17-i

CHAPTER 17. REGULATORY IMPACT ANALYSIS 

TABLE OF CONTENTS

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

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

LIST OF TABLES

Table 17.1.1 Non-Regulatory Alternatives to Standards........................................................ 17-1
17-1

CHAPTER 17. REGULATORY IMPACT ANALYSIS 

17.1 INTRODUCTION

Under the Process Rule (Procedures for Consideration of New or Revised Energy 

Conservation Standards for Consumer Products, 61 FR 36974 (July 15, 1996)), the U.S.

Department of Energy (DOE) is committed to continually explore non-regulatory alternatives to 

standards. DOE will prepare a draft regulatory impact analysis pursuant to E.O. 12866, 

“Regulatory Planning and Review,” which will be subject to review under the Executive Order 

by the Office of Management and Budget’s Office of Information and Regulatory Affairs. 58 FR 

51735. DOE has identified seven major alternatives to standards as representing feasible policy 

options to reduce consumer product energy consumption. It will evaluate each alternative in 

terms of its ability to achieve significant energy savings at a reasonable cost, and will compare 

the effectiveness of each one to the effectiveness of the proposed standards rule.

The non-regulatory means of achieving energy savings that DOE proposes to analyze are 

listed in Table 17.1.1. The technical support document (TSD) in support of DOE’s notice of 

proposed rulemaking will include a quantitative analysis of each alternative, the methodology for 

which is discussed briefly below.

Table 17.1.1 Non-Regulatory Alternatives to Standards

No new regulatory action

Consumer tax credits

Manufacturer tax credits

Performance Standards

Rebates

Voluntary energy efficiency targets

Early replacement

Bulk government purchases

17.2 METHODOLOGY

DOE will use the national impact analysis (NIA) spreadsheet model to calculate the 

national energy savings and the net present value (NPV) corresponding to each alternative to the 

proposed standards. The NIA model is discussed in chapter 10 of the TSD. To compare each 

alternative quantitatively to the proposed energy conservation standards, DOE will need to 

quantify the effect of each alternative on the purchase and use of energy efficient room air 

conditioners and clothes dryers. Once it has quantified each alternative, DOE will make the 

appropriate revisions to the inputs in the NIA models. Key inputs that DOE may revise in these 

models are:

• Energy prices and trends;
17-2

• Implicit market discount rates for trading off purchase price against operating 

expense when choosing product efficiency;

• Consumer purchase price, operating cost, and income elasticities;

• Consumer price-versus-efficiency relationships; and

• Product stock data (purchase of new products or turnover rates for inventories).

The key measures of the impact of each alternative will be:

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

projection minus the alternative policy case projection.

• Net present value: The value of future operating cost savings from products bought in 

a 30-year period beginning in the effective date of the new standard. DOE will 

calculate the NPV as the difference between the present value of product and 

operating expenditures (including energy) in the base case, and the present value of 

expenditures in each alternative policy case. DOE will discount future operating and 

product expenditures using a seven-percent and three-percent real discount rate. It 

will calculate operating expenses (including energy costs) for the life of the products.