RIA-i REGULATORY IMPACT ANALYSIS FOR SMALL ELECTRIC MOTORS

TABLE OF CONTENTS

RIA.1 INTRODUCTION ...................................................................................................... RIA-1 RIA.2 METHODOLOGY ..................................................................................................... RIA-1

LIST OF TABLES

Table RIA.1.1 Non-Regulatory Altern atives to Standards ..................................................... RIA-1RIA-1 REGULATORY IMPACT ANALYSIS FOR SMALL
ELECTRIC MOTORS

RIA.1 INTRODUCTION

In view of Title 10 of the Code of Federa l Regulations, Part 430, appendix A to subpart C, Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products , the U.S. Department of Energy (DOE) is committed to fully consider effective non-regulatory approaches as alternatives to standards and support voluntary efforts by manufact urers, retailers, utilities a nd other to increase product efficiency. a DOE will prepare a draft regulatory impact analysis pursuant to Executive Order 12866, “Regulatory Planning and Review,” which w ill be subject to review under the Executive Order by the Office of Management and Budget’s Of fice of Information and Regulatory Affairs. 58 FR 51735 (September 30, 1993). DOE has iden tified performance standards and six major alternatives to standards as representing feasible policy options to achieve customer product energy efficiency, in comparison to no new regulatory action. It will evaluate each alternative in terms of its ability to achieve significant ener gy savings at a reasonabl e cost, and will compare the effectiveness of each one to the eff ectiveness of the proposed standards rule.

The regulatory and non-regulatory means of ach ieving energy savings that DOE proposes to analyze are listed in Table RIA.1.1. The technical support documen t (TSD) in support of DOE’s notice of proposed rulemaking will includ e a complete quantitative analysis of each alternative, the methodology for whic h is discussed briefly below.

Table RIA.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

RIA.2 METHODOLOGY
DOE will use the national impact analysis (N IA) spreadsheet models to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to the

a Section 1.(e) of appendix A to subpart C of T itle 10, Code of Federal Regulations, Part 430.RIA-2 proposed energy conservation standards. The NIA spreadsheet model for each of the three appliance products is discussed in chapter 10 of the TSD. To compare each alternative quantitatively to the proposed energy conserva tion standards, DOE will need to quantify the effect of each alternative on the purchase and use of energy efficient small electric motors. Once it has quantified each alternative, DOE will make the appropriate revisions to the inputs in the NIA spreadsheet models. Key inputs that DOE may revise in these models are:

• energy prices and escalation factors;

• implicit market discount rates for trading o ff purchase price against operating expense when choosing equipment efficiency;

• consumer purchase price, operati ng cost, and income elasticities;

• consumer price-versus-effi ciency relationships; and

• equipment stock data (purchase of new equi pment or turnover rates for inventories).
The key measures of the impact of each alternative will be:

• Energy use (in exajoules, or 10 18 joules): Cumulative energy use of the equipment from the effective date of the new standard to the year 2045. DOE will report electricity consumption as primary (source) energy.

• National energy savings: Cumu lative national energy use from the base case projection minus the alternative policy case projection.

• Net present value: The value of future ope rating cost savings from equipment bought in the period from the effective date of the new standard (2015) to the year 2045. DOE will calculate the NPV as the difference betw een the present value of equipment and operating expenditures (including energy) in the base case, and th e present value of expenditures in each alternative policy case. DOE will discount future operating and equipment expenditures to 2008 using a seven- percent and three-pe rcent real discount rate. It will calculate oper ating expenses (including ener gy costs) for the life of the equipment.