1

- i CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS
1.1 PURPOSE OF THE DOCUMENT ................................................................................. 1 -1 1.2 OVERVIEW OF THE APPLIANCES AND COMMERCIAL EQUIPMENT STANDARDS PROGRAM ......................................................................................................... 1 -1 1.3 OVERVIEW OF GSFL AND IRL STANDARDS ......................................................... 1-2 1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS ................... 1 -3 1.5 STRUCTURE OF THE DOCUMENT ............................................................................ 1 -5
LIST OF TABLES Table 1.4.1 Analyses under the Process Rule .............................................................................. 1 -41

- 1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT This preliminary technical support document (TSD) provides the analytical approaches, inputs, and results associated with the U.S. Department of Energy’s (DOE’s) study of energy c onservation standards for general service fluorescent lamps (GSFLs) and incandescent reflector lamps (IRLs). The preliminary TSD also serves to provide technical detail and is a compendium to t he life-cycle cost (LCC) and payback period (PBP) and national impact analysis (NIA) spreadsheets that are available on regulations.gov, docket number EERE– 2011– BT

– STD– 0006 for the preliminary analysis at www.regulations.gov/#!docketDetail;D=EERE-2011- BT

- STD0006

. a

1.2 OVERVIEW OF THE APPLIANCES AND COMMERCIAL EQUIPMENT STANDARDS PROGRAM Title III of the Energy Policy and Conservation Act of 1975 (EPCA; 42 U.S.C. 6291– 63 17 ), as amended, established the “Energy Conservation Program for Consumer Products Other Than Automobiles,” which includes major household appliances. b Subsequent amendments expanded Title III of EPCA to include additional consumer products and certain commercial and industrial equipment, including certain general service fluorescent and incandescent reflector lamps—the products that are the focus of this rulemaking. Before DOE determines whether to a dopt a proposed energy conservation standard, it first solicits comments on the proposed standard. DOE designs any new or amended standard to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) To determine whether a standard is economically justifi ed , DOE must review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the following seven factors: (1) the economic impact of the standard on the manufacturers and consumers of the products subject to the standard; (2) the sav ings in operating costs throughout the estimated average life of the products compared to any increases in the price, initial charges, or maintenance expenses for the products that are likely to result from the imposition of the standard; (3) the total projected amount of energy savings likely to result directly from imposition of the standard;

a Information regarding the preliminary analysis can also be found here:
www 1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24

. b Part B was re-designated Part A on codification in the U.S. Code for editorial reasons.1

- 2

(4) any lessening of the utility or the performance of the products likely to result from imposition of the standard; (5) the impact of any lessening of competition, as determined in writing by the Attorney General, likely to result from imposition of the standard; (6) the need for national energy conservation; and (7) other factors the Secretary considers relevant. (42 U.S.C. 6295(o)(2)(B)(i))

1.3 OVERVIEW OF GSFL AND IRL STANDARDS As mentioned in the previous section, Part B of Title III (42 U.S.C. 6291-6309), as a mended, established the “Energy Conservation Program for Consumer Products Other Than Automobiles,” which includes the GSFLs and IRLs that are the subject of this rulemaking. In particular, amendments to EPCA in the Energy Policy Act of 1992 (EPAct 1992), P.L. 102-486, established energy conservation standards for certain classes of GSFLs and IRLs, and authorized DOE to conduct two rulemaking cycles to determine whether these standards should be amended. (42 U.S.C. 6291(1), and 6295(i)(1) and (3)-(4)) EPCA also authorized DOE to adopt standards for additional GSFLs, if such standards were warranted. (42 U.S.C. 6295(i)(5)) DOE completed the first cycle of amendments by publishing a final rule in July 2009 (hereafter the “2009 Lamps Rule”). 74 FR 34080 (July 14, 2009). The 2009 Lamps Rule addressed two statutory directives under 42 U.S.C. 6295(i) by amending existing energy conservation standards for GSFLs and IRLs (42 U.S.C. 6295(i)(3)) and adopting standards for additional GSFLs (42 U.S.C. 6295(i)(5)). That rule also amended the definition of “colored fluorescent lamp” and “rated wattage” and adopted test procedures applicable to the newly covered GSFLs. c
Th is rulemaking is DOE’s second cycle of review to determine whether the standards in e ffect for GSFLs and IRLs should be amended and whether the standards should apply to additional GSFL types as directed by EPCA. (42 U.S.C. 6295(i)(3)-(4) and (5)) DOE developed the analytical framework in the “Energy Conservation Standards Rulemaking Framework Document for General Service Fluorescent Lamps and Incandescent Reflector Lamps” (August 31, 2011)

. d DOE presented this analytical approach to interested parties during a public meeting he ld on October 4, 2011 (hereafter the “framework public meeting”).

c Information regarding the 2009 Lamps Rule can be found on regulations.gov, docket number EERE- 2006 -STD0131 at www.regulations.gov/#!docketDetail;D=EERE- 2006 -STD- 0131

. d The framework document is available at www.regulations.gov/#!documentDetail;D=EERE- 2011

- BT -STD-0006- 0002

.1

- 3

This rulemaking also addresses 42 U.S.C. 6295(gg)(3), in which DOE is directed to incorporate standby mode and off mode energy use in any new or amended standard adopted after July 1, 2010 pursuant to 42 U.S.C. 6295(o). Please see chapter 2 of this preliminary TSD for a detailed discussion of DOE’s consideration of standby and off mode energy consumption.

1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS DOE considers stakeholder participation a very important part of the standards-setting process. DOE encourages the participation of all stakeholders during the comment period of each rule making stage. Beginning with the rulemaking framework document for GSFLs and IRLs ( hereafter the “framework document ”) and during subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking. In conducting test procedure and the energy conservation standard rulemakings, DOE involves interested parties through formal public notifications ( i.e. , Federal Register n otices). For this GSFL and IRL energy conservation standards rulemaking, DOE will employ the procedures set forth in DOE’s Process Rule (Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products, 61 FR 36974, July 15, 1996, 10 CFR Part 430, Subpart C, Appendix A) to the extent they are appropriate for developing energy c onservation standards for the lamps covered under this rulemaking.
B efore DOE determines whether to amend energy conservation standards for GSFLs and I RLs, it must first solicit comments on a proposed standard. (42 U.S.C. 6295(o )( 2)(B)(i)) DOE must design new standards for th e se products to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant energy savings. (42 U.S.C. 6295(o)(2)(A) and (3)) To determine whether a proposed standa rd complies with these requirements, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens to the g reatest extent practicable, weighing the seven factors previously described.
S ubsequent to the publication of the framework document, the standards rulemaking process involves preliminary analyses followed by two additional formal, major public notices, whic h are published in the Federal Register

. The preliminary analyses are designed to publicly vet the models and tools used in the rulemaking and to facilitate public participation before the proposed rule stage. After the preliminary analyses are vetted, DOE issues the first major notice, the notice of proposed rulemaking (NOPR), which presents a discussion of comments received in response to the preliminary analyses of the impacts of standards on consumers, manufacturers, a nd the nation; DOE’s weighing of the impacts; and the proposed standards. The second notice is the f inal rule, which presents a discussion of comments received in response to the NOPR; the revised analysis of the impacts of standards; DOE’s weighing of the impacts; the standards adopted by DOE; and the compliance dates of the standards.1

- 4

Table 1.4. 1 Analyses under the Process Rule

Preliminary Analysi s NOPR Final Rule * Market and technology assessment Revised preliminary analyses Revised analyses Screening analysis Life

- cycle cost sub

- group analysis Engineering analysis Manufacturer impact analysis Energy use characterization Emissions analysis Product price determination Monetizing CO 2 and other e missions Life

- cycle cost and payback period analys i s Utility impact analysis

Shipments analysis Employment impact analysis National impact analysis Regulatory impact analysis Preliminary manufacturer impact analysis * During the final rule phase, DOE considers the comments submitted by the U.S. Department of Justice concerning the impact of any lessening of competition that is likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v)) On September 14, 2011, DOE published a notice announcing the availability of the framework document and a public meeting to discuss the proposed analytical framework for the rulemaking. 76 FR 56678. DOE also posted the framework document on its website:
www 1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24

. DOE held the public meeting on October 4, 2011 to discuss procedural and analytical a pproaches to the rulemaking and to inform and facilitate stakeholders’ involvement in the rulemaking process. The analytical framework presented at the public meeting described rule making analyses, such as the engineering analysis and the LCC and PBP analysis, the methods proposed for conducting them, and the relationships among the various analyses. See Ta ble 1.4. 1 for all the analyses discussed at the public meeting and the stage at which the analyses are undertaken. PDF copies of the slides and other material associated with the public mee ting are available at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24

. During the p ublic meeting and the framework document comment period, e stakeholders, including manufacturers, trade associations, environmental advocates, and other interested parties submitted several comments about the GSFL and IRL rulemaking. The major issues discussed were : scope of coverage, metrics, product classes, efficacy level approach, shipment tre nds, rare earth materials, and the unknown impacts of the 2009 Lamps Rule. A detailed discussion of stakeholder comments is available in chapter 2 of this TSD.

e The National Electrical Manufacturers Association (NEMA) requested that DOE extend the comment deadline from the original October 31, 2011 to November 28, 2011. DOE ag reed and moved the comment deadline accordingly. The notice extending the framework comment period is available at: www.regulations.gov/#!documentDetail;D=EERE- 20 11

- BT -STD- 0006 -0011

.1

- 5

As part of the information gathering and sharing process, DOE organized and held interviews with GSFL and IRL manufacturers who operate in the U.S. market. DOE had five objec tives for these interviews: (1) solicit feedback on the scope of coverage for the rulemaking; ( 2 ) solicit feedback on the engineering analysis; (3) solicit feedback on topics related to the pr eliminary manufacturer impact analysis; (4) provide an opportunity early in the rulemaking pr ocess to express specific concerns to DOE; and (5) foster cooperation between manufacturers a nd DOE. During the manufacturer interviews, DOE discussed these and other issues regarding mar ket data, distribution channels, anticipated consumer responses to standards, production and e quipment mix, conversion costs, and cumulative regulatory burden. Appendix 12 A of this TSD contains a complete copy of the interview guide. DOE incorporated the information gathered at the meetings into its market and technology assessment (chapter 3 of this TSD), engineering analysis (chapter 5 of this TSD ), product price determination (chapter 7 of this TSD ), and the preliminary manufacturer impact analysis (chapter 12 of this TSD ). Following the publication of the preliminary analysis, DOE intends to hold additional meetings with manufacturers as part of the consultative process for the manufacturer impact analysis conducted during the NOPR phase. For the LCC, PBP, and NIA, DOE developed spreadsheets using Microsoft Excel®. The LCC and PBP spreadsheets calculate the economic impacts of replacing GSFLs and IRLs with more efficacious lamps. The NIA spreadsheet calculates the national energy savings (NES) and na tional net present value (NPV) at various candidate standard levels and includes a model that for ecasts the impacts of energy conservation standards at various levels on product shipments. The se spreadsheets are available on regulations.gov, docket number EERE-2011- BT -STD-0006 at www.regulations.gov/#!docketDetail;D=EE RE -2011- BT -STD-0006

.

1.5 STRUCTURE OF THE DOCUMENT This preliminary TSD outlines the analytical approaches used in this rulemaking. The TSD c onsists of 17 chapters and 18 appendices. Chapter 1 Introduction: provides an overview of the appliance standards program

and how it applies to the rulemaking for GSFLs and IRLs, and outlines the structure of the document Chapter 2 Analytical Framework: describes the rulemaking process, and provides

an overview of each analysis including rationale for preliminary determinations Chapter 3 Market and Technology Assessment: characterizes the GSFL and IRL

market and the technologies available for increasing efficacy, and outlines product classes Chapter 4 Screening Analysis: determines which technology options are viable

for consideration in the engineering analysis1

- 6

Chapter 5 Engineering Analysis: describes DOE’s approach to the engineering

analysis, and establishes candidate standard levels based on lamp efficacy Chapter 6 Energy Use Characterization: discusses the sources and methods for

developing energy use estimates for GSFLs and IRLs Chapter 7 Product Price Determination: describes DOE’s approach to

determining the end-user prices for GSFLs and IRLs Chapter 8 LCC and PBP Analyses: discusses the economic effects of standards

and calculates the LCC and PBP of GSFLs and IRLs Chapter 9 Shipments Analysis: discusses the methods used for forecasting

shipments with and without higher energy conservation standards Chapter 10 National Impact Analysis: describes the national forecast of energy

consumption, efficacy of new lamps, and annual GSFL and IRL sales in the absence or presence of new standards Chapter 11 Life-Cycle Cost Sub-Group Analysis: discusses the methods to be

used to study the impacts of standards on sub-groups of GSFL and IRL consumers and to calculate the LCC and PBP for these consumers Chapter 12 Manufacturer Impact Analysis: discusses the methods to be used to

study the impacts of standards on the finances and profitability of GSFL and IRL manufacturers, and presents preliminary manufacturer impact analysis results Chapter 13 Employment Impact Analysis: discusses the methods to be used to

analyze the effects of standards on national employment Chapter 14 Utility Impact Analysis: discusses the methods to be used to study the

effects of standards on electric utilities Chapter 15 Emissions Analysis: discusses the methods to be used to study the

effects of standards on sulfur dioxide (SO 2 ), nitrogen oxides (NOx), mercury (Hg), and carbon dioxide (CO 2 ) emissions Chapter 16 Monetization of Emission Reductions Benefits: discusses the methods

to be used to study the effects of standards on monetary benefits likely to result from the reduced emissions of CO 2 and NO X Chapter 17 Regulatory Impact Analysis: discusses the methods to be used to

determine the impact of non-regulatory alternatives to energy conservation standards1

- 7

Appendix AA Acronyms and Abbreviations: provides a set of acronyms and

abbreviations used throughout the TSD. Appendix 3A Lighting Definitions in the United States Code and Code of Federal

R egulations: provides a set of existing statutory and regulatory definitions for general service fluorescent and incandescent reflector lamps Appendix 5A Four-Foot T5 Miniature Bipin High Output Model Lamp: details the

de velopment of an improved full wattage 4-foot T5 miniature bipin high output model lamp Appendix 5B Modified Spectrum Incandescent Reflector Lamps: describes how

DOE adopted the Energy Policy and Conservation Act definition of “modified spectrum” for IRLs and developed the factor used to set the efficacy requirements for the modified spectrum IRL product class Appendix 6A Lighting Controls: describes how DOE evaluated the effects of

lighting controls Appendix 7A Additional End-User Price Results: provides end-user price results for

additional products considered in the LCC and NIA Appendix 7B Rare Earth Phosphor Availability and Pricing: reflects findings of

DOE’s analysis of the rare earth phosphor market Appendix 7C Xenon Availability and Pricing: evaluates how the supply, market,

and price of xenon affect its usability as a high-efficiency inert fill gas Appendix 8A User Instructions for LCC and PBP Spreadsheet Appendix 8B Supplementary LCC and PBP Results: provides results for the Monte

C arlo and sensitivity analyses Appendix 8C Residential Discount Rate Distributions: provides the probability

distributions used with real interest rates to develop a residential discount rate Appendix 8D Hot Shock in Incandescent Reflector Lamps: describes the impact of

hot sh ock on LCC savings for IRLs Appendix 9A Lighting Controls Market Penetration Projection: describes the

assumptions and analysis DOE used to project changes in the penetration of lighting controls Appendix 9B Modeling of Rare Earth Price Impacts: describes the analysis DOE

used to project the impact of rare earth oxide prices on GSFL prices1

- 8

Appendix 10A User Instructions for the NIA Spreadsheet Appendix 10B Full-Fuel-Cycle: summarizes the method s used to calculate full-fuelcycle (FFC) energy savings expected to result from new standards Appendix 10C Lighting Rebound: describes direct rebound effect and the analysis

DOE used to establish its baseline rebound rate Appendix 12A Preliminary Manufacturer Interview Guide