CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUMENT

................................................................................. 1-1 1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DISHWASHERS, DEHUMIDIFIERS, AND COOKING PRODUC TS AND COMMERCIAL CLOTHES WASHERS

................................................................................................... 1-1 1.3 PROCESS FOR SETTING ENERGY CONERVATION ST ANDARDS

...................... 1-2 1.4 STRUCTURE OF THE DOCUMENT

............................................................................ 1-8

LIST OF TABLES
Table 1.3.1 Analyses Under the Process Rule

........................................................................ 1-5 Table 1.3.2 Proposed Energy Conservation Standards for Cooking Products and Commercial Clothes Wa shers

.............................................................................. 1-7

1-iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT This technical support docume nt (TSD) is a st and-alone report that provides the technical analyses and results in support of the informati on presented in the fina l rule for establishing energy conservation standards for residential di shwashers, dehumidifiers, cooking products and commercial clothes washers (also referre d to as “the considered products”).

1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DISHWASHERS, DEHUMIDIFIERS, AND COOKING PRODUCTS AND COMMERCIAL CLOTHES WASHERS The Energy Policy and Conservation Act (EPCA) of 1975 (42 U.S.C. 6291–6309) established an energy conservation program fo r major household applia nces. The National Energy Conservation Policy Act of 1978 (NECPA) am ended EPCA to add Part C of Title III (42 U.S.C. 6311–6317), which established an energy conservation program for certain industrial equipment. Additional amendments to EPCA ha ve given the Department of Energy (DOE) the authority to regulate the energy efficiency of seve ral products, including residential dishwashers, dehumidifiers, and cooking products and commerci al clothes washers—the products that are the focus of this document. The amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA) established pr escriptive energy conservation standards for dishwashers and cooking products, as well as requirements for determining whether these standards should be amended. (42 U.S.C. 6291–6309) The amendments to EPCA in the Energy Policy Act of 2005 (EPACT 2005), P.L. 109-58, in cluded provisions that expanded DOE’s energy conservation program to include certain re sidential products and commercial equipment, including dehumidifiers and co mmercial clothes washers.
NAECA established prescriptive standards for gas cooking products, requiring gas ranges and ovens with an electrical supply cord not to be equipped with cons tant burning pilots, and directed DOE to conduct two cycles of rulemakings to determine if more stringent standards are justified. a (42 U.S.C. 6295(h)(1)–(2)) DOE initially analyzed standards for cooking products as part of an eight-product sta ndards rulemaking. It issued a notice of proposed rulemaking (NOPR) on March 4, 1994, proposing performance st andards for gas and electric residential cooking products, including microwave ovens. 59 FR 10464. In accordance with the July 15, 1996, Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products (the “Process Rule”), 61 FR 36974 (July 15, 1996), DOE refined its standards analysis of cooking products. With regard to gas cooking products, DOE focused on

a DOE is required to conduct two cycles of rulemakings for both gas and electric cooking products.

1-1the economic justification for eliminating standi ng pilots. Partially due to the difficulty of conclusively demonstrating that elimination of standing pilots was ec onomically justified, DOE issued a final rule on September 8, 1998, that co vered only electric cooking products, including microwave ovens. 63 FR 48038. The final rule found that no standard s were justified for electric cooking products. DOE never comple ted its standards rulemaking for gas cooking products.
NAECA also established prescriptive standard s for dishwashers, requ iring that they be equipped with an option to dry without heat, a nd further required that DOE conduct two cycles of rulemakings to determine if more stringent sta ndards are justified. (42 U.S.C. 6295(g)(1), (4), (5)) On May 14, 1991, DOE issued a final rule establishing the first set of performance standards for dishwashers; the new standard s became effective on May 14, 1994. 56 FR 22250. DOE initiated a second standards rulemaking for dishwashers by issuing an advance notice of proposed rulemaking (ANOPR) on November 14, 1994. 59 FR 56423. As a result of the priority-setting process outlined in the Process Rule, DOE suspended the standards rulemaking for dishwashers. The Energy Independence and Security Act of 2007 (EISA 2007; Pub. L. No. 110-140) amended EPCA to establish revised en ergy conservation standards for residential dishwashers. (42 U.S.C. 6295(g)(9)) Thes e EISA 2007 amendments set energy efficiency standards for these products, effective January 1, 2010; therefore, DOE is not adopting standards for residential dishwashers in this final rule and instead will codify these statutory standards in a separate final rule.
Dehumidifiers are products first covere d by EPACT 2005, which es tablished standards for these products with an effective date of October 1, 2007. (Section 135(c)(4)) EPACT 2005 also required that DOE issue a final rule by October 1, 2009, to determine whether these standards should be amended. If amended stan dards were justified, EPACT 2005 required them to become effective by October 1, 2012. In the event that DOE failed to publish a final rule by October 1, 2009, EPACT 2005 specified a new set of amended standards with an effective date of October 1, 2012. EISA 2007 amended EPCA to establish revised energy conservation standards for dehumidifiers, effective Octobe r 1, 2012. (42 U.S.C. 6295(cc)) As with dishwashers, DOE is not adopting standards for de humidifiers in this final rule and instead will codify these statutory standard s in a separate final rule.

Like dehumidifiers, commercial clothes wa shers are equipment first covered by EPACT 2005. EPACT 2005 established standards for commerci al clothes washers withan effective date of January 1, 2007. (Section 136(e)) EPACT 2005 also requires th at DOE issue a final rule by January 1, 2010, to determine whether these standards should be amended.

1.3 PROCESS FOR SETTING ENERGY CONERVATION STANDARDS
Under EPCA, when DOE evaluates new or am ended standards, it must consider, to the greatest extent prac ticable, the following seven factors (42 U.S.C. 6295(o)(2)(B)(i); 42 U.S.C. 6316(a)):

1-21) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such a standard;

2) the savings in operating costs throughout th e estimated average life of the covered product in the type (or class) co mpared to any increases in th e price of, or in the initial charges for, or maintenance expenses of, th e covered products which are likely to result from the imposition of the standard;

3) the total projected amount of energy, or as applicable, water, savings likely to result directly from the impos ition of the standard;
4) any lessening of the utility or the performan ce of the covered produc ts likely to result from the imposition of the standard;

5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6) the need for national energy and water conservation; and
7) other factors the Secretary considers relevant.
Other statutory requirements are set forth in 42 U.S.C. 6295(o)(1)–(2)(A), (2)(B)(ii)–(iii), (3)–(4) and 42 U.S.C. 6316(a).
DOE considers stakeholder participation to be a very important part of the process for setting energy conservation standards. DOE activel y encourages the participation and interaction of all stakeholders during the comment period in each stage of the rulemaking. Beginning with the framework document and during subseque nt comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.
In conducting energy conservation standard s rulemakings, DOE involves stakeholders through formal public notifications ( i.e., Federal Register notices). For this rulemaking, DOE employed the procedures set forth in the Process Rule to the extent they were appropriate for developing energy conservation sta ndards for the considered products . The Process Rule greatly enhances opportunities for public input and im proved analytic approaches, and encourages adoption of consensus-based standards. The Pr ocess Rule provides polic ies and guidelines for early public review and consultation with interested parties wi th regard to identifying and screening design options, selecti ng a proposed standard, and establ ishing the final standard. The factors for screening design options include: (1) technological feasibility; (2) practicability to manufacture, install, and servic e; (3) adverse impacts on product utility or produc t availability; and (4) adverse impacts on health or safety (Process Rule at section 4(a)(4)). 61 FR 36982.

1-3The Process Rule requires DOE to evaluate uncertainty and variabil ity through the use of scenario or probability analysis, and provides for review by experts and interested parties of the analyses used, including: (1) qualitative a nd quantitative analytical methods; (2) economic, engineering, and life-cycle cost (LCC) an alyses; and (3) impacts on manufacturers and consumers, national energy savings, the economy, and the environment. Although the Process Rule specifically applies only to the development of energy cons ervation standards for consumer products, DOE has decided to apply its procedur es to the development of energy conservation standards for commercial and industrial equipment as well. See appendix A to subpart C of Title 10 of the Code of Federal Regulations Part 430 (10 CFR Part 430).

Before DOE determines whether or no t to adopt a proposed energy conservation standard, it must first solicit comments on the pr oposed standard. (42 U.S.C. 6295(o)(2)(B)(i)) Any new or amended standard must be designed to achieve significant additional conservation of energy and be technologically f easible and economically justif ied. (42 U.S.C. 6295(o)(2)(A)) To determine whether economic justificati on exists, DOE must re view comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent prac ticable, weighing the seven factors liste d above. (42 U.S.C. 6295(o)(2)(B)(i))
After the publication of the framework document, the standards rulemaking process involves three additional formal , major public notices, which DOE publishes in the Federal Register. The first of the rulemaking notices is an ANOPR b , which is designed to publicly vet the models and tools used in the rulemaking, and to facilitate public participation before the proposed rule stage. The second notice is a NOPR, which presents a discussion of comments received in response to the ANOP R; analysis of the impacts of standards on consumers, manufacturers, and the nation; DOE ’s weighting of these impacts; and the proposed standards. The third notice is the fi nal rule, which presents a discussion of comments received in response to the NOPR; the revised analysis of the imp acts of standards; DOE’s weighting of these impacts; the standards DOE is adopting; a nd the effective dates of the standards.
In April, 2006, DOE published a Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and Cooking Products , describing the procedural and analytical approaches DOE anticipated using to evaluate the establishment of energy conservation standards for th ese products. This document is available at www.eere.energy.gov/buildings/appliance_standards/ . DOE held a public meeting on April 27, 2006, to discuss procedural and an alytical approaches to the rulemaking, and to inform and facilitate interested parties’ involvement in th e rulemaking process. The analytical framework presented at the public meeting de scribed different analyses, such as the engineering analysis and

b In energy conservation standards rulemakings in the past, and for this rulemaking, DOE issued an ANOPR following publication of the framework document. The En ergy Independence and Security Act of 2007 eliminated the requirement that DOE issue ANOPRs as part of the standards rulemaking process; see EISA 2007, at sec. 307. DOE is now using an alternative process known as the pre liminary activities and analyses. The preliminary activities and analyses will provide the same information and ability for public comment as the ANOPR, but without publication of analyses in the Federal Register

.

1-4the LCC and payback period (PBP) analysis, th e methods proposed for conducting them, and the relationships among the various an alyses. Table 1.3.1 lists the anal yses undertaken and reported in each of the formal public rulemaking documents.

Table 1.3.1 Analyses Under the Process Rule ANOPRNOPR Final Rule Market and technology assessment

Screening analysis Revi sed ANOPR analyses

Life-cycle cost sub-group analysis Revised analyses

Engineering analysis Manufacturer impact analysis Energy and water use determination Utility impact analysis Markups for equipment price determination Environmental assessment

Life-cycle cost and payback period analysis Employment impact analysis

Shipments analysis National impact analysis Regulatory impact analysis

Preliminary manufacturer impact analysis

During the April, 2006, public meeting, intere sted parties commented about the following issues related to the rulemaking: (1) the exis ting DOE test procedure for microwave ovens; (2) baseline unit definitions for the considered products; (3) number of product classes for the considered products; (4) consid eration of limiting standby power as a design option for all considered products; (5) technology options for imp roving efficiency for all considered products; (6) type of approach to employ for the engineering analysis; (6) efficiency levels to consider for all of the considered products; (7) implicati ons of clothes container volume on commercial clothes washer efficiency; (8) proposed appro aches for specifying typical annual energy and water consumption for all considered products; (9) potential data sour ces for characterizing variability in annual energy and water consump tion; (10) typical distribution channels and markups for the considered products; (11) data sources for retail pric es; (12) type of approach to employ for the LCC and PBP analyses; (13) variab ility of forecasted energy and water prices; (14) repair, maintenance, and installation costrelationship to product efficiency; (15) product lifetimes; (16) development of consumer discount rates; (17) purchase price impacts on product shipments; (18) forecasted saturation rates of commercial clothes washers; (19) consumer subgroups; (20) water and wastewat er utility impacts; and (21) wastewater discharge impacts. Interested parties’ comments submitted du ring the Framework Document comment period elaborated on the issues raised at the public meeting. DOE worked with its contractors to address these issues in the analyses.
After the April, 2006, public meeting, as part of the information gathering and sharing process, DOE organized and held interviews wi th manufacturers of the considered products.

1-5DOE selected companies that represented produc tion of all types of equipment, ranging from small to large manufacturers, and included both Association of Home Ap pliance Manufacturers (AHAM) member companies and non-AHAM member companies. DOE had four objectives for these interviews: (1) Solicit feedback on the dr aft engineering analys is (including methodology, production costs, manufacturing processes, and findi ngs); (2) solicit feedback on topics related to the preliminary manufacturer imp act analysis (MIA); (3) provide an opportunity, early in the rulemaking process, to express specific concerns to DOE; and (4) foster cooperation between the manufacturers and DOE. There were six general topics related to the preliminary manufacturer impact analysis discussed during each of the in terviews: (1) general key issues; (2) shipment projections; (3) capital conversion costs; (4) product mix and profitability; (5) market shares and industry consolidation; and (6) cumulative regulatory burden. DOE incorporated the information gathered at the interviews into its engineeri ng analysis (see chapter 5 of the ANOPR TSD) and the preliminary manufacturer impact analysis (see chapter 13 of the ANOPR TSD). Following the publication of the ANOPR and the ANOPR public meeting, DOE held additional meetings with manufacturers as part of the consultative process for the MIA conducted during the NOPR phase of the rulemaking.
DOE developed spreadsheets for the LCC, PBP, and national impact analyses for each of the considered products in an effort to meet the objectives of the Process Rule. For each product, DOE developed an LCC spreadsheet that calc ulates the LCC and PBP at various energy efficiency levels. DOE also developed a natio nal impact analysis (NIA) spreadsheet that calculates the national energy savi ngs (NES) and national net presen t values (NPVs) at various energy efficiency levels. This spreadsheet includ es a model that forecasts the impacts of energy efficiency standards at various levels on product shipments. A ll of these spreadsheets are available on the DOE website ( www.eere.energy.gov/buildings /appliance_standards ), within the specific pages for each of the considered products.
On November 15, 2007, DOE published an ANO PR to consider establishing new or revised energy conservation standards for the covered products, and to announce a public meeting to receive comments on a variety of issues. 72 FR 64432. This document is available at www.eere.energy.gov/buildings/appliance_standards/ . DOE held a public meeting on December 13, 2007, to provide interested pa rties the opportunity to commen t on topics including: (1) the proposed product classes; (2 ) the analytical framew ork, models, and tools ( e.g. , LCC and NES spreadsheets) that DOE used to perform anal yses of the impacts of energy conservation standards; (3) the results of the preliminary an alyses; and (4) the candidate energy conservation standard levels.
After the publication of the ANOPR and th e presentation of the ANOPR to interested parties at the public meeting, DOE conducted inte rviews with manufacturers of the covered products as part of the MIA for the NOPR. There were thirteen general topics discussed during each of the interviews: (1) general key issues; (2) company overview and organizational characteristics; (3) company financial paramete rs; (4) production cost breakdown; (5) shipment projections and market shares; (6) equipment mixes; (7) conversion costs; (8) markups and profitability; (9) cumulative regulatory bur den; (10) exports, foreign competition, and

1-6outsourcing; (11) direct employ ment impact assessment; (12) market consolidation; and (13) baseline products and di fferent design options.
Subsequent to the ANOPR, DOE revised it s preliminary analyses to address public comments it had received on its ANOPR. In addition, DOE conducted all of the analyses identified in Table 1.3.1 that are requiredfor the NOPR phase of the rulemaking.
On October 17, 2008, DOE published a NOPR proposing energy conservation standards for the covered products, and to announce a public meeting to receive comments on a variety of issues. 73 FR 62034. In conjunction with th e NOPR, DOE also published on its website the complete TSD for the proposed rule, which in corporated the analyses DOE conducted and technical documentation of each analysis, as we ll as the LCC and NIA spreadsheets. These documents are available at www.eere.energy.gov/buildings/appliance_standards/ . For the reasons discussed above in sec tion 1.2, DOE did not consider en ergy conservation standards for dishwashers and dehumidifiers, and is instead codifying in a separate final rule the standards set by EISA 2007 for these products. The energy cons ervation standards proposed in the NOPR for the remaining covered products were as follows:

Table 1.3.2 Proposed Energy Conservation Standards for Cooking Products and Commercial Clothes Washers

Product Class Proposed Energy Conservation Standards Conventional Cooking Products Gas cooktops/conventional burners No constant burning pilot lights Electric cooktops/low or high wattage ope n (coil) elements No standard Electric cooktops/smooth elements No standard Gas ovens/standard oven No constant burning pilot lights Gas ovens/self-clean oven No change to existing standard Electric ovens No standard Microwave ovens Maximum standby power = 1.0 watt Commercial clothes washers Top-loading commercial clothes washers 1.76 Modified Energy Factor / 8.3 Water Factor Front-loading commercial clothes washers 2.00 Modified Energy Factor / 5.5 Water Factor
The NOPR also included additional backgr ound information on the history of this rulemaking and on DOE’s use in this rulemaking of the procedures, interp retations, and policies set forth in the Process Rule. 73 FR62034, 62038–41 (Oct. 17, 2008). DOE held a public meeting on November 13, 2008, to hear oral comment s on and solicit information relevant to the proposed rule.
Based on information provided by interested parties at the public meeting and in subsequent written comments, DOE determined th at additional analyses would be required to

1-7further evaluate energy conservation standards for commercial clothes washers and microwave ovens as to standby power. The EISA 2007 amendments to EPCA require DOE to amend the ranges and ovens and microwave oven test pro cedure to incorporate standby and off mode energy consumption no later than March 31, 2011. (42 U.S.C. 6295(gg)(2)(B)(vi)) For commercial clothes washers, EPCA requires that DOE issue a final rule by January 1, 2010, to determine whether the existing energy conservation standards should be amended. (42 U.S.C. 6313(e)(2)(A)) Because additional analyses ar e required to resolve issues concerning commercial clothes washer and microwave ove n standby power energy conservation standards and EPCA does not require DOE to take action on these products by March 2009 (as is required under a Consent Decree c for the cooking efficiency for reside ntial electric and gas kitchen ranges and ovens and microwave ovens), DOE is contin uing the rulemaking for these products at this time.
According to the rulemaking timeline, DOE plans to issue a final rule for energy conservation standards pertaining to cooking efficiency for reside ntial electric and gas kitchen ranges and ovens and microwave ovens in March 2009. The effective date for these new standards would be in March 2012. Separate final rules for commercial clothes washers and microwave ovens pertaining to standby power are pl anned to be issued as soon as the revised analyses are complete.

1.4 STRUCTURE OF THE DOCUMENT This final rule TSD outlines the analytical approaches used in this rulemaking. The TSD consists of seventeen chapters and appendices.
Chapter 1 Introduction: provides an overview of the appliance standards program and how it applies to th is rulemaking, and outlines the structure of the document.
Chapter 2 Analytical Framework: describes the rulemaking process.
Chapter 3 Market and Technology Assessm ent: characterizes the market for the considered products and the technologies available for increasing product efficiency.
Chapter 4 Screening Analysis: determin es which design options are viable for consideration in the engineering analysis.

c “Consent Decree” refers to the consolidat ed Consent Decree in New York v. Bodman , No. 05 Civ. 7807 (S.D.N.Y. filed Sept. 7, 2005) and Natural Resources Defense Council v. Bodman , No. 05 Civ. 7808 (S.D.N.Y. filed Sept. 7, 2005)

1-8Chapter 5 Engineering Analysis: discu sses the methods used for developing the relationship between increased ma nufacturer cost and increased efficiency.
Chapter 6 Energy and Water Use Determin ation: discusses the process used for generating energy- and water-use estim ates for the considered products as a function of standard levels.
Chapter 7 Markups for Equipment Price Determination: discusses the methods used for establishing markups for converting manufacturer costs to customer retail prices.
Chapter 8 Life-Cycle Cost and Payback Pe riod Analysis: discusses the effects of standards on individual customer s and users of the products and compares the LCC and PBP of produc ts with and without higher energy conservation standards.
Chapter 9 Trial Standard Levels: discusse s the trial standard levels and methods used to derive the energy-efficien cy equations corresponding to the proposed energy conservation standards.
Chapter 10 Shipments Analysis: discusses the methods used for forecasting shipments with and without higher e fficiency standards, including how equipment purchase decisions are economically influenced and how DOE models this relationship with econometric equations.
Chapter 11 National Impact Analysis: di scusses the methods used for forecasting national energy consumption and national economic impacts based on estimates of future equipment efficiency, new construction and building starts, and annual equipment sales in the absence and presence of higher efficiency standards.
Chapter 12 Life-Cycle Cost Subgroup Analys is: discusses the effects of standards on different subgroups of consumers and compares the LCC and PBP of products with and without higher efficiency standards for these

consumers.
Chapter 13 Manufacturer Impact Analysis: discusses the financial impact of new energy conservation standards on manufacturers.
Chapter 14 Utility Impact Analysis: discu sses the effects of standards on electric and gas utilities.
Chapter 15 Employment Impact Analysis : discusses the effects of standards on national employment.

1-9Chapter 16 Environmental Assessment: di scusses the effects of amended energy conservation standards on three pollutants—sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), and mercury—as well as carbon emissions.
Chapter 17 Regulatory Impact Analysis: disc usses the present regulatory actions as well as the impact of non-regulatory a lternatives to setting new energy conservation standards.
Appendix 5A AHAM Data Submittal: presen ts the data provided by AHAM to DOE for microwave ovens.
Appendix 6A Cooktops and Ovens: Determination of Energy-Using Components: discusses the method for determining the energy use by energy-using components of cooktops and ovens including cooking, ignition, selfcleaning, and clock energy.
Appendix 8A User Instructions for LCC a nd PBP Spreadsheets: briefly describes the LCC and PBP spreadsheets for each of the considered products and provides brief user instructions on how to operate the spreadsheets.
Appendix 8B Uncertainty and Variability: discusses how DOE uses uncertainty and variability to characte rize the inputs to the LCC and PBP analysis.
Appendix 8C Lifetime Distributions: discusses how product lifetimes are characterized with Weibull probability distributions.
Appendix 8D Household Discount Rate Di stributions: provides the probability distributions for various household debt classes and asset holdings used to develop discount rates for househol d appliances in the LCC analysis.
Appendix 10A Relative Price Elasticity of Demand for A ppliances: describes the analysis that DOE conducted to determine the consumer sensitivity to appliance purchase price changes as well as operating cost changes and household income.
Appendix 11A User Instructions for Ship ments and NIA Spreadsheets: briefly describes the shipments and national impact analysis (NIA) spreadsheets for each of the considered products a nd provides brief user instructions on how to operate the spreadsheets.
Appendix 11B National Equipment and Opera ting Costs: provides the components to the NPV for each of the considered products, namely, the present value of the equipment costs and the present value of the operating costs.

1-10Appendix 13A Manufacturer Interview Guides: presents questionnaires used to guide DOE interviews with residentia l cooking product manufacturers.
Appendix 13B Government Regulatory Impact Model (GRIM): disc usses the method to estimate the change in value of an industry or manufacturers(s) following a regulation or a series of regulations.
Appendix 14A Interpolation of Utility a nd Environmental Results from NEMS-BT Output: describes the methodology fo r using output from NEMS-BT to estimate the utility impact and envi ronmental impact results for product standards.
Appendix 17A Regulatory Impact Analysis Supporting Material: provides more detailed information on the data us ed to conduct the Regulatory Impact Analysis.

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