, 

Installation Costs, and Total Installed Costs

Efficiency

Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated 

Water

Factor

(gal/cu.ft.)

Equipment 

Price

(2013$)

Installation

Cost 

(2013$)

Total Installed 

Cost

(2013$)

Baseline 1.15 8.90 $1,004 $225 $1,229

1 1.35 8.80 $1,004 $225 $1,229

2 1.55 6.90 $1,068 $225 $1,293

8-11
Table 8.2.9 Front-Loading Commercial Clothes Washers: Consumer Equipment Prices, 

Installation Costs, and Total Installed Costs

Efficiency

Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated 

Water

Factor

(gal/cu.ft.)

Equipment 

Price

(2013$)

Installation

Cost 

(2013$)

Total Installed 

Cost

(2013$)

Baseline 1.65 5.20 $1,592 $225 $1,817

1 1.80 4.50 $1,592 $225 $1,817

2 2.00 4.10 $1,593 $225 $1,818

3 2.20 3.90 $1,623 $225 $1,848

8.2.1.7 Future Product Prices

DOE obtained historical PPI data for commercial laundry and drycleaning machinery

spanning the time period 1982-2013 from the Bureau of Labor Statistics’ (BLS).a The PPI data 

reflect nominal prices, adjusted for product quality changes. An inflation-adjusted (deflated) 

price index for commercial laundry and drycleaning machinery was calculated by dividing the 

PPI series by the Gross Domestic Product Chained Price Index (see Figure 8.2.1).

a

 Series ID PCU3333183333182; http://www.bls.gov/ppi/

8-12

 
Figure 8.2.1 Historic Nominal and Deflated Producer Price Indexes for 

Commercial Laundry and Drycleaning Machinery

From the early-1980s to early-1990s, the deflated price index for commercial laundry and 

drycleaning machinery was decreasing slowy. Since 1993, the deflated price index for this 

industry has risen consistently and only till the last forth year (2010), the prices started to stay

flat and dropped slightly in 2013. The rising prices we observed in commercial laundry and 

drycleaning machinery industry from early-2000s to 2010 could partly attribute to the concurrent 

price increase in copper and steel products which are heavily used in commercial clothes 

washers; however, it is uncertain what was cauing the price to rise between 1993 to early-2000s. 

Although the prices in this industry remain roughly constant in the last three years, given the 

uncertain cuase of the long-lasting increasing price trend and the slowdown in global economic 

activity in recent years, DOE believes that the extent to how the trends will continue is very 

uncertain. Additionally, in terms of the types of commerial clothes washers considered in this 

rulemaking, they are largely similar to the residential clothes washers. Hence, DOE also referred 

to the household laundry equipment PPI for comparison and found that the deflated household 

laundry equipment PPI have actually been decreasing consistenly from 1947 to 2013 but the 

decreasing rate has slowed down in recent years, as shown in Figure 8.2.2. b

b

 Series ID PCU335224335224P; http://www.bls.gov/ppi/

8-13

 
Figure 8.2.2 Historic Nominal and Deflated Producer Price Indexes for 

Household Laundry Equipment

Given the uncertainties mentioned above, DOE decided to use constant prices as the 

default price assumption to project future commercial clothes washer prices. Thus, projected 

prices for the LCC and PBP analysis are equal to the 2013 values for each efficiency level in 

each product class.

8.2.2 Operating Cost Inputs

DOE defines the operating cost by the following equation:

OC = EC +WC + RC + MC

where:

EC = Energy expenditure associated with operating the equipment, 

WC = For dishwashers and commercial clothes washers, the water expenditure 

associated with operating the equipment,

RC = Repair cost associated with component failure, and 

MC = Service cost for maintaining equipment operation.

Table 8.2.10 shows the inputs for determining the operating costs. The inputs listed in 

Table 8.2.10 are also necessary for determining lifetime operating expenses, which include the 

8-14
energy price trends (and water price trends), product lifetime, discount rate, and effective date of 

the standard.

Table 8.2.10 Inputs for Operating Cost

Annual Energy (and Water) Consumption

Energy and Water Prices

Repair and Maintenance Costs

Energy and Water Price Trends

Product Lifetime

Discount Rate

Effective Date of Standard

The annual energy consumption is the site energy use associated with operating the 

equipment. The annual water consumption, which is applicable to commercial clothes washers, 

is the site water use associated with operating the equipment. The annual energy (and water) 

consumption vary with the product efficiency. That is, the energy and water consumption 

associated with standard-level equipment (i.e., equipment with efficiencies greater than baseline 

equipment) are less than the consumptions associated with baseline equipment. Energy and 

water prices are the prices paid by consumers for energy (i.e., electricity, gas, or oil) and water. 

Multiplying the annual energy and water consumption by the energy and water prices yields the 

annual energy cost and water cost, respectively. Repair costs are associated with repairing or 

replacing components that have failed. Maintenance costs are associated with maintaining the 

operation of the equipment. DOE used energy and water price trends to forecast energy and 

water prices into the future and, along with the product lifetime and discount rate, to establish the 

lifetime energy and water costs. The product lifetime is the age at which the equipment is retired 

from service. The discount rate is the rate at which DOE discounted future expenditures to 

establish their present value. DOE calculated the operating cost for baseline products based on 

the following equation:

BASE ENERGY BASE WATER BASE BASE

BASE BASE BASE BASE BASE

AEC PRICE AWC PRICE RC MC

OC EC WC RC MC

= × + × + +

= + + +

where:

OCBASE = Baseline operating cost,

ECBASE = Energy expenditure associated with operating the baseline equipment, 

WCBASE = For commercial clothes washers, the water expenditure associated with 

operating the baseline equipment,

RCBASE = Repair cost associated with component failure for the baseline 

equipment,

MCBASE = Service cost for maintaining baseline equipment operation,

8-15
AECBASE = Annual energy consumption for baseline equipment, 

PRICEENERGY = Energy price,

AWCBASE = Annual water consumption for baseline equipment, and

PRICEWATER = Water price.

 DOE calculated the operating cost for standard-level products based on the following 

equation:

( ) ( )

( ) ( ) BASE STD BASE STD

BASE STD ENERGY BASE STD WATER

STD ENERGY STD WATER STD STD

STD STD STD STD STD

RC RC MC MC

AEC AEC PRICE AWC AWC PRICE

AEC PRICE AWC PRICE RC MC

OC EC WC RC MC

+ + D + + D

= D × + D ×

= × + × + +

= + + +

__ __

where:

OCSTD = Standard-level operating cost,

ECSTD = Energy expenditure associated with operating standard-level equipment, 

WCSTD = For commercial clothes washers, the water expenditure associated with 

operating standard-level equipment,

RCSTD = Repair cost associated with component failure for standard-level 

equipment,

MCSTD = Service cost for maintaining standard-level equipment operation,

AECSTD = Annual energy consumption for standard-level equipment, 

PRICEENERGY = Energy price,

AWCSTD = Annual water consumption for standard-level equipment,

PRICEWATER = Water price,

ΔAECSTD = Change in annual energy consumption caused by standard-level

equipment, 

ΔAWCSTD = Change in annual water consumption caused by standard-level 

equipment,

ΔRCSTD = Change in repair cost caused by standard-level equipment, and

ΔMCSTD = Change in maintenance cost caused by standard-level equipment.

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the operating costs for cooking products, dishwashers, 

dehumidifiers, and commercial clothes washers. 

8.2.2.1 Annual Energy and Water Consumption

Chapter 7, Energy and Water Use Analysis, details how DOE determined the annual 

energy and water consumption for baseline and standard-level products. 

DOE characterized the variability of commercial clothes washer usage based on several 

studies. For both multi-family as well as laundromat applications, DOE equally weighted each 

8-16
study to establish the variability. Refer back to Chapter 7, section 7.4 to review how DOE 

characterized commercial clothes washer usage variability.

The tables presented below are based on the energy and water use analysis described in 

Chapter 7. Keep in mind that the annual energy and water consumption values in the tables 

below are averages. DOE captured the variability in energy (and water) consumption when it 

conducted its LCC and PBP analysis.

Table 8.2.11 and Table 8.2.12 provide the average annual energy and water consumption 

by efficiency level for top-loading commercial clothes washers. Table 8.2.13 and Table 8.2.14

provide the average annual energy and water consumption by efficiency level for front-loading 

commercial clothes washers. DOE presents annual consumption based on two applications: 

multi-family housing and laundromats. 

Table 8.2.11 Top-Loading Commercial Clothes Washers, Multi-Family Application: 

Annual Energy and Water Use by Efficiency Level

Efficiency

Level

MEF IWF

Annual Energy Use*

Annual 

Water Use

Water Heating** Drying***

Electric Gas Electric Gas Machine

cu.ft./kWh/cyc gal/cu.ft. kWh/yr MMBtu/yr kWh/yr MMBtu/yr kWh/yr 1000 gal/year

Baseline 1.15 8.90 107.1 1.29 913.0 5.23 240.9 30.21

1 1.35 8.80 138.6 1.68 692.0 3.97 230.0 29.87

2 1.55 6.90 108.7 1.31 690.9 3.96 109.5 24.26

* Annual usage based on 3.0 cycles per day (1,095 cycles per year).

** Electric and gas water heating based on water heater efficiencies of 98% for electric and 83% for gas. Water 

heater consumption is weighted by the share of buildings with electric (25%) and gas (75%) water heaters. 

*** Dryer consumption is weighted by the share of buildings with electric (40%) and gas (60%) dryers.

Table 8.2.12 Top-Loading Commercial Clothes Washers, Laundromat Application: 

Annual Energy and Water Use by Efficiency Level

Efficiency

Level

MEF IWF

Annual Energy Use*

Annual 

Water Use

Water Heating** Drying***

Electric Gas Electric Gas Machine

cu.ft./kWh/cyc gal/cu.ft. kWh/yr MMBtu/yr kWh/yr MMBtu/yr kWh/yr 1000 gal/year

Baseline 1.15 8.90 0.0 2.36 0.0 11.92 329.3 41.30

1 1.35 8.80 0.0 3.05 0.0 9.04 314.4 40.84

2 1.55 6.90 0.0 2.39 0.0 9.02 149.7 33.17

* Annual usage based on 4.1 cycles per day (1,497 cycles per year).

** Electric and gas water heating based on water heater efficiencies of 98% for electric and 83% for gas. Water 

heater consumption is weighted by the share of buildings with electric (0%) and gas (100%) water heaters. 

*** Dryer consumption is weighted by the share of buildings with electric (0%) and gas (100%) dryers.

8-17
Table 8.2.13 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Annual Energy and Water Use by Efficiency Level

Efficiency

Level

MEF IWF

Annual Energy Use*

Annual 

Water Use

Water Heating** Drying***

Electric Gas Electric Gas Machine

cu.ft./kWh/cyc gal/cu.ft. kWh/yr MMBtu/yr kWh/yr MMBtu/yr kWh/yr 1000 gal/year

Baseline 1.65 5.20 88.9 1.07 552.9 3.17 120.5 15.94

1 1.80 4.50 91.1 1.10 516.1 2.96 87.6 14.10

2 2.00 4.10 51.4 0.62 501.3 2.87 109.5 12.85

3 2.20 3.90 67.1 0.81 522.7 3.00 76.7 14.12

* Annual usage based on 3.0 cycles per day (1,095 cycles per year).

** Electric and gas water heating based on water heater efficiencies of 98% for electric and 83% for gas. Water 

heater consumption is weighted by the share of buildings with electric (25%) and gas (75%) water heaters. 

*** Dryer consumption is weighted by the share of buildings with electric (40%) and gas (60%) dryers.

Table 8.2.14 Front-Loading Commercial Clothes Washers, Laundromat Application: 

Annual Energy and Water Use by Efficiency Level

Efficiency

Level

MEF IWF

Annual Energy Use*

Annual 

Water Use

Water Heating** Drying***

Electric Gas Electric Gas Machine

cu.ft./kWh/cyc gal/cu.ft. kWh/yr MMBtu/yr kWh/yr MMBtu/yr kWh/yr 1000 gal/year

Baseline 1.65 5.20 0.0 1.96 0.0 7.22 164.7 21.80

1 1.80 4.50 0.0 2.01 0.0 6.74 119.8 19.28

2 2.00 4.10 0.0 1.13 0.0 6.55 149.7 17.57

3 2.20 3.90 0.0 1.48 0.0 6.83 104.8 19.30

* Annual usage based on 4.1 cycles per day (1,497 cycles per year).

** Electric and gas water heating based on water heater efficiencies of 98% for electric and 83% for gas. Water 

heater consumption is weighted by the share of buildings with electric (0%) and gas (100%) water heaters. 

*** Dryer consumption is weighted by the share of buildings with electric (0%) and gas (100%) dryers.

8.2.2.2 Energy and Water Prices

 

DOE derived energy prices for 27 geographic areas in the U.S. and derived water prices 

for the four Census regions. Using these data, DOE analyzed the variability of energy and water 

prices at the regional level for commercial clothes washers. 

DOE characterized energy and water price regional variability with probability 

distributions. It based the probability associated with each regional energy and water price on the 

population weight of each region. 

8-18
The methodology that DOE used for deriving the energy and water prices is presented 

below. Included are tables that summarize the regional energy and water prices for each product.

Energy Prices

DOE derived average commercial electricity prices from data that are published annually 

based on EIA Form 861.

2 Those data include annual electricity sales in kilowatt-hours, revenues 

from electricity sales, and number of customers in the residential, commercial, and industrial 

sectors, for every utility serving final consumers. DOE calculated commercial electricity prices 

for each of the 27 U.S. geographic areas to accordance with RECS 2009 geographic areas. The 

calculation of an average commercial electricity price proceeds in two steps:

1. For each utility, estimate an average commercial price by dividing the commercial 

revenues by commercial sales.

2. Calculate a regional average price, weighting each utility with customers in a region by 

the number of commercial consumers served in that region.

Table 8.2.15 shows the results for each geographic region.

8-19
Table 8.2.15 Average Commercial Electricity Prices in 2012

Geographic Area 2012$/kWh

1 Connecticut, Maine, New Hampshire, 

Rhode Island, Vermont 0.138

2 Massachusetts 0.143

3 New York 0.156

4 New Jersey 0.133

5 Pennsylvania 0.106

6 Illinois 0.089

7 Indiana, Ohio 0.098

8 Michigan 0.114

9 Wisconsin 0.105

10 Iowa, Minnesota, North Dakota, South 

Dakota 0.087

11 Kansas, Nebraska 0.096

12 Missouri 0.085

13 Virginia 0.085

14 Delaware, District of Columbia, 

Maryland, West Virginia 0.109

15 Georgia 0.099

16 North Carolina, South Carolina 0.092

17 Florida 0.099

18 Alabama, Kentucky, Mississippi 0.100

19 Tennessee 0.106

20 Arkansas, Louisiana, Oklahoma 0.080

21 Texas 0.097

22 Colorado 0.095

23 Idaho, Montana, Utah, Wyoming 0.082

24 Arizona 0.100

25 Nevada, New Mexico 0.094

26 California 0.140

27 Alaska , Hawaii , Oregon, Washington 0.108

Source: EIA Form 861.

Table 8.2.16 shows the national average commercial electricity prices for commercial 

clothes washers based on the relative residential consumer weight of each geographic area. DOE 

used 2013 population estimates from the U.S. Census as a proxy to estimate how the national 

saturation of commercial clothes washers was distributed over the 27 geographic areas.3 Because 

DOE conducted the LCC and PBP analysis in 2013$, all electricity prices are in 2013$. To 

perform the necessary monetary conversion, DOE used the CPI to convert the electricity prices 

from 2012$ to 2013$.

8-20
Table 8.2.16 Average Commercial Electricity Prices for Commercial Clothes Washers in 

2013

Geographic Area 2013$/kWh Saturation

1 Connecticut, Maine, New Hampshire, 

Rhode Island, Vermont $0.140 2.5%

2 Massachusetts $0.145 2.1%

3 New York $0.159 6.2%

4 New Jersey $0.135 2.8%

5 Pennsylvania $0.108 4.0%

6 Illinois $0.091 4.1%

7 Indiana, Ohio $0.099 5.7%

8 Michigan $0.115 3.1%

9 Wisconsin $0.107 1.8%

10 Iowa, Minnesota, North Dakota, South 

Dakota $0.088 3.2%

11 Kansas, Nebraska $0.098 1.5%

12 Missouri $0.086 1.9%

13 Virginia $0.087 2.6%

14 Delaware, District of Columbia, 

Maryland, West Virginia $0.111 2.4%

15 Georgia $0.101 3.2%

16 North Carolina, South Carolina $0.093 4.6%

17 Florida $0.100 6.2%

18 Alabama, Kentucky, Mississippi $0.102 3.9%

19 Tennessee $0.107 2.1%

20 Arkansas, Louisiana, Oklahoma $0.081 3.6%

21 Texas $0.099 8.4%

22 Colorado $0.097 1.7%

23 Idaho, Montana, Utah, Wyoming $0.083 1.9%

24 Arizona $0.101 2.1%

25 Nevada, New Mexico $0.096 1.5%

26 California $0.142 12.1%

27 Alaska , Hawaii , Oregon, Washington $0.110 4.7%

Source: EIA Form 861.

Commercial Natural Gas Prices

DOE obtained the data for the natural gas price calculation from the EIA publication 

Natural Gas Prices.

4 This publication includes a compilation of monthly natural gas delivery 

volumes and average consumer prices by State, for residential, commercial, and industrial 

customers. The Department used the complete annual data for 2012 to calculate an average annul 

price for each area. The calculation of average prices proceeds in two steps:

8-21
1. Calculate the annual price for each State using a simple average over the appropriate 

months.

2. Calculate a regional price, weighting each State in a region by its population.

 This method differs from the method used to calculate electricity prices because EIA 

does not provide consumer- or utility-level data on gas consumption and prices. Table 8.2.17

shows the national average commercial natural gas prices for commercial clothes washers based 

on the relative commercial consumer weight of each geographic area. DOE used 2013 population 

estimates from the U.S. Census as a proxy to estimate how the national saturation of commercial 

clothes washers was distributed over the 27 geographic areas. DOE also used the CPI to convert 

the natural gas prices from 2012$ to 2013$.

8-22
Table 8.2.17 Average Commercial Natural Gas Prices in 2012

Geographic Area 2013$/MMBtu Saturation

1 Connecticut, Maine, New Hampshire, 

Rhode Island, Vermont $10.21 2.5%

2 Massachusetts $10.20 2.1%

3 New York $7.38 6.2%

4 New Jersey $8.29 2.8%

5 Pennsylvania $10.54 4.0%

6 Illinois $8.76 4.1%

7 Indiana, Ohio $7.46 5.7%

8 Michigan $8.64 3.1%

9 Wisconsin $6.92 1.8%

10 Iowa, Minnesota, North Dakota, South 

Dakota $6.49 3.2%

11 Kansas, Nebraska $8.25 1.5%

12 Missouri $10.44 1.9%

13 Virginia $8.70 2.6%

14 Delaware, District of Columbia, 

Maryland, West Virginia $10.97 2.4%

15 Georgia $9.84 3.2%

16 North Carolina, South Carolina $8.47 4.6%

17 Florida $10.19 6.2%

18 Alabama, Kentucky, Mississippi $9.85 3.9%

19 Tennessee $8.27 2.1%

20 Arkansas, Louisiana, Oklahoma $8.88 3.6%

21 Texas $6.75 8.4%

22 Colorado $7.68 1.7%

23 Idaho, Montana, Utah, Wyoming $7.22 1.9%

24 Arizona $9.49 2.1%

25 Nevada, New Mexico $6.98 1.5%

26 California $6.97 12.1%

27 Alaska , Hawaii , Oregon, Washington $13.08 4.7%

Source: EIA, Natural Gas Prices.

8-23
Water Prices

DOE obtained water price data from the year 2012 from the Water and Wastewater Rate 

Survey conducted by Raftelis Financial Consultants and the American Water Works 

Association.5 The survey covers approximately 290 water utilities and 214 wastewater utilities, 

with each industry analyzed separately. The water survey includes, for each utility, the cost to 

consumers of purchasing a given volume of water. In this case, the data include a division of the 

total consumer cost into fixed and volumetric charges. The calculations use only the volumetric 

charge to calculate water prices, since only this charge would be affected by a change in water 

consumption. Including the fixed charge in the average would lead to a slightly higher water 

price.

The Water and Wastewater Rate Survey provides prices separately for residential and 

non-residential customers. For wastewater utilities, the format is similar, but the cost refers to 

the cost of treating a given volume of wastewater. In both surveys, the non-residential sector is 

divided into four sub-sectors based on the average monthly volume of water delivered or, 

equivalently, the size of the delivery pipe. The sub-sectors are named non-manufacturing, 

commercial, industrial 1, and industrial 2. DOE’s analysis uses the commercial category to 

estimate prices for commercial consumers. 

A sample of 290 utilities is not large enough to calculate regional prices for all U.S. 

Census divisions and large States (for comparison, the EIA Form 861 data include more than 

3000 utilities). For this reason, DOE calculated regional values at the Census region level 

(Northeast, South, Midwest, and West). The calculation of average per-unit-volume prices 

proceeds in three steps:

1. For each utility, calculate the per-unit-volume price by dividing the total volumetric cost 

by the volume delivered.

2. Calculate a State-level average price by weighting each utility in a given State by the 

number of commercial consumers it serves.

3. Calculate a regional average by combining the State-level averages, weighting each by

the population of that State. This third step helps reduce any bias in the sample that may 

occur due to relative under-sampling of large States.

 The results of the calculation for the commercial sector are presented in Table 8.2.18. 

The price units in the table are dollars per thousand gallons ($/tg).

8-24
Table 8.2.18 Average Per-Unit-Volume Water and Waste Water Prices in 2012

Commercial

Region 2013$/tg Water 2013$/tg Wastewater

Northeast 3.90 6.58

Midwest 3.32 3.97

South 3.33 4.74

West 4.04 4.76

Source: Raftelis, Raftelis Survey, 2013.

8.2.2.3 Energy and Water Price Trends

DOE used price forecasts by the EIA to estimate the trends in natural gas, oil, and 

electricity prices. To arrive at prices in future years, it multiplied the average prices described in 

the preceding section (section 8.2.2.2) by the forecast of annual average price changes in EIA’s 

AEO 2014.

6 To estimate the trend after 2040, DOE followed past guidelines provided to the 

Federal Energy Management Program (FEMP) by EIA and used the average rate of change 

during 2030–2040. 

The Department set up its analysis to calculate LCC and PBP using three separate 

projections: Reference, Low Economic Growth, and High Economic Growth. These three cases 

reflect the uncertainty of economic growth in the forecast period. The high and low growth cases 

show the projected effects of alternative growth assumptions on energy markets. Figure 8.2.3 and 

Figure 8.2.4 show the commercial electricity and natural gas price trends, respectively, based on 

the three projections. For the LCC results presented in section 8.4, DOE used only the energy 

price forecasts from the AEO 2014 Reference Case.

8-25
Figure 8.2.3 Electricity Price Trends

Figure 8.2.4 Natural Gas Price Trends

To estimate the future trend for water and wastewater prices, DOE used data on the 

historic trend in the national water price index (U.S. city average) from 1970 through 2012.

7

 

DOE extrapolated the future trend based on the linear growth from 1970 to 2012. But rather than 

use the extrapolated trend to forecast the prices for the eight years after 2012, DOE used the 

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Electricity Price Trend (2012=100)

Reference High Low

0.90

1.10

1.30

1.50

1.70

1.90

2.10

2.30

Natural Gas Price Trend (2012=100)

Reference Case High Case Low Case

8-26
annual growth rate between 2012 and 2021 to project water price trend. Otherwise, forecasted 

prices for this eight-year time period would have been much lower than the price in 2012. 

Beyond the eight-year time period, DOE used the extrapolated trend to forecast prices out to the 

year 2047. Figure 8.2.5 shows the historical and projected water price trend data. DOE used the 

forecasted data to estimate water and wastewater prices for commercial clothes washers.

Figure 8.2.5 Water Price Trend

8.2.2.4 Repair and Maintenance Costs

Typically, small incremental changes in product efficiency incur no, or only very small,

changes in repair and maintenance costs over baseline products. However, equipment with 

efficiencies that are significantly higher than the baseline are more likely to incur higher repair 

and maintenance costs because its higher complexity and higher part count typically increases 

the cumulative probability of failure. 

The Whirlpool Corporation estimates that the unit shipments of horizontal-axis 

commercial clothes washers are less than half that of vertical-axis machines while their inwarranty repair costs are double that of vertical-axis machines.8 This suggests that the repair of 

horizontal-axis machines is four times as costly as that of vertical-axis machines. Because inwarranty repair costs, based on Whirlpool’s experience, are greater for horizontal-axis machines 

that vertical-axis machines, DOE estimated that commercial clothes washer repair costs would 

increase as a function of equipment efficiency. DOE utilized an algorithm developed for central 

air conditioners and heat pumps to estimate repair cost increases.

9 This algorithm calculates 

annualized repair costs by dividing the half the equipment retail price by the equipment lifetime

as show in the expression below:

y = 8.502x - 16753

R2 = 0.9558

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0 Water Price CPI Trend (1982-1984=100)

Historical Water Price CPI

Extrapolated Water Price CPI 

Trend

Linear (Historical Water Price 

CPI)

8-27
LIFE

EQP RCANNUAL

× = 0.5

where:

RCANNUAL = Annualized repair cost associated with equipment,

EQP = Consumer equipment price, and

LIFE = Product lifetime.

Table 8.2.19 and Table 8.2.20 show for each product class and each product application 

(multi-family buildings and laundromats) the annualized repair costs for the commercial clothes 

washer baseline and efficiency levels. Annualized repair costs for each product application differ 

because commercial clothes washer lifetime is different for each application. (Product lifetimes 

are presented below is section 8.2.3). The tables also present the consumer equipment prices for 

the baseline level and each efficiency level. 

Table 8.2.19 Top-Loading Commercial Clothes Washer Annualized Repair Costs

Efficiency 

Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated 

Water

Factor

(gal/cu.ft.)

Equipment 

Price

(2013$)

Annualized Repair Cost (2013$)

Multi-Family* Laundromat*

Baseline 1.15 8.90 $1,004 $46 $71

1 1.35 8.80 $1,004 $46 $71

2 1.55 6.90 $1,068 $49 $76

* Average product lifetime: Multi-family = 11.3 years; Laundromat = 7.1 years.

Table 8.2.20 Front-Loading Commercial Clothes Washer Annualized Repair Costs

Efficiency 

Level

Modified

Energy Factor

(cu.ft./kWh/cyc)

Integrated 

Water

Factor

(gal/cu.ft.)

Equipment 

Price

(2013$)

Annualized Repair Cost (2013$)

Multi-Family* Laundromat*

Baseline 1.65 5.20 $1,592 $72 $113

1 1.80 4.50 $1,592 $72 $113

2 2.00 4.10 $1,593 $73 $113

3 2.20 3.90 $1,623 $74 $115

* Average product lifetime: Multi-family = 11.3 years; Laundromat = 7.1 years.

8.2.3 Product Lifetime

DOE used only primary sources of data to estimate product lifetimes. DOE considered 

the sources listed in Table 8.2.21 to estimate product lifetime. 

8-28
Table 8.2.21 Commercial Clothes Washers: Product Lifetime Estimates and Sources

Lifetime (years) Source

7 to 10 CEE (1998) 5

Top-Loading (12 to 14 lbs.): 5 to 8*

Front-Loading (18 to 50 lbs.): 10 to 15** CLA10 

8 to 9*** ACEEE (2001)11 

5 (high-use)* to 13 (low-use)** Southern California Edison (2000)12 

15** † CALMAC (2000)13 

* Used to establish laundromat lifetime only.

** Used to establish multi-family lifetime only.

*** Depending on the usage rate, the life can be shorter.

† Based on engineering judgment.

Because DOE conducted the LCC analysis based on analyzing two product 

applications—multi-family and laundromats—it established separate lifetimes for each product 

application. Because clothes washers in multi-family applications are used less frequently than in 

laundromats, DOE decided to use only those sources that indicated lifetimes of seven years or 

greater for multi-family applications. For laundromat applications, where clothes washers receive 

heavier use, DOE decided to use only those sources that indicated lifetimes of 10 years or less. 

DOE then took an average of the lifetime estimates that met the above criteria. For multi-family 

applications the average lifetime turned out to be 11.3 years, while the average lifetime for 

laundromats was 7.1 years. DOE used the low estimate for the above applicable sources to 

establish the minimum product lifetime for each product application. For multi-family 

applications the minimum estimate is 7 years and for laundromats it is 5 years. To establish the 

maximum product lifetime, DOE took the difference between the minimum and average values 

(4.3 years for multi-family and 2.1 years for laundromats) and added it to the average product 

lifetime. The minimum, average, and maximum lifetime estimates for each product application 

are shown in Table 8.2.22.

Table 8.2.22 Commercial Clothes Washers: Average, Minimum, and Maximum Product

Lifetimes

Product

Minimum

years

Average

years

Maximum

years

Multi-Family

Laundromats

7.0

5.0

11.3

7.1

15.5

9.3

DOE characterized the clothes washer product lifetimes for each product application with 

Weibull distributions. Appendix 8C presents the Weibull distributions for commercial clothes 

washers that DOE used in the LCC and PBP analysis.

8-29
8.2.4 Discount Rates

The commercial discount rate is the rate at which future operating costs are discounted to 

establish their present value in the LCC analysis. The discount rate value is applied in the LCC to 

future year energy costs and non-energy operations and maintenance costs to calculate the 

estimated net life-cycle cost of products of various efficiency levels and life-cycle cost savings as 

compared to the baseline for a representative sample of commercial end users.

DOE’s method views the purchase of a higher efficiency appliance as an investment that 

yields a stream of energy cost savings. DOE derived the discount rates for the LCC analysis by 

estimating the cost of capital for companies that purchase commercial clothes washers. The 

weighted average cost of capital (WACC) is commonly used to estimate the present value of 

cash flows to be derived from a typical company project or investment. Most companies use both 

debt and equity capital to fund investments, so their cost of capital is the weighted average of the 

cost to the firm of equity and debt financing, as estimated from financial data for publicly traded 

firms in the sectors that purchase commercial clothes washers.

14 

Damodaran Online is a widely used source of information about company debt and 

equity financing for most types of firms, and was the primary source of data for two sectors 

included in this analysis: property management and lodging.15 The Damodaran database does not 

include data on the personal services sector, which includes laundromats, or public sectors, such 

as state-run educational facilities. Discount rates for laundromats were estimated using sectorlevel financial data for the personal services sector published by Ibbotson Associates. 16 

Ibbotson Associates is a leading authority on asset allocation with expertise in capital market 

expectations and portfolio implementation. DOE used the average state and local bond rate to 

represent the discount rate for education.17 

DOE estimated the cost of equity using the capital asset pricing model (CAPM).18 The 

CAPM assumes that the cost of equity (ke) for a particular company is proportional to the 

systematic risk faced by that company, where high risk is associated with a high cost of equity 

and low risk is associated with a low cost of equity. The systematic risk facing a firm is

determined by several variables: the risk coefficient of the firm (β), the expected return on riskfree assets (Rf), and the equity risk premium (ERP). The risk coefficient of the firm indicates the 

risk associated with that firm relative to the price variability in the stock market. The expected 

return on risk-free assets is defined by the yield on long-term government bonds. The ERP

represents the difference between the expected stock market return and the risk-free rate. The 

cost of equity financing is estimated using the following equation, where the variables are 

defined as above:

k R ( ERP) e = f + β ×

Where:

ke = cost of equity,

Rf = expected return on risk-free assets,

8-30
β = risk coefficient of the firm, and

ERP = equity risk premium.

Several parameters of the cost of capital equations can vary substantially over time, and 

therefore the estimates can vary with the time period over which data is selected and the 

technical details of the data averaging method. For guidance on the time period for selecting and 

averaging data for key parameters and the averaging method, DOE used Federal Reserve 

methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve 

uses a forty-year period for calculating discount rate averages, utilizes the gross domestic 

product price deflator for estimating inflation, and considers the best method for determining the 

risk free rate as one where “the time horizon of the investor is matched with the term of the riskfree security.”19 

By taking a forty-year geometric average of Federal Reserve data on annual nominal 

returns for 10-year Treasury bills, DOE estimated the following risk free rates for 2004 - 2013 

(Table 8.2.23).20 DOE also estimated the ERP by calculating the difference between risk free 

rate and stock market return for the same time period, as estimated using Damodaran Online data 

on the historical return to stocks.21 

Table 8.2.23 Risk free rate and equity risk premium, 2004 – 2013 

Year Risk free rate (%) ERP (%)

2004 7.10% 3.25%

2005 7.11% 3.68%

2006 7.10% 3.49%

2007 7.08% 3.36%

2008 7.01% 2.40%

2009 6.88% 3.07%

2010 6.74% 3.23%

2011 6.61% 2.94%

2012 6.41% 3.99%

2013 6.24% 5.30%

The cost of debt financing (kd) is the interest rate paid on money borrowed by a company. 

The cost of debt is estimated by adding a risk adjustment factor (Ra) to the risk-free rate. This 

risk adjustment factor depends on the variability of stock returns represented by standard 

deviations in stock prices. So for firm i, the cost of debt financing is:

di Rf Rai k = +

Where:

8-31
kd = cost of debt financing for firm, i,

Rf = expected return on risk-free assets, and

Rai = risk adjustment factor to risk-free rate for firm, i. 

DOE estimates the WACC using the following equation:

e e d wd WACC = k ×w + k ×

Where:

WACC = weighted average cost of capital,

we = proportion of equity financing, and

wd = proportion of debt financing.

By adjusting for the influence of inflation, DOE estimates the real weighted average cost 

of capital, or discount rate, for each company. DOE then aggregates the company real weighted 

average costs of capital to estimate the discount rate for each of the ownership types in the 

commercial clothes washer analysis.

Table 8.2.24 shows the average WACC values for the major sectors that purchase 

commercial clothes washers. While WACC values for any sector may trend higher or lower over 

substantial periods of time, these values represent a cost of capital that is averaged over major 

business cycles. 

Table 8.2.24 Weighted Average Cost of Capital for Sectors that Purchase Washers

Sector Real Weighted Average 

Cost of Capital (%)

Standard 

Deviation (%)

Property 5.12% 0.90%

Lodging 5.96% 1.65%

Education 2.46% 2.15%

Personal Services a 4.67% -- a The Ibbotson Associates report provides only a single value for the personal services sector, so a standard 

deviation cannot be calculated.

8.2.5 Effective Date of Standard

The effective date is the future date when a new standard becomes operative. Based on 

DOE’s implementation report for energy conservation standards activities submitted pursuant to

Section 136 of the Energy Policy Act of 2005, a final rule for the commercial clothes washers

being considered for this standards rulemaking is scheduled for completion no later than January 

1, 2015. Therefore, the effective date of any new energy efficiency standards for these products 

8-32
will be three years after the final rule is published, which is January 1, 2018. The Department 

calculated the LCC for all consumers as if they each would purchase a new piece of equipment 

in the year the standard takes effect. 

8.2.6 Equipment Assignment for the Base Case

For purposes of conducting the LCC analysis, DOE analyzed standard levels relative to a 

baseline efficiency level. However, some consumers already purchase products with efficiencies 

greater than the baseline levels. Thus, to accurately estimate the percentage of consumers that 

would be affected by a particular standard level, DOE took into account the distribution of

product efficiencies currently in the marketplace. In other words, rather than analyzing the 

impacts of a particular standard level assuming that all consumers are currently purchasing 

products at the baseline level, DOE conducted the analysis by taking into account the full breadth 

of product efficiencies that consumers purchase under the base case (i.e., the case without new 

energy efficiency standards).

DOE took into account the mix of commercial clothes washer efficiencies by 

characterizing the current mix of product efficiencies as a probability distribution. In other 

words, as DOE performed the Monte Carlo simulation, each standard level analyzed was 

evaluated against the distribution of product efficiencies in the base case. 

 For top-loading commercial clothes washers, DOE utilized the market share efficiency 

data for 2010-2013 submitted by AHAM to establish the base-case efficiency distributions for 

2013.

22 The market share efficiency distribution for top-loading units submitted by AHAM 

provided a consolidated share for baseline (1.15 MEFJ2) and levels higher than the baseline. In 

order to accurately represent the higher efficiency levels through appropriate market shares, the 

analysis utilized available models data from DOE’s Compliance Certification Database for 

commercial clothes washers to allocate shares to higher efficiency levels.

23 For front-loading 

washers, DOE used the data submitted by AHAM for 2013. DOE used the 2013 distribution to 

represent the market in the compliance year (2018). DOE found that the distribution based on 

Energy Star qualified products matched closely with the data submitted by AHAM.24

Table 8.2.25 and Table 8.2.26 present the market shares of the efficiency levels in the 

base case for top-loading and front-loading washers, respectively. The tables represent the 

equipment that establishments would have purchased in the year 2018 in the absence of new 

standards.

Table 8.2.25 Top-Loading Commercial Clothes Washers: Base Case Market Shares

Efficiency Level MEF IWF Market Share

Baseline 1.15 8.90 62.0%*

1 1.35 8.80 26.7%**

2 1.55 6.90 11.3%***

* Represents units with the following MEF and WF ratings: 1.15≤ MEF < 1.35; 8.9 ≥ IWF > 8.8.

** Represents units with the following MEF and WF ratings: 1.35 ≤ MEF < 1.55; 8.8 ≥ IWF > 6.9.

8-33
*** Represents units with the following MEF and WF ratings: MEF ≥ 1.55; IWF ≤ 6.9.

Table 8.2.26 Front-Loading Commercial Clothes Washers: Base Case Market Shares

Efficiency Level MEF WF Market Share

Baseline 1.65 5.20 0.0%*

1 1.80 4.50 31.0%**

2 2.00 4.10 69.0%***

3 2.20 3.90 0.0%†

* Represents units with the following MEF and WF ratings: 1.65 ≤ MEF < 1.80; 5.2 ≥ IWF > 4.5.

** Represents units with the following MEF and WF ratings: 1.80 ≤ MEF < 2.00; 4.5 ≥ IWF > 4.1.

*** Represents units with the following MEF and WF ratings: 2.00 ≤ MEF < 2.20; 4.9 ≥ IWF > 3.9.

† Represents units with the following MEF and WF ratings: MEF ≥ 2.35; IWF ≤ 3.9.

8.3 PAYBACK PERIOD INPUTS

The payback period is the amount of time it takes the consumer to recover the assumed 

higher purchase expense of more energy-efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase expense (i.e., from a less efficient 

design to a more efficient design) to the decrease in annual operating expenditures. This type of 

calculation is known as a “simple” payback period, because it does not take into account changes 

in operating expense over time or the time value of money; i.e., the calculation is done at an 

effective discount rate of zero percent. 

The equation for PBP is:

OC

IC PBP

∆

∆ =

where:

ΔIC = Difference in the total installed cost between the more efficient standard level 

and the baseline design, and 

ΔOC = difference in annual operating expenses. 

Payback periods are expressed in years. Payback periods greater than the life of the 

product mean that the increased total installed cost is not recovered in reduced operating 

expenses.

The data inputs to PBP are the total installed cost of the equipment to the consumer for 

each efficiency level and the annual (first year) operating expenditures for each standard level. 

The inputs to the total installed cost are the equipment price and the installation cost. The inputs 

to the operating costs are the first-year costs of energy (and water) cost, the annual repair cost, 

and the annual maintenance cost. The PBP uses the same inputs as the LCC analysis as described 

in section 8.2, except that energy (and water) price trends and discount rates are not required. 

8-34
Since the PBP is a “simple” payback, the required energy price is only for the year in which a 

new standard is to take effect—in this case, the year 2018. The energy price DOE used in the 

PBP calculation was the price projected for that year. Discount rates are also not required for the 

simple PBP calculation.

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS

This section presents the LCC and PBP results for commercial clothes washers. DOE’s 

approach for conducting the LCC analysis relied on characterizing the uncertainty and variability 

of many of the inputs to the analysis with probability distributions. DOE used a Monte Carlo 

simulation technique to perform the LCC calculations. DOE calculated the average LCC and 

LCC savings for each of the efficiency level.The payback period uses average values rather than 

distributions. It is calculated by dividing the change in average installed cost by the change in 

average first year operating cost over the baseline efficiency level for all considered efficiency 

levels in the standards case. 

DOE calculated LCC savings relative to the base case equipment that it assigned to 

commercial consumers. As discussed in section 8.2.6, DOE assigned base case equipment that is 

more efficient than some of the standard levels. For that reason, the average LCC impacts are not 

equal to the difference between the LCC of a specific and the LCC of the baseline equipment. 

In the subsections below, DOE presents figures showing the distribution of LCCs in the 

base case for each product class. Also presented below for a specific are figures showing the 

distribution of LCC impacts. The figures are presented as frequency charts that show the 

distribution of LCCs, LCC impacts with their corresponding probability of occurrence. DOE 

generated the figures for the distributions from a Monte Carlo simulation run based on 10,000 

samples. The LCC calculation was performed 10,000 times by sampling from the probability 

distributions that DOE developed to characterize many of the inputs. 

 Based on the Monte Carlo simulations that DOE performed, for each standard-level, 

DOE calculated the share of commercial consumers with a net LCC cost. DOE considered a 

commercial user to receive no impact at a given efficiency level if DOE assigned it a base-case 

product having an efficiency equal to or greater than the efficiency level in question. To illustrate 

the range of LCC impacts among the commercial clothes washer users, the sections below 

present figures that provide such information for each product class.

8.4.1 Base Case LCC Distributions

Figure 8.4.1 and Figure 8.4.2 show the frequency charts for the base case LCC for both 

product applications of top-loading commercial clothes washers. Figure 8.4.3 and Figure 8.4.4

show the frequency charts for the base case LCC for both product applications of front-loading 

8-35
commercial clothes washers.The figures below show the mean LCC of the base case distribution 

as well as the full range of LCCs.

Figure 8.4.1 Top-Loading Commercial Clothes Washers, MultiFamily Application: Base Case LCC Distribution 

Figure 8.4.2 Top-Loading Commercial Clothes Washers, 

Laundromat Application: Base Case LCC Distribution 

8-36
Figure 8.4.3 Front-Loading Commercial Clothes Washers, MultiFamily Application: Base Case LCC Distribution 

Figure 8.4.4 Front-Loading Commercial Clothes Washers, 

Laundromat Application: Base Case LCC Distribution 

8-37
8.4.2 Standard-Level Distributions of LCC Impacts

Figure 8.4.5 is an example of a frequency chart showing the distribution of LCC 

differences for the case of EL2 for front-loading washers, multi-family product application. In 

the figure, a text box next to a vertical line at that value on the x-axis shows the mean change in 

LCC (a savings of $271.59 in the example here). The note, “Certainty is 98.79% from $0 to 

+Infinity,” means that 98.79 percent of owners of CCW units will have LCC savings or not be 

impacted due to the EL compared to the base case. The large ‘spike’ in Figure 8.4.5 represents 

the percentage of consumers that are not impacted by an increase in the EL, i.e., consumers that 

already use commercial clothes washers with efficiencies greater than or equal to the EL. Refer 

back to section 8.2.6 on the distribution of product efficiencies under the base case. DOE can 

generate a frequency chart like the one shown in Figure 8.4.5 for every EL and each product 

application. 

Figure 8.4.5 Front-Loading Commercial Clothes Washers, MultiFamily Application: Distribution of LCC Impacts for 

EL2

8.4.3 LCC and PBP Results

Table 8.4.1 through Table 8.4.4 show the LCC and simple PBP results for both product 

applications of top-loading commercial clothes washers. Table 8.4.5 through Table 8.4.8 show 

the LCC and simple PBP results for both product applications of front-loading commercial 

clothes washers. 

8-38
Table 8.4.1 Summary of LCC and PBP Results by Efficiency Level for Top-Loading 

Commercial Clothes Washers, Multi-Family Application

TSL Efficiency 

Level

Average Costs 

Simple 

Payback

years

2013$ Average 

Lifetime

Installed 

Cost

First 

Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC years

-- 0 1,229 556 4,453 5,682 -- 11.3

1, 2 1 1,229 522 4,159 5,388 0.0 11.3

3, 4 2 1,293 459 3,580 4,873 0.7 11.3

Table 8.4.2 Summary of LCC and PBP Results by Efficiency Level for Top-Loading 

Commercial Clothes Washers, Laundromat Application

TSL Efficiency 

Level

Average Costs 

Simple 

Payback

years

2013$ Average 

Lifetime

Installed 

Cost

First 

Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC years

-- 0 1,229 678 3,638 4,867 -- 7.1

1, 2 1 1,229 651 3,472 4,701 0.0 7.1

3, 4 2 1,293 568 2,950 4,243 0.6 7.1

Table 8.4.3 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Top-Loading Commercial Clothes Washers, Multi-Family 

Application

TSL Efficiency Level

Life-Cycle Cost Savings

% of Consumers that 

Experience Average Savings 

2013$

Net Cost

-- 0 -- --

1, 2 1 0 294

3, 4 2 0 807

8-39
Table 8.4.4 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Top-Loading Commercial Clothes Washers, Laundromat 

Application

TSL Efficiency Level

Life-Cycle Cost Savings

% of Consumers that 

Experience Average Savings 

2013$

Net Cost

-- 0 -- --

1, 2 1 0 166

3, 4 2 0 622

Table 8.4.5 Summary of LCC and PBP Results by Efficiency Level for Front-Loading 

Commercial Clothes Washers, Multi-Family Application

TSL Efficiency 

Level

Average Costs 

Simple 

Payback

years

2013$ Average 

Lifetime

Installed 

Cost

First 

Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC years

-- 0 1,817 409 2,915 4,732 -- 11.3

1 1 1,817 384 2,695 4,512 0.0 11.3

2, 3 2 1,818 364 2,519 4,337 0.0 11.3

4 3 1,848 381 2,659 4,507 1.1 11.3

Table 8.4.6 Summary of LCC and PBP Results by Efficiency Level for Front-Loading 

Commercial Clothes Washers, Laundromat Application

TSL Efficiency 

Level

Average Costs 

Simple 

Payback

years

2013$ Average 

Lifetime

Installed 

Cost

First 

Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC years

-- 0 1,817 524 2,452 4,269 -- 7.1

1 1 1,817 493 2,266 4,082 0.0 7.1

2, 3 2 1,818 471 2,133 3,951 0.0 7.1

4 3 1,848 491 2,243 4,092 1.0 7.1

8-40
Table 8.4.7 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Front-Loading Commercial Clothes Washers, Multi-Family 

Application

TSL Efficiency Level

Life-Cycle Cost Savings

% of Consumers that 

Experience Average Savings 

2013$

Net Cost

-- 0 -- --

1 1 0 221

2, 3 2 0 272

4 3 55 -3

Table 8.4.8 Summary of Life-Cycle Cost Savings Relative to the Base Case Efficiency 

Distribution for Front-Loading Commercial Clothes Washers, Laundromat 

Application

TSL Efficiency Level

Life-Cycle Cost Savings

% of Consumers that 

Experience Average Savings 

2013$

Net Cost

-- 0 -- --

1 1 0 184

2, 3 2 0 212

4 3 65 -10

Figure 8.4.6 and Figure 8.4.7 show the range of LCC savings for the efficiency levels for 

both product applications of top-loading commercial clothes washers. Figure 8.4.8 and Figure 

8.4.9 show the range of LCC savings for the efficiency levels for both product applications of 

front-loading commercial clothes washers. For each EL, the top and the bottom of the box 

indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the 

median; 50 percent of the households have LCC savings above this value The ‘whiskers’ at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each EL. 

8-41
Figure 8.4.6 Range of LCC Savings for Top-Loading Commercial 

Clothes Washers, Multi-Family 

Figure 8.4.7 Range of LCC Savings for Top-Loading Commercial 

Clothes Washers, Laundromat

0

200

400

600

800

1,000

1,200

1,400

1,600

Level 1 Level 2

Life Cycle Cost Savings ($)

Efficiency Level

median average

0

200

400

600

800

1,000

1,200

Level 1 Level 2

Life Cycle Cost Savings ($)

Efficiency Level

median average

8-42
Figure 8.4.8 Range of LCC Savings for Front-Loading 

Commercial Clothes Washers, Multi-Family 

Figure 8.4.9 Range of LCC Savings for Front-Loading 

Commercial Clothes Washers, Laundromat

-400

-200

0

200

400

600

800

Level 1 Level 2 Level 3

Life Cycle Cost Savings ($)

Efficiency Level

median average

-400

-200

0

200

400

600

800

Level 1 Level 2 Level 3

Life Cycle Cost Savings ($)

Efficiency Level

median average

8-43
8.5 REBUTTABLE PAYBACK PERIOD

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption 

that an energy efficiency standard is economically justified if the additional product costs 

attributed to the standard are less than three times the value of the first-year energy cost savings. 

(42 U.S.C. §6295 (o)(2)(B)(iii))

8.5.1 Metric

The basic equation for rebuttable PBP is the same as that shown in section 8.3, Payback 

Period Inputs. Unlike the analyses described in sections 8.2 and 8.3, however, the rebuttable 

PBP is not based on the use of household samples and probability distributions. Rather than 

distributions, the rebuttable PBP is based on discrete single-point values. For example, while 

DOE uses a probability distribution of regional energy prices in the distributional payback period 

analysis, it uses only the national average energy price from the probability distribution to 

determine the rebuttable PBP.

Other than the use of single-point values, the most notable difference between the 

distribution PBP and the rebuttable PBP is the latter’s reliance on the DOE test procedure to 

determine a product’s annual energy and water consumption. The following identifies the 

differences between the annual energy and water consumptions determined for the distribution 

PBP and the rebuttable PBP.

DOE based the annual energy and water consumption values that it used to determine the 

rebuttable PBP on the number of cycles per year specified in the DOE test procedure.25 The 

commercial clothes washer test procedure cites the residential clothes washer test procedure to 

establish efficiency ratings as well as annual energy and water consumption. As a result, the 

annual number of use cycles, 295 cycles per year, for determining the annual energy and water 

consumption of commercial clothes washers is representative of residential use, not commercial 

use. Because residential use is significantly lower than the average usage for commercial 

applications—1460 cycles per year in multi-family buildings and 2190 cycles per year in 

laundromats—the average annual energy and water consumption used to determine rebuttable 

PBP will be significantly less than the consumption associated with actual usage. As a result, the 

rebuttable PBP will be significantly longer than the distribution PBPs for both multi-family and 

laundromat applications.

8.5.2 Inputs

Inputs for the rebuttable PBP differ from the distribution PBP in that the calculation uses 

discrete values, rather than distributions, for inputs. Note that for the calculation of distribution 

PBP, because inputs for the determination of total installed cost were based on single-point 

values, only the variability and/or uncertainty in the inputs for determining operating cost 

contributed to variability in the distribution PBPs. The following summarizes the single-point 

values that DOE used in the determination of the rebuttable PBP. 

8-44
• Manufacturing costs, markups, sales taxes, and installation costs were all based on the 

single-point values used in the distributional LCC and PBP analysis.

• As described in section 8.5.1, annual energy and water consumption is based on the DOE 

test procedure.

• Energy and water prices are based on national average values for the year that new 

standards are assumed to take effect.

• An average discount rate or lifetime is not required in the rebuttable PBP calculation.

• The effective date of the standard is assumed to be 2018. 

8.5.3 Results

DOE calculated rebuttable PBPs for each efficiency level relative to the distribution of 

product efficiencies assumed for the base case (refer back to section 8.2.6 for more details on the 

base case efficiency distributions for each product). In other words, DOE did not determine the 

rebuttable PBP relative to the baseline efficiency level, but relative to the current distribution of 

product efficiencies DOE determined for the base case (i.e., the case without new standards). 

The following sections present the results for the sets of products being analyzed for this 

standards rulemaking.

Table 8.5.1 and Table 8.5.2 present the rebuttable PBPs for top-loading commercial 

clothes washers under both product applications; multi-family buildings and laundromats. Table 

8.5.3 and Table 8.5.4 present the rebuttable PBPs for front-loading commercial clothes washers 

under both product applications; multi-family buildings and laundromats.

Table 8.5.1 Top-Loading Commercial Clothes Washers, Multi-Family Application: 

Rebuttable Payback Periods

Efficiency Level MEF IWF

PBP

years

Baseline 1.15 8.90 -

1 1.35 8.80 0

2 1.55 6.90 2.6

8-45
Table 8.5.2 Top-Loading Commercial Clothes Washers, Laundromat Application: 

Rebuttable Payback Periods

Efficiency Level MEF IWF

PBP

years

Baseline 1.15 8.90 -

1 1.35 8.80 0

2 1.55 6.90 3.1

Table 8.5.3 Front-Loading Commercial Clothes Washers, Multi-Family Application: 

Rebuttable Payback Periods

Efficiency Level MEF IWF

PBP

years

Baseline 1.65 5.20 -

1 1.80 4.50 0

2 2.00 4.10 0.1

3 2.20 3.90 11.2

Table 8.5.4 Front-Loading Commercial Clothes Washers, Laundromat Application: 

Rebuttable Payback Periods

Efficiency Level MEF IWF

PBP

years

Baseline 1.65 5.20 -

1 1.80 4.50 0

2 2.00 4.10 0.1

3 2.20 3.90 11.1

8-46
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 RS Means Company Inc., RS Means Mechanical Cost Data, 36st Annual Edition. 2013. 

Kingston, MA.

2

 U.S. Department of Energy–Energy Information Administration, Form EIA-861 for 

2012, 2013. (Last accessed November, 2013.) http://www.eia.gov/electricity/data/eia861

3

 U.S. Census Bureau, Population Estimates, National Totals: Vintage 2013, (Last 

accessed November, 2013.) 

< http://www.census.gov/popest/data/national/totals/2013/index.html>

4

 U.S. Department of Energy-Energy Information Administration, Natural Gas Prices, 

2013. Washington, DC. 

http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm

5

 Raftelis Financial Consultants Inc., 2012 RFC/AWWA Water and Wastewater Rate 

Survey, 2013. Charlotte, NC, Kansas City, MO, and Pasadena, CA. 

http://www.raftelis.com/news/rfcawwa-2012-water-and-wastewater-rate-survey-nowavailable/

6

 U.S. Department of Energy-Energy Information Administration, Annual Energy Outlook 

2014 with Projections to 2040, 2014. Washington, DC. http://www.eia.gov/forecasts/aeo/

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