CHAPTER 16. REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY

CONSERVATION STANDARDS FOR CENTRAL AIR CONDITIONERS AND HEAT

PUMPS

TABLE OF CONTENTS

16.1 INTRODUCTION

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16.2 METHODOLOGY

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LIST OF TABLES

Table 16.1.1 Non-Regulatory Alternatives to Standards

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16-iCHAPTER 16. REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY

CONSERVATION STANDARDS FOR CENTRAL AIR CONDITIONERS AND HEAT

PUMPS

16.1 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 Offi ce 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 consum ption. 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 eff ectiveness of the proposed standards rule.

The non-regulatory means of achieving energy savings that DOE proposes to analyze are listed in Table 16.1.1. The technical support docum ent (TSD) in support of DOE’s notice of proposed rulemaking will include a complete quantitative analysis of each alternative, the methodology for which is di scussed briefly below.

Table 16.1.1 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

16.2 METHODOLOGY

DOE will use the national impact analysis (NIA) spreadsheet models for each of the two products to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to the proposed standards. The NIA model for each of the two products is discussed in chapter 10 of the TSD. To compare each alternative quantita tively 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 ai r conditioners and clothes dryers. Once it has quantified each alternative, DOE will make the appropriate revi sions to the inputs in the NIA models. Key inputs that DOE may revise in these models are:

• Energy prices and escalation factors;

16-1• Implicit market discount rates for tradin g off purchase price against operating expense when choosing product efficiency;

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

• Consumer price-versus-effi ciency relationships; and

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

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

• Energy use: Cumulative energy use of the product from the effective date of the new standard to the year 2045. DOE will report el ectricity consumption as primary energy.

• 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 the period from the effective date of the new standard 2016 to the year 2045. 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 cas e. DOE will discount future operating and product expenditures to 2010 using a seven-pe rcent and three-percent real discount rate. It will calculate operating expenses (including energy costs) for the life of the products.

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