APPENDIX 17-A. REGULATORY IMPACT ANALYSIS: SUPPORTING 

MATERIALS

TABLE OF CONTENTS

17-A.1 INTRODUCTION ...............................................................................................17-A-1

17-A.2 MARKET SHARE ANNUAL INCREASES BY POLICY................................17-A-2

17-A.3 NIA-RIA INTEGRATED MODEL.....................................................................17-A-8

17-A.4 CONSUMER REBATE POLICY MARKET PENETRATION CURVES ........17-A-8

17-A.4.1 Introduction..........................................................................................................17-A-8

17-A.4.2 Adjustment of XENERGY Penetration Curves.................................................17-A-10

17-A.4.3 Interpolation of Penetration Curves...................................................................17-A-11

17-A.5 CONSUMER REBATE PROGRAMS..............................................................17-A-12

17-A.6 FEDERAL AND STATE TAX CREDITS........................................................17-A-16

17-A.6.1 Federal Tax Credits for Consumers...................................................................17-A-16

17-A.6.2 Federal Tax Credits for Manufacturers..............................................................17-A-17

17-A.6.3 State Tax Credits................................................................................................17-A-18

LIST OF TABLES

Table 17-A.2.1 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (< 7,000 Btu/h).......17-A-2

Table 17-A.2.2 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (7,000 – 15,000 

Btu/h) .......................................................................................................17-A-3

Table 17-A.2.3 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (> 15,000 Btu/h).....17-A-3

Table 17-A.2.4 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (< 7,000 Btu/h) ..............17-A-4

Table 17-A.2.5 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (7,000 – 15,000 Btu/h)...17-A-5

Table 17-A.2.6 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (> 15,000 Btu/h) ............17-A-6

Table 17-A.5.1 Representative Capacities and Energy Efficiencies Used to Calculate 

the Rebate Amounts for each Rebate Program......................................17-A-12

Table 17-A.5.2 Representative Rebate Amounts (2013$) ..............................................17-A-13

Table 17-A.5.3 Rebates for Packaged Terminal Air Conditioners and Packaged 

Terminal Heat Pumps ............................................................................17-A-14

LIST OF FIGURES

Figure 17-A.4.1 S-Curves Showing Effects of External and Internal Sources on 

Adoption of New Technologies.............................................................17-A-10

17-A-i
APPENDIX 17-A. REGULATORY IMPACT ANALYSIS: SUPPORTING MATERIALS 

17-A.1 INTRODUCTION

This appendix contains sections discussing the following topics: 

• Projections of annual market share increases for the alternative policies;

• NIA-RIA Integrated Model;

• XENERGY penetration curves used to analyze consumer rebates, including:

o Background material,

o DOE’s adjustment of these curves for this analysis, and

o The method DOE used for interpolating the curves;

• Detailed tables of rebates offered for the considered products; and

• Background material on Federal and state tax credits for appliances.

17-A-1
17-A.2 MARKET SHARE ANNUAL INCREASES BY POLICY

Table 17-A.2.1 through Table 17-A.2.6 show the annual increases in market shares of 

packaged terminal air conditioners (PTACs) and packaged terminal heal pumps (PTHPs) 

meeting the target efficiency levels for the proposed TSL (TSL 2). DOE used these market share 

increases as inputs to the NIA-RIA spreadsheet model.

Table 17-A.2.1 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (< 7,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 40.0% 24.0% 12.0% 1.1% 0.7%

2019 38.2% 22.9% 11.5% 0.0% 0.8%

2020 32.0% 19.2% 9.6% 0.0% 0.9%

2021 26.1% 15.6% 7.8% 0.0% 1.0%

2022 19.9% 11.9% 6.0% 0.0% 1.1%

2023 14.0% 8.4% 4.2% 0.0% 1.2%

2024 7.8% 4.7% 2.4% 0.0% 1.3%

2025 1.9% 1.2% 0.6% 0.0% 1.5%

2026 0.0% 0.0% 0.0% 0.0% 1.6%

2027 0.0% 0.0% 0.0% 0.0% 1.7%

2028 0.0% 0.0% 0.0% 0.0% 1.8%

2029 0.0% 0.0% 0.0% 0.0% 0.0%

2030 0.0% 0.0% 0.0% 0.0% 0.0%

2031 0.0% 0.0% 0.0% 0.0% 0.0%

2032 0.0% 0.0% 0.0% 0.0% 0.0%

2033 0.0% 0.0% 0.0% 0.0% 0.0%

2034 0.0% 0.0% 0.0% 0.0% 0.0%

2035 0.0% 0.0% 0.0% 0.0% 0.0%

2036 0.0% 0.0% 0.0% 0.0% 0.0%

2037 0.0% 0.0% 0.0% 0.0% 0.0%

2038 0.0% 0.0% 0.0% 0.0% 0.0%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

17-A-2
Table 17-A.2.2 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (7,000 – 15,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 57.7% 34.6% 17.3% 4.3% 0.5%

2019 57.2% 34.3% 17.1% 1.1% 0.7%

2020 57.0% 34.2% 17.1% 0.0% 0.8%

2021 53.2% 31.9% 16.0% 0.0% 0.9%

2022 48.9% 29.4% 14.7% 0.0% 1.1%

2023 44.4% 26.7% 13.3% 0.0% 1.2%

2024 39.9% 24.0% 12.0% 0.0% 1.3%

2025 35.7% 21.4% 10.7% 0.0% 1.5%

2026 30.6% 18.3% 9.2% 0.0% 1.5%

2027 25.7% 15.4% 7.7% 0.0% 1.5%

2028 20.5% 12.3% 6.2% 0.0% 1.5%

2029 15.6% 9.4% 4.7% 0.0% 1.5%

2030 10.5% 6.3% 3.2% 0.0% 1.6%

2031 4.0% 2.4% 1.2% 0.0% 1.7%

2032 0.0% 0.0% 0.0% 0.0% 0.0%

2033 0.0% 0.0% 0.0% 0.0% 0.0%

2034 0.0% 0.0% 0.0% 0.0% 0.0%

2035 0.0% 0.0% 0.0% 0.0% 0.0%

2036 0.0% 0.0% 0.0% 0.0% 0.0%

2037 0.0% 0.0% 0.0% 0.0% 0.0%

2038 0.0% 0.0% 0.0% 0.0% 0.0%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

Table 17-A.2.3 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Air Conditioners (> 15,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 56.1% 33.7% 16.8% 0.1% 0.4%

2019 56.1% 33.7% 16.8% 0.2% 0.6%

17-A-3
2020 56.1% 33.7% 16.8% 0.3% 0.7%

2021 56.1% 33.7% 16.8% 0.4% 0.9%

2022 56.1% 33.7% 16.8% 0.5% 1.0%

2023 56.1% 33.7% 16.8% 0.7% 1.2%

2024 56.1% 33.7% 16.8% 0.8% 1.3%

2025 56.1% 33.7% 16.8% 1.0% 1.5%

2026 66.6% 39.9% 20.0% 0.0% 1.5%

2027 63.3% 38.0% 19.0% 0.0% 1.5%

2028 59.9% 35.9% 18.0% 0.0% 1.5%

2029 57.8% 34.7% 17.3% 0.0% 1.5%

2030 57.2% 34.3% 17.2% 0.0% 1.5%

2031 54.0% 32.4% 16.2% 0.0% 1.5%

2032 46.5% 27.9% 13.9% 0.0% 1.5%

2033 38.7% 23.2% 11.6% 0.0% 1.5%

2034 30.9% 18.5% 9.3% 0.0% 1.5%

2035 23.4% 14.0% 7.0% 0.0% 1.5%

2036 15.6% 9.3% 4.7% 0.0% 1.5%

2037 8.1% 4.8% 2.4% 0.0% 1.7%

2038 0.3% 0.2% 0.1% 0.0% 0.3%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

Table 17-A.2.4 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (< 7,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 59.0% 35.4% 17.7% 2.1% 0.1%

2019 57.6% 34.5% 17.3% 0.0% 0.1%

2020 56.2% 33.7% 16.9% 0.0% 0.1%

2021 54.7% 32.8% 16.4% 0.0% 0.1%

2022 53.3% 32.0% 16.0% 0.0% 0.1%

2023 52.2% 31.3% 15.7% 0.0% 0.2%

2024 51.3% 30.8% 15.4% 0.0% 0.2%

2025 50.6% 30.3% 15.2% 0.0% 0.2%

2026 49.9% 30.0% 15.0% 0.0% 0.2%

17-A-4
2027 49.4% 29.6% 14.8% 0.0% 0.2%

2028 49.1% 29.4% 14.7% 0.0% 0.2%

2029 48.9% 29.3% 14.7% 0.0% 0.2%

2030 47.4% 28.5% 14.2% 0.0% 0.2%

2031 41.2% 24.7% 12.4% 0.0% 0.2%

2032 35.2% 21.1% 10.6% 0.0% 0.2%

2033 29.0% 17.4% 8.7% 0.0% 0.2%

2034 22.9% 13.7% 6.9% 0.0% 0.2%

2035 16.9% 10.1% 5.1% 0.0% 0.2%

2036 10.7% 6.4% 3.2% 0.0% 0.2%

2037 4.7% 2.8% 1.4% 0.0% 0.2%

2038 0.0% 0.0% 0.0% 0.0% 0.0%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

Table 17-A.2.5 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (7,000 – 15,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 49.9% 30.0% 15.0% 10.3% 0.1%

2019 47.8% 28.7% 14.4% 8.9% 0.1%

2020 46.3% 27.8% 13.9% 7.5% 0.1%

2021 45.0% 27.0% 13.5% 5.8% 0.1%

2022 43.8% 26.3% 13.1% 4.3% 0.1%

2023 39.6% 23.8% 11.9% 2.4% 0.2%

2024 35.4% 21.3% 10.6% 0.4% 0.2%

2025 31.5% 18.9% 9.5% 0.0% 0.2%

2026 27.4% 16.4% 8.2% 0.0% 0.2%

2027 23.4% 14.1% 7.0% 0.0% 0.2%

2028 19.3% 11.6% 5.8% 0.0% 0.2%

2029 15.4% 9.2% 4.6% 0.0% 0.2%

2030 11.2% 6.7% 3.4% 0.0% 0.2%

2031 4.7% 2.8% 1.4% 0.0% 0.2%

2032 0.0% 0.0% 0.0% 0.0% 0.0%

2033 0.0% 0.0% 0.0% 0.0% 0.0%

17-A-5
2034 0.0% 0.0% 0.0% 0.0% 0.0%

2035 0.0% 0.0% 0.0% 0.0% 0.0%

2036 0.0% 0.0% 0.0% 0.0% 0.0%

2037 0.0% 0.0% 0.0% 0.0% 0.0%

2038 0.0% 0.0% 0.0% 0.0% 0.0%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

Table 17-A.2.6 Annual Increases in Market Shares Attributable to Alternative Policy 

Measures for Packaged Terminal Heat Pumps (> 15,000 Btu/h)

Year Consumer

Rebates

Consumer

Tax Credits

Manufacturer

Tax Credits

Voluntary 

Energy 

Efficiency 

Targets

Bulk 

Government 

Purchases

2018 51.6% 31.0% 15.5% 7.9% 0.1%

2019 49.8% 29.9% 14.9% 4.9% 0.1%

2020 48.5% 29.1% 14.6% 1.9% 0.1%

2021 47.8% 28.7% 14.3% 0.0% 0.1%

2022 47.6% 28.6% 14.3% 0.0% 0.2%

2023 43.8% 26.3% 13.2% 0.0% 0.2%

2024 38.6% 23.2% 11.6% 0.0% 0.2%

2025 33.6% 20.2% 10.1% 0.0% 0.2%

2026 28.4% 17.1% 8.5% 0.0% 0.2%

2027 23.2% 13.9% 7.0% 0.0% 0.2%

2028 18.2% 10.9% 5.5% 0.0% 0.2%

2029 13.0% 7.8% 3.9% 0.0% 0.2%

2030 8.1% 4.8% 2.4% 0.0% 0.2%

2031 0.3% 0.2% 0.1% 0.0% 0.3%

2032 0.0% 0.0% 0.0% 0.0% 0.0%

2033 0.0% 0.0% 0.0% 0.0% 0.0%

2034 0.0% 0.0% 0.0% 0.0% 0.0%

2035 0.0% 0.0% 0.0% 0.0% 0.0%

2036 0.0% 0.0% 0.0% 0.0% 0.0%

2037 0.0% 0.0% 0.0% 0.0% 0.0%

2038 0.0% 0.0% 0.0% 0.0% 0.0%

2039 0.0% 0.0% 0.0% 0.0% 0.0%

2040 0.0% 0.0% 0.0% 0.0% 0.0%

17-A-6
2041 0.0% 0.0% 0.0% 0.0% 0.0%

2042 0.0% 0.0% 0.0% 0.0% 0.0%

2043 0.0% 0.0% 0.0% 0.0% 0.0%

2044 0.0% 0.0% 0.0% 0.0% 0.0%

2045 0.0% 0.0% 0.0% 0.0% 0.0%

2046 0.0% 0.0% 0.0% 0.0% 0.0%

2047 0.0% 0.0% 0.0% 0.0% 0.0%

17-A-7
17-A.3 NIA-RIA INTEGRATED MODEL

For this analysis, DOE used its integrated NIA-RIAa model approach that built on the 

NIA model discussed in Chapter 10 and documented in Appendix 10-A.The resulting integrated 

NIA-RIA model featured both the NIA analysis inputs and results and the RIA inputs and had 

the capability to generate results for each of the RIA policies. A separate module produced 

results summaries for the tables and figures in the RIA document. For the RIA methodology 

documentation in Chapter 17, the module created summaries of parameters calculated by the 

model for the consumer rebates policy, generated its penetration curves (discussed in Section 17-

A.4.3 below), and reported market share impacts for the rebate and tax credit policies by 

equipment class. For the RIA results reported in Chapter 17, the module produced graphs of the 

market share increases resulting from each of the policies analyzed and created summary tables 

for the national energy savings (NES) and net present value (NPV) results. This module also 

generated tables of market share increases for each policy reported in Section 17-A.2 of this 

Appendix.

17-A.4 CONSUMER REBATE POLICY MARKET PENETRATION CURVES

This section first discusses the theoretical basis for the market penetration curves that 

DOE used to analyze the Consumer Rebates policy. Next it discusses the adjustments it made to 

the maximum penetration rates. It then refers to the method it used to develop interpolated 

penetration curves for each specific equipment class and efficiency level in the analysis. The 

resulting curves for the PTAC and PTHP equipment classes are in Chapter 17.

17-A.4.1 Introduction

XENERGY, Inc.b

, developed a re-parameterized, mixed-source information diffusion 

model to estimate market impacts induced by financial incentives for purchasing energy efficient 

appliances.

1 The basic premise of the mixed-source model is that information diffusion drives 

the adoption of technology. 

Extensive economic literature describes the diffusion of new products as technologies 

evolve. Some research focuses primarily on developing analytical models of diffusion patterns 

applicable to individual consumers or to technologies from competing firms.

2, 3, 4 One study 

records researchers’ attempts to investigate the factors that drive diffusion processes.

5 Because a 

new product generally has its own distinct characteristics, few studies have been able to 

conclusively develop a universally applicable model. Some key findings, however, generally are 

accepted in academia and industry. 

a NIA = national impact analysis; RIA = regulatory impact analysis

b XENERGY is now owned by KEMA, Inc. (www.kema.com)

17-A-8

 
One accepted finding is that, regardless of their economic benefits and technological 

merits, new technologies are unlikely to be adopted by all potential users. For many products, a 

ceiling must be placed on the adoption rate. A second conclusion is that not all adopters purchase 

new products at the same time: some act quickly after a new product is introduced; others wait 

for the product to mature. Third, diffusion processes can be characterized approximately by 

asymmetric S-curves that depict three stages of diffusion: starting, accelerating, and decreasing 

(as the adoption ceiling is approached).

A so-called epidemic model of diffusion is used widely in marketing and social studies. 

The epidemic model assumes that (1) all consumers place identical value on the benefits of a 

new product, and (2) the cost of a new product is constant or declines monotonically over time. 

What induces a consumer to purchase a new product is information about the availability and 

benefits of the product. In other words, information diffusion drives consumers’ adoption of a 

new product.

3

The model incorporates information diffusion from both internal sources (spread 

by word of mouth from early adopters to prospective adopters) and external sources (the 

“announcement effect” produced by government agencies, institutions, or commercial 

advertising). The model incorporates both internal and external sources by combining a logistic 

function with an exponential function.4,5

The relative degree of influence from the internal and external sources determines the 

general shape of the diffusion curve for a specific product.4,5 If adoption of a product is 

influenced primarily by external sources of information (the announcement effect), for instance, 

a high rate of diffusion occurs at the beginning of the process. In this scenario, external sources 

provide immediate information exposure to a significant number of prospective adopters. In 

contrast, internal sources (such as a network of prospective adopters) are relatively small in size 

and reach, producing a more gradual exposure to prospective adopters. Graphically speaking, 

information diffusion dominated by external sources is represented by a concave curve (the 

exponential curve in Figure 17-A.4.1). If adoption of a new product is influenced most strongly 

by internal sources of information, the number of adopters increases gradually, forming a convex 

curve (the logistic curve in Figure 17-A.4.1).

17-A-9
Figure 17-A.4.1 S-Curves Showing Effects of External and Internal 

Sources on Adoption of New Technologies

17-A.4.2 Adjustment of XENERGY Penetration Curves

In consultation with the primary authors of the 2002 XENERGY study who later 

conducted similar California studies, DOE made some adjustments to XENERGY’s original 

implementation (penetration) curves.6 The experiences with utility programs since the 

XENERGY study indicate that incentive programs have difficulty achieving penetration rates as 

high as 80 percent. Consumer response is limited by barriers created by consumer utility issues 

and other non-economic factors. DOE therefore adjusted the maximum penetration parameters 

for some of the curves from 80 percent to the following levels:

Moderate Barriers: 70%

High Barriers: 60%

Extremely High Barriers: 50%

The low barriers and no barriers curves (the latter used only when a product has a very 

high base-case-market share) remained, respectively, with 80 percent and 100 percent as their 

maximum penetration rates. For the interpolated penetration curves (discussed below), DOE set 

the no barriers and extremely high barriers curves as the upper and lower bounds, respectively, 

17-A-10
for any benefit/cost ratio points higher or lower than the curves. It set another constraint such 

that the policy case market share cannot be great than 100 percent, as might occur for products 

with high base case market shares of the target-level technology.

17-A.4.3 Interpolation of Penetration Curves

As discussed above, the XENERGY penetration (implementation) curves followed a 

functional form to estimate the market implementation rate caused by energy efficiency 

measures such as consumer rebates.c The XENERGY report presents five reference market 

implementation curves that vary according to the level of market barriers to technology 

penetration.1 Such curves have been used by DOE in the Regulatory Impact Analyses for 

rulemakings for appliance energy efficiency standards to estimate market share increases in 

response to rebate programs.d They provide a framework for evaluating technology penetration, 

yet require matching the studied market to the curve that best represents it. This approximate 

matching can introduce some inaccuracy to the analysis. 

Blum et al (2011, Appendix A)7

presents an alternative approach to such evaluation: a method 

to estimate market implementation rates more accurately by performing interpolations of the 

reference curves. The referred report describes the market implementation rate function and the 

reference curves, the method to calibrate the function to a given market, and the limitations of 

the method. 

c The RIA chapter refers to these curves as penetration curves. This section, in references to the original source, uses 

the term implementation curve. d DOE has also used this method to estimate market share increases resulting from consumer tax credit and 

manufacturer tax credit programs, since the effects of tax credits on markets can be considered proportional to the 

rebate impacts. 

17-A-11

 
17-A.5 CONSUMER REBATE PROGRAMS 

DOE performed a search for rebate programs that offered incentives for PTACs and 

PTHPs. Some organizations nationwide, comprising electric utilities and regional agencies, offer 

rebate programs for this equipment. Table 17-A.5.3 provides the organizations’ names, states,

rebate amounts, and program websites. If there is more than one entry for an organization, it

offers different rebates in different states. When an organization offers rebates through several 

utilities, it is represented only once in each table. 

Rebates are offered either on per unit or per ton basis. Most of the rebate programs offer a 

fixed amount rebate. However, some of them include an incremental rebate amount proportional 

to the equipment cooling capacity and energy efficiency. DOE calculated a representative rebate 

amount for each equipment class and TSL. The representative amount accounts for the 

equipment class cooling capacity and the efficiency level corresponding to each TSL. Table 17-

A.5.1 shows the cooling capacities (in tons) and efficiencies (in EER) that DOE used to calculate 

specific rebate amounts for each equipment class and TSL. 

Table 17-A.5.1 Representative Cooling Capacities and Energy Efficiencies Used to 

Calculate the Rebate Amounts for each Rebate Program

Equipment Class

Energy Efficiency (EER) per 

Trial Standard Levels

Representative

Cooling

Capacity

(tons) 1 2 3 4 5

< 7,000 Btu/h 12.2 12.6 13.1 13.6 13.8 7

7,000 – 15,000 Btu/h 11.5 12.0 12.4 12.9 13.1 12

> 15,000 Btu/h 9.7 10.0 10.4 10.8 11.0 15

< 7,000 Btu/h 12.2 12.6 13.1 13.6 13.8 7

7,000 – 15,000 Btu/h 11.5 12.0 12.4 12.9 13.1 12

> 15,000 Btu/h 9.7 10.0 10.4 10.8 11.0 15

After calculating a rebate amount for each program, DOE calculated the representative 

rebate amount for each equipment class and TSL taking the simple average of the rebate amounts 

DOE calculated for each rebate program. Table 17-A.5.2 shows the representative rebate 

amounts DOE used for each equipment class and TSL in its analysis of the benefits from 

consumer rebates.

17-A-12
Table 17-A.5.2 Representative Rebate Amounts (2013$)

Equipment Class

Trial Standard Levels

1 2 3 4 5

< 7,000 Btu/h 34.82 37.13 39.43 41.74 42.89

7,000 – 15,000 Btu/h 43.95 47.70 51.45 55.20 57.08

> 15,000 Btu/h 48.74 52.67 56.60 60.52 62.49

< 7,000 Btu/h 32.91 33.14 33.37 33.60 33.71

7,000 – 15,000 Btu/h 40.95 41.32 41.70 42.07 42.26

> 15,000 Btu/h 45.71 46.10 46.49 46.88 47.08

17-A-13
Table 17-A.5.3 Rebates for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps

Organization State Rebate Website

PTAC PTHP

SRP AZ $20/ton $20/ton http://www.savewithsrpbiz.com/rebates.aspx

Imperial Irrigation District CA $50/ton $50/ton http://www.iid.com/index.aspx?page=293

Modesto Irrigation District CA $75/unit $75/unit http://www.mid.org/rebates/commercial/default.html

Pacific Power CA $25/ton $50/ton https://www.pacificpower.net/bus/se/california/sc/hc.html

City of Roseville California CA $125/unit $125/unit http://www.roseville.ca.us/electric/business/rebates/hvac.asp

Southern California Edison CA $100/unit $100/unit https://www.sce.com/wps/portal/home/business/savingsincentives/express-solutions/how-to-apply/!ut/p/b1

Silicon Valey Power CA $100/ton $100/ton https://siliconvalleypower.com/index.aspx?page=1931

SMUD CA $100/unit $100/unit https://www.smud.org/en/business/save-energy/rebatesincentives-financing/incentives-for-heating-andcooling/express-incentives-air-conditioning.htm

City of Fort Collins CO $50/ton* $50/ton* http://www.fcgov.com/utilities/business/improveefficiency/rebates-incentives/electric-efficiency/coolingrebates

JEA FL $50/ton $50/ton https://www.jea.com/Manage_My_Account/Ways_to_Save/

Rebate_Programs/InvestSmart/Heating,_Cooling_and_Air_

Handling_Rebates.aspx

TECO FL $37.50/ton $37.50/ton http://www.tampaelectric.com/business/saveenergy/cooling/

Cedar Falls Utilities IA $50/unit $50/unit http://www.cfu.net/save-energy/business-rebates.aspx

Illinois Municipal Electric Agency IL $50/ton $50/ton http://www.imea.org/EEProjects.aspx

Duke Energy IN $20/ton $20/ton http://www.duke-energy.com/indiana-business/energymanagement/cooling-incentive.asp

Kentucky Utilities Company KY $10/ton $10/ton http://lge-ku.com/saving-energy-money/commercial-rebates

Louisville Gas & Electric KY $10/ton $10/ton http://lge-ku.com/saving-energy-money/commercial-rebates

Baltimore Gas & Electric Company MD $30/unit $30/unit http://www.bgesmartenergy.com/business/energy-solutionsbusiness/application-forms

Baltimore Gas & Electric Company MD $40/unit $40/unit http://www.bgesmartenergy.com/business/energy-solutionsbusiness/application-forms

Baltimore Gas & Electric Company MD $50/unit $50/unit http://www.bgesmartenergy.com/business/energy-solutionsbusiness/application-forms

17-A-14
Organization State Rebate Website

CONNEXUS ENERGY MN $10/ton** $10/ton** https://www.connexusenergy.com/business/rebates/coolingand-heat-pumps/

CONNEXUS ENERGY MN $10/ton† $10/ton† https://www.connexusenergy.com/business/rebates/coolingand-heat-pumps/

Dakota Electric Association MN $10/ton** $10/ton** https://www.dakotaelectric.com/business/programs/rebates_

grants_and_loans/heating_cooling_ventilation_rebates

Dakota Electric Association MN $10/ton† $10/ton† https://www.dakotaelectric.com/business/programs/rebates_

grants_and_loans/heating_cooling_ventilation_rebates

East Central Energy MN $10/ton** $10/ton** http://www.eastcentralenergy.com/rebatesbusiness.aspx

East Central Energy MN $10/ton † $10/ton† http://www.eastcentralenergy.com/rebatesbusiness.aspx

Elk River Municipal Utilities MN $10/ton** $10/ton** http://www.elkriverutilities.com/pages/rebate-forms

Elk River Municipal Utilities MN $10/ton† $10/ton† http://www.elkriverutilities.com/pages/rebate-forms

Minnesota Valley Electric Cooperative MN $10/ton** $10/ton** http://www.mvec.net/business/efficiency-rebates/

Minnesota Valley Electric Cooperative MN $10/ton† $10/ton† http://www.mvec.net/business/efficiency-rebates/

Moorhead Public Service Utility MN $35/room†

†

$30/room†† http://www.brightenergysolutions.org/municipalities/?categ

ory=business&state=mn&municipality=28&program=4

El Paso Electric Company NM $30/ton $30/ton http://www.epesaver.com/index.php/component/content/arti

cle/105-commercial-cooling

PNM NM $20/ton $20/ton http://www.pnmenergyefficiency.com/Projects/Default.aspx

?tabid=908

conEdison NY $50/ton $50/ton https://www.conedci.com/HVAC.aspx#electric

Dayton Power & Light OH $50/unit $50/unit http://www.dpandl.com/save-money/businessgovernment/rapid-rebates/hvac-rebates/#pack

AEP Ohio OH $30/ton $30/ton https://www.aepohio.com/save/programs/PrescriptiveProgra

m.aspx

FirstEnergy (MetEdison, Penelec, Penn 

Power)

PA $150/unit $150/unit http://www.energysavepa-business.com/index.php

AEP Appalachian Power WV $30/ton $30/ton http://aeprebates.com/commercial-program/ * incremental rebate ($5/ton per 0.1 EER above base)

** incremental rebate ($1.75/ton per 0.1 EER above base)

† incremental rebate ($3.50/ton per 0.1 EER above base)

††DOE assumed a per unit rebate amount

17-A-15
17-A.6 FEDERAL AND STATE TAX CREDITS

This section summarizes the Federal and State tax credits available to consumers who 

purchase energy efficient appliances. This section also describes tax credits available to 

manufacturers who produce certain energy efficient appliances.

17-A.6.1 Federal Tax Credits for Consumers

EPACT 2005 included Federal tax credits for consumers who installed efficient air 

conditioners or heat pumps; gas, oil and propane furnaces and boilers; furnace fans; and/or gas, 

oil, or electric heat pump water heaters in new or existing homes.8, 9 These tax credits were in 

effect in 2006 and 2007, expired in 2008, and were reinstated for 2009–2010 by the American 

Recovery and Reinvestment Act (ARRA).10 There was a $1,500 cap on the credit per home, 

including the amount received for insulation, windows, and air and duct sealing. Congress 

extended this provision for 2011, with some modifications to eligibility requirements, and 

reductions in the cap to $500 per home. The American Taxpayer Relief Act of 2012 extended, 

with some modifications, residential tax credits for air conditioners, heat pumps, furnaces, and 

water heaters placed in service between January 1, 2012 and December 31, 2013.8, 11

The tax credit for furnace fans was $50 in 2011, after which it expired.

The importance of the Federal tax credits has been emphasized in research in the 

residential heating industry on the impacts of the relatively large credits that were available for 

HVAC (heating, ventilating, and air conditioning) equipment. In a survey of HVAC distributors 

conducted by Vermont Energy Investment Corporation, respondents indicated that the ample 

credit had had a notable impact on sales of higher-efficiency heating and cooling equipment. 

Some distributors combined the Federal tax credits with manufacturer rebates and utility 

program rebates for a greater consumer incentive. However, when the amount of the Federal tax 

credit was reduced, smaller utility rebate incentives had not induced the same levels of 

equipment sales increases. The decrease in incentive size from a $1,500 cap in 2009-2010 to a 

$500 cap in 2011, during a period when the economy continued to be sluggish, resulted in a 

decline in total sales of residential HVAC products. Distributors stated that an incentive needed 

to cover 25 to 75 percent of the incremental cost of the efficient equipment to influence 

consumer choice. The industry publication “2011 HVAC Review and Outlook” noted a decline 

in sales of air conditioning units with >14 SEER in 2011 and a return in sales of units with >16 

SEER to 2009 levels (after an increase in 2010). The large majority of distributor observed no 

impacts from the utility programs with their lower rebate amounts available in 2011. Distributors 

also commented on the advantages of the Federal tax credit being nationwide in contrast to 

utility rebate programs that target regional markets.12, 13

In an effort to evaluate the potential impact of a Federal appliance tax credit program, 

DOE reviewed Internal Revenue Service (IRS) data on the numbers of taxpayers who claimed 

the tax credits during tax years 2006 and 2007. It estimated the percentage of taxpayers who filed 

Form 5695, Residential Energy Credits.

14 It also estimated the percentage of taxpayers with 

entries under Form 5695’s section 3, Residential energy property costs, line 3b, qualified natural 

gas, propane, or oil furnace or hot water boiler. DOE reasoned that the percentage of taxpayers 

17-A-16
with an entry on Line 3b could serve as a rough indication of the potential of taxpayer 

participation in a Federal tax credit program for furnaces during the initial program years. DOE 

found that of all residential taxpayers filing tax returns, 0.8 percent in 2006 and 0.6 percent in 

2007, claimed a credit for a furnace or boiler. DOE further found that the percentages of those 

filing Form 5695 for any qualifying energy property expenditure (which also included 

installation of efficient windows, doors and roofs) were 3.1 and 3.2 percent in 2006 and 2007 

respectively. 

DOE also reviewed data from an earlier Federal energy conservation tax credit program 

in place in the 1980s. While this tax credit was available from 1979 through 1985, DOE located 

data for only the first three years of the program.

15, 16, 17 For those three years - 1979, 1980, and 

1981 - the percentages of taxpayers filing Form 5695 were 6.4 percent, 5.2 percent, and 4.9 

percent. Given that the data from this earlier tax credit program were not disaggregated by type 

of energy property, this data series served only to indicate a possible trend of greater 

participation in the initial program year, followed by slightly smaller participation in subsequent 

years. However, DOE did not find detailed analysis of this program to indicate the possible 

reasons for such a trend. Also, this trend varies from the more stable trend shown in the EPAct 

2005 energy tax credit program data for its first two program years.

As discussed in Chapter 17, DOE analyzed the percentage of participation in consumer 

tax credit programs using its estimates of consumer participation in rebate programs that was 

based on benefit/cost data specific to each equipment class. Hence it was difficult to compare 

these detailed estimates to the more general data analysis described above from the existing 

Federal tax credit program, or to use the IRS data analysis in its consumer tax credit analysis.

17-A.6.2 Federal Tax Credits for Manufacturers

EPACT 2005 provided Federal Energy Efficient Appliance Credits to manufacturers that 

produced high-efficiency refrigerators, clothes washers, and dishwashers in 2006 and 2007.18

The Emergency Economic Stabilization Act of 200819 amended the credits and extended them 

through 2010. The credits were extended again to 2011 with modifications in the eligibility 

requirements. Manufacturer tax credits were extended again, by the American Taxpayer Relief 

Act of 2012, for clothes washers, refrigerators, and dishwashers manufactured between January 

1, 2012 and December 31, 2013.20

Manufacturers who produce these appliances receive the credits for increasing their 

production of qualifying appliances. These credits had several efficiency tiers in 2011. For 2012-

2013, credits for the higher tiers remain but were eliminated for the lowest (least efficient) tiers 

for clothes washers and dishwashers.

11 The credit amounts applied to each unit manufactured. 

The credit to manufacturers of qualifying clothes washers, refrigerators and dishwashers was 

capped at $75 million for the period of 2008-2010. However, the most efficient refrigerator 

(30%) and clothes washer (2.2 MEF/4.5 wcf) models was not subject to the cap. The credit to 

manufacturers was capped at $25 million for 2011, with the most efficient refrigerators (35%) 

and clothes washers (2.8 MEF/3.5 WCF) exempted from this cap.21

17-A-17
17-A.6.3 State Tax Credits

The States of Oregon and Montana have offered consumer tax credits for efficient 

appliances for several years, and the States of Kentucky, Michigan and Indiana began offering 

such credits in 2009. The Oregon Department of Energy (ODOE) has disaggregated data on 

taxpayer participation in credits for eligible products. (See the discussion in Chapter 17, Section 

17.3.3, on tax credit data for clothes washers.) Montana’s Department of Revenue does not 

disaggregate participation data by appliance, although DOE reviewed Montana's overall 

participation trends and found them congruent with its analysis of Oregon's clothes washer tax 

credits. 

Oregon’s Residential Energy Tax Credit (RETC) was created in 1977. The Oregon 

legislature expanded the RETC program in 1997 to include residential refrigerators, clothes 

washers, and dishwashers, which significantly increased participation in the program. The 

program subsequently added credits for high-efficiency heat pump systems, air conditioners, and 

water heaters (2001); furnaces and boilers (2002); and duct/air sealing, fuel cells, heat recovery, 

and renewable energy equipment. Beginning in 2012 a Tax Credit Extension Bill (HB3672) 

eliminated refrigerators, clothes washers, dishwashers, air conditioners, and boilers from the 

RETC program, leaving credits for water heaters, furnaces, heat pumps, tankless water heaters, 

and heat pump water heaters.22, 23 Those technologies recognized by the Oregon Department of 

Energy as “premium efficiency” are eligible for tax credit of $0.60 per kWh saved in the first 

year (up to $1,500).22, 24

Montana has had an Energy Conservation Tax Credit for residential measures since 

1998.25 The tax credit covers various residential energy and water efficient products, including 

split system central air conditioning; package system central air conditioning; split system air 

source heat pumps; package system heat pumps; natural gas, propane, or oil furnaces; hot water 

boilers; advanced main air circulating fans; heat recovery ventilators; gas, oil, or propane water 

heaters; electric heat pump water heaters; low-flow showerheads and faucets; light fixtures; and 

controls. In 2002 the amount of the credit was increased from 5 percent of product costs (up to 

$150) to 25 percent (up to $500) per taxpayer. The credit can be used for products installed in 

new construction or remodeling projects. The tax credit covers only that part of the cost and 

materials that exceed established standards of construction.

17-A-18
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17-A-21