1

- i CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT

................................ ................................ .............. 1

- 1

1.2 OVERVIEW OF STANDARD S FOR RESIDENTIAL CL OTHES WASHERS

.......... 1

- 1

1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

.................. 1

- 2

1.4 STRUCTURE OF THE DOC UMENT

................................ ................................ ........ 1

- 5

LIST OF TABLES

Table 1.3.1 Analyses Under the Process Rule

................................ ................................ ..... 1

- 41-1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT

This technical support document (TSD) is a stand

- alone report that provides the technical analyses and results supporting the information presented in the direct final rule and executive

summary for residential clothes washers . This TSD reports on the acti vities and analyses conducted in the period following the preliminary analysis of this rulemaking.

1.2 OVERVIEW OF STANDARD S FOR RESIDENTIAL CLOTHES WASHERS

The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94

- 163 (42 United States Code (U.S.C.) 6291

– 6309)

, established an energy conservation program for major household appliances. The National Energy Conservation Policy Act of 1978 (NECPA), Pub. L.

95

- 619, amended EPCA to add Part C a of Title III (42 U.S.C. 6311

– 6317), which established an

energy conservation program for certain industrial equipment. Additional amendments to EPCA give DOE the authority to regulate the energy efficiency of several products, including

residential clothes washers

— the products that are the focus of this document. The a mendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA), Pub. L. 100

- 12,

established standards for residential clothes washers , as well as requirements for determining

whether these standards should be amended. (42 U.S.C. 6295 (g ) )

NAECA established the first prescriptive standards for residential clothes washers

, requiring that all rinse cycles of clothes washers manufactured after January 1, 1988, shall include an unheated water option, but may have a heated water rinse option, and further required that DOE conduct two cycles of rulemakings to determine if more stringent standards are justified. b (42 U.S.C. 6295 (g)(2) and (4)) On May 14, 1991, DOE published a final rule in the

Federal Register (FR) establishing the first set of performance standards for residential clothes washers; the compliance date of the new standards was May 14, 1994

. 56 FR 22279. DOE conducted a second standards rulemaking for residential clothes washers, publishing a January

2001 f inal r ule revisin g the energy conservation standards; the revised standards became effective in two phases, with compliance dates of January 1, 2004

, and January 1, 2007. 66 FR

3314.

a Part C has been redesignated Part A

- 1 in the United States Code for editorial reasons.

b DOE defines “clothes washer” under EPCA as “a consumer product designed to clean clothes, utilizing a water solution of soap and/or detergent and mechanical agitation or other movement, and must be one of the following
classes: automatic clothes washers, semi

- automatic clothes washers, and other clothes washers.” 10 CFR 430.2.1-2 As part of its priority

- setting activities for fiscal year 2006, DOE conducted analyses for residential clothes washers to estimate the energy savings potential of amended standards

. DOE

determined that amended standards could result in energy savings for residential clothes washers of 5.5 quads cumulative over the period of 2004

– 2030 . A summ ary of the analyses is available

on DOE’s website at www1.eere.energy.gov/buildings/appliance_standards/pdfs/2006_activities_data_sheets.pdf

1.3 PROCESS FOR SETTING ENERGY CON S ERVATION STANDARDS

Under EPCA, when DOE is studying new or amended standards, it must consider , to the greatest extent practicable, the following seven factors (42 U.S.C. 6295 (o)(2)(B)(i)):

1) the economic impact of the standard on the manufacturers and consumers of the affected products;

2) the savings in operating costs throughout the estimated ave rage life of the product compared to any increases in the initial cost or maintenance expense;

3) the total projected amount of energy savings likely to result directly from the imposition of the standard;

4) any lessening of the utility or the performance of the products likely to result from the imposition of the standard;

5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the impositi on of the standard;

6) the need for national energy conservation; and

7) other factors the Secretary considers relevant.

Other statutory requirements are set forth in 42 U.S.C. 6295 (o)(1)

– (2)(A), (2)(B)(ii)

– (iii), and (3)

– (4) and 42 U.S.C. 6316(e).

DOE considers stakeholder participation to be a very important part of the process for setting energy conservation standards. Through formal public notifications ( i.e.

, Federal Register notices) , DOE actively encourages the participation and interaction of all stakeholders during the comment period in each stage of the rulemaking. Beginning with the f ramework d ocument and during subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.1-3 B efore DOE determines whether or not to adopt a proposed energy conservation standard, it must first solicit comments on the proposed standard. ( 42 U.S.C. 6295(m)(2)(B); 42

U.S.C. 6295(p)(2) ) Any new or amended standard must be desi gned to achieve significant additional conservation of energy and be technologically feasible and economically justified. (42

U.S.C. 6295(o)(2)(A) ) To determine whether economic justification exists, DOE must review comments on the proposal and determine t hat the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the seven factors listed above. (42 U.S.C. 6295 (o)(2)(B)(i))

After the publication of the framework document, the energy conservation standards

rul emaking process involves three additional, formal public notices, which DOE publishes in the Federal Register . The first of the rulemaking notices is a notice of public meeting ( NOPM )

, which is designed to publicly vet the models and tools used in the prel iminary rulemaking and to facilitate public participation before the next stage. The second notice is the notice of proposed rulemaking ( NOPR ) , which presents a discussion of c omments received in response to the NOPM and the preliminary analyses and analyt ical tools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these impacts of amended energy conservation standards; and the proposed energy

conservation standards fo r the product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s weighting of these impacts; the amended energy conservation standards DOE is adopting for the product; and the compliance dates of the amended energy conservation standards.

DOE initiated the current rulemaking on August 28, 2009 by publishing a notice announcing the availability of the framework document, the “Energy Conservation Standards

Rulem aking Framework Document for Residential Clothes Washers.” In this notice, DOE also announced a public meeting and requested public comment on the matters raised in the framework document. 74 FR 44306 (Aug. 28, 2009). The framework document described the

p rocedural and analytical approaches that DOE anticipated using to evaluate energy conservation standards for clothes washers and identified various issues to be resolved in conducting this rulemaking. The framework document is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/clothes_washers_fra mework.pdf

.

DOE held a public meeting on September 21, 2 009, where it presented the contents of the framework document; described the analyses it planned to conduct during the rulemaking; sought comments from interested parties on these subjects; and, in general, sought to inform interested parties about, and f acilitate their involvement in, the rulemaking. I nterested parties commented about numerous issues relating to each one of the analyses listed in Table 1.3.1. At the meeting and during the period for commenting on the framework document, DOE received

many comments that helped it identify and resolve issues involved in this rulemaking. DOE then began to gather additional information to perform a preliminary analysis to help develop potential energy conservation standards for residential clothes washers.1-4 Table 1.3.1 Analyses Under the Process Rule

Preliminary Analyses NOPR Final Rule

Market and technology assessment Revised preliminary analyses Revised NOPR analyses

Screening analysis Life

- cycle cost sub

- group analysis

Engineering analysis Manufacturer impact analysis

Energy use determination Utility impact analysis

Markups for equipment price

determination E missions analysis

Life

- cycle cost and payback period analysis Employment impact analysis

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer impact analysis

In response to the framework document, DOE received the “Agreement on Minimum Federal Efficiency Standards, Smart Appliances, Federal Incentives and Related Matters for Specified Appliances” (the “Joint Petition”), a comment submitted by groups representing

manufacturers

, energy and environmental advocates

, and consumer groups (collectively, the “Joint Petitioners”). This collective set of comments, which DOE refers to in this notice as the

“J oint Petition” c recommends specific energy conservation standards and their compliance dates for residential clothes washers that, in the commenters’ view, would satisfy the EPCA requirements in 42 U.S.C. 6295(o).

EPCA allows DOE to issue a direct final rule establishing an energy conservation standard on receipt of a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and effi ciency advocates) that contains recommendations with respect to an energy conservation standard that are in accordance with the provisions of 42 U.S.C. 6295(o). DOE has concluded that the recommendations of the Joint Petition satisfy the requirements of 42 U.S.C. 6295(o). Therefore, DOE is publishing this direct final rule concurrently with a notice of proposed rulemaking that proposes identical energy conservation standards and compliance

dates . If DOE receives adverse comment and determines that such comm ent may provide a reasonable basis for withdrawing the direct final rule, this final rule will be withdrawn and DOE will proceed with the proposed rule.

c DOE Docket No. EERE

– 200 8

– BT

– STD

–00 19 , Comment 32 . DOE considered the Joint Petitioners’ comments to supersede earlier comments by the listed parties regarding issues subsequently discussed in the Joint Petition

.1-5 As part of the information gathering and sharing process, DOE organized and held

interviews with manufacturers of the residential clothes washers considered in this rulemaking as part of the engineering analysis. DOE selected companies that represented production of all types of products, ranging from small to large manufacturers, and included the Association of Home Appliance Manufacturers (AHAM) member companies. DOE had four objectives for these interviews: (1) solicit manufacturer feedback on the draft inputs to the engineering analysis; (2) solicit feedback on topics related to the preliminary manufacturer impact analysis; (3) provide an

opport unity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster cooperation between manufacturers and DOE. DOE incorporated the information gathered during the engineering interviews with manufacturers into its engineering analysis ( chapter 5) and the manufacturer impact analysis ( chapter 12).

DOE developed spre adsheets for the engineering, Life

- Cycle Cost (LCC) Payback Period (PBP)

, and national impact analyses for each product. The LCC spreadsheet calculates the LCC

and PBP at various energy efficiency levels. The national impact analysis spreadsheet calculates

th e national energy savings and national ne t present values at various energy efficiency levels. This spreadsheet includes a model that forecasts the impacts of a mended energy conservation standards at various levels on product shipments. All of these spreadsheets are available on the

DOE website for residential clothes washers at : www1.eere.energy.gov/buildings/appliance_standa rds/residential/clothes_washers.html

.

DOE can als o provide quantitative outputs from its analyses in machine

- readable format
upon request. For example, outputs from trial runs of the LCC Monte Carlo simulations ca n be provided in such a format.

1.4 STRUCTURE OF THE DOCUMENT

This TSD outlines the analytical approaches used in this rulemaking. The TSD consists of

14 chapters, an emissions a nalysis , a regulatory impact analysis, a monetization analysis, a panel analysis, and appendices.

Chapter 1 Introduction: provides an overview of the appliance standards p r ogram and how it applies to this rulemaking, and outlines the structure of the

document.

Chapter 2 Analytical Framework: describes the rulemaking process.

Chapter 3 Market and Technology Assessment: characterizes the market for the considered products and the technologies available for increasing product efficiency.1-6 Chapter 4 Screening Analysis: identifies all the design options that improve efficiency of the considered products, and determines which technology options are viable for consideration in the engineering analysis.

Chapter 5 Engineering Analysis: discusses the methods used for developing the relationship between increased manufacturer price and increased efficiency.

Chapter 6 Markups Analysis : discusses the methods used for establishing markups for converting manufacturer prices to customer product cost s

.

Chapter 7 Energy Use Analysis : discusses the pro cess used for generating energy

use estimates for the considered products as a function of standard

levels.

Chapter 8 Life

- Cycle Cost and Payback Period Analysis: discusses the effects of

standards on individual customers and users of the products and compares the LCC and PBP of products with and without higher efficiency standards.

Chapter 9 Shipments Analysis: estimate s shipments of the products over the 30

- year analysis period that i s used in performing the national impact analysis (NIA)

.

Chapter 10 National Impact Analysis: assesse s the national energy savings, and the national net present value of total con sumer costs and savings, expected to result from specific, potential energy conservation standards for

residential clothes washers

.

Chapter 11 Consumer Subgroup Analysis: discusses the effects of standards on

different subgroups of consumers.

Chapter 12 Manufacturer Impact Analysis: discusses the effects of standards on the finances and profitability of product manufacturers.

Chapter 1 3 Employment Impact Analysis: discusses the effects of standards on national employment.

Chapter 1 4 Utility Impact A nalysis: discusses certain effects of the considered

standards on electric and gas utilities.

Chapter 1 5 Emissions Analysis : discusses the effects of standards on three pollutants

— sulfur dioxide (SO 2 ), nitrogen oxides (NO

x ), and mercury

— as well as carbon dioxide emissions.1-7 Chapter 1 6 Mon etization o f Emission Reductions Benefits

Chapter 17 Regulatory Impact Analysis: discusses the impact of non

- regulatory alternatives to efficiency standards.

Chapter 18 Do Standards Incre ase Consumer Welfare? Evidence from a 2007 Change In Energy Efficiency Requirements f or Clothes Washers

Appendix 5

- A Engineering Data Request Sheets

Appendix 5

- B AHAM Data Submittal

Appendix 5

- C Engineering Questionnaires

Appendix 8

- A User Instru ctions for Life

- Cycle Cost and Payback Period Spreadsheets

Appendix 8

- B Uncertainty and Variability

Appendix 8

- C Lifetime Distributions

Appendix 8

- D Distributions of Interest Rates for Household Debt and Equity

Appendix 8

- E Estimation of Equipment Price Trends for Residential Clothes Washers

Appendix 9

- A Relative Price Elasticity of Demand for Clothes Washers

Appendix 10

- A User Instructions for Shipments and National Impact Analysis Spreadsheet s

Appendix 10

- B National Product and Operating Cost s

Appendix 10

- C National Net Present Value of Consumer Benefits Using Alternative

Product Price Forecasts

Appendix 12

- A M anufacturer Impact Analysis

Appendix 15

- A Environmental Emissions Factors

Appendix 16

- A Social Cost of Carbon

Appendix 17

- A RIA Supporting Materials