After a regulatory action has been completed, Executive Order 12866 requires agencies 

to identify the substantive changes between the draft submitted to Office of Information 

and Regulatory Affairs (OIRA) for review and the action subsequently announced, and to 

identify those changes made at the suggestion or recommendation of OIRA.
[6450-01-P]

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE–2010–BT–STD–0011]

RIN: 1904–AC22

Energy Conservation Program for Consumer Products: Energy Conservation 

Standards for Residential Furnace Fans

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Final rule.

SUMMARY: Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), as 

amended, the U.S. Department of Energy (DOE) must prescribe energy conservation 

standards for various consumer products and certain commercial and industrial 

equipment, including residential furnace fans. EPCA requires DOE to determine whether 

such standards would be technologically feasible and economically justified, and would 

save a significant amount of energy. In this final rule, DOE is adopting new energy 

conservation standards for residential furnace fans. DOE has determined that the 

prescribed energy conservation standards for these products would result in significant 

conservation of energy, and are technologically feasible and economically justified. 

1
DATES: The effective date of this rule is [INSERT DATE 60 DAYS AFTER DATE 

OF PUBLICATION IN THE FEDERAL REGISTER]. Compliance with the 

prescribed standards established for residential furnace fans in this final rule is required 

on and after [INSERT DATE 5 YEARS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER].

ADDRESSES: The docket for this rulemaking, which includes Federal Register notices, 

public meeting attendee lists and transcripts, comments, and other supporting 

documents/materials, is available for review at www.regulations.gov. All documents in 

the docket are listed in the www.regulations.gov index. However, not all documents 

listed in the index may be publicly available, such as information that is exempt from 

public disclosure.

A link to the docket web page can be found at: 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. 

The www.regulations.gov webpage contains simple instructions on how to access all 

documents, including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards 

at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: 

2
Mr. Ron Majette, U.S. Department of Energy, Office of Energy Efficiency and 

Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue, 

SW., Washington, DC, 20585-0121. Telephone: (202) 586-7935. E-mail:

Ronald.Majette@ee.doe.gov.

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-71, 

1000 Independence Avenue, SW., Washington, DC, 20585-0121. Telephone: (202) 586-

9507. E-mail: Eric.Stas@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Residential Furnace Fans

III. General Discussion

A. Test Procedures

B. Product Classes and Scope of Coverage

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Commercial Customers

b. Savings in Operating Costs Compared to Increase in Price (Life-Cycle Costs)

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

3
e. Impact of Any Lessening of Competition

f. Need of the Nation to Conserve Energy

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion

A. Market and Technology Assessment

1. Definition and Scope of Coverage

2. Product Classes

3. Technology Options

a. Fan Housing and Airflow Path Design Improvements

b. Inverter Controls for PSC Motors

c. High-Efficiency Motors

d. Multi-Stage or Modulating Heating Controls

e. Backward-Inclined Impellers

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

a. High-Efficiency Motors

b. Backward-Inclined Impellers

C. Engineering Analysis

1. Efficiency Levels

a. Baseline

b. Percent Reduction in FER

2. Manufacturer Production Cost (MPC)

a. Production Volume Impacts on MPC

b. Inverter-Driven PSC Costs

c. Furnace Fan Motor MPC

d. Motor Control Costs

e. Backward-Inclined Impeller MPC

f. Other Components

D. Markups Analysis

E. Energy Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Installed Cost

2. Operating Costs

3. Furnace Fan Lifetime

4. Discount Rates

5. Compliance Date

6. Base-Case Efficiency Distribution

7. Payback Period

G. Shipments Analysis

H. National Impact Analysis

1. National Energy Savings Analysis

2. Net Present Value Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

4
1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Discussion of Comments

a. Conversion Costs

b. Cumulative Regulatory Burden

c. Scope of MIA Coverage

d. Markups Analysis

e. Employment Impacts

f. Consumer Utility

g. Small Businesses

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

M. Utility Impact Analysis

N. Employment Impact Analysis

O. Comments on Proposed Standards

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Product Utility or Performance

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

C. Conclusions

1. Benefits and Burdens of Trial Standard Levels Considered for Residential 

Furnace Fans

2. Summary of Benefits and Costs (Annualized) of Today’s Standards

5
VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

 C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Summary of the Final Rule

Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the 

Act), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy 

Conservation Program for Consumer Products Other Than Automobiles. Pursuant to 

EPCA, any new or amended energy conservation standard that DOE prescribes for 

certain products, such as furnace fans, must be designed to achieve the maximum 

improvement in energy efficiency that is technologically feasible and economically 

justified. (42 U.S.C. 6295(o)(2)(A)). Furthermore, the new or amended standard must 

result in a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)). In accordance 

with these and other statutory provisions discussed in this notice, DOE proposes amended 

energy conservation standards for furnace fans. The proposed standards shall have a fan 

energy rating (FER) value that meets or is less than the values shown in Table I.1. These 

standards would apply to all products listed in Table I.1 and manufactured in, or imported 

into, the United States on or after manufactured on and after [INSERT DATE FIVE 

YEARS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].

6
Table I.1. Energy Conservation Standards for Covered Residential Furnace Fans

Product Class FER* (Watts/cfm)

Percent 

Increase 

Over 

Baseline

Non-Weatherized, Non-Condensing Gas Furnace Fan 

(NWG-NC) FER = 0.044 x QMax + 182 46%

Non-Weatherized, Condensing Gas Furnace Fan 

(NWG-C) FER = 0.044 x QMax + 195 46%

Weatherized Non-Condensing Gas Furnace Fan 

(WG-NC) FER = 0.044 x QMax + 199 46%

Non-Weatherized, Non-Condensing Oil Furnace Fan 

(NWO-NC) FER = 0.071 x QMax + 382 12%

Non-Weatherized Electric Furnace / Modular Blower 

Fan (NWEF/NWMB) FER = 0.044 x QMax + 165 46%

Mobile Home Non-Weatherized, Non-Condensing 

Gas Furnace Fan (MH-NWG-NC) FER = 0.071 x QMax + 222 12%

Mobile Home Non-Weatherized, Condensing Gas 

Furnace Fan (MH-NWG-C) FER = 0.071 x QMax + 240 12%

Mobile Home Electric Furnace / Modular Blower 

Fan (MH-EF/MB) FER = 0.044 x QMax + 101 46%

Mobile Home Non-Weatherized Oil Furnace Fan 

(MH-NWO) Reserved

Mobile Home Weatherized Gas Furnace Fan (MHWG) Reserved

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test 

procedure at 10 CFR part 430, subpart B, appendix AA.

A. Benefits and Costs to Consumers

Table I.2 presents DOE’s evaluation of the economic impacts of today’s standards 

on consumers of residential furnace fans, as measured by the average life-cycle cost 

(LCC) savings and the median payback period (PBP). The average LCC savings are 

positive for all product classes.

Table I.2 Impacts of Energy Conservation Standards on Consumers of Residential Furnace 

Fans

Product Class Average LCC 

Savings (2013$)

Median Payback 

Period (years)

Non-Weatherized, Non-Condensing Gas Furnace $506 5.4

7
Fan

Non-weatherized, Condensing Gas Furnace Fan $341 5.8

Weatherized Non-Condensing Gas Furnace Fan $447 4.4

Non-Weatherized, Non-Condensing Oil Furnace Fan $46 1.7

Non-weatherized Electric Furnace/Modular Blower 

Fan $204 3.2

Mobile Home Non-Weatherized, Non-Condensing 

Gas Furnace Fan $36 2.7

Mobile Home Non-Weatherized, Condensing Gas 

Furnace Fan $35 2.3

Mobile Home Electric Furnace/Modular Blower Fan $85 4.1

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to 

the industry from the base year through the end of the analysis period (2014 to 2048). 

Using a real discount rate of 7.8 percent, DOE estimates that the INPV for manufacturers 

of residential furnace fans is $349.6 million.

1

 Under today’s standards, DOE expects that 

manufacturers may lose up to 16.9 percent of their INPV, which is approximately $59.0 

million. Total conversion costs incurred by industry prior to the compliance date are 

expected to reach $40.6 million.

C. National Benefits and Costs2

DOE’s analyses indicate that today’s standards would save a significant amount 

of energy. The lifetime energy savings for residential furnace fans purchased in the 30-

year period that begins in the year of compliance with the standards (2019–2048) amount 

1 DOE calculated a present value in 2014; all monetary values in this document are expressed in 2013

dollars unless explicitly stated otherwise. 2 All monetary values in this section are expressed in 2013$ and are discounted to 2014.

8

 
to 3.99 quadrillion Btu (quads3

). The estimated annual energy savings in 2030 (0.07 

quads) are equivalent to 0.3 percent of total U.S. residential energy use in 2012. 

The cumulative net present value (NPV) of total consumer costs and savings of

today’s standards for residential furnace fans ranges from $10,024 million (at a 7-percent 

discount rate) to $28,810 million (at a 3-percent discount rate). This NPV expresses the 

estimated total value of future operating-cost savings minus the estimated increased 

product costs for residential furnace fans purchased in 2019–2048. 

In addition, today’s standards are expected to have significant environmental 

benefits. The energy savings would result in cumulative emission reductions of 

approximately 180.6 million metric tons (Mt)4 of carbon dioxide (CO2), 695.0 thousand 

tons of methane (CH4), 235.7 thousand tons of sulfur dioxide (SO2), 84.0 thousand tons 

of nitrogen oxides (NOX), 6.2 thousand tons of nitrous oxide (N2O), and 0.4 tons of 

mercury (Hg).3 The cumulative reduction in CO2 emissions through 2030 amounts to 34 

million Mt.

The value of the CO2 reductions is calculated using a range of values per metric 

ton of CO2 (otherwise known as the Social Cost of Carbon, or SCC) developed by a 

3

 A quad is equal to 1015 British thermal units (Btu). 4 A metric ton is equivalent to 1.1 short tons. Results for NOX and Hg are presented in short tons. 3 DOE calculated emissions reductions relative to the Annual Energy Outlook 2013 (AEO 2013) Reference 

case, which generally represents current legislation and environmental regulations for which implementing 

regulations were available as of December 31, 2012.

9

 
recent Federal interagency process. 5

 The derivation of the SCC values is discussed in 

section IV.L. Using discount rates appropriate for each set of SCC values, DOE estimates 

that the net present monetary value of the CO2 emissions reductions is between 1,134 

million to 16,799 million.. DOE also estimates that the net present monetary value of the 

NOX emissions reductions is $53.1 million at a 7-percent discount rate, and $110.8 

million at a 3-percent discount rate.6

Table I.3 summarizes the national economic costs and benefits expected to result 

from today’s standards for residential furnace fans.

5 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 

12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; 

revised November 2013) (Available at:

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbonfor-regulator-impact-analysis.pdf). 6

DOE is investigating valuation of avoided Hg and SO2 emissions.

10

 
Table I.3 Summary of National Economic Benefits and Costs of Residential Furnace Fans 

Energy Conservation Standards*

Category

Present 

Value

million

2013 $

Discount Rate

Benefits

Consumer Operating Cost Savings 13,409 7%

34,999 3%

CO2 Reduction Monetized Value ($12.0/t case)** 1,134 5%

CO2 Reduction Monetized Value ($40.5/t case)** 5,432 3%

CO2 Reduction Monetized Value ($62.4/t case)** 8,694 2.5%

CO2 Reduction Monetized Value ($119/t case)** 16,799 3%

NOX Reduction Monetized Value (at $2,684/ton)**

53 7%

111 3%

Total Benefits† 18,894 7%

40,542 3%

Costs

Consumer Incremental Installed Costs 3,385 7%

6,189 3%

Net Benefits

Including CO2 and NOX† Reduction Monetized 

Value

15,509 7%

34,353 3%

* This table presents the costs and benefits associated with residential furnace fans shipped in 2019−2048. 

These results include benefits to consumers which accrue after 2048 from the products purchased in 

2019−2048. The results account for the incremental variable and fixed costs incurred by manufacturers due 

to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios 

of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 

3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC 

distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an 

escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC 

with 3-percent discount rate.

The benefits and costs of today’s standards, for products sold in 2019-2048, can 

also be expressed in terms of annualized values. The annualized monetary values are the 

sum of: (1) the annualized national economic value of the benefits from operating the 

product that meets the new or amended standard (consisting primarily of operating cost 

savings from using less energy, minus increases in equipment purchase and installation 

11
costs, which is another way of representing consumer NPV), and (2) the annualized 

monetary value of the benefits of emission reductions, including CO2 emission 

reductions.7

Although adding the value of consumer savings to the values of emission 

reductions provides a valuable perspective, two issues should be considered. First, the 

national operating cost savings are domestic U.S. consumer monetary savings that occur 

as a result of market transactions, whereas the value of CO2 reductions is based on a 

global value. Second, the assessments of operating cost savings and CO2 savings are 

performed with different methods that use different time frames for analysis. The national 

operating cost savings is measured for the lifetime of residential furnace fans shipped in 

2019–2048. The SCC values, on the other hand, reflect the present value of all future 

climate-related impacts resulting from the emission of one metric ton of carbon dioxide 

in each year. These impacts continue well beyond 2100.

Estimates of annualized benefits and costs of today’s standards are shown in 

Table I.4. The results under the primary estimate are as follows. Using a 7-percent 

discount rate for benefits and costs other than CO2 reduction (for which DOE used a 3-

7 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized 

values. First, DOE calculated a present value in 2014, the year used for discounting the NPV of total 

consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven 

percent for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used a range of 

discount rates, as shown in Table I.4. From the present value, DOE then calculated the fixed annual 

payment over a 30-year period (2019 through 2048) that yields the same present value. The fixed annual 

payment is the annualized value. Although DOE calculated annualized values, this does not imply that the 

time-series of cost and benefits from which the annualized values were determined is a steady stream of 

payments.

12

 
percent discount rate along with the SCC series that has a value of $40.5/t in 2015), the 

cost of the residential furnace fans standards in today’s final rule is $358 million per year 

in increased equipment costs, while the benefits are $1416 million per year in reduced 

equipment operating costs, $312 million in CO2 reductions, and $5.61 million in reduced 

NOX emissions. In this case, the net benefit amounts to $1,376 million per year. Using a 

3-percent discount rate for all benefits and costs and the SCC series that has a value of 

$40.5/t in 2015, the cost of the residential furnace fans standards in today’s rule is $355 

million per year in increased equipment costs, while the benefits are $2010 million per 

year in reduced operating costs, $312 million in CO2 reductions, and $6.36 million in 

reduced NOX emissions. In this case, the net benefit amounts to $1,973 million per year.

13
Table I.4 Annualized Benefits and Costs of Standards for Residential Furnace Fans

Discount 

Rate

Primary 

Estimate*

Low Net 

Benefits 

Estimate*

High Net 

Benefits 

Estimate*

million 2013$/year

Benefits

Consumer Operating Cost Savings

7% 1416 1167 1718

3% 2010 1626 2467

CO2 Reduction (at $12.0/t case)** 5% 90 77 108

CO2 Reduction (at $40.5/t case)** 3% 312 268 377

CO2 Reduction (at $62.4/t case)** 2.5% 459 393 555

CO2 Reduction (at $119/t case)** 3% 965 828 1166

NOX Reduction (at $2,684/ton)**

7% 5.61 4.80 6.82

3% 6.36 5.35 7.86

Total Benefits†

7% plus 

CO2 range 1,512 to 2,387 1,249 to 2,000 1,833 to 2,891

7% 1,734 1,439 2,102

3% plus 

CO2 range 2,106 to 2,981 1,708 to 2,459 2,583 to 3,641

3% 2,328 1,899 2,852

Costs

Consumer Incremental Product 

Costs

7% 358 314 410

3% 355 304 419

Net Benefits

Total†

7% plus 

CO2 range 1,154 to 2,029 935 to 1,685 1,423 to 2,481

7% 1,376 1,125 1,692

3% plus 

CO2 range 1,750 to 2,625 1,404 to 2,155 2,164 to 3,222

3% 1,973 1,595 2,433

* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 

2019 - 2048. These results include benefits to consumers which accrue after 2048 from the products 

purchased from 2019 - 2048. The results account for the incremental, variable, and fixed costs incurred by 

manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, 

Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the 

AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental 

product costs reflect a flat rate for projected product price trends in the Primary Estimate, a slightly 

increasing rate for projected product price trends in the Low Benefits Estimate, and a slightly declining rate 

for projected product price trends in the High Benefits Estimate. The methods used to derive projected 

price trends are explained in section IV.F.

14
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios 

of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 

3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC 

distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an 

escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average 

SCC with a 3% discount rate. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the 

operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added 

to the full range of CO2 values.

D. Conclusion

Based on the analyses culminating in this final rule, DOE found the benefits to the 

nation of the standards (energy savings, consumer LCC savings, positive NPV of 

consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC 

increases for some users of these products). DOE has concluded that the standards in 

today’s final rule represent the maximum improvement in energy efficiency that is 

technologically feasible and economically justified, and would result in significant 

conservation of energy.

II. Introduction 

The following section briefly discusses the statutory authority underlying today’s 

final rule, as well as some of the relevant historical background related to the 

establishment of standards for residential furnace fans.

A. Authority

Title III, Part B8 of the Energy Policy and Conservation Act of 1975 (EPCA or 

the Act), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy 

8

 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

15

 
Conservation Program for Consumer Products Other Than Automobiles, a program 

covering most major household appliances (collectively referred to as “covered 

products”)9

, which includes the types of residential furnace fans that are the subject of 

this rulemaking. (42 U.S.C. 6295(f)(4)(D))

Pursuant to EPCA, DOE’s energy conservation program for covered products 

consists of essentially of four parts: (1) testing; (2) labeling; (3) the establishment of 

Federal energy conservation standards; and (4) certification and enforcement procedures. 

The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE 

implements the remainder of the program. Subject to certain criteria and conditions, DOE 

is required by EPCA to consider and establish energy conservation standards for 

“electricity used for purposes of circulating air through duct work” (which DOE has 

referred to in shorthand as residential “furnace fans”). (42 U.S.C. 6295(f)(4)(D)) DOE is 

also required by EPCA to develop test procedures to measure the energy efficiency, 

energy use, or estimated annual operating cost of each covered product prior to the 

adoption of an energy conservation standard. (42 U.S.C. 6295(o)(A)(3) and (r))

Manufacturers of covered products must use the prescribed DOE test procedure as the 

basis for certifying to DOE that their products comply with the applicable energy 

conservation standards adopted under EPCA and when making representations to the 

public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 

6295(s)) Similarly, DOE must use these test procedures to determine whether the 

products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The 

9 All references to EPCA in this document refer to the statute as amended through the American Energy 

Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112-210 (Dec. 18, 2012).

16

 
DOE test procedures for residential furnace fans currently appear at title 10 of the Code 

of Federal Regulations (CFR) part 430, subpart B, appendix AA.

DOE must follow specific statutory criteria for prescribing new or amended 

standards for covered products, including furnace fans. As indicated above, any standard 

for a covered product must be designed to achieve the maximum improvement in energy 

efficiency that is technologically feasible and economically justified. (42 U.S.C. 

6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not 

result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE 

may not prescribe a standard: (1) for certain products, including residential furnace fans, 

if no test procedure has been established for the product, or (2) if DOE determines by rule 

that the standard is not technologically feasible or economically justified. (42 U.S.C. 

6295(o)(3)(A)-(B)) In deciding whether a standard is economically justified, DOE must 

determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 

6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the 

proposed standard, and by considering, to the greatest extent practicable, the following 

seven factors:

(1) The economic impact of the standard on manufacturers and consumers of the 

products subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the

covered products in the type (or class) compared to any increase in the price, initial 

17
charges, or maintenance expenses for the covered products that are likely to result from 

the standard; 

(3) The total projected amount of energy (or as applicable, water) savings likely to 

result directly from the standard;

(4) Any lessening of the utility or the performance of the covered products likely 

to result from 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 standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary of Energy (Secretary) considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII))

EPCA, as codified, also contains what is known as an “anti-backsliding” 

provision, which prevents the Secretary from prescribing any standard that either 

increases the maximum allowable energy use or decreases the minimum required energy 

efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not 

prescribe an amended or new standard if interested persons have established by a 

preponderance of the evidence that the standard is likely to result in the unavailability in 

the United States of any covered product type (or class) of performance characteristics 

(including reliability), features, sizes, capacities, and volumes that are substantially the 

same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

18
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is 

economically justified if the Secretary finds that the additional cost to the consumer of 

purchasing a product complying with an energy conservation standard level will be less 

than three times the value of the energy savings during the first year that the consumer 

will receive as a result of the standard, as calculated under the applicable test procedure. 

(See 42 U.S.C. 6295(o)(2)(B)(iii))

Additionally, under 42 U.S.C. 6295(q)(1), the statute specifies requirements when 

promulgating an energy conservation standard for a covered product that has two or more 

subcategories. DOE must specify a different standard level for a type of class of covered 

product that has the same function or intended use, if DOE determines that products 

within such group: (A) consume a different kind of energy from that consumed by other 

covered products within such type (or class); or (B) have a capacity or other 

performance-related feature which other products within such type (or class) do not have 

and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In 

determining whether a performance-related feature justifies a different standard for a 

group of products, DOE must consider such factors as the utility to the consumer of such 

a feature and other factors DOE deems appropriate. Id. Any rule prescribing such a 

standard must include an explanation of the basis on which such higher or lower level 

was established. (42 U.S.C. 6295(q)(2))

Federal energy conservation requirements generally supersede State laws or 

regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 

19
6297(a)–(c)) DOE may, however, grant waivers of Federal preemption for particular 

State laws or regulations, in accordance with the procedures and other provisions set forth 

under 42 U.S.C. 6297(d)).

Finally, pursuant to the amendments contained in the Energy Independence and 

Security Act of 2007 (EISA 2007), Pub. L. 110-140, any final rule for new or amended 

energy conservation standards promulgated after July 1, 2010, is required to address 

standby mode and off mode energy use. (42 U.S.C. 6295(gg) (3)) Specifically, when 

DOE adopts a standard for a covered product after that date, it must, if justified by the 

criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby 

mode and off mode energy use into a single standard, or, if that is not feasible, adopt a 

separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) 

The furnace fan energy rating metric does not account for the electrical energy 

consumption in standby mode and off mode, because energy consumption in those modes 

is being fully accounted for in the DOE energy conservation standards for residential 

furnaces and residential central air conditioners (CAC) and heat pumps (HP).

Manufacturers will be required to use the new metrics and methods adopted in those 

rulemakings for the purposes of certifying to DOE that their products comply with the 

applicable energy conservation standards adopted pursuant to EPCA and for making 

representations about the efficiency of those products. (42 U.S.C. 6293(c); 42 U.S.C. 

6295(s))

20
B. Background

1. Current Standards

Currently, no Federal energy conservation standards apply to residential furnace 

fans. 

2. History of Standards Rulemaking for Residential Furnace Fans

Pursuant to 42 U.S.C. 6295(f)(4)(D), DOE must consider and prescribe new 

energy conservation standards or energy use standards for electricity used for purposes of 

circulating air through duct work. DOE has interpreted this statutory language to allow 

regulation of the electricity use of any electrically-powered device applied to residential 

central heating, ventilation, and air-conditioning (HVAC) systems for the purpose of 

circulating air through duct work.

DOE initiated the current rulemaking by issuing an analytical Framework

Document, “Rulemaking Framework for Furnace Fans” (June 1, 2010). DOE then 

published the Notice of Public Meeting and Availability of the Framework Document for 

furnace fans in the Federal Register on June 3, 2010. 75 FR 31323. See 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. 

The Framework Document explained the issues, analyses, and process that DOE 

anticipated using to develop energy conservation standards for residential furnace fans. 

DOE held a public meeting on June 18, 2010 to solicit comments from interested parties 

regarding DOE’s analytical approach. DOE originally scheduled the comment period on 

the Framework Document to close on July 6, 2010, but due to the large number and broad 

21
scope of questions and issues raised, DOE subsequently published a notice in the Federal

Register reopening the comment period from July 15, 2010 until July 27, 2010, to allow 

additional time for interested parties to submit comments. 75 FR 41102 (July 15, 2010). 

As a concurrent effort to the residential furnace fan energy conservation standard

rulemaking, DOE also initiated a test procedure rulemaking for residential furnace fans. 

On May 15, 2012, DOE published a notice of proposed rulemaking (NOPR) for the test

procedure in the Federal Register. 77 FR 28674. In that NOPR, DOE proposed to 

establish methods to measure the performance of covered furnace fans and to obtain a 

value for the proposed metric, referred to as the “fan efficiency rating” (FER).

10 DOE 

held the test procedure NOPR public meeting on June 15, 2012, and the comment period 

closed on July 30, 2012. After receiving comments on the NOPR alleging significant 

manufacturer burden associated with the proposed test procedure, DOE determined that 

an alternative test method should be developed. DOE published in the Federal Register an

SNOPR on April 2, 2013, which contained its revised test procedure proposal and an 

explanation of the changes intended to reduce burden. 78 FR 19606. DOE proposed to 

adopt a modified version of the alternative test method recommended by the AirConditioning, Heating, and Refrigeration Institute (AHRI) and other furnace fan 

manufacturers to rate the electrical energy consumption of furnace fans. DOE concluded 

that the AHRI-proposed method provides a framework for accurate and repeatable 

determinations of FER that is comparable to the test method previously proposed by 

10 In the May 15, 2012 NOPR for the test procedure, DOE referred to FER as “fan efficiency rating.” 

However, in the April 2, 2013 test procedure SNOPR, DOE proposed to rename the metric as “fan energy 

rating,” thereby keeping the same abbreviation (FER).

22

 
DOE, but at a significantly reduced test burden. DOE published in the Federal Register a 

final rule on January 3, 2014, which contained the final test procedure for residential 

furnace fans. 79 FR 500.

To further develop the energy conservation standards for residential furnace fans, 

DOE gathered additional information and performed a preliminary technical analysis. 

This process culminated in publication in the Federal Register of a Notice of Public 

Meeting and the Availability of the Preliminary Technical Support Document (TSD) on 

July 10, 2012. 77 FR 40530. DOE published a NOPR in the Federal Register and made 

available an accompanying NOPR TSD on October 25, 2013. 78 FR 64068. In that 

document, DOE requested comment on the following matters discussed in the TSD: (1) 

additional FER values; (2) the methodology for accounting for the relationship between 

FER and airflow capacity; (3) the reasonableness of the values that DOE used to 

characterize the rebound effect with high-efficiency residential furnace fans; (4) DOE’s 

estimate of the base-case efficiency distribution of residential furnace fans in 2018; (5) 

the long-term market penetration of higher-efficiency residential furnace fans; (6) data 

regarding manufacturer product costs for furnace fan equipment and components; (7) the 

effect of standards on future furnace fan equipment shipments; (8) whether there are 

features or attributes of the more energy-efficient furnace fans that manufacturers would 

produce to meet the standards in the proposed rule that might affect how they would be 

used by consumers; (9) data that would refine the analytical timeline; (10) input on 

average equipment lifetimes; (11) the new SCC values used to determine the social 

benefits of CO2 emissions reductions over the rulemaking analysis period; and (12) input 

23
on the cumulative regulatory burden. Id. DOE also invited written comments on these 

subjects, as well as any other relevant issues. A PDF copy of the NOPR TSD is available 

at http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0068.

The NOPR TSD provided an overview of the activities DOE undertook in 

developing proposed energy conservation standards for residential furnace fans, and 

discussed the comments DOE received in response to the Preliminary Analysis. It also 

described the analytical methodology that DOE used and each analysis DOE had 

performed up to that point. These analyses were as follows:

• A market and technology assessment addressed the scope of this rulemaking, 

identified the potential product classes of residential furnace fans, characterized 

the markets for these products, and reviewed techniques and approaches for 

improving their efficiency;

• A screening analysis reviewed technology options to improve the efficiency of 

furnace fans, and weighed these options against DOE’s four prescribed screening 

criteria;

• An engineering analysis developed relationships that show the manufacturer’s 

cost of achieving increased efficiency;

• A markups analysis developed distribution channel markups that relate the 

manufacturer production cost (MPC) to the cost to the consumer;

• An energy use analysis estimated the annual energy use of furnace fans at various 

potential standard levels;

24
• A life-cycle cost (LCC) analysis calculated, at the consumer level, the discounted 

savings in operating costs throughout the estimated average life of the product, 

compared to any increase in installed costs likely to result directly from the 

adoption of a given standard;

• A payback period (PBP) analysis estimated the amount of time it would take 

consumers to recover the higher expense of purchasing more-energy-efficient 

products through lower operating costs;

• A shipments analysis estimated shipments of residential furnace fans over the 

time period examined in the analysis (30 years), which were used in performing 

the national impact analysis;

• A national impact analysis assessed the aggregate impacts at the national level of 

potential energy conservation standards for residential furnace fans, as measured 

by the net present value of total consumer economic impacts and national energy 

savings;

• A manufacturer impact analysis estimated the financial impact of new energy 

conservation standards on manufacturers and calculated impacts on competition, 

employment, and manufacturing capacity;

• A consumer subgroup analysis evaluated variations in customer characteristics 

that might cause a standard to affect particular consumer sub-populations (such as 

low-income households) differently than the overall population;

• An emissions analysis assessed the effects of the considered standards on 

emissions of carbon dioxide (CO2), sulfur dioxide (SO2) nitrogen oxides (NOX), 

mercury (Hg), nitrous oxide (N20), and methane (CH4);

25
• An emissions monetization estimated the economic value of reductions in CO2

and NOX emissions from the considered standards;

• A utility impact analysis estimated selected effects of the considered standards on 

electric utilities;

• An employment impact analysis assessed the impacts of the considered standards 

on national employment; and

• A regulatory impact analysis (RIA) evaluated alternatives to amended energy 

conservation standards in order to assess whether such alternatives could achieve 

substantially the same regulatory goal at a lower cost.

The NOPR public meeting took place on December 3, 2013. At this meeting, 

DOE presented the methodologies and results of the analyses set forth in the NOPR TSD. 

The numerous comments received since publication of the October 2013 NOPR, 

including those received at the NOPR public meeting, have contributed to DOE’s 

resolution of the issues raised by interested parties. 

The submitted comments include a comment from the American Council for an 

Energy-Efficiency Economy (ACEEE); a joint comment from the American Fuel and 

Petrochemical Manufacturers (AFPM), the U.S. Chamber of Commerce (the Chamber), 

the Council of Industrial Boiler Owners (CIBO), the American Forest and Paper 

Association (AF&PA), and the American Petroleum Institute (API); a comment from the 

American Gas Association (AGA); a comment from the Air-Conditioning, Heating, and 

26
Refrigeration Institute (AHRI); a comment from the American Public Gas Association 

(APGA); a joint comment from the Appliance Standards Awareness Project (ASAP), 

Alliance to Save Energy (ASE), National Consumer Law Center (NCLC) and the Natural 

Resources Defense Council (NRDC); a second joint comment from California InvestorOwned Utilities (CA IOUs) including Pacific Gas and Electric Company (PG&E), 

Southern California Edison (SCE), Southern California Gas Company (SCGC), and San 

Diego Gas and Electric (SDGE); a comment from the Cato Institute; a comment from 

China WTO (WTO); a comment from Earthjustice; a comment from Edison Electric 

Institute (EEI); a comment from the George Washington University Regulatory Studies 

Center; a comment from Goodman Global, Inc. (Goodman); a comment from Heating, 

Air-Conditioning and Refrigeration Distributers International (HARDI); a comment from 

Johnson Controls; a comment from Laclede Gas Company (Laclede); a comment from a 

comment from Lennox International, Inc. (Lennox); a comment from the Mercatus 

Center at George Mason University; a comment from Morrison Products, Inc.

(Morrison); a comment from Mortex Product, Inc. (Mortex); a comment from the 

National Association of Manufacturers (NAM); a joint comment from the Northwest 

Energy Efficiency Alliance (NEEA) and the Northwest Power and Conservation Council 

(NPCC); a comment from the Northeast Energy Efficiency Partnerships (NEEP); a 

comment from Rheem Manufacturing Company (Rheem); a comment from Southern 

Company; a comment from Ingersoll Rand; and a comment from Unico, Incorporated. 

Comments made during the public meeting by those not already listed include Nidec 

Motor Corporation (Nidec) and the motor manufacturer Regal Beloit. This final rule

summarizes and responds to the issues raised in these comments. A parenthetical 

27
reference at the end of a quotation or paraphrase provides the location of the item in the 

public record.

III. General Discussion

A. Test Procedures

DOE published the furnace fan test procedure final rule in the Federal Register on 

January 3, 2014. 79 FR 499. DOE’s test procedure for furnace fans (hereinafter referred 

to as “the test procedure”) is codified in appendix AA of subpart B of part 430 of the 

code of federal regulations (CFR).The test procedure is applicable to circulation fans 

used in weatherized and non-weatherized gas furnaces, oil furnaces, electric furnaces, and 

modular blowers. The test procedure is not applicable to any non-ducted products, such 

as whole-house ventilation systems without ductwork, central air-conditioning (CAC) 

condensing unit fans, room fans, and furnace draft inducer fans.

DOE aligned the test procedure with the DOE test procedure for furnaces by 

incorporating by reference specific provisions from an industry standard that is also 

incorporated by reference in the DOE test procedure for furnaces. DOE’s test procedure 

for furnaces is codified in appendix N of subpart B of part 430 of the CFR. The DOE 

furnace test procedure incorporates by reference American National Standards Institute 

(ANSI) / American Society of Heating, Refrigerating and Air Conditioning Engineers 

(ASHRAE) 103-1993, Method of Testing for Annual Fuel Utilization Efficiency of 

Residential Central Furnaces and Boilers (ASHRAE 103-1993). The DOE furnace fan test 

procedure incorporates by reference the definitions, test setup and equipment, and 

28
procedures for measuring steady-state combustion efficiency provisions of the 2007 

version of ASHRAE 103 (ASHRAE 103-2007). In addition to these provisions, the test 

procedure includes provisions for apparatuses and procedures for measuring temperature 

rise, external static pressure, and furnace fan electrical input power. The test procedure 

also incorporates by reference provisions for measuring temperature and external static 

pressure from ANSI/ASHRAE 37-2009, Methods of Testing for Rating Electrically 

Driven Unitary Air-Conditioning and Heat Pump Equipment (ASHRAE 37-2009). There 

are no differences between the 2005 version (which is already incorporated by reference 

in the CFR) and the 2009 version of the ASHRAE 37 provisions incorporated by 

reference for the furnace fan test procedure. The test procedure also establishes

calculations to derive the rating metric, fan energy rating (FER), for each furnace fan 

basic model based on the results of testing per the test method for furnace fans codified in 

appendix AA of subpart B of part 430 of the CFR.

FER is the estimated annual electrical energy consumption of a furnace fan 

normalized by: (a) the estimated total number of annual fan operating hours (1,870); and 

(b) the airflow in the maximum airflow-control setting. For the purposes of the furnace 

fan test procedure, the estimated annual electrical energy consumption is the sum of the 

furnace fan electrical input power (in Watts), measured separately for multiple airflowcontrol settings at different external static pressures (ESPs), multiplied by national 

average operating hours associated with each setting. These ESPs are determined by a 

reference system, based on operation at maximum airflow that represents national 

average ductwork system characteristics. Table III.1 includes the reference system ESP 

29
values by installation type that are specified by the test procedure. In previous rulemaking 

documents for the furnace fan test procedure and energy conservation standard 

rulemaking, DOE used the term “manufactured home furnace” to be synonymous with 

“mobile home furnace,” as defined in the Code of Federal Regulation (CFR). 10 CFR 

430.2. DOE will use the term “mobile home” hereinafter to be consistent with the CFR

definition for “mobile home furnace.” All provisions and statements regarding mobile 

homes and mobile home furnaces are applicable to manufactured homes and 

manufactured home furnaces.

Table III.1: Required Reference System Criteria (i.e., ESP at Maximum Airflow) by 

Furnace Fan Installation Type

Installation Type

ESP at Maximum Airflow

(in. wc)

Units with an internal evaporator coil 0.50

Units designed to be paired with an evaporator coil 0.65

Units designed to be installed in a mobile home11 0.30

The test procedure requires measurements for the airflow-control settings that 

correspond to fan operation while performing the cooling function (which DOE finds is 

predominantly associated with the maximum airflow-control setting), heating function, 

and constant-circulation function. Table III.2 describes the required airflow-control 

settings by product type. 

11 Mobile home external static pressure is much lower because there is no return air ductwork in mobile

homes. Also, the United States Department of Housing and Urban Development (HUD) requirements for 

mobile homes stipulate that the ductwork for cooling should be designed for 0.3 in. water column (wc). 24 

CFR 3280.715

30

 
Table III.2: Airflow-Control Settings at which Measurements are Required for each

Product Type

Product Type

Airflow-control Setting 

1

Airflow-control 

Setting 2

Airflow-control 

Setting 3

Single-stage 

Heating

Default constantcirculation Default heat Absolute maximum*

Multi-stage or 

Modulating Heating

Default constantcirculation Default low heat Absolute maximum

*For the purposes of the test procedure, “absolute maximum” airflow-control setting refers to the airflowcontrol setting that achieves the maximum attainable airflow at the operating conditions specified by the 

test procedure.

As shown in Table III.2, for products with single-stage heating, the three airflow-control 

settings to be tested are: the default constant-circulation setting; the default heating 

setting; and the absolute maximum setting. For products with multi-stage heating or 

modulating heating, the airflow-control settings to be tested are: the default constantcirculation setting; the default low heating setting; and the absolute maximum setting. 

The absolute lowest airflow-control setting is used to represent constant circulation if a 

default constant-circulation setting is not specified. DOE defines “default airflow-control 

settings” as the airflow-control settings for installed use specified by the manufacturer in 

the product literature shipped with the product in which the furnace fan is integrated. See

Section 2.2 of Appendix AA to Subpart B of 10 CFR part 430. Manufacturers typically 

provide detailed instructions for setting the default heating airflow-control setting to 

ensure that the product in which the furnace fan is integrated operates safely. In instances 

where a manufacturer specifies multiple airflow-control settings for a given function to 

account for varying installation scenarios, the highest airflow-control setting specified for 

the given function shall be used for the DOE test procedure. High heat and reduced heat 

shall be considered different functions for multi-stage heating units. Manufacturer 

installation guides also provide detailed instructions regarding compatible thermostats 

and how to wire them to achieve the specified default settings. 

31
The Watt measurements for calculating FER are weighted using designated 

annual operating hours for each function (i.e., cooling, heating, and constant circulation) 

that represent national average operation. Table III.3 shows the estimated national 

average operating hours for each function.

Table III.3: Estimated National Average Operating Hour Values for Calculating 

FER

Operating Mode Variable

Single-stage 

(hours)

Multi-stage or 

Modulating (hours)

Heating HH 830 830/HCR

Cooling CH 640 640

Constant Circulation CCH 400 400

For multi-stage heating or modulating heating products, the specified operating 

hours for the heating mode are divided by the heating capacity ratio (HCR) to account for 

variation in time spent in this mode associated with turndown of heating output. The 

HCR is the ratio of the measured reduced heat input rate to the measured maximum heat 

input rate. 

The FER equation is:

FER = (CH × EMax) + (HH × EHeat) + (CCH × ECirc)

(CH + 830 + CCH) × QMax

× 1000

Where:

CH= annual furnace fan cooling operating hours;

32
EMax= furnace fan electrical consumption at maximum airflow-control setting operating 

point;

HH= annual furnace fan heating operating hours;

EHeat= furnace fan electrical consumption at the default heating airflow-control setting 

operating point for units with single-stage heating or the default low-heating airflow 

control setting operating point for units with multi-stage heating;

CHH= annual furnace fan constant circulation hours;

ECirc= furnace fan electrical consumption at the default constant-circulation airflowcontrol setting operating point (or minimum airflow-control setting operating point 

if a default constant-circulation airflow-control setting is not specified); 

QMax= airflow at maximum airflow-control setting operating point; and

1000= constant to put metric in terms of watts/1000cfm, which is consistent with industry 

practice.

DOE received comments from interested parties regarding the furnace fan test 

procedure in response to the furnace fan energy conservation standard (ECS) NOPR. 

Interested parties’ comments on the test procedure are summarized below. DOE 

addressed many of these issues in the test procedure final rule, published in the Federal 

Register on January 3, 2014. (79 FR 514). The publication of the test procedure final rule 

occurred after the standards NOPR public meeting, held on December 3, 2013, but before 

the close of the standards NOPR comment period on January 23, 2014. For comments 

that were addressed in the test procedure final rule, a reference to the applicable 

discussion contained in the test procedure final rule document is provided. DOE’s 

detailed response is provided in this document for comments that were not addressed in 

33
the test procedure final rule document.

AHRI, Goodman, Morrison, Rheem, Southern Company, Johnson Controls, and 

Ingersoll Rand commented that DOE’s schedule for finalizing the test procedure did not 

provide interested parties with sufficient time to evaluate product performance in 

accordance with the final test procedure in order to develop and submit substantive 

comments on the standards proposed in the NOPR. (AHRI, No. 98 at p. 2, 3; Goodman, 

No. 102 at pp. 7, 8; Morrison, No. 108 at p. 3; Rheem, No. 83 at p. 1; Southern Company, 

No. 85 at p. 2; Johnson Controls, No. 95 at p. 3; Ingersoll Rand, No. 43 at p. 33) Ingersoll 

Rand added that the comments they have submitted to date are based on the proposed test 

procedure, not the final test procedure. (Ingersoll Rand, No. 107 at pp. 2, 10) AGA and 

Allied Air agree and recommend that DOE delay promulgation of standards to give 

interested parties and DOE more time to conduct analyses using the final test procedure. 

(AGA, No. 110 at pp. 3, 4; Allied Air, Public Meeting Transcript, No. 43 at p. 48) 

Goodman recommended a delay of three months for this type of product and testing. 

(Goodman, No. 102 at p. 3) Prior to publication of the test procedure final rule, EEI 

expressed support for DOE issuing a supplemental notice of proposed rulemaking 

(SNOPR) for the standard if changes were made to the test procedure final rule that had 

significant impacts on DOE’s analyses results. (EEI, No. 87 at p. 3) APGA and Southern 

Company also recommended that DOE publish a standards SNOPR. (APGA, No. 90 at p. 

2; Southern Company, No. 43 at p. 37)

DOE recognizes that interested parties need sufficient time to collect and evaluate 

relevant fan performance data in order to submit meaningful comments on the proposed 

34
energy conservation standard for furnace fans. Thus, on December 24, 2013, DOE posted 

a pre-publication test procedure final rule notice to regulations.gov and issued a 30-day 

extension of the standards NOPR comment period to provide interested parties with time 

to evaluate DOE’s proposed standards using the final test procedure. 

AHRI, Johnson Controls, and Morrison stated that, even with the comment period 

extension, the 20 days between the publication of the test procedure final rule on January 

3, 2014 and the close of the standards NOPR comment period on January 23, 2014 did 

not provide interested parties with sufficient time to assess the energy conservation 

standards NOPR based on the provisions within the final test procedure. AHRI added that 

DOE was obligated to issue the NOPR on the proposed energy conservation standards 

after the issuance of the final rule on the furnace fan test procedures per Section 7(c) of 

Appendix A to Subpart C of 10 CFR part 430. (AHRI, No. 98 at pp. 2, 3; Johnson 

Controls, No. 95 at p. 3; Morrison, No. 108 at p. 3) Mortex stated that they were not able 

to test any of their products according to the final test procedure by the time the energy 

conservation standard NOPR comment period closed. (Mortex, No. 104 at p. 2) Ingersoll 

Rand commented that DOE’s standards NOPR analyses are invalid because they were not 

based on the test procedure final rule. (Ingersoll Rand, No. 107 at p. 2, 10). NEEA and 

NPCC provided there is a need for product testing using the final test procedure, and a reassessment of the derivation of the proposed FER equations and standard levels. NEEA 

and NPCC added that they do not support a decision on standards before there is 

sufficient data with which to verify that the proposed FER values will not disqualify from 

compliance the majority of the very products upon which they are founded, and for which 

DOE’s economic analyses are valid. (NEEA and NPCC, No. 96 at p. 2)

35
DOE disagrees with AHRI and Morrison that the extended comment period was 

insufficient. DOE issued a test procedure SNOPR for furnace fans on April 2, 2013. 78 

FR 19606. DOE did not make changes to the test procedure between the SNOPR and 

final rule that would significantly alter FER values for most products. Interested parties 

that conducted testing in accordance with the test procedure SNOPR proposal should not 

have to retest most furnace models to derive an FER value that is consistent with the final 

test procedure. For most furnaces, the FER value should not change or the FER value can 

be recalculated per the final test procedure requirements using the raw data measured 

according to the SNOPR test method. Therefore, notwithstanding the 20 days between 

the test procedure final rule and the close of the standards NOPR comment period, 

interested parties still had over nine months between the publication of the test procedure 

SNOPR and the close of the standards NOPR comment period to collect and evaluate fan 

performance data that is relevant to DOE’s proposed standards. DOE received data that 

could be used to derive FER values that meet the final test procedure requirements from 

multiple manufacturers during this period. 

DOE agrees with NEEA and NPCC that its proposed standards should be assessed 

based on FER values that are reflective of performance as measured by the final test 

procedure. For the reasons stated above, DOE was able to use much of the FER data it 

has collected in previous phases of this rulemaking to generate FER values that meet the 

requirements of the final test procedure. DOE also conducted testing prior to and during 

the development of the test procedure final rule that generated a broad set of results to 

enable DOE to derive FER values that are consistent with the requirements of the final 

test procedure. In addition, DOE continued to collect and use data from publicly36
available product literature. DOE relied on the mathematical methods outlined in the test 

procedure NOPR for using this data to model fan performance and estimate FER values 

that meet the final test procedure requirements. 77 FR 28690 (May 15, 2012). DOE 

recognizes that this method is not identical to the final test procedure method. However, 

DOE believes the FER values generated in this manner are still relevant because the final 

test method is similar to the test method proposed by AHRI (with support from 

Goodman, Ingersoll Rand, Lennox, and Morrison) in response to the test procedure 

NOPR, which they argued would result in accurate and repeatable FER values that are 

comparable to the FER values resulting from the methods proposed in the NOPR. (AHRI, 

No. 16 at p. 3; Goodman, No. 17 at p. 4; Ingersoll Rand, No. 14 at p. 1; Morrison, No. 21 

at p. 3.) For these reasons, Ingersoll Rand’s comment stating that DOE’s standards NOPR 

analyses are invalid because they are not based on the test procedure final rule is 

inaccurate. The standards proposed in the NOPR and those established by this final rule 

are based on relevant FER data.

Goodman stated that DOE’s modifications to the test procedure since the April 

2013 test procedure SNOPR will have a significant impact on FER. Goodman referred 

specifically to the modification in the test procedure that specifies that airflow be 

calculated based on firing the product in the absolute maximum airflow-control setting if 

that setting is a default heating setting. According to Goodman, most furnaces allow 

heating operation at the highest airflow setting. Thus, instead of heating airflow setting 

being a mid‐range temperature rise as typically set by factory default, it will now be a 

low‐range temperature rise at a much higher and less efficient setting for FER calculation 

(and a setting that will not be typical of a field installation). (Goodman, No. 102 at p. 7) 

37
Ingersoll Rand echoed Goodman’s statement, adding that the modification would also

result in higher watts in heating mode and a higher FER value than would have resulted 

using the procedure in the SNOPR for a majority of furnaces. (Ingersoll Rand, No. 107 at 

pp. 2, 10)

DOE disagrees with Goodman’s and Ingersoll Rand’s comments. DOE expects 

that both interested parties have misinterpreted the test procedure requirement. DOE 

recognizes that product controls can be altered from factory settings to allow heating in 

the absolute maximum airflow-control setting. The test procedure does not allow for this 

practice. The test procedure only requires testing in factory-set configurations. Specific to 

the modification in question, the test procedure requires heating in the absolute maximum 

airflow-control setting only if that setting is a default heat setting. See Section 8.6.1.2 of 

Appendix AA to Subpart B of 10 CFR part 430. By definition, as outlined in the test 

procedure, a default heating airflow-control setting is factory-set and specified for 

installed-use as a heat setting by the manufacturer. See Section 2.2 of Appendix AA to 

Subpart B of 10 CFR part 430. Consequently, the resulting temperature rise is also 

factory-set by the manufacturer, and the measured performance will be representative of 

field use. In addition, the test procedure SNOPR and final rule requirements for EHeat (the 

watts in heating mode input for FER) are consistent and the measured values for this 

input should not change. The impacts of the modification in question are explained in 

more detail in the test procedure final rule. 79 FR 514 (January 3, 2014).

AHRI commented that in the final test procedure that was published on January 3, 

2014, DOE introduced a change within the test procedure that increases the measured 

38
FER. AHRI stated that DOE decided not to implement AHRI’s recommendation that a 

furnace be fired at the maximum airflow rate to calculate the maximum airflow. Instead, 

according to AHRI, the final rule specifies that the maximum airflow is determined by 

applying the airflow equation for a heating setting and adjusting to the maximum setting 

based on pressure measurements. AHRI claims that this approach results in an increase of 

the measured FER and was not accounted within the analyses associated with the energy 

conservation standards NOPR TSD that was issued on October 25, 2013. AHRI 

recommends that DOE reevaluate the analyses within the entire TSD due to this single 

change. (AHRI, No. 98 at p. 3, 4)

DOE introduced the change referred to by AHRI in the April 2, 2013 test 

procedure SNOPR. A detailed discussion of DOE’s reasoning for that change are 

provided in that notice. 78 FR 19616. DOE made additional changes to this provision in 

the test procedure final rule by requiring that the product under test be fired at the 

maximum airflow rate to calculate the maximum airflow for furnaces for which the 

maximum airflow-control setting is a default heat setting (consistent with AHRI’s 

recommendation). See Section 8.6.1.2 of Appendix AA to Subpart B of 10 CFR part 430.

DOE disagrees with AHRI that the change in question will result in higher FER values. 

DOE fan performance tests, including tests following the final test procedure, show that 

the maximum airflow calculated when firing the product under test in the maximum 

airflow control setting is typically lower than when applying the airflow equation for a 

heating setting and adjusting to the maximum setting based on pressure measurements. 

Consequently, FER values would be lower if they were derived using airflow values 

calculated when firing in the maximum airflow-control setting. AHRI did not provide 

39
data to the contrary. As stated above, DOE’s proposed standards and the standards 

established by this document are valid because they are based on FER values that are 

consistent with the final test procedure (to include FER values employing the airflow 

adjustment method in question). 

AHRI, Morrison, and Ingersoll Rand commented that they are opposed to DOE 

eliminating the HCR from the denominator of the FER equation. According to AHRI, 

DOE did not provide a sound technical justification for such a modification and 

unnecessarily penalized the FER values associated with multi-stage and modulating units.

(AHRI, No. 98 at p. 2, 3; Morrison, No. 108 at p. 3, 4; Ingersoll Rand, No. 107 at p. 2, 

10)

As discussed in the test procedure final rule, DOE found that including HCR in 

the denominator of the FER equation resulted in percent reductions in estimated annual 

energy consumption, as calculated for FER, of 15 percent. 79 FR 515 (January 3, 2014).

Further, DOE found percent reductions in FER of approximately 30 percent when 

comparing single-stage products using constant-torque brushless permanent magnet 

(BPM) motors to multi-stage products using constant-torque BPM motors. DOE 

eliminated HCR from the FER equation because, as a result, percent reductions in FER 

dropped to 15 percent on average, which is consistent with percent reduction in estimated 

annual energy consumption. 79 FR 515 (January 3, 2014). DOE did not receive any new 

FER values for products that use a constant-torque BPM motor and multi-stage heating. 

DOE was also unable to find data in the public domain with which to calculate new FER 

values to represent such products. In the absence of new data, DOE used the raw airflow, 

40
ESP, and fan electrical energy consumption data for single-stage furnaces with constanttorque BPM motors to generate FER values reflecting the addition of theoretical multistage heating capabilities. Single-stage furnaces using constant-torque BPM motors 

typically have additional airflow-control settings that provide less airflow than the 

factory-set heating airflow-control setting. Theoretically, these airflow-control settings 

could be used for a low heat setting in a multi-stage heating configuration. DOE 

identified as many models as possible that meet this criterion and for which DOE has 

sufficient data to calculate theoretical FER values for a multi-stage configuration. For 

each model, DOE first calculated the temperature rise in the default heating setting based 

on the airflow, thermal efficiency and input heat rating in that setting. Next, DOE used a 

variation of the same relationship between these parameters to calculate the theoretical 

low input capacity that would achieve the same temperature rise for each available 

airflow-control setting below the heat setting. DOE then evaluated the HCR for each of 

the lower airflow-control settings based on the theoretical input capacity of the lower 

setting and the rated input capacity of the default heat setting. DOE selected the low 

airflow-control setting that produced an HCR between 0.4 and 0.9 that was closest to 0.7 

to represent the theoretical low heating setting. DOE chose these criteria based on 

investigation of typical HCR values observed in currently available products. Finally, 

DOE calculated estimated annual energy consumption and an FER value using the singlestage model’s data for the absolute maximum and constant circulation airflow-control 

settings and the data for the theoretical low heating setting for the heating airflow-control 

setting. DOE’s new data shows that multi-staging reduces estimated annual energy 

consumption by an average of 14 percent and FER by an average of 12 percent. These 

41
findings are consistent with DOE’s previous findings and support its decision to eliminate 

HCR from the denominator of the FER calculation.

Ingersoll Rand stated that the final test procedure reduces the estimated savings 

associated with BPM motors. Ingersoll Rand commented that BPM motors consume 

more power as static pressure increases than permanent-split capacitor (PSC) motors. 

(Ingersoll Rand, No. 107 at p. 2, 10)

DOE addressed this issue in the energy conservation standards NOPR. 78 FR 

64084 (October 25, 2013). While BPM motors consume more power as static pressure 

increases, they also provide more airflow. FER is normalized by airflow to account for 

this difference in behavior between BPM and PSC motors. In addition, the standards 

established in this document are a function of airflow. BPM motor-driven fan 

performance is evaluated relative to PSC motor-driven fans that provide the same amount 

of airflow at the same reference system static pressure as a result. Interested parties did 

not provide any evidence that these methods are inappropriate for evaluating relative fan 

performance.

China WTO commented that FER includes factors, such as HCR, to account for 

multi-stage heating but does not include analogous factors for multi-stage cooling. (China 

WTO, No. 92 at p. 1)

DOE considered accounting for fan performance during multi-stage cooling 

operation for the test procedure NOPR. 77 FR 28680. DOE did not include factors for 

42
multi-stage cooling in the final test procedure because the presence and capacity of lowstage cooling is dependent on the cooling system with which a product containing a 

furnace fan is paired. DOE found in its review of publicly-available product literature that 

detailed characteristics of the cooling system are not typically provided. Consequently, 

entities performing the DOE furnace fan test procedure cannot identify the airflowcontrol setting that would be designated for low-stage cooling operation. In addition, 

multi-stage heating is not necessarily associated with multi-stage cooling capability (e.g., 

multi-stage cooling equipment is much less common than multi-stage heating 

equipment).

China WTO stated that the final test procedure does not provide a method for 

calculating the maximum airflow when the maximum airflow-control setting is only 

designated for cooling. (China WTO, No. 92 at p.1)

The method for calculating the maximum airflow when the maximum airflowcontrol setting is only designated for cooling is provided in the final rule and in Section 9 

of appendix AA of subpart B of part 430 of the CFR. 79 FR 524 (January 3, 2014).

The California Investor Owned Utilities (CA IOU) commented that they observed 

a potential error in the calculation of airflow in the final test procedure. Specifically, CA 

IOU recommended that DOE include the humidity ratio in pounds water vapor per 

pounds dry air. CA IOU submits that this addition will increase the accuracy of the 

calculation of specific volume of test room air in cubic feet per pound of dry air to 

calculate airflow. (CA IOU, No. 106 at p. 4)

43
The equation for calculating airflow in the final test procedure already includes 

the humidity ratio in pounds water vapor per pounds dry air as codified in Section 9 of 

appendix AA of subpart B of part 430 of the CFR.

CA IOU recommended that in addition to reporting FER, which is the basis for 

the performance standard, DOE require manufacturers to report individual mode 

electrical energy consumption values (e.g., EHeat, EMax, and ECirc). According to CA IOU, 

reporting these values would greatly facilitate the development of more targeted energy 

efficiency incentive programs, and manufacturers already have to measure and perform 

these calculations for the composite FER. CA IOU recognizes that EMax could represent 

fan electrical energy consumption in either heating or cooling mode depending on the 

product. Nonetheless, CA IOU also recommends that DOE require manufacturers to 

report fan electrical energy consumption in cooling mode even if not included in FER 

because having it as an additional data point could be useful for the development of 

utility programs across the country. CA IOU stated that energy efficiency incentive 

programs typically require a rigorous level of review and justification for 

implementation. Gaps in performance data of commercially available equipment is one of 

the main limiting factors in program development, contributing to the lengthy and 

resource-intensive data collection and verification processes. In the case of this 

rulemaking, manufacturers will already be required to test their products in heating, 

cooling, and constant circulation modes. CA IOU believes that the minimal extra effort 

required by manufacturers to report these values would be outweighed by the opportunity 

for utilities and other public agencies to develop incentive programs using these 

performance metrics, which in turn would positively impact manufacturers of high 

44
performing products. For these reasons, CA IOU strongly urge DOE to require 

manufacturers to report tested and calculated metrics that feed into a composite metric for 

the standard. ASAP, ASE, NCLC, and NRDC, hereinafter referred to as ASAP, et al.,

agree. (ASAP, et al., No. 105 at p. 3)

At this time, DOE is declining to adopt reporting requirements for individual 

mode electrical consumption values as the CA IOU suggests. While DOE is open to 

considering additional reporting metrics in the future, DOE believes that establishing a 

Federal test procedure and metric (i.e., FER) will provide utility programs with a basis 

for establishing meaningful incentive programs as the CA IOUs desire. Further, DOE 

believes that reporting the aggregated electrical consumption (i.e., the FER metric) will 

provide market differentiation amongst currently- available models, thereby allowing the 

utility programs to set voluntary levels for incentive programs at meaningful levels to 

obtain energy savings. If data and analyses are provided, which show the disaggregated 

levels are necessary for the proper execution of utility incentive programs, DOE will 

consider modifying the certification requirements for furnace fans.

Unico pointed out that DOE presents the required minimum reference system ESP

values inconsistently across rulemaking documents. Unico noticed that in some 

documents DOE presents these values as a range for each installation type, and in other 

rulemaking documents DOE presents only the lower value within each range with an 

asterisk. (Unico, No. 93 at p. 6)

As explained in the test procedure final rule, DOE’s test experience confirms 

45
manufacturer concerns that specific ESP values are difficult to achieve and maintain 

when measuring airflow. The final test procedure specifies that products maintain an ESP 

level between the minimum reference system value and 0.05 in. wc. above that minimum 

value to allow for slight variations. 79 FR 508 (January 3, 2014). Consequently, DOE 

presents the minimum required ESP values as a range in Section 8.6.1.2 in appendix AA 

of subpart B of part 430 in the CFR or as the minimum value with an asterisk 

accompanied by the explanation above in other DOE documents.

AHRI commented that DOE should provide the option of employing an 

alternative efficiency determination method (AEDM) to determine FER. AHRI insists 

that an AEDM is critical for manufacturers to implement new requirements on a timely 

basis while minimizing burden. AHRI believes that the number of furnace fan basic 

models will be greater than the number of furnace basic models. According to AHRI, the 

pressure drop due to the gas heat exchanger will require that each furnace basic model 

also be considered as a furnace fan basic model. AHRI added that additional furnace fan 

basic models would be created in order to account for the type of installation. AHRI also 

pointed out that many furnace fan manufacturers also produce several other DOE 

regulated products. AHRI submits that rather than requiring manufacturers to spend 

valuable resources on conducting several tests, DOE should recognize that those 

resources could be better spent on innovating more efficient products. (AHRI, No. 98 at 

p. 13)

DOE provided a detailed discussion of this issue in the test procedure final rule. 

79 FR 513 (January 3, 2014). DOE currently does not allow the use of AEDMs for 

46
residential products, with the exception of central air conditioners and heat pumps due to 

the uniquely large number of combinations of split-system air conditioners and heat 

pumps that are rated. DOE recognizes that the number of furnace fan basic models may 

outnumber furnace basic models for the reasons AHRI lists. Even so, DOE expects the 

number of basic models of furnace fans to be significantly less than the number of basic 

models of residential central air conditioners and heat pumps (CAC and HP) for which 

alternative rating methods are currently allowed. DOE has not found the residential 

furnace fan market to be highly customized (i.e., containing many unique built-to-order 

designs) and expects that manufacturers will be able to group similar individual furnace 

fan types into basic models to reduce testing burden. DOE notes that it currently has over 

1 million CAC combinations certified in the Compliance Certification Management 

System (CCMS) compared to approximately 12,500 certified furnace basic models. 

Consequently, DOE does not agree with AHRI’s assertion that an alternative rating 

method needs to be considered at this time. Should AHRI or the industry provide 

additional data or substantiation for its requests demonstrating why testing furnace fans 

are unique, as compared to the majority of other residential products for which AEDMs 

are not allowed, then DOE may consider such requests in a separate rulemaking. 

B. Product Classes and Scope of Coverage

Although the title of 42 U.S.C 6295(f) refers to “furnaces and boilers,” DOE notes 

that 42 U.S.C. 6295(f)(4)(D) was written using notably broader language than the other 

provisions within the same section. Specifically, that statutory provision directs DOE to 

“consider and prescribe energy conservation standards or energy use standards for 

47
electricity used for purposes of circulating air through duct work.” Such language could 

be interpreted as encompassing electrically-powered devices used in any residential 

HVAC product to circulate air through duct work, not just furnaces, and DOE has 

received numerous comments on both sides of this issue. However, in this rulemaking, 

DOE is only covering those circulation fans that are used in furnaces and modular 

blowers. DOE is using the term “modular blower” to refer to HVAC products powered 

by single-phase electricity that comprise an encased circulation blower that is intended to 

be the principal air-circulation source for the living space of a residence. A modular 

blower is not contained within the same cabinet as a residential furnace, CAC, or heat 

pump. Instead, modular blowers are designed to be paired with separate residential 

HVAC products that provide heating and cooling, typically a separate CAC/HP coil-only 

unit. DOE finds that modular blowers and electric furnaces are very similar in design. In 

many cases, the only difference between a modular blower and electric furnace is the 

presence of an electric resistance heating kit. DOE is aware that some modular blower 

manufacturers offer electric resistance heating kits to be installed in their modular blower 

models so that the modular blowers can be converted to stand-alone electric furnaces. In 

addition, FER values for modular blowers can be easily calculated using the final test 

procedure. DOE addresses the furnace fans used in modular blowers in this rulemaking 

for these reasons. As a result of the extent of the current rulemaking, DOE is not 

addressing public comments that pertain to fans in other types of HVAC products.

When evaluating and establishing energy conservation standards, DOE divides 

covered products into product classes by the type of energy used or by capacity or other 

48
performance-related features that justify a different standard. In making a determination 

whether a performance-related feature justifies a different standard, DOE must consider 

such factors as the utility to the consumer of the feature and other factors DOE 

determines are appropriate. (42 U.S.C. 6295(q)) For this rulemaking, DOE differentiates

between product classes based on internal structure and application-specific design 

differences that impact furnace fan energy consumption. Details regarding how internal 

structure and application-specific design differences that impact furnace fan energy 

consumption are included in chapter 3 of the final rule technical support document 

(TSD). DOE includes the following product classes for this rulemaking.

• Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)

• Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)

• Weatherized Non-Condensing Gas Furnace Fan (WG-NC)

• Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)

• Non-Weatherized Electric Furnace / Modular Blower Fan 

(NWEF/NWMB)

• Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MHNWG-NC)

• Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MHNWG-C)

• Mobile Home Electric Furnace / Modular Blower Fan (MH-EF/MB)

• Mobile Home Weatherized Gas Furnace Fan (MH-WG)

• Mobile Home Non-Weatherized Oil Furnace Fan (MH-NWO)

49
Each product class title includes descriptors that indicate the application-specific 

design and internal structure of its included products. “Weatherized” and “nonweatherized” are descriptors that indicate whether the HVAC product is installed 

outdoors or indoors, respectively. Weatherized products also include an internal 

evaporator coil, while non-weatherized products are not shipped with an evaporator coil 

but may be designed to be paired with one. “Condensing” refers to the presence of a 

secondary, condensing heat exchanger in addition to the primary combustion heat 

exchanger in certain furnaces. The presence of an evaporator coil or secondary heat 

exchanger significantly impacts the internal structure of an HVAC product, and in turn, 

the energy performance of the furnace fan integrated in that HVAC product. “Mobile

home” products meet certain design requirements that allow them to be installed in 

mobile homes (e.g., a more compact cabinet size). Descriptors for “gas,” “oil,” or 

“electric” indicate the type of fuel that the HVAC product uses to produce heat, which 

determines the type and geometry of the primary heat exchanger used in the HVAC 

product. 

C. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening 

analysis based on information gathered on all current technology options and prototype 

designs that could improve the efficiency of the products or equipment that are the 

subject of the rulemaking. As the first step in such an analysis, DOE develops a list of 

50
technology options for consideration in consultation with manufacturers, design 

engineers, and other interested parties. DOE then determines which of those means for 

improving efficiency are technologically feasible. DOE considers technologies 

incorporated in commercially-available products or in working prototypes to be 

technologically feasible. 10 CFR part 430, subpart C, appendix A, Section 4(a)(4)(i).

After DOE has determined that particular technology options are technologically 

feasible, it further evaluates each technology option in light of the following additional 

screening criteria: (1) practicability to manufacture, install, and service; (2) adverse 

impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 

CFR part 430, subpart C, appendix A, Section 4(a)(4)(ii)-(iv). Additionally, it is DOE 

policy not to include in its analysis any proprietary technology that is a unique pathway 

to achieving a certain efficiency level. Section IV.B of this document discusses the 

results of the screening analysis for residential furnace fans, particularly the designs DOE 

considered, those it screened out, and those that are the basis for the tcrial standard levels 

(TSLs) in this rulemaking. For further details on the screening analysis for this 

rulemaking, see chapter 4 of the final rule TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt a new standard for a type or class of covered 

product, it must determine the maximum improvement in energy efficiency or maximum 

reduction in energy use that is technologically feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum 

51
technologically feasible (“max-tech”) improvements in energy efficiency for residential 

furnace fans, using the design parameters for the most-efficient products available on the 

market or in working prototypes. The max-tech levels that DOE determined for this 

rulemaking are described in section IV.C of this final rule and in chapter 5 of the final 

rule TSD.

D. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the products that are the 

subjects of this rulemaking purchased during a 30-year period that begins in the year of 

compliance with amended standards (2019–2048).12 The savings are measured over the 

entire lifetime of products purchased in the 30-year period.13 DOE used the NIA model to 

estimate the NES for products purchased over the above period. The model forecasts total 

energy use over the analysis period for each representative product class at efficiency 

levels set by each of the considered TSLs. DOE then compares the aggregated energy use 

at each TSL to the base-case energy use to obtain the NES. The NIA model is described 

in section IV.H of this document and in chapter 10 of the final rule TSD.

DOE used its NIA spreadsheet model to estimate energy savings from amended 

standards for the products that are the subject of this rulemaking. The NIA spreadsheet 

12 DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period. 13 In the past, DOE presented energy savings results for only the 30-year period that begins in the year of 

compliance. In the calculation of economic impacts, however, DOE considered operating cost savings 

measured over the entire lifetime of products purchased during the 30-year period. DOE has chosen to 

modify its presentation of national energy savings to be consistent with the approach used for its national 

economic analysis.

52

 
model (described in section IV.H of this notice) calculates energy savings in site energy, 

which is the energy directly consumed by products at the locations where they are used. 

For electricity, DOE reports national energy savings in terms of the primary (source) 

energy savings, which are the savings in the energy that is used to generate and transmit 

the site electricity. To convert site energy to primary energy, DOE derives annual 

conversion factors from the model used to prepare the Energy Information 

Administration’s (EIA) Annual Energy Outlook 2013 (AEO 2013).

DOE also has begun to estimate full-fuel-cycle energy savings. 76 FR 51282 

(August 18, 2011), as amended at 77 FR 49701 (August 17, 2012). The full-fuel-cycle 

(FFC) metric includes the energy consumed in extracting, processing, and transporting 

primary fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a more complete

picture of the impacts of energy efficiency standards. DOE’s evaluation of FFC savings is 

driven in part by the National Academy of Science’s (NAS) report on FFC measurement 

approaches for DOE’s Appliance Standards Program.14 The NAS report discusses that 

FFC was primarily intended for energy efficiency standards rulemakings where multiple 

fuels may be used by a particular product. In the case of this rulemaking pertaining to 

residential furnace fans, only a single fuel—electricity—is consumed by the product. 

DOE’s approach is based on the calculation of an FFC multiplier for each of the energy 

types used by covered products. Although the addition of FFC energy savings in the 

rulemakings is consistent with the recommendations, the methodology for estimating

14 “Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building 

Appliance Energy- Efficiency Standards,’’ (Academy report) was completed in May 2009 and included 

five recommendations. A copy of the study can be downloaded at: 

http://www.nap.edu/catalog.php?record_id=12670.

53

 
FFC does not project how fuel markets would respond to this particular standards

rulemaking. The FFC methodology simply estimates how much additional energy, and in 

turn how many tons of emissions, may be displaced if the estimated fuel were not 

consumed by the products covered in this rulemaking. It should be noted that inclusion of 

FFC savings has not affected DOE’s choice of the energy conservation standards adopted 

in today’s final rule. For more information on FFC energy savings, see section IV. H.2..

2. Significance of Savings

EPCA prohibits DOE from adopting a standard for a covered product that would 

not result in significant energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term 

“significant” is not defined in EPCA, the U.S. Court of Appeals for the District of 

Columbia, in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 

(D.C. Cir. 1985), opined that Congress intended “significant” energy savings in this 

context to be savings that were not “genuinely trivial.” The energy savings for today’s 

standards (presented in section V of this notice) are nontrivial, and, therefore, DOE 

considers them “significant” within the meaning of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria

As discussed in section II.A, EPCA provides seven factors to be evaluated in 

determining whether a potential energy conservation standard is economically justified. 

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The following sections generally discuss how DOE 

is addressing each of those seven factors in this rulemaking. For further details and the 

54
results of DOE’s analyses pertaining to economic justification, see sections IV and V of 

today’s document.

Economic Impact on Manufacturers and Commercial Customers

In determining the impacts of a potential new or amended energy conservation 

standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 

discussed in section IV.J. DOE first determines a potential standard’s quantitative 

impacts using an annual cash flow approach. This step includes both a short-term 

assessment (based on the cost and capital requirements associated with new or amended 

standards during the period between the announcement of a regulation and the 

compliance date of the regulation) and a long-term assessment (based on the costs and 

marginal impacts over the 30-year analysis period). The impacts analyzed include: (1)

industry net present value (INPV) (which values the industry based on expected future 

cash flows); (2) cash flows by year; (3) changes in revenue and income; and (4) other 

measures of impact, as appropriate. Second, DOE analyzes and reports the potential 

impacts on different types of manufacturers, paying particular attention to impacts on 

small manufacturers. Third, DOE considers the impact of new or amended standards on 

domestic manufacturer employment and manufacturing capacity, as well as the potential 

for new or amended standards to result in plant closures and loss of capital investment, as 

discussed in section IV.N. Finally, DOE takes into account cumulative impacts of other 

DOE regulations and non-DOE regulatory requirements on manufacturers.

55
For individual customers, measures of economic impact include the changes in 

LCC and the PBP associated with new or amended standards. These measures are 

discussed further in the following section. For consumers in the aggregate, DOE also 

calculates the national net present value of the economic impacts applicable to a 

particular rulemaking. DOE also evaluates the LCC impacts of potential standards on 

identifiable subgroups of consumers that may be affected disproportionately by a national 

standard.

Savings in Operating Costs Compared to Increase in Price (Life-Cycle Costs)

EPCA requires DOE to consider the savings in operating costs throughout the 

estimated average life of the covered product compared to any increase in the price of the 

covered product that are likely to result from the standard. (42 U.S.C. 

6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis. 

The LCC is the sum of the purchase price of a product (including the cost of its 

installation) and the operating costs (including energy, maintenance, and repair costs)

discounted over the lifetime of the equipment. To account for uncertainty and variability 

in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of 

values, with probabilities attached to each value. For its analysis, DOE assumes that 

consumers will purchase the covered product in the first year of compliance with new

standards.

56
The LCC savings and the PBP for the considered efficiency levels are calculated 

relative to a base-case scenario, which reflects likely market trends in the absence of new 

or amended standards. DOE identifies the percentage of consumers estimated to receive 

LCC savings or experience an LCC increase, in addition to the average LCC savings 

associated with a particular standard level. DOE’s LCC analysis is discussed in further 

detail in section IV.F.

Energy Savings

Although significant conservation of energy is a separate statutory requirement 

for adopting an energy conservation standard, EPCA also requires DOE, in determining 

the economic justification of a standard, to consider the total projected energy savings 

that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 

DOE uses NIA spreadsheet results in its consideration of total projected savings. For the 

results of DOE’s analyses related to the potential energy savings, see section V.B of this 

notice and chapter 10 of the final rule TSD.

Lessening of Utility or Performance of Equipment

In establishing product classes, and in evaluating design options and the impact of 

potential standard levels, DOE follows EPCA’s requirement to develop standards that 

would not lessen the utility or performance of the products under consideration. (42 

U.S.C. 6295(o)(2)(B)(i)(IV)) DOE has determined that none of the TSLs presented in 

today’s final rule would reduce the utility or performance of the products under

consideration in this rulemaking. During the screening analysis, DOE eliminated from 

57
consideration any technology that would adversely impact customer utility. See section 

IV.B of this notice and chapter 4 of the final rule TSD for further details.

Impact of Any Lessening of Competition

EPCA requires DOE to consider any lessening of competition that is likely to 

result from setting new or amended standards. It also directs the Attorney General of the 

United States (Attorney General) to determine the impact, if any, of any lessening of 

competition likely to result from a proposed standard and to transmit such determination 

to the Secretary within 60 days of the publication of a proposed rule, together with an 

analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii)) 

To assist the Department of Justice (DOJ) in making such a determination, DOE 

provided DOJ with copies of both the NOPR and NOPR TSD for review. In its 

assessment letter responding to DOE, DOJ concluded that the proposed energy 

conservation standards for residential furnace fans are unlikely to have a significant 

adverse impact on competition. DOE is publishing the Attorney General’s assessment at 

the end of this final rule.

Need of the Nation to Conserve Energy

Another factor that DOE must consider in determining whether a new or amended 

standard is economically justified is the need for national energy and water conservation. 

(42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from new or amended standards are 

likely to provide improvements to the security and reliability of the Nation’s energy 

58
system. Reductions in the demand for electricity may also result in reduced costs for

maintaining the reliability of the Nation’s electricity system. DOE conducts a utility 

impact analysis to estimate how new or amended standards may affect the Nation’s 

needed power generation capacity, as discussed in section IV.M. 

Energy savings from energy conservation standards are also likely to result in 

environmental benefits in the form of reduced emissions of air pollutants and greenhouse 

gases associated with energy production (i.e., from power plants). For a discussion of the 

results of the analyses relating to the potential environmental benefits of today’s

standards, see sections IV.K, IV.L and V.B.6 of this notice. DOE reports the expected 

environmental effects from today’s standards, as well as from each TSL it considered, in 

chapter 13 of the final rule TSD. DOE also reports estimates of the economic value of 

emissions reductions resulting from the considered TSLs in chapter 14 of the final rule 

TSD. 

Other Factors

EPCA allows the Secretary, in determining whether a new or amended standard is 

economically justified, to consider any other factors that the Secretary deems to be 

relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) There were no other factors considered for 

today’s final rule.

59
2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA provides for a rebuttable 

presumption that an energy conservation standard is economically justified if the 

additional cost to the consumer of a product that meets the new or amended standard is 

less than three times the value of the first-year energy (and, as applicable, water) savings 

resulting from the standard, as calculated under the applicable DOE test procedure. 

DOE’s LCC and PBP analyses generate values that calculate the PBP for consumers of 

products subject to potential new and amended energy conservation standards. These 

analyses include, but are not limited to, the 3-year PBP contemplated under the rebuttable 

presumption test. However, DOE routinely conducts an economic analysis that considers 

the full range of impacts to consumers, manufacturers, the Nation, and the environment, 

as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of these analyses serve as the 

basis for DOE’s evaluation of the economic justification for a potential standard level 

(thereby supporting or rebutting the results of any preliminary determination of economic 

justification). The rebuttable presumption payback calculation is discussed in section 

IV.F of this rulemaking and chapter 8 of the final rule TSD. 

IV. Methodology and Discussion

A. Market and Technology Assessment

DOE develops information that provides an overall picture of the market for the 

products concerned, including the purpose of the products, the industry structure, 

manufacturers, market characteristics, and technologies used in the products. This 

activity includes both quantitative and qualitative assessments, based primarily on 

60
publicly-available information. The subjects addressed in the market and technology 

assessment for this residential furnace fans rulemaking include: (1) a determination of the 

scope of this rulemaking; (2) product classes; (3) manufacturers; (4) quantities and types 

of products sold and offered for sale; (5) retail market trends; (6) regulatory and nonregulatory programs; and (7) technologies or design options that could improve the 

energy efficiency of the product(s) under examination. The key findings of DOE’s 

market assessment are summarized below. See chapter 3 of the final rule TSD for further 

discussion of the market and technology assessment.

1. Definition and Scope of Coverage

EPCA provides DOE with the authority to consider and prescribe new energy 

conservation standards for electricity used to circulate air through duct work. (42 U.S.C. 

6295(f)(4)(D)) DOE adopted the term “furnace fan” as shorthand to describe the range of 

products encompassed by this statutory mandate. In the preliminary analysis, DOE 

interpreted its statutory mandate by defining “furnace fan” to include “any electricallypowered device used in residential central heating, ventilation, and air-conditioning 

(HVAC) systems for the purpose of circulating air through duct work.” 77 FR 40530, 

40532 (July 10, 2012). DOE considered a typical furnace fan as consisting of a fan motor 

and its controls, an impeller, and a housing, all of which are components of an HVAC 

product that includes additional components, including the cabinet.

In response to the preliminary analysis, many interested parties disagreed with 

DOE’s definition of “furnace fan” and corresponding approach to set component-level 

61
regulations, which they warned would ignore system effects that could impact both fan 

and HVAC system energy consumption. California investor-owned utilities CA IOUs 

suggested that “furnace fan” should be defined as a unit consisting of a fan motor, its 

controls, an impeller, shroud, and cabinet that houses all of the heat exchange material for 

the furnace. According to CA IOUs, their suggested definition would reduce ambiguity 

and ensure that the components in HVAC products that affect furnace fan energy 

consumption are considered in this rulemaking. (CA IOUs, No. 56 at p. 1) Ingersoll 

Rand went further and suggested a system-level regulatory approach, where the entire 

duct and furnace system would be regulated, maintaining that such approach would 

produce a more useful metric to consumers when evaluating performance. (Ingersoll 

Rand, PA Public Meeting Transcript, No. 43 at p. 42) Conversely, NEEP observed that 

by regulating fan energy use separately, the individual efficiency of the component is 

considered when it would otherwise be ignored by manufacturers. (NEEP, No. 51 at p. 3) 

Rheem commented that some designs require higher air velocity to improve heat transfer 

but also require more electrical consumption to drive the blower at the higher velocity. 

(Rheem, PA Public Meeting Transcript, No. 43 at p. 63) Rheem commented that 

turbulent flow is considerably more efficient for heat transfer than laminar flow15, but 

more energy is required to move turbulent air. (Rheem, No. 54 at p. 10) Similarly, 

Lennox and Morrison commented that in order to improve heating and cooling 

efficiency, often a second heating coil is added, but this also leads to higher electrical 

.”

Laminar flow” is as term to describe when all fluid particles move in paths parallel to the overall flow 

direction (i.e., in layers). Laminar flow may occur when the flow channel is small and the speed is low. 

“Turbulent flow” is characterized by a three-dimensional movement of the fluid particles superimposed on 

the overall direction of motion. Turbulent flow may occur when the flow speed is higher and when there 

are obstacles in the channel that disrupt the flow profile. The turbulent flow intensifies the heat transfer,

thus resulting in more efficient heat exchange.

62

 
consumption by the furnace fan. (Lennox, No. 43 at p. 64; Morrison, No. 43 at p. 64)

Ingersoll Rand argued that as the efficiency of the furnace fan motor increases, it 

dissipates less heat, and consequently, the furnace will consume more gas to compensate 

and meet the desired house heat load. (Ingersoll Rand, No. 43 at p. 66)

In the NOPR, DOE responded by explaining that DOE is required by EPCA to 

consider and prescribe new energy conservation standards or energy use standards for 

electricity used for purposes of circulating air through duct work. (42 U.S.C. 

6295(f)(4)(D)) Consequently, in the context of furnace fans, DOE does not have latitude 

to apply only a single standard for the larger HVAC product (which is already regulated). 

Pursuant to this statutory mandate, DOE issued a NOPR which proposed energy 

conservation standards for circulation fans used in residential central HVAC systems (78 

FR 64068 (Oct. 25, 2013)). DOE added that it did not interpret its authority as including 

regulating the duct work itself. DOE recognized that component-level regulations could 

have system-level impacts. Accordingly, DOE conducted its NOPR analyses and selected 

the standard levels proposed in the NOPR in such a way that meets the statutory 

requirements set forth by EPCA without ignoring system effects, which otherwise might

compromise the thermal performance of the HVAC products that incorporate furnace 

fans. For example, the final test procedure codified in DOE’s regulations at 10 CFR part 

430, subpart B, appendix AA specifies that the furnace fan be tested as factory-installed 

in the HVAC product, thereby enabling the rating metric, FER, to account for system 

effects on airflow delivery and, ultimately, energy performance. In addition, the product 

class structure proposed in the NOPR allowed for differentiation of products with designs 

63
that achieve higher thermal efficiency but may have lower fan performance, such as 

condensing furnaces. 78 FR 64068, 64082 (Oct. 25, 2013).

In the January 3, 2014 test procedure final rule, DOE broadened its definition of 

“furnace fan” to mean “an electrically-powered device used in a consumer product for the 

purpose of circulating air through ductwork.” 79 FR 500, 521.

In response to the NOPR, DOE did not receive comments from interested parties 

regarding the definition of “furnace fan” established by the test procedure final rule.

Consequently, in this standards final rule, DOE is maintaining the definition for “furnace 

fan,” codified at 10 CFR 430.2. However, DOE did receive comments on its definitions 

for certain product types that include furnace fans. DOE summarizes and responds to 

these comments later in this section of the notice. 

The scope of the preliminary analysis included furnace fans used in furnaces, 

modular blowers, and hydronic air handlers. Even though DOE has interpreted its 

authority as encompassing any electrically-powered device used in residential HVAC 

products to circulate air through duct work, the preliminary analysis scope excluded 

single-package central air conditioners (CAC) and heat pumps (HP) and split-system 

CAC/HP blower-coil units. At the time of the preliminary analysis, DOE determined that 

it may consider these and other such products in a future rulemaking as data and 

information to develop credible analyses becomes available. 

64
In response to the preliminary analysis, efficiency advocates expressed concern at 

DOE’s exclusion of packaged and split-system CAC products because advocates believe 

current standards for these products do not maximize the technologically feasible and 

economically justified energy savings for the circulation fans integrated in these products. 

ASAP and Adjuvant stated that the metric used for CAC products does not accurately 

represent field conditions and requested that they be added to the scope. 78 FR 64068, 

64080 (Oct. 25, 2013).

In contrast, many manufacturers submitted comments in response to the 

preliminary analysis that they believe that the scope of coverage presented in the 

preliminary analysis exceeds the statutory authority granted to DOE because the statutory 

language for this rulemaking is found in 42 U.S.C 6295(f) under the title “Standards for 

furnaces and boilers.” Consequently, manufacturers stated that DOE should not include 

any non-furnace products such as central air conditioners, heat pumps, or condensing 

unit-blower-coil combinations. Manufacturers also claimed that the electricity used to 

circulate air through duct work is already adequately accounted for in existing energy 

efficiency metrics for CAC and HP products that use circulation fans. 78 FR 64068, 

64080-81 (Oct. 25, 2013).

In the October 25, 2013 furnace fan energy conservation standard NOPR, DOE 

noted that, although the title of this statutory section refers to “furnaces and boilers,” the 

applicable provision at 42 U.S.C. 6295(f)(4)(D) was written using notably broader 

language than the other provisions within the same section. 78 FR 64068, 64081. 

65
Specifically, that statutory provision directs DOE to “consider and prescribe energy 

conservation standards or energy use standards for electricity used for purposes of 

circulating air through duct work.” Id. Such language could be interpreted as 

encompassing electrically-powered devices used in any residential HVAC product to 

circulate air through duct work, not just furnaces, and DOE has received numerous 

comments on both sides of this issue. In the standards NOPR, however, DOE only 

proposed energy conservation standards for those circulation fans that are used in 

residential furnaces and modular blowers (see discussion below). As a result, DOE did 

not address public comments that pertain to fans in other types of HVAC products (other 

than to clarify instances where there was uncertainty as to whether a given product fits 

within the scope of the current rulemaking). The following list describes the furnace fans 

which DOE proposed to address in the standards NOPR.

• Products addressed in this rulemaking: furnace fans used in weatherized and nonweatherized gas furnaces, oil furnaces, electric furnaces, and modular blowers.

• Products not addressed in this rulemaking: furnace fans used in other products, 

such as split-system CAC and heat pump indoor units, through-the-wall indoor 

units, small-duct, high-velocity (SDHV) indoor units, energy recovery ventilators 

(ERVs), heat recovery ventilators (HRVs), draft inducer fans, exhaust fans, or 

hydronic air handlers.

Id.

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In the October 25, 2013 NOPR, DOE also maintained its proposal to account for the 

electrical consumption of furnace fans while performing all active mode functions (i.e., 

heating, cooling, and constant circulation) because furnace fans are used not just for 

circulating air through duct work during heating operation, but also for circulating air 

during cooling and constant-circulation operation. In DOE’s view, in order to obtain a 

complete assessment of overall performance and a metric that reflects the product’s 

electrical energy consumption during a representative average use cycle, the metric must 

account for electrical consumption in a set of airflow-control settings that spans all active 

mode functions. This would ensure a more accurate accounting of the benefits of 

improved furnace fans. Id.

China WTO commented that DOE’s definition for “furnace fan” and the proposed 

scope show that residential furnace fans primarily perform the heating function. For this 

reason, China WTO recommended that DOE exclude fan performance for cooling 

operation to avoid unnecessary test procedure burden. (China WTO, No. 92 at pp. 1-2).

For the reasons stated above, the energy conservation standards established by 

this notice account for the electrical consumption of furnace fans while performing all 

active mode functions (i.e., heating, cooling, and constant circulation). The commenter 

did not dispute the fact that fans will operate in cooling or constant-circulation mode, 

often for non-trivial periods of time. Because the electrical energy consumption of the fan 

may vary substantially depending on its mode of operation, DOE has concluded that 

testing fan operation in all these modes is necessary to reflect the product’s energy 

67
consumption during a representative use cycle and that such testing would not be unduly 

burdensome to conduct.

Unico submitted comments regarding concerns with DOE’s test procedure and 

proposed standard levels as they apply to SDHV systems. Unico explains that DOE 

proposed to exclude SDHV products from the rulemaking but included modular blowers 

and electric furnaces, resulting in a potential conflict. Unico added that most of their

SDHV air handlers are modular in construction. Unico also offers an add-on electric 

furnace to provide secondary or backup heat, but very few systems are installed as an 

electric furnace. As a result, Unico expressed uncertainty whether this rule applies to 

SDHV modular blowers and SDHV electric furnaces. Unico provided data showing that 

SDHV blowers operate at different conditions compared to the products proposed to be 

covered and cannot meet the proposed FER levels. Ultimately, Unico expressed concerns 

that this rule could potentially eliminate many SDHV products from the market if they 

are subject to DOE’s proposed standards. (Unico, No. 93 at pp.1- 4)

In response to the comment, DOE clarifies that the furnace fan test procedure and 

the energy conservation standards established by this final rule do not apply to SDHV 

products, including SDHV modular blowers and electric furnaces. DOE recognizes that 

these products operate at different conditions which significantly impact their fan 

performance, as compared to the products addressed in this rulemaking. While DOE’s 

regulations at 10 CFR 430.2 include a definition for “small duct high velocity systems,” it 

does not include a definition for small duct high velocity modular blowers or SDHV 

68
electric furnaces. Absent clarification, DOE realizes that confusion may result regarding 

which products are and are not covered by today’s standards. Accordingly, DOE is 

adopting the following definition of “small-duct high-velocity (SDHV) modular blower,” 

which has been drafted to be consistent with the existing definition of “SDHV system” at 

10 CFR 430.2:

Small-duct high-velocity (SDHV) modular blower means a product that:

• Meets the definition of “modular blower,” as set forth in 10 CFR part 430, subpart 

B, appendix AA;

• Is designed for, and produces, at least 1.2 inches of external static pressure when 

operated at the certified air volume rate of 220-350 CFM per rated ton of cooling 

in the highest default cooling airflow-controls setting; and

• When applied in the field, uses high velocity room outlets generally greater than 

1,000 fpm that have less than 6.0 square inches of free area. 

Similarly, DOE is adopting a definition for “small-duct high-velocity (SDHV) electric 

furnace” to read as follows:

Small-duct high-velocity (SDHV) electric furnace means a product that:

• Meets the definition of “electric furnace,” as set forth in 10 CFR 430.2;

• Is designed for, and produces, at least 1.2 inches of external static pressure when 

operated at the certified air volume rate of 220-350 CFM per rated ton of cooling 

in the highest default cooling airflow-control setting; and

• When applied in the field, uses high velocity room outlets generally greater than 

1,000 fpm that have less than 6.0 square inches of free area.

69
DOE has concluded that these amendments should eliminate any confusion associated 

with DOE not addressing SDHV modular blowers and SDHV electric furnaces in the 

present rulemaking. Unico also submitted other SDHV-related concerns, but DOE need 

not discuss those issues further because SDHV products are not addressed in this

rulemaking.

AHRI, Morrison, Goodman, Johnson Controls, and Mortex stated that modular 

blowers should be excluded from the scope of this rulemaking. (AHRI, No. 98 at pp. 1, 2; 

Morrison, No. 108 at p. 1; Goodman, No. 102 at p. 5; Johnson Controls, No. 95 at p. 2; 

and Mortex, NOPR Public Meeting Transcript, No. 91 at pp. 78-79). AHRI, Morrison, 

and Johnson Controls continue to advance an interpretation of 42 USC 6295(f)(4)(D) as 

being only applicable to furnaces, and these commenters argued that absent a legislative 

change, DOE has exceeded its statutory authority in terms of the NOPR’s proposed 

coverage of modular blowers. (AHRI, No. 98 at pp. 1-2; Morrison, No. 108 at p. 1; and 

Johnson Controls, No, 95 at p. 2). AHRI and Johnson Controls added that some modular 

blowers in today’s marketplace are not designed to operate with electric resistance heat 

kits, rendering the final test procedure insufficient for these products. (AHRI, No. 98 at 

pp. 1,2; and Johnson Controls, No. 95 at p. 3).

ASAP, et al., on the other hand, expressed support for the inclusion of modular 

blowers in the scope of coverage. ASAP, et al. stated that they understand that the strip 

heat used with electric furnaces is often installed in the field, which means that an 

70
“electric furnace” is often sold by the manufacturer as a “modular blower.” ASAP, et al. 

cite DOE’s finding that non-weatherized and mobile home electric furnace/modular 

blower furnace fans represent 10 percent of all furnace fan sales. According to ASAP, et 

al., excluding modular blowers from the scope of coverage would not only reduce energy 

savings from this rulemaking, but would also create a loophole— i.e., manufacturers 

would have an incentive to sell electric furnaces as modular blowers (without strip heat 

installed) in order to avoid compliance with the furnace fan energy conservation 

standards. (ASAP, et al., No. 105 at pp. 1, 2)

As stated above, DOE maintains its interpretation that the relevant statutory 

language at 42 U.S.C. 6295(f)(4)(D) is broader in its applicability than just furnaces, and 

consequently, it provides DOE authority to cover modular blowers in this rulemaking. 

These same arguments were already addressed in some detail in the NOPR (see 78 FR 

64068, 64081 (Oct. 25, 2013)). DOE also disagrees with the contention of AHRI and 

Johnson Controls that the final test procedure is not sufficient to address all modular 

blowers. All modular blower models of which DOE is aware can be operated in 

conjunction with an electric resistance heat kit, and commenters did not identify any 

models of modular blowers that cannot. Even assuming arguendo that modular blowers 

do exist that are not designed to operate with an electric resistance heat kit, DOE expects 

that number of such models would be de minimis and that manufacturers producing

modular blowers that cannot be operated in conjunction with an electric resistance heat 

kit would apply for a waiver from the test procedure. DOE provides more details 

regarding this issue in the January 3, 2014 test procedure final rule. 79 FR 504.

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In its comments, Johnson Controls stated that DOE’s use of the phrase “primary 

heat source” is too ambiguous, especially when certain products might be modified in the 

field. According to Johnson Controls, DOE’s characterizations of air handlers and 

modular blowers when an air handler or modular blower is the primary heating source is 

still confusing and brings uncertainty to the NOPR market assessment. Johnson Controls 

commented that none of the residential air handlers, modular blowers, or residential 

single-package finished good models built by Johnson Controls includes factory-installed 

electric heat kits. Therefore, according to the commenter, electric heat kits installed in 

these products cannot be considered to be the primary source for heat in their 

applications, and so none of these products should be included in this rulemaking. 

Johnson Controls added that while field-installed electric heat kits are available and used 

frequently, the use of field kits is outside of the air handler or modular blower 

manufacturer’s control, unlike gas furnaces where the application is known to usually be 

the primary heating source in the vast number of situations. (Johnson Controls, No. 95 at 

p. 2) NEEA, Mortex, and Daikin agreed that the contractor determines whether a 

CAC/HP blower-coil unit with electric resistance heat is the principal source of heating 

for a residence, rendering any such determination speculative for other entities. (NEEA, 

NOPR Public Meeting Transcript, No. 91 at pp. 64-65; Mortex, NOPR Public Meeting 

Transcript, No. 91 at pp. 78-79; and Daikin, NOPR Public Meeting Transcript, No. 91 at 

pp. 75-76)

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Modular blowers are not a source of heat per DOE’s definition of “modular 

blower” as provided in 10 CFR part 430, subpart B, appendix AA. Consequently, the 

“principal heating source” qualifier (per the definition of “furnace” at 10 CFR 430.2) 

does not apply to modular blowers, so this part of the “furnace” definition has the effect 

of excluding modular blowers from that definition. However, the “furnace” definition is 

not the only factor in deciding whether modular blowers are covered in this rulemaking, 

contrary to what Johnson Controls suggests. If electric resistance heat is added to a 

modular blower product, that product no longer meets DOE’s definition of a “modular 

blower.” Instead, DOE considers the modified product an electric furnace, absent other 

design changes. Regardless of whether the electric resistance heat is factory-installed, 

both product variations are covered in the final test procedure and this energy 

conservation standard. 

DOE recognizes that interested parties may have trouble determining whether a 

CAC/HP blower-coil unit with electric resistance heating is considered an electric 

furnace and thereby covered by the energy conservation standards established by this 

final rule. Strictly following the DOE definition for “electric furnace” (which references 

the DOE definition of “furnace”) as set forth at 10 CFR 430.2, coverage in this final rule 

of a CAC/HP blower-coil with electrical resistance heating depends on whether the 

electric resistance heating is the “principal heating source for the residence.” As Johnson 

Controls points out, this is not as easily determined as for gas and oil furnaces. DOE 

expects that in the significant majority of CAC/HP blower-coil models that have electric 

resistance heat, the electric resistance heat is supplemental in nature and not the principal 

73
heating source for the residence. For this reason, DOE has decided that the energy 

conservation standards established by this rule will not cover CAC/HP blower-coil units,

regardless of whether they include electric resistance heat.

Lennox argued that including weatherized commercial products in this 

rulemaking is unrealistic and improper. Specifically, Lennox expressed concerns that 

DOE mischaracterizes single-package weatherized products as “residential” when these 

products are offered with a single-phase power source. The commenter stated that these 

products are often used in commercial applications, explaining that single-phase 

weatherized products are often designed to have higher duct static pressure capability 

than a traditional residential furnace. Lennox commented that they have single-phase 

belt-drive products that are capable of operating up to 2 inches water column external 

static pressure to meet commercial duct static requirements. According to Lennox, BPM 

motors (including both constant-torque and constant-airflow BPM motors) typically used 

in residential products cannot achieve the high static pressures required in these 

commercial installations. Therefore, Lennox recommended that DOE should exclude all 

products marked not for residential use from standards coverage. (Lennox, No. 100 at p. 

4).

DOE recognizes that industry may differentiate between residential products and 

commercial equipment differently than DOE. The standards established by this final rule 

do not cover all single-phase, single-package HVAC products, only single-phase 

weatherized furnaces (i.e., single-phase, single-package HVAC products that include a 

74
“furnace” as defined at 10 CFR 430.2). Lennox did not identify, and after additional 

research, DOE is not aware of any weatherized gas furnace models that operate at the 

static pressures mentioned by the commenter. DOE expects that the operating conditions 

mentioned by Lennox are typical of single-package heat pump equipment, which is not 

covered by this rule. DOE expects the number of models covered by this rule that DOE 

defines as residential but are designed and operated in commercial applications to be de 

minimis. Any manufacturer which can substantiate its case that it would suffer serious 

hardship, gross inequity, and an unfair distribution of burdens if required to comply with 

the furnace fan standards may seek exception relief from DOE’s Office of Hearings and 

Appeals (OHA).

16

ACEEE commented that if manufacturers offered air handlers as a separate 

product, without the coil, the modified product would not be inherently different than a 

modular blower. ACEEE stated that DOE should cover CAC/HP blower-coil units 

following the same logic that DOE used to justify covering modular blowers (i.e., 

because of their similarities to electric furnaces). ACEEE also commented that the DOE 

definition for “modular blower” is confusing because, in their experience, all (or almost 

all) conventional indoor blower units -- whether furnaces, HP, or CAC -- use a separate 

assembly (or field-fabricated ‘plenum’) to house the coil used as the evaporator (CAC) or 

evaporator and condenser (HP). (ACEEE, No. 94 at pp. 1-2,4).

16 For information about obtaining exception relief, see 10 CFR part 1003 (available at 

http://www.ecfr.gov/cgi-bin/textidx?SID=d95bf6ed9cd849253fab734656f80c2e&node=10:4.0.3.5.3&rgn=div5).

75

 
DOE disagrees with ACEEE’s assessment that a CAC/HP blower-coil unit with 

the coil removed and an electric furnace are equally comparable to a modular blower. For 

example, modular blowers are typically designed to accommodate the addition of electric 

resistance heating kits (after which DOE would consider them as electric furnaces) 

without modifying the product envelope. Modular blower envelope dimensions are 

similar, and in many cases identical, to electric furnace dimensions as a result. In 

addition, the final test procedure requires an electric resistance heat kit to be installed in 

modular blowers to produces a temperature rise allowing for calculation of airflow for the 

rating metric, FER. The test configurations for electric furnaces and modular blowers are 

almost identical as a result. In turn, the FER values for an electric furnace and modular

blower with no other design difference other than the presence of an electric resistance 

heat kit are expected to be approximately equivalent. On the other hand, the coils 

typically included in CAC/HP blower-coil units are larger than heat resistance kits. 

Consequently, blower-coil unit envelope dimensions are different than modular blower 

dimensions, which impacts fan performance. CAC/HP blower-coil unit design, as it 

relates to fan performance, cannot be compared to modular blower design for this reason. 

The final test procedure does not include methods for deriving an FER value for CAC/HP 

blower-coil units. Furthermore, the coil and envelope dimension differences mentioned 

would preclude the circulation fan performance of a CAC/HP blower-coil unit from being 

deemed equivalent to an otherwise similarly-designed modular blower. In addition, 

modular blowers and electric furnaces are product configurations installed in the field. 

DOE doubts that a CAC/HP blower-coil unit with the coil removed would be offered by 

manufacturers or purchased and installed in the field. Regarding the criticism of its 

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definition of “modular blower,” DOE recognizes that the definition for “modular blower” 

as set forth at 10 CFR part 430, subpart B, appendix AA may be confusing because it 

does not explicitly state that a modular blower does not include an indoor refrigerant coil, 

only that it does not provide heating or cooling. An “indoor unit,” on the other hand, is 

defined at 10 CFR 430.2 as containing a “coil.” This notice modifies the definition of 

“modular blower” to explicitly exclude products that contain an indoor refrigerant coil in 

order to eliminate ambiguity between the two definitions.

ACEEE, Earthjustice, and CA IOU stated that DOE’s decision to exclude 

products such as CAC/HP and hydronic air handlers is inappropriate and in conflict with 

DOE’s interpretation of the statutory language. These interested parties also commented 

that DOE does not provide a justification for its decision to exclude products for which 

DOE claims to have authority to set energy conservation standards. (ACEEE, No. 94 at 

pp. 1-2,4; and CA IOU, No. 106 at pp. 1,2) According to Earthjustice, DOE’s decision to 

exclude products for which it claims authority to cover represents a failure to carry out 

EPCA’s command to adopt “standards for electricity used for purposes of circulating air 

through ductwork” and does not comply with the statute’s requirement that standards 

“shall be designed to achieve the maximum improvement in energy efficiency” that is 

“technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A). 

Earthjustice adds that EPCA authorizes DOE not to prescribe an amended or new 

standard for a type or class of covered product in three situations: (1) the standard will 

eliminate certain product features from the market; (2) the standard will not result in 

significant conservation of energy or is not technologically feasible or economically 

77
justified; or (3) for certain products, test procedures have not been established. (42 

U.S.C. 6295(o)(3) and (4)). Earthjustice states that DOE has failed to show that the 

products it is not addressing in this rule meet those criteria. (Earthjustice, No. 101 at p. 1)

ASAP, et al. encouraged DOE to adopt standards and/or test procedure changes to 

drive improved efficiency of furnace fans that are part of single-package and blower-coil 

central air conditioners and heat pumps in the future. According to ASAP, et al., CA IOU 

and ACEEE, the operating conditions and metrics used in the DOE test procedures for 

CAC/HP (i.e., SEER and HSPF) are insufficient for representing furnace fan performance 

in the field for those products. (ASAP, et al., No. 105 at pp. 2,3; CA IOU, No. 106 at pp. 

1, 2; and ACEEE, No. 94 at pp. 1-2, 4). Further, ASAP, et al. are concerned that heat 

pump indoor units will increasingly be installed and operated as electric furnaces 

(without an outdoor unit) to avoid both the DOE standard for CAC/HP and the standards 

established by this rule. ASAP, et al. added that consumers will have greater incentive to 

install heat pump indoor units to operate as electric furnaces if a heat pump indoor unit 

with a PSC motor is less expensive than an electric furnace/modular blower with a 

constant-torque BPM motor. (ASAP, et al., No. 105 at pp. 2,3) Earthjustice also 

identified CAC/HP blower-coil units installed without an outdoor unit and operated as an 

electric furnace as a potential loophole. (Earthjustice, No. 101 at p. 1) While ASAP, et 

al., stated that they recognize that it may be too late to include furnace fans that are part 

of single-package and blower-coil central air conditioners and heat pumps in the scope of 

coverage in the current rulemaking, they encourage DOE to address furnace fan 

efficiency in these products in the future through one of two options: (1) amend the test 

78
procedures for central air conditioners and heat pumps to incorporate more realistic 

external static pressure values; or (2) include furnace fans that are part of single-package 

and blower-coil central air conditioners and heat pumps in a future rulemaking for 

furnace fans. ASAP, et al., submitted that if DOE pursued the second option, changing 

the external static pressure values in the central air conditioner and heat pump test 

procedures would be less critical, because fan efficiency would be addressed through 

standards for furnace fans. (ASAP, et al., No. 105 at pp. 2,3) CA IOU also expressed 

support for a separate, expedited rulemaking to set energy conservation standards for 

products not addressed in this rule. CA IOU claims that such a rule would ensure that the 

entire market for furnace fans is regulated, thereby avoiding the negative market impacts 

due to the prevalence of unregulated products. (CA IOU, No. 106 at pp. 1, 2). NEEA and 

NPCC also expressed disappointment that DOE is choosing to cover only two-thirds of 

furnace fan products by excluding indoor blower/cool units used with split system heat 

pump and air conditioning systems and hydronic air handlers, which leaves substantial 

energy savings on the table. (NEEA and NPCC, No. 96 at p. 3). ACEEE estimated that 

approximately two quads of potential cumulative energy savings are left uncaptured by 

DOE’s decision to exclude CAC/HP blower-coil units, which ACEEE claims could 

jeopardize achievement of the Administration’s goal of 3 billion tons of CO2 avoided. 

(ACEEE, No. 94 at p. 1-2, 4). CA IOU cited these potential energy savings as another 

reason that a separate, expedited rulemaking is warranted. (CA IOU, No. 106 at pp. 1,2). 

Laclede, APGA, and AGA also recommended that DOE expand the scope of this rule to 

include products such as split-system central air conditioners, heat pump air handlers, 

through-the-wall air handlers, and small-duct high-velocity air handlers that compete 

79
with the types of natural gas furnaces covered by this rules. Each cited concerns that 

DOE’s decision to exclude fans used in these products could lead to fuel switching. 

(Laclede, No. 89 at p. 2; APGA, No. 90 at p. 2; and AGA, No. 110 at p. 2). Laclede 

believes the Department failed to adequately explain why fans in heat pumps are 

excluded and to clearly demonstrate how this exclusion serves the best interests of the 

American public.

EEI, on the other hand, supports DOE’s exclusion of CAC/HP blower-coils and 

hydronic air handlers from this rulemaking. EEI commented that the energy used by the 

fans operating in the cooling mode is part of the calculation of SEER, EER, and HSPF. 

EEI explains that manufacturers have already made design decisions that reduce the 

energy usage of such fans for these systems to meet the higher air conditioner and heat 

pump energy conservation standards (based on SEER and HSPF) that took effect in 1992 

and 2006, and will take effect in 2015. EEI stated that including these fans in this rule 

would be a form of “double regulation” of the same product. (EEI, No. 87 at p. 3) 

Southern Company agreed that CAC/HP fan energy is already covered by the SEER and 

HSPF rating. (Southern Company, NOPR Public Meeting, No. 43 at p. 70).

As explained previously, DOE has noted the relatively broad scope of the 

language of 42 U.S.C. 6295(f)(4)(D), which provides DOE authority to regulate 

“electricity used for purposes of circulating air through duct work.” At the present time, 

however, DOE is only adopting energy conservation standards for those circulation fans 

that are used in residential furnaces and modular blowers. The DOE test procedure for 

80
furnace fans is not currently equipped to address fans contained in central air 

conditioners, heat pumps, or other products, as would be required for the adoption of 

standards under 42 U.S.C. 6295(o)(3). Consequently, DOE is not considering standard 

setting for other products beyond the current scope of the rulemaking at this time.

2. Product Classes

DOE identified nine key product classes in the preliminary analysis, each of 

which was assigned its own candidate energy conservation standard and baseline FER. 

DOE identified twelve additional product classes that represent significantly fewer 

shipments and significantly less overall energy use. DOE grouped each non-key product 

class with a key product class to which it is closely related in application-specific design

and internal structure (i.e., the primary criteria used to differentiate between product 

classes). DOE assigned the analytical results of each key product class to the non-key 

product classes with which it is grouped because DOE expected the energy use and 

incremental manufacturer production costs (MPCs) of improving efficiency to be similar 

within each grouping. Table IV.1 lists the 21 preliminary analysis product classes. 

Table IV.1: Preliminary Analysis Product Classes

Key Product Class Additional Product Classes

Non-Weatherized, Non-Condensing Gas 

Furnace Fan (NWG-NC)

Non-weatherized, Condensing Gas Furnace 

Fan (NWG-C)

Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC)

Weatherized, Non-Condensing Oil Furnace 

Fan (WO-NC)

Weatherized Electric Furnace/Modular Blower 

Fan (WEF/WMB)

Mobile Home Weatherized Gas Furnace Fan 

(MH-WG)

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Mobile Home Weatherized Oil Furnace Fan 

(MH-WO)

Mobile Home Weatherized Electric 

Furnace/Modular Blower Fan (MHWEF/WMB)

Non-weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC)

Non-Weatherized, Condensing Oil Furnace 

Fan (NWO-C)

Mobile Home Non-Weatherized Oil Furnace 

Fan (MH-NWO)

Non-weatherized Electric Furnace / Modular 

Blower Fan (NWEF/NWMB)

Heat/Cool Hydronic Air Handler Fan (HAHHC)

Heat-Only Hydronic Air Handler Fan (HAHH)

Hydronic Air Handler Fan with Coil (HAH-C)

Mobile Home Heat/Cool Hydronic Air 

Handler Fan (MH-HAH-HC)

Mobile Home Heat-Only Hydronic Air 

Handler Fan (MH-HAH-H)

Mobile Home Hydronic Air Handler Fan with 

Coil (MH-HAH-C)

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWGNC)

Mobile Home Non-Weatherized, Condensing 

Gas Furnace Fan (MH-NWG-C)

Mobile Home Electric Furnace/ Modular 

Blower Fan (MH-EF/MB)

Manufacturers agreed that the selected key product classes are an accurate 

representation of the market. Some manufacturers disagreed with DOE’s approach to 

specify additional product classes within a key product class, stating that shipment data 

indicates that the additional product classes are too small to be covered.

In the NOPR, DOE agreed with manufacturers’ assertion that the additional nonkey product classes represent products with few and in many cases, no shipments. 78 FR 

64082. Individual discussions with manufacturers for the MIA confirmed this assertion. 

82
Additionally, review of the AHRI appliance directory revealed that only two of the 

additional non-key product classes have active models listed: (1) mobile home

weatherized gas furnace fans (MH-WG) and (2) mobile home non-weatherized oil 

furnace fans (MH-NWO). The number of active basic models for MH-WG and MHNWO are 4 and 16, respectively. For this reason, DOE proposed in the NOPR to 

eliminate the additional non-key product classes except for MH-WG and MH-NWO. Due 

to the limited number of basic models for MH-WG and MH-NWO, DOE did not have 

data to directly analyze and establish standards for these additional product classes. As a 

result, DOE proposed to reserve space to establish standards for MH-WG and MH-NWO 

furnace fans in the future as sufficient data become available. DOE also proposed to 

exclude hydronic air handlers from consideration in this rulemaking, thereby further 

reducing the number of product classes addressed in the NOPR to 10. 78 FR 64082.

Table IV.2 includes a list of the revised set of product classes for residential furnace fans

used in the NOPR. 

DOE did not receive comment or additional information on the proposed product 

classes, thus, DOE is not making changes to the product classes in this Final Rule. Table 

IV.2 includes a list of the product classes for residential furnace fans used in the Final 

Rule. 

Table IV.2: Product Classes for Residential Furnace Fans

Product Class

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)

Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)

Weatherized Non-Condensing Gas Furnace Fan (WG-NC)

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)

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Non-Weatherized Electric Furnace / Modular Blower Fan (NWEF/NWMB)

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH-NWG-NC)

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH-NWG-C)

Mobile Home Electric Furnace / Modular Blower Fan (MH-EF/MB)

Mobile Home Weatherized Gas Furnace Fan (MH-WG)

Mobile Home Non-Weatherized Oil Furnace Fan (MH-NWO)

3. Technology Options

In the preliminary analysis, DOE considered seven technology options that would 

be expected to improve the energy efficiency of furnace fans: (1) fan housing and airflow 

path design modifications; (2) high-efficiency fan motors (in some cases paired with 

multi-stage or modulating heating controls); (3) inverter-driven permanent-split capacitor

(PSC) fan motors; (4) backward-inclined impellers; (5) constant-airflow brushless 

permanent magnet (BPM) motor control relays; (6) toroidal transformers; and (7) 

switching mode power supplies. In the NOPR, DOE revised its proposed scope of 

coverage to no longer address hydronic air handlers, the only furnace fan product class 

for which standby mode and off mode energy consumption is not already fully accounted 

for in the DOE energy conservation standards rulemakings for residential furnaces and 

residential CAC and HPs. 76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011). 

Consequently, the standby mode and off mode technology options (options 5 through 7 in 

the list above) are no longer applicable. In addition, DOE found that multi-staging and 

modulating heating controls can also improve FER, so DOE evaluated multi-staging and 

modulating heating controls as a separate technology option for the NOPR. 78 FR 64083.

DOE did not receive comment or additional information regarding the evaluated 

technology options, so DOE did not make any changes to the list of technology options 

84
identified in the NOPR. The resultant list of technology options identified to be evaluated 

in the screening analysis before consideration in the engineering analysis for the Final 

Rule include: (1) fan housing and airflow path design modifications; (2) inverter-driven 

PSC fan motors; (3) high-efficiency fan motors; (4) multi-staging and modulating heating 

controls; and (5) backward-inclined impellers. Each identified technology option is 

discussed below and in more detail in chapter 3 of the Final Rule TSD.

Fan Housing and Airflow Path Design Improvements

The preliminary analysis identified fan housing and airflow path design 

modifications as potential technology options for improving the energy efficiency of 

furnace fans. Optimizing the shape of the inlet cone17 of the fan housing, minimizing 

gaps between the impeller and fan housing inlet, and optimizing cut-off location and 

manufacturing tolerances were identified as enhancements to a fan housing that could 

improve efficiency. Separately, modification of elements in the airflow path, such as the 

heat exchanger, could reduce internal static pressure and as a result, reduce energy 

consumption. Manufacturer input was requested to determine the use and practicability of 

these potential technology options. 

Interested parties expressed support for DOE’s consideration of the aerodynamics 

of furnace fan cabinets in its initial analysis of technology options. In particular, ASAP 

17 The inlet cone is the opening of the furnace fan housing through which return air enters the housing. The 

inlet cone is typically curved inward, forming a cone-like shape around the perimeter of the opening, to 

provide a smooth surface to direct air from outside the housing to inside the housing and into the impeller.

85

 
cited a 2003 GE study18 that quantified energy savings produced by modifying fan 

housing as justification for its inclusion as an option. ACEEE, et al. also cited a

Lawrence Berkeley National Laboratory (LBNL) study19 that linked changes in 

efficiency to modifying the clearance between fan housing and an air handler cabinet 

wall. Ingersoll Rand stated that there are proprietary fan housing designs on the market 

that already improve mechanical efficiency by 10-20 percent at a cost much lower than 

the cost to implement high-efficiency motors or make changes to the impeller and its 

tolerances. 78 FR 64083. 

DOE is aware of the studies cited by ASAP and ACEEE, as well as the 

proprietary housing design mentioned by Ingersoll Rand. For the NOPR, DOE decided to 

include fan housing design modifications as a technology to be evaluated further in the 

screening analysis because of these indications that each could improve fan efficiency. 78 

FR 64083. 

Many interested parties requested that DOE keep airflow path design as a 

technology option. Manufacturers stated that improving airflow path design, like 

modifying fan housing, is highly cost-effective when compared to other enhancements. 

Similar to the fan housing design modifications, DOE decided to include airflow path 

design as a technology option to be evaluated further in the screening analysis as a result 

of these claims of potential fan efficiency improvement. 78 FR 64083. DOE believes

18 Wiegman, Herman, Final Report for the Variable Speed Integrated Intelligent HVAC Blower (2003) 

(Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf). 19 Walker, I.S, State-of-the-art in Residential and Small Commercial Air Handler Performance (2005) 

LBNL 57330 (Available at: http://epb.lbl.gov/publications/pdf/lbnl-57330plus.pdf). 

86

 
including airflow path design is appropriate because of its potential to impact fan 

efficiency. Airflow path design will impact the rating metric, FER, because the DOE test 

procedure requires the furnace fan to be tested as it is factory-installed in the HVAC 

product.

DOE did not receive comment or additional information on fan housing about 

including airflow path design improvements as a technology option, thus, DOE is 

including these as technologies to be evaluated further in the screening analysis. Chapter 

3 of the Final Rule TSD provides more technical detail regarding fan housing and airflow 

path design modifications and how these measures could reduce furnace fan energy 

consumption.

Inverter Controls for PSC Motors

In the preliminary analysis, DOE identified inverter-driven PSC motors as a 

technology option. DOE is aware of a series of non-weatherized gas furnaces with 

inverter-driven PSC furnace fan motors that was once commercially available. DOE has 

determined that inverter controls provide efficiency improvement by offering additional

intermediate airflow-control settings and a wider range of airflow-control settings (i.e.,

lower turndown ratio) than conventional PSC controls. The additional airflow-control 

settings and range enable the furnace fan to better match demand. Publically-available 

performance data for the series of furnaces using inverter-driven PSCs demonstrate that 

the use of this technology results in reduced FER values compared to baseline PSC 

87
furnace fans. Consequently, DOE considered inverter-driven PSCs as a technologically 

feasible option for reducing furnace fan energy consumption.

Manufacturers were opposed to listing inverter-driven PSCs as a viable 

technology option. Manufacturers commented that there are alternate, more cost-effective 

solutions to reduce energy consumption for air-moving systems, such as airflow path 

design or ECM (referred to herein by DOE as a “constant-airflow BPM motor”)

technology. 78 FR 64084. 

For the NOPR analysis, DOE recognized manufacturers’ concerns with the costeffectiveness of inverter-driven PSC fan motors. However, DOE decided to include 

inverter-driven PSC motors as a technology option to be evaluated further in the 

screening analysis due to their potential to reduce furnace fan energy consumption. 78 FR 

64084. 

DOE did not receive comment or additional information on including inverter 

controls for PSC motors as a technology option, thus, DOE is including this technology

option in the Final Rule. DOE evaluates in the engineering analysis the cost-effectiveness 

of all energy-saving technology options that are not screened out. Chapter 3 of the Final 

Rule TSD provides a more detailed discussion of inverter-driven PSC furnace fan motors. 

88
High-Efficiency Motors

In the preliminary analysis, DOE identified four motor types that are typically 

used in furnace fan assemblies: (1) PSC motors; (2) PSC motors that have more than 3 

airflow-control settings and sometimes improved materials (hereinafter referred to as 

“improved PSC” motors); (3) constant-torque BPM motors (often referred to as “X13 

motors”); and (4) constant-airflow BPM motors (often referred to as “ECMs”).20 DOE 

finds that furnace fans using high-efficiency motor technology options operate more 

efficiently than furnace fans using baseline PSC motors by:

• Functioning more efficiently at a given operating condition;

• Maintaining efficiency throughout the expected operating range; and

• Achieving a lower turndown ratio21 (i.e., ratio of airflow in lowest setting to 

airflow in highest setting).

Ingersoll Rand commented that a PSC motor will use less energy at higher static 

pressures, while an ECM increases energy use as static pressure rises. Ingersoll Rand 

stated that as a result, understanding the impact of switching to an ECM at higher static 

pressures may confuse the consumer. (Ingersoll Rand, PA Public Meeting Transcript, No. 

43 at p. 67)

20 “ECM” and “X13” refer to the constant-airflow and constant torque (respectively) BPM offerings of a 

specific motor manufacturer. Throughout this notice, DOE will refer to these technologies using generic 

terms, which are introduced in the list above. However, DOE’s summaries of interested-party submitted 

comments include the terminology used by the interested party when referring to motor technologies.

21 A lower turndown ratio can significantly improve furnace fan efficiency because fan input power has a 

cubic relationship with airflow.

89

 
For the NOPR analysis, DOE stated that it is aware that consumers may be 

confused when BPM motors (referred to as ECMs by Ingersoll Rand above) consume 

more energy than PSC motors at higher static pressures, because consumers expect BPM 

motors to consume less energy than PSC motors under the same operating conditions. In 

general, input power to the fan motor increases as static pressure increases to provide a 

given airflow (i.e., the fan motor has to work harder in the face of increased resistance to 

provide a desired amount of air).22 DOE agreed with Ingersoll Rand that as static 

pressure increases, input power to a PSC-driven furnace fan will decrease, which is 

seemingly contradictory to the principle described above. DOE found that input power to 

a PSC-driven furnace fan decreases because the airflow provided by the fan decreases as 

static pressure rises (i.e., the fan does not have to work as hard in the face of increased 

resistance because the fan is not providing as much air). 78 FR 64084. Input power to a 

constant-airflow BPM motor-driven furnace fan, on the other hand, will increase as static 

pressure rises because the BPM motor-driven fan is designed to maintain the desired 

level of airflow. Recognizing that this behavior could complicate comparing the relative 

performance of these motor technologies, DOE’s rating metric, FER, is normalized by 

airflow to result in ratings that are in units of watts/cfm. DOE believed that a comparison 

using a watts/cfm metric will mitigate confusion by accurately reflecting that even though 

a constant-airflow BPM motor is consuming more power at higher statics, it is also 

providing more airflow, which is useful to the consumer.

22 See chapter 3 of the TSD for more details regarding fan operation.

90

 
As detailed in the NOPR, interested parties recognized the benefits provided by 

constant-torque and constant-airflow BPM motors. Interested parties also agreed that the 

BPM motor variations (i.e., constant-torque and constant-airflow) and inverter-driven 

PSC motors generally have lower turndown ratios than a three-speed PSC motor. 78 FR 

64084. Table IV.3 contains the turndown ratio estimates supplied publicly by interested 

parties. Manufacturers generally provided similar feedback during interviews.

Table IV.3: Interested Party Estimated Fan Motor Turndown Ratios

Interested Party PSC

Wave 

chopper 

controller 

PSC

Constanttorque ECMConstantairflow ECM

NMC 

(NMC, No. 60 at p. 1) 0.45 0.36 0.45 0.20

Goodman 

(Goodman, No. 50 at p. 2) 0.70-0.75 - 0.40-0.50 0.25-0.35

Rheem 

(Rheem, No. 54 at p. 6) 0.60 - 0.30 0.20

Overall, comments regarding high-efficiency motor turndown ratio validated 

DOE’s expectation that lower turndowns are associated with improved PSCs, inverterdriven PSCs, and BPM motor variations. These motors consume significantly less energy 

over a typical residential furnace fan operating range. DOE disagreed with Lennox that 

including constant circulation as part of FER would “artificially” inflate the performance 

of BPM motors compared to PSC motors, because DOE concluded that there is nontrivial use of this mode by consumers. 78 FR 64085. As part of the test procedure 

rulemaking, DOE estimated that on average, consumers operate furnace fans in constantcirculation mode 400 hours annually. This estimate is used to weight fan constantcirculation electrical energy consumption in FER. Excluding this mode from the rating 

91
metric would underestimate the potential efficiency improvements of technology options, 

such as BPM motors, that could reduce fan electrical consumption while performing this 

function. A detailed discussion of DOE’s estimate for national average constantcirculation furnace fan operating hours can be found in the test procedure NOPR. 77 FR 

28674, 28682 (May 15, 2012). DOE did not revise these estimates in the test procedure 

Final Rule published on January 3, 2014. 79 FR 499.

DOE did not receive comment or additional information on including highefficiency motors as a technology option, thus, DOE is including this technology option 

in the Final Rule. DOE evaluates in the engineering analysis the cost-effectiveness of all 

energy-saving technology options that are not screened out. Chapter 3 of the Final Rule 

TSD provides a more detailed discussion of high-efficiency furnace fan motors. 

Multi-Stage or Modulating Heating Controls

In the preliminary analysis (77 FR 40530 (July 10, 2012)), DOE identified twostage and modulating heating controls (hereinafter collectively referred to as “multistage” controls) as a method of reducing residential furnace fan energy consumption. 

Multi-stage furnaces typically operate at lower heat input rates and, in turn, a lower 

airflow-control setting for extended periods of time compared to single-stage furnaces to 

heat a residence.23 Due to the cubic relationship between fan input power and airflow, 

operating at the reduced airflow-control setting reduces overall fan electrical energy 

23 A further discussion of multi-stage heating controls is found in chapter 3 of the preliminary analysis 

TSD, which can be found at the following web address: 

http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0037. 

92

 
consumption for heating despite the extended hours. In the preliminary analysis, DOE 

analyzed multi-staging controls paired with use of a constant-airflow BPM fan motor as 

one technology option, because DOE found the two to be almost exclusively used 

together in commercially-available products.

Interested parties encouraged DOE to consider X13-level motors applied with 

multi-stage furnace controls as a technology option. 78 FR 64085. During interviews, 

manufacturers commented that multi-stage heating controls can be and are used 

regardless of motor type.

Based on comments from manufacturers, DOE recognized that multi-stage 

controls can be paired with other motor types, not just constant-airflow BPM motors. 

DOE agreed with interested parties that implementing multi-stage heating controls 

independent of motor type could result in residential furnace fan efficiency 

improvements. Consequently, DOE decided to de-couple multi-staging controls from the 

constant-airflow BPM motor technology option. Accordingly, DOE evaluated multistaging controls as a separate technology option for the NOPR. 78 FR 64085. 

DOE did not receive comment or additional information on multi-staging controls 

as a technology option, thus, DOE is including this technology option in the Final Rule. 

93
Backward-Inclined Impellers

DOE determined in the preliminary analysis that using backward-inclined 

impellers could lead to possible residential furnace fan energy savings. Although limited 

commercial data regarding backward-inclined impeller performance were available, DOE 

cited research by General Electric (GE) that showed large improvements in efficiency 

were achievable under certain operating conditions.24

Interested parties disagreed with the DOE’s findings, stating that literature 

indicates there are varying degrees of performance improvement when backward-inclined 

impellers are used in place of forward-curved impellers. 78 FR 64085. Ebm-papst, a 

company that provides custom air-movement products, offered a diverging opinion from 

most manufacturers regarding the energy-saving potential of backward-inclined 

impellers. That company retrofitted several HVAC products with furnace fan assemblies 

that incorporated backward-inclined impellers without increasing cabinet size and tested 

them. Depending on the application and the external static pressure load (typically 0.5 

in.w.c. to 1 in.w.c.), ebm-papst found that the backward-inclined impeller achieved input 

power reductions from 15-30 percent. (ebm-papst Inc., No. 52 at p. 1) 

DOE recognized that backward-inclined impellers may not be more efficient than 

forward-curved impellers under all operating conditions and that there may be

considerable constraints to implementation. However, the GE prototype and ebm-papst 

prototype both demonstrate that significant energy consumption reduction is achievable 

24 Wiegman, Herman, Final Report for the Variable Speed Integrated Intelligent HVAC Blower (2003) 

(Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).

94

 
at some points within the range of residential furnace fan operation. For this reason, DOE

included backward-inclined impellers as a technology option in the NOPR. 78 FR 64086.

DOE did not receive additional comment or information on including backwardinclined impellers as a technology option. Thus, DOE included backward-inclined 

impellers as a technology to be evaluated further in the screening analysis for the Final 

Rule.

B. Screening Analysis

DOE uses the following four screening criteria to determine which technology

options are suitable for further consideration in an energy conservation standards 

rulemaking:

1. Technological feasibility. Technologies that are not incorporated in commercial 

products or in working prototypes will not be considered further.

2. Practicability to manufacture, install, and service. If it is determined that mass 

production and reliable installation and servicing of a technology in commercial 

products could not be achieved on the scale necessary to serve the relevant market 

at the time of the compliance date of the standard, then that technology will not be 

considered further.

3. Impacts on product utility or product availability. If it is determined that a 

technology would have significant adverse impact on the utility of the product to 

significant subgroups of consumers or would result in the unavailability of any 

covered product type with performance characteristics (including reliability), 

95
features, sizes, capacities, and volumes that are substantially the same as products 

generally available in the United States at the time, it will not be considered 

further.

4. Adverse impacts on health or safety. If it is determined that a technology would

have significant adverse impacts on health or safety, it will not be considered 

further.

(10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b))

In sum, if DOE determines that a technology, or a combination of technologies,

fails to meet one or more of the above four criteria, it will be screened out from further 

consideration in the engineering analysis. The reasons for eliminating any technology are 

discussed below.

The subsequent sections include comments from interested parties pertinent to the 

screening criteria, DOE’s evaluation of each technology option against the screening 

analysis criteria, and whether DOE determined that a technology option should be 

excluded (“screened out”) based on the screening criteria. 

1. Screened-Out Technologies

DOE screened out fan housing and airflow path design improvements in the 

preliminary analysis. DOE had little quantitative data to correlate specific fan housing 

alterations with efficiency improvements. Additionally, DOE anticipated that any 

96
improvements to airflow path design that would result in fan efficiency improvement 

would require an increase in furnace fan cabinet size or negatively impact heat exchanger 

performance, thereby compromising the practicability to manufacture or reducing utility 

to consumers.

In response to the preliminary analysis, interested parties stated many concerns 

associated with modifying airflow path designs to reduce residential furnace fan electrical 

energy consumption, namely, . that airflow path design modifications would likely 

require increasing HVAC product size. Manufacturers explained that increasing HVAC 

products size would have adverse impacts on practicability to install and consumer 

utility, because the furnace fan market is predominantly a replacement market. 78 FR 

64086.

For the NOPR, DOE did not receive or find additional quantitative data that

shows a measurable increase in fan efficiency as a result of a specific fan housing or 

airflow path design modification. Even after individual discussion with manufacturers, 

DOE was not able to identify a case in which fan housing or airflow path design 

modifications could lead to potential fan energy savings without increasing the size of the 

HVAC product or compromising thermal performance or safety. DOE is aware of the 

impacts on thermal efficiency and furnace fan performance of the additional heat 

exchanger in condensing furnaces. As discussed in section III.B, DOE accounted for 

these impacts in its criteria for differentiating product classes. In addition, DOE concurs 

with manufacturers’ observations that an increase in envelope size would adversely 

97
impact practicability to manufacture and install, as well as product utility. Accordingly, 

DOE decided to screen out fan housing and airflow path design modifications in the 

NOPR. 78 FR 64086.

DOE did not receive additional comment or information regarding fan housing 

and airflow path design modifications in response to the NOPR. Thus, DOE determined 

to screen out fan housing and airflow path design modifications in the Final Rule.

2. Remaining Technologies

Through a review of each technology, DOE found that all of the other identified 

technologies met all four screening criteria to be examined further in DOE’s analysis. 78 

FR 64087. In summary, DOE did not screen out the following technology options: (1) 

inverter-driven PSC fan motors; (2) high-efficiency fan motors; (3) multi-stage heating 

controls; and (4) backward-inclined impellers. DOE understands that all of these 

technology options are technologically feasible, given that the evaluated technologies are 

being used (or have been used) in commercially-available products or working 

prototypes. These technologies all incorporate materials and components that are 

commercially available in today’s supply markets for the residential furnace fans that are 

the subject of this Final Rule. Therefore, DOE believes all of the efficiency levels 

evaluated in this notice are technologically feasible. For additional details, please see 

chapter 4 of the Final Rule TSD.

98
Interested parties, however, voiced concerns regarding these screening criteria as 

they apply to BPM fan motors and backward-inclined impellers in previous phases of this 

rulemaking. DOE summarizes and addresses these concerns in the sections immediately 

below. DOE did not receive public comments relevant to the screening analysis criteria 

for the other remaining technology options. 

 

High-Efficiency Motors

In response to the preliminary analysis, manufacturers stated that there are a 

limited number of ECM motor suppliers to furnace fan manufacturers, and that it is a 

proprietary technology. Manufacturers also stated that no alternative ECM exists at the 

scale of Regal Beloit ECMs and that limiting PSC applicability would reduce product 

flexibility. 

Motor manufacturers disagreed with residential furnace fan manufacturers,

claiming that there is more than just a single motor manufacturer offering ECM 

technology. Motor manufacturers also supported DOE’s assumption that after 

implementation of furnace fan efficiency standards, brushless permanent magnet motor 

technologies will become increasingly available over time. DOE discovered during 

interviews with manufacturers that there are multiple suppliers of BPM motors. DOE also 

found further evidence that some manufacturers purchase BPM motors from multiple 

suppliers. EEI stated that the expiration of Regal Beloit ECM patents around 2020 may 

increase the availability of this motor type while decreasing cost. (EEI, PA Public 

Meeting Transcript, No. 43 at p. 127)

99
In the preliminary analysis, DOE requested comment as to whether manufacturers could 

alternatively develop BPM motor controls in-house when using high-efficiency motors 

from other, non-Regal Beloit, suppliers. Most furnace fan manufacturers claimed that 

development of in-house controls for BPM motors is not an option. 78 FR 64087. 

While DOE recognizes that Regal Beloit possesses a number of patents in the 

BPM motor space, other motor manufacturers (e.g., Broad Ocean, ebm-papbst, and 

NMC) also offer BPM models. Additionally, DOE is aware that in years past, residential 

furnace fans paired with constant-airflow BPM motors accounted for 30 percent of the 

market. While DOE estimates that constant-airflow BPM motors represent only 10-15

percent of the current furnace fan market, the manufacturing capability to meet BPM 

motor demand exists. Thus, DOE continues to expect that BPM motor technology is 

currently available from more than one source and will become increasingly available to 

residential furnace fan manufacturers. 78 FR 64087. 

Also in response to the preliminary analysis, some fan manufacturers expressed 

concern that high-efficiency motor reliance on rare earth metals would impact supply. 

However, DOE is aware of high-efficiency motors that do not contain rare earth 

materials. DOE is also confident, after discussions with manufacturers, that if BPM 

motors are adopted as a means to meet a future residential furnace fan energy 

conservation standard, manufacturers would have a number of cost- and performance100
competitive suppliers from which to choose who have available, or could rapidly

develop, control systems independently of the motor manufacturer. 78 FR 64087. 

DOE did not receive additional comment or information in response to the NOPR 

about high-efficiency motors related to the screening criteria. Thus DOE included highefficiency motors as a technology option in the engineering analysis. 

Backward-Inclined Impellers

In response to the preliminary analysis, furnace fan manufacturers stated that

backward-inclined impellers must have larger diameter and operate at higher speed than 

forward-curve impellors in order to attain equivalent performance (i.e., flow and pressure 

rise). However, ebm-papst stated that they retrofitted existing equipment with backwardinclined impellers, which only required making minor changes to the airflow path within 

the equipment. 78 FR 64088. 

Manufacturers were also concerned with the potential impacts that backwardinclined impellers could have on heat exchanger temperatures. Some commenters also 

argued that backward-inclined impellers may affect furnace fan utility, because the noise 

produced by this impeller type may limit product application. Utilities claimed that a 

backward-inclined impeller, in combination with increased fan motor speeds to achieve 

higher efficiency, leads to amplified noise levels. 78 FR 64088. 

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For the NOPR, DOE found that there are multiple approaches to implementing 

backward-inclined impellers to reduce furnace fan energy consumption. DOE recognized

that one approach is to use a backward-inclined impeller that is larger than a standard 

forward-curved impeller, which may lead to larger HVAC products. Another approach is 

to pair the backward-inclined impeller with a motor that operates at increased RPM.

Ebm-papst tests show a significant potential to reduce fan electrical energy consumption 

for a backward-inclined impeller assembly that uses existing motor technology at higher 

RPMs and is implemented in existing HVAC products (i.e., no increase in product size 

required). Ebm-papst does not believe that achieving higher RPMs with existing motor 

technology is an obstacle for implementing this technology. DOE believed that this 

prototype represented a backward-inclined implementation approach that could achieve 

fan energy savings while avoiding the negative impacts listed by manufacturers. 

Consequently, DOE decided not to screen out the backward-inclined impeller technology 

option in the NOPR. 78 FR 64088.

DOE did not receive additional comment or information about backward-inclined

impellers related to the screening criteria. Thus, DOE decided not to screen out 

backward-inclined impellers in the Final Rule.

C. Engineering Analysis

In the engineering analysis (corresponding to chapter 5 of the Final Rule TSD), 

DOE establishes the relationship between the manufacturer selling price (MSP) and 

improved residential furnace fan efficiency. This relationship serves as the basis for cost102
benefit calculations for individual consumers, manufacturers, and the Nation. DOE 

typically structures the engineering analysis using one of three approaches: (1) design 

option; (2) efficiency level; or (3) reverse engineering (or cost-assessment). The designoption approach involves adding the estimated cost and efficiency of various efficiencyimproving design changes to the baseline to model different levels of efficiency. The 

efficiency-level approach uses estimates of cost and efficiency at discrete levels of 

efficiency from publicly-available information, and information gathered in manufacturer 

interviews that is supplemented and verified through technology reviews. The reverse 

engineering approach involves testing products for efficiency and determining cost from 

a detailed bill of materials derived from reverse engineering representative products. The 

efficiency values range from that of a least-efficient furnace fan sold today (i.e., the 

baseline) to the maximum technologically feasible efficiency level. For each efficiency 

level examined, DOE determines the MSP; this relationship is referred to as a costefficiency curve.

1. Efficiency Levels

In this rulemaking, DOE used an efficiency-level approach in conjunction with a 

design-option approach to identify incremental improvements in efficiency for each 

product class. An efficiency-level approach enabled DOE to identify incremental 

improvements in efficiency for efficiency-improving technologies that furnace fan 

manufacturers already incorporate in commercially-available models. A design-option 

approach enabled DOE to model incremental improvements in efficiency for 

technologies that are not commercially available in residential furnace fan applications. 

103
In combination with these approaches, DOE used a cost-assessment approach to 

determine the manufacturing production cost (MPC) at each efficiency level identified 

for analysis. This methodology estimates the incremental cost of increasing product 

efficiency. When analyzing the cost of each efficiency level, the MPC is not for the entire 

HVAC product, because furnace fans are a component of the HVAC product in which 

they are integrated. The MPC includes costs only for the components of the HVAC 

product that impact FER. 

Baseline

During the preliminary analysis, DOE selected baseline units typical of the leastefficient furnace fans used in commercially-available, residential HVAC models that 

have a large number of annual shipments. This sets the starting point for analyzing 

potential technologies that provide energy efficiency improvements. Additional details on 

the selection of baseline units may be found in chapter 5 of the Final Rule TSD. DOE 

compared the FER at higher energy efficiency levels to the FER of the baseline unit and 

compared baseline MPCs to the MPCs at higher efficiency levels. 

DOE reviewed FER values that it calculated using test data and performance 

information from publicly-available product literature to determine baseline FER ratings. 

Table IV.4 presents the baseline FER values identified in the preliminary analysis for 

each product class. 

Table IV.4: Preliminary Analysis Baseline FER

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Product Class FER (W/1000 cfm)

Non-Weatherized, Non-condensing Gas Furnace Fan 380

Non-Weatherized, Condensing Gas Furnace Fan 393

Weatherized, Non-Condensing Gas Furnace Fan 333

Non-Weatherized, Non-Condensing Oil Furnace Fan 333

Electric Furnace / Modular Blower Fan 312

Mobile Home Non-weatherized, Non-condensing Gas 

Furnace Fan 295

Mobile Home Non-weatherized, Condensing Gas 

Furnace Fan 319

Mobile Home Electric Furnace / Modular Blower Fan 243

In response to the preliminary analysis, manufacturers asserted that the baseline 

FER values presented were not representative of the furnace fans in the least-efficient 

residential HVAC models offered for sale today. Some manufacturers also requested that 

DOE alter FER to better reflect unit capacity. Specifically, some manufacturers stated 

that residential furnace fans having a larger capacity also have higher FERs and 

recommended that DOE adjust baseline FER values to include the largest-capacity fan 

within a product class. 78 FR 64089. 

In the NOPR, DOE evaluated the feedback it received and used the data provided 

by interested parties to generate new FER values and to revise its baseline, intermediate 

efficiency levels, and max-tech FER estimates. DOE’s revisions included FER results for 

furnace fan models that span the capacity range of residential products. After reviewing 

all of the available FER values based on new data, DOE concluded that FER can best be 

represented as a linear function of airflow capacity (i.e., a first constant added to airflow 

multiplied by a second constant). The slope of the linear fit characterizes the change in 

FER for each unit of airflow capacity increase, and the y-intercept represents where the 

105
FER line intersects the y-axis (where airflow capacity is theoretically zero). For the 

NOPR, DOE proposed to use such linear functions to represent FER for the different 

efficiency levels of the different product classes. 78 FR 64089. 

Table IV.5 shows the revised FER baseline efficiency levels estimates that DOE 

used for the NOPR. 

Table IV.5: NOPR Baseline FER Estimates

Product Class FER*

(W/1000 cfm)

Non-Weatherized, Non-condensing Gas Furnace Fan FER = 0.057 x QMax + 362

Non-Weatherized, Condensing Gas Furnace Fan FER = 0.057 x QMax + 395

Weatherized Non-Condensing Gas Furnace Fan FER = 0.057 x QMax + 271

Non-Weatherized, Non-Condensing Oil Furnace Fan FER = 0.057 x QMax + 336

Electric Furnace / Modular Blower Fan FER = 0.057 x QMax + 331

Mobile Home Non-weatherized, Non-condensing Gas 

Furnace Fan FER = 0.057 x QMax + 271

Mobile Home Non-weatherized, Condensing Gas 

Furnace Fan FER = 0.057 x QMax + 293

Mobile Home Electric Furnace / Modular Blower Fan FER = 0.057 x QMax + 211

Mobile Home Weatherized Gas Furnace Fan Reserved

Mobile Home Non-Weatherized Oil Furnace Fan Reserved *

QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test 

procedure at the time of the ECS NOPR publication. 78 FR 19606, 19627 (April 2, 2013).

Manufacturers stated that the baseline FER values presented in the NOPR need to 

be re-evaluated to determine the appropriate baseline. Because the test procedure was not 

finalized at the time of the ECS NOPR publication, Lennox believes that assumptions 

were made by DOE to determine the baseline from other sources, leading to overstated 

energy savings and misleading conclusions. (Lennox, No. 100 at p. 3) Goodman believes 

106
that the NOPR baseline values are too high. Goodman initially commented that baseline 

values were too low for the preliminary analysis. Based on the product testing per the 

April 2013 test procedure SNOPR, Goodman feels the increased values for baseline FER 

are too high, and should be closer (but still higher than) the original TSD estimated

values. (Goodman, No. 102 at p. 8) Morrison, NEEA, and NPPC also commented that 

because there was no finalized test procedure at the time the ECS NOPR was published, 

DOE should not be using test data from public literature to generate FER values. 

(Morrison, No. 91 at p. 124; NEEA, NPCC, No. 96 at p. 2) Ingersoll-Rand echoed 

Lennox’s and Morrison’s comments, stating that it is difficult to get furnace fan power 

data from public literature, and that DOE’s baseline FER values are over-estimated. 

(Ingersoll-Rand, No. 91 at pp. 110-111) Rheem and Lennox questioned whether the 

efficiency levels are based off of FER or the average annual auxiliary electrical energy 

consumption (Eae). (Rheem, No. 83 at p. 4; Lennox, No. 100 at p. 3) Lennox and 

Ingersoll-Rand also commented specifically about the baseline FER for weatherized gas 

furnaces, citing a dramatic difference in DOE’s baseline performance level as compared 

to their product offerings. Additionally, when the performance improvement factors are 

applied to DOE’s baseline, the result is a very aggressive mandated increase in 

performance. (Lennox, No. 100 at p. 3; Ingersoll-Rand, No. 107 at p. 4) AHRI also 

commented on the FER for weatherized gas furnaces, stating that the FER values for 

weatherized gas furnace fans and non-weatherized condensing gas furnace fans should be 

the same because the test procedure is the same for both products, except for a difference 

in ESP. AHRI explained the difference in ESP accounts for the cooling coil within the 

weatherized gas furnace, therefore, in effect, the furnace fan assemblies for weatherized 

107
and non-weatherized gas furnaces are subject to the same ESP. (AHRI, No. 91 at pp. 127-

129) Goodman agreed with AHRI that weatherized gas furnace fans should have the save 

efficiency levels as non-weatherized gas, non-condensing furnace fans. (Goodman, No. 

102 at p. 3) 

 

DOE did not use Eae as an input for the engineering analysis. All efficiency levels 

considered by DOE throughout this rulemaking, including the baseline, are based on FER 

data, not Eae. DOE used Eae as a proxy for FER to evaluate market-wide energy 

performance of furnace fans in the market and technology assessment only. Further 

description of this characterization is found in chapter 3 of the Final Rule TSD. DOE 

disagrees with Lennox, Morrison, NEEA, and NPPC that FER values that DOE generated 

prior to the final test procedure or based on public literature should not be considered in 

this Final Rule. DOE outlines in detail in section III.A the reasons that FER data from 

previous stages of the rulemaking and public literature are relevant. Section III.A also 

explains how DOE’s changes to the test procedure between the test procedure SNOPR 

and final rule should not result in significant differences in FER values for many covered 

products. Thus, DOE disagrees with Ingersoll Rand, Lennox, Goodman, and Morrison’s 

claims that, in the absence of a final test procedure or because of changes in the final test 

procedure, DOE used unreliable information to calculate FER and model efficiency 

levels for the NOPR. Regardless, DOE agrees with interested parties that DOE should reupdate its NOPR baseline equations based on new data. DOE received some baseline 

FER data from interested parties in response to the NOPR. As discussed in section III.A, 

DOE also conducted testing prior to and during the development of the test procedure 

108
final rule that generated a broad enough set of results to enable DOE to derive FER 

values that are consistent with the requirements of the final test procedure. DOE used this 

new baseline FER data to revise its baseline equations.

DOE investigated interested party claims that DOE’s proposed baseline equation 

for weatherized gas furnace fans did not match manufacturer performance estimates. 

DOE did not receive additional baseline FER data for weatherized gas furnace fans. 

However, DOE did derive additional FER values from data from specification sheets and 

testing of weatherized gas furnaces at higher efficiency levels (i.e., weatherized gas 

furnaces that use constant-torque and constant-airflow BPM motors). DOE was able to 

collect more reliable FER data for more efficient weatherized gas furnace fans than for 

baseline weatherized gas furnace fans. Consequently, DOE estimated the weatherized gas 

furnace fan baseline FER by multiplying the market and capacity weighted FER value for 

weatherized gas furnace fans with constant-airflow BPM motor and multi-staging by the 

expected percent increase in FER (i.e., the inverse of the expected percent reduction in 

FER for constant-airflow BPM and multi-staging). DOE then developed a conversion 

factor from the non-weatherized, non-condensing gas furnace fan baseline FER to 

generate a y-intercept for the weatherized non-condensing gas furnace fan baseline FER 

equation. This approach significantly increased DOE’s estimated baseline FER for 

weatherized non-condensing gas furnace fans to a level consistent with the revised 

baseline for non-weatherized, condensing gas furnace fans. Even though they are not 

identical, DOE concludes that the approach described is appropriate based on interested 

party feedback. The airflow path design of weatherized non-condensing gas and non109
weatherized, condensing gas furnaces are very different, which impacts furnace fan 

performance, accounting for the slightly different FER equations. 

 

DOE also received comments from interested parties regarding the slopes in the 

NOPR FER equations. Rheem and Lennox commented that the slope characterizing the 

relationship between FER and airflow capacity is too flat, adding that higher-capacity 

models are space constrained, and their FER values do not meet the proposed FER levels 

in the NOPR. (Rheem, No. 83 at p. 8; Lennox, No. 100 at p. 6) Ingersoll-Rand 

commented that for condensing furnaces and furnaces using improved PSC motors and 

multi-staging controls, FER tends to decrease as capacity increases, creating a negative 

slope. (Ingersoll-Rand, No. 91 at pp. 110-111; Ingersoll-Rand, No. 107 at pp. 3-4) 

Ingersoll-Rand also commented that even though FER values for furnace fans with PSC 

motors follow a linear trend, FER values for furnace fans that use BPM motor 

technologies do not because they react differently to changes in static pressure (IngersollRand, No. 107 at p. 5) ACEEE, Goodman, and Mortex questioned whether a linear slope 

is the best way to characterize the relationship between FER and airflow capacity. AHRI 

and Goodman added that there is a cubic relationship between fan input power and 

airflow, thus, a non-linear slope may be more appropriate. (ACEEE, No. 94 at p. 3; 

Goodman, No. 102 at p. 13; Mortex, No. 104 at p. 3; AHRI, No. 98 at p. 3) 

In response to interested party comments, DOE recalculated FER versus airflow 

capacity slopes using new data from baseline series for both non-weatherized, noncondensing gas furnace fans and non-weatherized, condensing gas furnace fans. DOE 

110
found that the average baseline slope increased dramatically from 0.057 to 0.081. DOE is 

aware that some instances of furnace series models will not match DOE’s slope analysis

results. The data that DOE has show a positive slope when characterizing the relationship 

between FER and airflow capacity. Furthermore, DOE did not determine that a linear fit 

was the best fit statistically. DOE believes a linear fit is the best representation of furnace 

fan performance given the level of data available. DOE finds that linear fits result in a 

distribution of efficiency levels that match the distribution of furnace fan performance by 

technology option used. Additionally, a cubic trend-line does not account for changes in 

furnace envelope size, heat exchanger size, furnace fan outlet size, and other factors the 

affect furnace fan performance. Using a cubic trend-line would only be appropriate if 

these other factors were held constant. DOE finds that input power to a PSC-driven 

furnace fan decreases because the airflow provided by the fan decreases as static pressure 

rises (i.e., the fan does not have to work as hard in the face of increased resistance 

because the fan is not providing as much air). Input power to a constant-airflow BPM 

motor-driven furnace fan, on the other hand, will increase as static pressure rises because 

the BPM motor-driven fan is designed to maintain the desired level of airflow. 

Recognizing that this behavior could complicate comparing the relative performance of 

these motor technologies, DOE’s rating metric, FER, is normalized by airflow to result in 

ratings that are in units of watts/cfm. 

Table IV.6 shows the revised FER baseline efficiency levels estimates that DOE 

used for the Final Rule. 

Table IV.6: Final Rule Baseline FER Estimates

111
Product Class FER*

(W/1000 cfm)

Non-Weatherized, Non-condensing Gas Furnace Fan FER = 0.081 x QMax + 335

Non-Weatherized, Condensing Gas Furnace Fan FER = 0.081 x QMax + 358

Weatherized Non-Condensing Gas Furnace Fan FER = 0.081 x QMax + 365

Non-Weatherized, Non-Condensing Oil Furnace Fan FER = 0.081 x QMax + 433

Electric Furnace / Modular Blower Fan FER = 0.081 x QMax + 304

Mobile Home Non-weatherized, Non-condensing Gas 

Furnace Fan FER = 0.081 x QMax + 252

Mobile Home Non-weatherized, Condensing Gas 

Furnace Fan FER = 0.081 x QMax + 273

Mobile Home Electric Furnace / Modular Blower Fan FER = 0.081 x QMax + 186

Mobile Home Weatherized Gas Furnace Fan Reserved

Mobile Home Non-Weatherized Oil Furnace Fan Reserved * QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test 

procedure. 79 FR 499, 524 (January 3, 2014).

Percent Reduction in FER

For the preliminary analysis, DOE determined average FER reductions for each 

efficiency level for a subset of key product classes and applied these reductions to all 

product classes. DOE found from manufacturer feedback and its review of publicallyavailable product literature that manufacturers use similar furnace fan components and 

follow a similar technology path to improving efficiency across all product classes. DOE 

does not expect the percent reduction in FER associated with each design option, whether 

commercially available or prototype, to differ across product classes as a result. Table 

IV.7 includes DOE’s preliminary analysis estimates for the percent reduction in FER 

from baseline for each efficiency level.

Table IV.7: Preliminary Analysis Estimates for Percent Reduction in FER from 

Baseline for Each Efficiency Level

Efficiency Level (EL) Design Option Percent Reduction 

in FER from 

112
Baseline

1 Improved PSC 2%

2 Inverter-Driven PSC 10%

3 Constant-Torque BPM Motor 45%

4 Constant-Airflow BPM Motor 

+ Multi-Staging 59%

5

Premium Constant-Airflow 

BPM Motor + MultiStaging + Backward-Inclined

Impeller

63%*

*DOE estimates that implementing a backward-inclined impeller at EL 5 results in a 10% reduction in FER 

from EL 4. This is equivalent to a reduction of 4% percent of the baseline FER. The total percent reduction 

in FER from baseline for EL 5 includes the 59% reduction from EL 4 and the 4% net reduction of the 

backward-inclined impeller for a total percent reduction of 63% from baseline.

Interested parties questioned DOE’s estimates for the FER reduction for highefficiency motors. Specifically, interested parties noted that DOE underestimated the 

efficiency gain of improved PSC motors over standard PSC motors, and overestimated 

the efficiency improvement of BPM motor technology options. 78 FR 64090. 

For the NOPR, DOE reviewed its estimates of percent reduction in FER from 

baseline for each efficiency level based on interested party feedback. In addition to the 

comments summarized above, interested parties also provided FER values for higherefficiency products in manufacturer interviews. DOE used these data to revise its percent 

reduction estimates. Table IV.8 shows DOE’s revised estimates for the percent reduction 

in FER for each efficiency level that DOE used in the NOPR. For a given product class, 

DOE applied the percent reductions below to both the slope and y-intercept of the 

baseline FER equation to generate FER equations to represent each efficiency level above 

baseline.

113
Table IV.8: NOPR Estimates for Percent Reduction in FER from Baseline for Each 

Efficiency Level

Efficiency Level (EL) Design Option

Percent Reduction 

in FER from 

Baseline

1 Improved PSC 10%

2 Inverter-Driven PSC 25%

3 Constant-Torque BPM Motor 42%

4 Constant-Torque BPM Motor 

and Multi-Staging 50%

5 Constant-Airflow BPM Motor 

and Multi-Staging 53%

6 Premium Constant-Airflow 

BPM Motor and Multi-Staging 

+ Backward-Inclined Impeller

57%*

*DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER 

from EL 5. This is equivalent to a 4% percent reduction in FER from baseline. The total percent reduction 

in FER from baseline for EL 6 includes the 53% reduction from EL 5 and the 4% net reduction from the 

backward-inclined impeller for a total percent reduction of 57% from baseline.

Note that EL 4 in the table above was a newly proposed efficiency level in the 

NOPR. As discussed in section IV.A.3, DOE analyzed multi-staging as a separate 

technology option. For the NOPR, DOE also evaluated a separate efficiency level 

representing applying multi-staging to a furnace fan with a constant-torque BPM motor. 

78 FR 64091. 

In response to the NOPR, AHRI asked if DOE considered pairing PSC motors 

with multi-stage furnace controls in its analysis. (AHRI, No. 91 at p. 310) While DOE 

did gather data for and investigated PSC-driven furnace fans in multi-stage products, 

DOE did not include this combination as an efficiency level for the Final Rule. In the 

engineering analysis, DOE assesses technology options in order of cost-effectiveness. 

DOE finds that constant-torque BPM motors are more cost-effective than PSC motors 

with multi-staging. While the cost of multi-staging for each motor type is approximately 

114
the same, multi-staging results in significantly less energy savings when used with a PSC 

motor. DOE expects this is the result of a limited turndown ratio as discussed in section 

III.A.4. 

Interested parties commented on the NOPR percent reductions in FER from the 

baseline and resulting efficiency level equations. Nidec stated that the percent reductions 

do not reflect furnace fan performance improvements when using higher-efficiency PSC 

motors. (Nidec, No. 91 at p. 147) Many manufacturers stated that the proposed efficiency 

levels are not consistent with product performance using the varying design options. 

Rheem, Allied Air, Daikin, Lennox, and Ingersoll-Rand stated that only their multistaging furnace lines that use constant-airflow BPM motors would meet the proposed 

standard level. (Rheem, No, 83 at pp. 1-2; Allied Air, No. 91 at p. 105; Daikin, No. 91 at 

p. 105; Lennox, No. 100 at p. 5; Ingersoll-Rand, No. 91 at pp. 102-103) Goodman and 

AHRI submitted similar comments stating that there are existing products that use the 

design options specified within TSL 5 that will not even meet the proposed energy 

conservation standards. (AHRI, No. 98 at p. 3; and Goodman, No 102 at pp. 4 and 7) In a 

joint comment submitted by Appliance Standards Awareness Project (ASAP), Alliance to 

Save Energy (ASE), National Consumer Law Center (NCLC), and National Resources 

Defense Council (NRDC) and in a separate comment submitted by California InvestorOwned Utilities (CA IOUs), interested parties recommended that DOE conduct 

additional testing of furnace fans with constant-torque BPM motors with multi-staging 

controls to verify the accuracy of the proposed FER standard level equations, and to 

ensure that the majority of products containing constant-torque BPM motors with multi115
staging controls meet the standard. (ASAP, et al., No. 105 at p. 2; CA IOU, No. 106 at p. 

3) 

 

DOE carefully considered the feedback received from interested parties on the 

percent reductions in FER from baseline that the Department proposed in the NOPR. 

DOE shares manufacturers’ concerns that their products are not meeting the levels 

proposed in the NOPR despite those models using the technologies (or more efficient 

technologies) on which those levels are based. DOE used data provided by interested 

parties, conducted additional testing using the final DOE test procedure, and gathered 

data from additional product specification sheets to generate new FER values. DOE used 

this new FER data to revise its estimates of percent reduction in FER from baseline for 

each efficiency level. In response to Nidec, DOE did analyze an efficiency level 

associated with improved PSC motors. However, DOE did not receive and could not 

gather any new FER data with which to revise its estimated percent reduction in FER 

from baseline for this technology. Using the revised estimates of percent reduction in 

FER from baseline, DOE revised its FER equations. Then, for the product classes with 

the highest shipments, DOE assessed how many models for which DOE has an FER 

value met the revised EL 4. DOE finds that over 90% of the non-weatherized, noncondensing gas, non-weatherized, condensing gas and weatherized non-condensing gas 

furnace fans for which DOE has FER values that use constant-torque BPM motors and 

multi-staging meet the revised EL 4. DOE finds that many models in those product 

classes for which DOE has FER data that use constant-torque BPM motors without multistaging would also meet the revised EL 4. DOE feels that the percentage of models that 

116
meet the revised EL 4 show that the Final Rule efficiency levels are reflective of the 

performance of the technologies on which they are based. 

Ingersoll Rand stated that percent reduction in FER from the baseline should not 

be constant across all capacities for products using constant-torque BPM motor 

technologies. Specifically, Ingersoll-Rand noted that efficiency improvements with this 

technology decrease with increasing furnace capacity, and that at high airflow capacities, 

there is little or no difference in FER values between furnace fans using improved PSC 

motors and those using constant-torque BPM motors. (Ingersoll-Rand, No. 107 at p. 5) 

Additionally, Ingersoll-Rand stated that wider cabinets for furnaces with more cooling 

capacity but the same heating input will have lower FERs. (Ingersoll-Rand, NOPR Public 

Meeting Transcript, No. 91 at p. 94) Ingersoll-Rand and Mortex disagree with DOE using 

the same slope for FER equations for both mobile home furnaces as well as non-mobile 

home furnaces. These parties cite that there are space constraints associated with mobile 

home applications, and that it is more difficult to meet the proposed standard at higher 

capacities because the cabinet size must remain the same. (Ingersoll-Rand, No. 91 at pp. 

116-117; Mortex, No. 91 at pp. 129-131)

DOE recognizes that percent reduction in FER from baseline for a given 

technology option varies with capacity. DOE’s estimates of percent reduction in FER 

from baseline are based on market-weighted averages of FER values from across the 

entire range of furnace fan airflow capacities to account for this variation. As discussed 

above, DOE finds that constant percent reductions in FER from baseline result in a 

117
distribution of efficiency levels that match the distribution of furnace fan performance by 

technology option used across the entire range of furnace fan airflow capacities. Thus, 

DOE believes that a constant percent reduction in FER from baseline across all airflow 

capacities is appropriate. DOE is also aware that in some instances FER may decrease for 

furnaces with higher cooling capacities but the same heating input. DOE's analysis 

includes FER data for furnace fans that have differing heating capacity to cooling 

capacity ratios. DOE recognizes that these ratios indicate design differences that impact 

fan performance. However, a significant majority of the models for which DOE has FER 

data are meeting the ELs associated with the technologies that they use. Of the few 

models that do not, DOE observes no pattern related to the ratio of heating capacity to 

cooling capacity. DOE recognizes that mobile home products are more space-constrained 

than the other products covered by this standard. DOE did not receive mobile home FER 

data in response to the NOPR. Despite DOE using the same slope for mobile home 

product classes to characterize the relationship between FER and airflow capacity for all 

product classes, the resulting ELs for mobile home furnace fans are less stringent than 

those for non-mobile home furnaces at higher capacities. EL 4 for MH-NWG-NC and 

NWG-NC both have slopes of 44 FER per 1000 cfm, for example. Thus, for an increase 

in airflow capacity of 1000 cfm, EL 4 allows for an increase of 44 in FER for both 

classes. At 1,200 cfm, EL 4 is represented by and FER of 235 for NWG-NC and 190 for 

MH-NWG-NC. An increase of 44 in FER would represent an increase in FER of 

approximately 18 percent for the NWG-NC furnace fan, but an increase in FER of 

approximately 23% for the MH-NWG-NC furnace fan. Consequently, the allowable 

increase in FER as capacity increases is more lenient for mobile home furnaces. DOE 

118
believes this leniency is appropriate considering the more rigid space constraints mobile 

home furnaces must meet. DOE recognizes that the same variation in stringency occurs 

as a result of DOE’s method for establishing baseline FER equations using conversion 

factors as described in more detail in chapter 5 of the Final Rule TSD. However, the 

difference in FER values between mobile home and non-mobile home furnace fans is 

much greater than the difference between FER values amongst non-mobile home furnace 

fans. The variation in stringency for non-mobile home products is minimal as a result. 

Table IV.9 shows DOE’s revised estimates for the percent reduction in FER for 

each efficiency level that DOE used in the Final Rule analyses. 

Table IV.9: Final Rule Estimates for Percent Reduction in FER from Baseline for 

Each Efficiency Level

Efficiency Level (EL) Design Option

Percent Reduction 

in FER from 

Baseline

1 Improved PSC 12%

2 Inverter-Driven PSC 25%

3 Constant-Torque BPM Motor 41%

4 Constant-Torque BPM Motor 

and Multi-Staging 46%

5 Constant-Airflow BPM Motor 

and Multi-Staging 51%

6 Premium Constant-Airflow 

BPM Motor and Multi-Staging 

+ Backward-Inclined Impeller

56%*

*DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER 

from EL 5. This is equivalent to a 5% percent reduction in FER from baseline. The total percent reduction 

in FER from baseline for EL 6 includes the 51% reduction from EL 5 and the 5% net reduction from the 

backward-inclined impeller for a total percent reduction of 56% from baseline.

Ingersoll Rand provided a significant amount of FER data in its written comment 

to support its statements. (Ingersoll Rand, No. 107 at pp. 3, 12-16) DOE appreciates this 

119
information and included these FER values in its revision of the engineering analysis to 

account for the furnace fan performance behaviors described by Ingersoll Rand.

2. Manufacturer Production Cost (MPC)

In the preliminary analysis, DOE estimated the manufacturer production cost 

associated with each efficiency level to characterize the cost-efficiency relationship of 

improving furnace fan performance. The MPC estimates are not for the entire HVAC 

product because furnace fans are a component of the HVAC product in which they are 

integrated. The MPC estimates includes costs only for the components of the HVAC 

product that impact FER, which DOE considered to be the:

• Fan motor and integrated controls;

• Primary control board (PCB);

• Multi-staging components;

• Impeller;

• Fan housing; and

• Components used to direct or guide airflow.

DOE separated the proposed product classes into high-volume and low-volume 

product classes and generated high-volume and low-volume MPC estimates to account 

for the increased purchasing power of high-volume manufacturers.25

25 High-volume and low-volume product classes are discussed further in chapter 5 of the Final Rule TSD. 

120

 
Production Volume Impacts on MPC

In response to the preliminary analysis, manufacturers commented that they use 

different manufacturing processes for high and low-volume products. In the NOPR 

analysis, DOE found that 94 percent of the MPC for furnace fans is attributed to materials 

(included purchased parts like fan motors), which are not impacted by process 

differences. DOE’s estimates also already accounted for process differences between 

manufacturers for high-volume and low-volume products. The products that DOE 

evaluated to support calculation of MPC included furnace fans from various 

manufacturers, including both high-volume and low-volume models. Observed process 

differences are reflected in the bills of materials for those products. DOE believed that its 

approach to distinguish between high-volume and low-volume product classes accounts 

for the expected difference in MPC between high-volume and low-volume product 

classes. 78 FR 64091.

DOE did not receive comment or additional information on production volume 

impacts on MPC, thus, DOE is taking the same approach to distinguish between highvolume and low-volume product classes in the Final Rule.

Inverter-Driven PSC Costs

In the preliminary analysis, DOE estimated that the MPC of inverter control for a 

PSC motor is $10-$12, depending on production volume. Interested parties commented 

that DOE was underestimating the cost of adding an inverter to a PSC motor, and 

questioned if DOE’s cost estimate was for wave chopper technology and not inverters. In 

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the NOPR, DOE stated that the preliminary analysis estimate for the MPC of an inverterdriven PSC was indeed based on a wave chopper drive. DOE found that more 

sophisticated and costly inverters are required to achieve the efficiencies reflected in 

DOE’s analysis. Consequently, DOE adjusted its cost estimate for PSC inverter 

technology. DOE gathered more information about the cost of inverters that are suited for 

improving furnace fan efficiency. In addition to receiving cost estimates during 

manufacturer interviews, DOE also reviewed its cost estimates for inverter drives used in 

other residential applications, such as clothes washers. DOE found that $30 for highvolume products and $42.29 for low-volume products are better estimates of the MPC for 

inverters used to drive PSC furnace fan motors. Accordingly, DOE updated those values 

for the NOPR. 78 FR 64091-64092.

DOE did not receive comment or additional information on cost estimates for 

inverter-driven PSC motors, thus, DOE is not making changes to the MPC estimates for 

inverters used to drive PSC furnace fan motors in the Final Rule.

Furnace Fan Motor MPC

In response to the preliminary analysis, manufacturers stated that DOE 

underestimated the incremental MPC to implement high-efficiency motors in HVAC 

products, other than oil furnaces. Most manufacturers stated that the cost increase to 

switch from PSCs to more-efficient motor technologies was at least twice that of the 

DOE’s estimate. Based upon the input received from interested parties, DOE adjusted its 

motor cost estimates in the NOPR analysis. In general, DOE increased its estimates by 

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approximately 10 to 15 percent, which is consistent with the feedback DOE received. 78 

FR 64092.

Goodman stated that DOE significantly underestimated the costs of the increasing 

levels of fan motor cost. (Goodman, No. 102 at p. 9) Lennox stated that DOE 

underestimated the total cost of furnace fans with BPM motor technology by 10 to 30 

percent, therefore, the incremental costs are underestimated by 20 to 120 percent. 

(Lennox, No. 100 at p. 6) Conversely, ACEEE commented that DOE has a wellestablished record of over-estimating the cost of complying with standards, thus, DOE’s 

cost estimates should be discounted to further improve the economics of advanced 

technology options. (ACEEE, No. 94 at p. 3) Rheem questioned if the DOE motor cost 

estimates included power factor correction filters for BPM motors, as those can cost $10 

to $20. (Rheem, No. 91 at p. 165) 

 

DOE recognizes that BPM motor use contributes to concerns regarding total 

harmonic distortion. However, the use of power factor correction filters for BPM motor 

technologies is currently not required under federal regulations. The DOE cost estimates 

reflect what is currently available on the market, thus, the added cost of filters for BPM 

motor technologies is not included in DOE’s MPC estimates for BPM motors. DOE 

believes the motor MPC estimates presented in the NOPR are representative of current 

motor costs. Thus, DOE is keeping the same furnace fan motor cost estimates presented 

in the NOPR for the Final Rule analysis. Details regarding DOE’s MPC estimates are 

provided in chapter 5 of the Final Rule TSD.

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Motor Control Costs 

In the preliminary analysis, DOE estimated that the MPC of the primary control 

board (PCB) increases with each conversion to a more-efficient motor type (i.e., from 

PSC to constant-torque BPM motor and from constant-torque to constant-airflow BPM 

motor). Manufacturers confirmed that higher-efficiency motors and modulating motors 

require more sophisticated and costly controls. DOE also received feedback regarding the 

cost of the PCBs associated with each motor type during manufacturer interviews. In 

general, manufacturers commented that the PCBs used with constant-torque BPM motors 

are more costly. However, other manufacturer interview participants stated that the MPC 

of the PCB used with these motors should be equivalent or even less expensive than the 

PCBs used with PSC motors. 78 FR 64092.

In the NOPR, DOE agreed with interested parties that the MPC of the PCB 

needed for a constant-airflow BPM motor is higher than for the PCB paired with a PSC 

motor. DOE estimated that the MPC of a PCB paired with a constant-airflow BPM motor 

is roughly twice as much as for a PCB paired with a constant-torque BPM motor or PSC. 

DOE also agreed with the interested parties that stated that the MPC for a PCB paired 

with a constant-torque BPM motor is equivalent to that of a PCB needed for a PSC 

motor. DOE revised its analysis to reflect this assumption in the NOPR as a result.

DOE did not receive comment or additional information on motor control costs, 

thus, DOE is not making changes to this in the Final Rule.

124
Backward-Inclined Impeller MPC

Interested parties commented that DOE’s preliminary analysis estimate for the 

incremental MPC associated with implementing a backward-inclined impeller, in 

combination with a premium constant-airflow BPM motor and multi-staging, is too low. 

Manufacturers also commented that tighter tolerances and increased impeller diameter 

lead to increased material costs, as well as increased costs associated with motor mount 

structure and reverse forming fabrication processes. 

During the NOPR, DOE reviewed its manufacturer production cost estimates for the 

backward-inclined impeller technology option based on interested party comments. 

During manufacturer interviews, some manufacturers reiterated or echoed that DOE’s 

estimated MPC for backward-inclined impellers is too low, but they did not provide 

quantification of the total MPC of backward-inclined impellers or the incremental 

MPC associated with the changes needed to implement them. Other manufacturers did 

quantify the MPC of backward-inclined impeller solutions and their estimates were 

consistent with DOE’s preliminary analysis estimate. Consequently, DOE did not 

modify its preliminary analysis estimated MPC for backward-inclined impellers in the 

NOPR. 78 FR 64092.

In response to the NOPR, Mortex questioned whether the price differential 

between backward-inclined impellers manufactured at high volume and those 

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manufactured at low volume should be greater than DOE’s estimate of 32 cents. (Mortex, 

No. 91 at p. 163) 

DOE reviewed its manufacturer production cost estimates for the backwardinclined impeller technology option based on interested party comments. DOE did not 

receive any quantification of the total MPC of backward-inclined impellers or the 

incremental MPC associated with the changes needed to implement them. Consequently, 

DOE did not modify its NOPR estimated MPC for backward-inclined impellers in the 

Final Rule. Regardless, DOE finds that EL 6, which represents use of a backwardinclined impeller, is not economically justified. Modifying the MPC estimate for this 

technology would not impact the standard set by this Final Rule as a result. 

Other Components 

In response to the MPCs presented in the NOPR, Goodman commented that there 

are likely additional components for the furnace that may need to be added if significant 

changes to the blower system are implemented. For example, improving air moving 

efficiency may require an increase in cabinet size, or the addition of internal baffling to 

direct airflow over the heat exchanger. None of these additional components or 

modifications were accounted for in the furnace fan MPC. (Goodman, No. 102 at p. 13) 

As discussed in section III.B.1 and chapter 4 of the Final Rule TSD, DOE did not 

include housing design modifications in the engineering analysis. Thus, DOE did not 

develop cost estimates for housing design modifications. DOE recognizes that the airflow 

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path design of the HVAC product in which the furnace fan is integrated impacts 

efficiency. DOE anticipates that modifying the size of the cabinet and the geometry of the 

heat exchanger(s) would be the primary considerations for improving airflow path design. 

Alterations to the design and configuration of internal components, such as the heat 

exchanger, could impact the thermal performance of the HVAC product, potentially 

reducing or eliminating product availability for certain applications. While DOE did not 

consider airflow path design as a technology option, as described in section III.B.1, DOE 

did account for the components used to direct or guide airflow in the MPC estimates. 

D. Markups Analysis

DOE uses manufacturer-to-consumer markups to convert the manufacturer selling 

price estimates from the engineering analysis to consumer prices, which are then used in 

the LCC and PBP analysis and in the manufacturer impact analysis. Before developing 

markups, DOE defines key market participants and identifies distribution channels. 

Generally, the furnace distribution chain (which is relevant to the residential furnace fan 

distribution chain) includes distributors, dealers, general contractors, mechanical 

contractors, installers, and builders. For the markups analysis, DOE combined 

mechanical contractors, dealers, and installers in a single category labeled “mechanical 

contractors,” because these terms are used interchangeably by the industry. Because 

builders serve the same function in the HVAC market as general contractors, DOE 

included builders in the “general contractors” category.

127
DOE used the same distribution channels for furnace fans as it used for furnaces in 

the recent energy conservation standards rulemaking for those products. DOE believes 

that this is an appropriate approach, because the vast majority of the furnace fans covered 

in this rulemaking is a component of a furnace. Manufactured housing furnace fans in 

new construction have a separate distribution channel in which the furnace and fan go 

directly from the furnace manufacturer to the producer of mobile homes. DOE has 

concluded that there is insufficient evidence of a replacement market for furnace fans to 

establish a separate distribution channel on that basis.

DOE develops baseline and incremental markups to transform the manufacturer 

selling price into a consumer product price. DOE uses the baseline markups, which cover 

all of a distributor’s or contractor’s costs, to determine the sales price of baseline models. 

Incremental markups are separate coefficients that DOE applies to reflect the incremental 

cost of higher-efficiency models. 

Ingersoll Rand stated that the incremental markup percentages do not represent 

real life practices and are too low. It commented that once the new rule goes into effect, 

the more expensive furnaces will become the baseline and will need to be marked up 

appropriately for manufacturers, distributors, and dealers to remain viable. (Ingersoll

Rand, No. 107 at p. 8) However, the commenter provided no data to support its 

expectation of how the actors respond in terms of pricing when confronted with morestringent energy conservation standards.

128
DOE acknowledges that detailed information on actual distributor and contractor 

practices would be helpful in evaluating their markups on furnaces. In the absence of 

such information, DOE has concluded that its approach, which is consistent with 

expected business behavior in competitive markets, is reasonable to apply. If the cost of 

goods sold increases due to efficiency standards, DOE continues to assume that markups 

would decline slightly, leaving profit unchanged, and, thus, it uses lower markups on the 

incremental costs of higher-efficiency products. 

Goodman stated that lower markups on incremental costs of higher-efficiency 

products is an invalid practice because manufacturers will attempt to have higher margin 

dollars to offset overall lower volumes. (Goodman, No. 102 at p. 9) For the LCC and 

NIA analyses, DOE does not use a lower markup on the incremental manufacturer selling 

price of higher-efficiency products. Instead, it assumes that manufacturers are able to 

maintain existing average markups in response to new standards. The MIA considers 

different markup scenarios for manufacturers (see section IV.J.2.b).

E. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual energy 

consumption of residential furnace fans in representative U.S. homes and to assess the 

energy savings potential of increased furnace fan efficiency. In general, DOE estimated 

the annual energy consumption of furnace fans at specified energy efficiency levels 

across a range of climate zones. The annual energy consumption includes the electricity 

use by the fan, as well as the change in natural gas, liquid petroleum gas (LPG), 

129
electricity, or oil use for heat production as result of the change in the amount of useful 

heat provided to the conditioned space as a result of the furnace fan. The annual energy 

consumption of furnace fans is used in subsequent analyses, including the LCC and PBP 

analysis and the national impact analysis.

DOE used the existing DOE test procedures for furnaces and air conditioners to 

estimate heating and cooling mode operating hours for the furnace fan. The power 

consumption of the furnace fan is determined using the individual sample housing unit 

operating conditions (the pressure and airflow) at which a particular furnace fan will 

operate when performing heating, cooling, and constant-circulation functions. The 

methodology and the data are fully described in chapter 7 of the final rule TSD.

DOE used the Energy Information Administration’s (EIA) Residential Energy 

Consumption Survey (RECS)26 to establish a sample of households using furnace fans for 

each furnace fan product class. RECS data provide information on the age of furnaces 

with furnace fans, as well as heating and cooling energy use in each household. The 

survey also includes household characteristics such as the physical characteristics of 

housing units, household demographics, information about other heating and cooling 

products, fuels used, energy consumption and expenditures, and other relevant data. DOE 

uses the household samples not only to determine furnace fan annual energy 

consumption, but also as the basis for conducting the LCC and PBP analysis.

26 Energy Information Administration, 2009 Residential Energy Consumption Survey (Available at: 

http://www.eia.doe.gov/emeu/recs). 

130

 
DOE used RECS 200927 heating and cooling energy use data to determine 

heating and cooling operating hours. DOE used data from RECS 2009, American 

Housing Survey (AHS) 2011,

28 and the Census Bureau29 to project household weights in 

2019, which is the anticipated compliance date of any new energy efficiency standard for 

residential furnace fans. These adjustments account for housing market changes since 

2009, as well as for projected product and demographic changes.

The power consumption (and overall efficiency) of a furnace fan depends on the 

speed at which the motor operates, the external static pressure difference across the fan, 

and the airflow through the fan. To calculate furnace fan electricity consumption, DOE 

determined the operating conditions (the pressure and airflow) at which a particular 

furnace fan will operate in each RECS housing unit when performing heating, cooling, 

and constant-circulation functions. For the final rule, DOE adjusted the furnace fan 

energy use estimated from RECS 2009 data to account for projected changes in heating 

and cooling loads due to climate change (as projected by EIA in AEO 2013).

DOE gathered field data from available studies and research reports to determine 

an appropriate distribution of external static pressure (ESP) values. DOE compiled over 

1,300 field ESP measurements from several studies that included furnace fans in singlefamily and mobile homes in different regions of the country. The average ESP value in 

27 See http://www.eia.gov/consumption/residential/data/2009/. 28 See http://www.census.gov/housing/ahs/data/national.html. 29 See http://www.census.gov/popest/.

131

 
the cooling operating mode from these studies results in an average 0.65 in. w.c. for 

single-family households and 0.30 in. w.c. for mobile homes. 

Rheem stated that substitution of a BPM motor can increase the conditioned air 

that is leaked to the atmosphere. (Rheem, No. 83 at p. 13) However, the commenter 

provided no data to support its view on increased air leakage associated with BPM 

motors. 

DOE agrees that if a BPM motor maintains flow in a high-resistance duct system 

that has leakage, it may lead to higher duct leakage compared to a PSC motor. However, 

in cases where the heating load can be met with low air flow, the BPM motor may have 

lower air leakage. Given that the magnitude of these effects is uncertain and may offset, 

DOE did not include it in its analysis. DOE notes that the constant-torque BPM motor, 

which meets the standards in today’s final rule, may not maintain the flow in leaky and 

overly-restrictive ducts, and, thus, would be expected to have similar losses as a PSC 

motor.

NEEA stated that their field measurements of ESP for the past 40 years are 

consistent with DOE's analysis. (NEEA, No. 91 at p. 222) Daikin stated that, from 

experience over the past 30 plus years, mobile homes have higher external static pressure 

than the typical site-built home in the preponderance of cases. (Daikin, No. 91 at p. 222)

132
The data that DOE has seen (described in appendix 7B of the final rule TSD) do 

not indicate that mobile homes have higher external static pressure. Furthermore, the 

HUD static pressure criteria for mobile homes

30 are supportive of DOE’s assumptions 

regarding ESP. Consequently, DOE has maintained its approach regarding ESP for this 

final rule.

DOE determined furnace fan operating hours in heating mode by calculating the 

furnace burner operating hours and adjusting them for delay times between burner and 

fan operation. Burner operating hours are a function of annual house heating load, 

furnace efficiency, and furnace input capacity.

For the NOPR, to estimate use of constant circulation in the sample homes, DOE 

evaluated the available studies, which include a 2010 survey in Minnesota31 and a 2003 

Wisconsin field monitoring of residential furnaces.32 DOE did not use these data 

directly, however, because it believes they are not representative of consumer practices 

for the U.S. as a whole. In these northern States, many homes have low air infiltration,

and there is a high awareness of indoor air quality issues, which could lead to significant 

use of constant circulation. To develop appropriate assumptions for other regions, DOE 

modified the data from these States using information from manufacturer product 

literature (which suggests very little use in humid climates) and consideration of climate 

30 HUD for Mobile Home with comfort cooling certificate – 0.3 inches WC at cooling airflow setting [Title 

24 of the HUD code PART 3280--Mobile Home Construction and Safety Standards, Part 3280.715 (a) (3) 

(ll)]

31 Provided in CEE, No. 22 at pp. 1-2. 32 Pigg, S., “Electricity Use by New Furnaces: A Wisconsin Field Study” (October 2003) (Available at 

http://www.doa.state.wi.us/docview.asp?docid=1812).

133

 
conditions in other regions. For the NOPR, DOE used the same assumptions for use of 

constant circulation as were used in the proposed DOE test procedure for furnace fans. 77 

FR 28674 (May 15, 2012). The average value that emerges is approximately 400 hours 

per year. The shares of homes using the various constant-circulation modes are presented 

in Table IV.10. 

NEEA and NPCC commented that DOE’s estimate of 400 hours per year of 

continuous-circulation mode may be overly conservative, and they disagree with 

stakeholders who suggest that 400 hours per year is too high. (NEEA, NPCC, No. 32 at p. 

5) 

For the final rule, DOE examined a newly-released proprietary survey that 

broadly evaluates the use of continuous circulation across the U.S.33 This survey shows a 

higher number of continuous-circulation hours than DOE used for the NOPR. DOE has 

concerns about the representativeness of the data, however, because the survey only 

included homeowners who had been involved in the purchase of central HVAC 

equipment in the past two years. The practices of these consumers may not accurately 

portray the use of continuous circulation across the entire stock of homes with central 

HVAC equipment. Given the uncertainty regarding the survey data, DOE decided that it 

would not be appropriate to change the continuous-circulation hours for the final rule.

33 Decision Analysts, 2013 American Home Comfort Study (2013) (Available at:

http://www.decisionanalyst.com/Syndicated/HomeComfort.dai). 

134

 
Southern Company stated that if DOE is assuming a greater percentage of 

variable speed fans in the future, the need for constant circulation will be reduced. 

(Southern Company, No. 91 at p. 233) DOE accounted for the reduced hours of 

operation during constant-circulation mode when variable speed motors are applied (see 

appendix 7-C). Variable speed fans tend to increase the operating hours in heating and 

cooling modes, which would result in a smaller fraction of time in continuous-fan mode.

DOE also performed a sensitivity analysis to estimate the effect on the LCC 

results if it assumed half as much use of constant circulation. These results are discussed 

in section V.B.1 of this document.

Table IV.10 Constant-Circulation Test Procedure Assumptions Used for Furnace 

Fans Standards Analysis

Constant-Circulation 

Fan Use

Assumed 

Average 

Number of 

Hours 

Estimated Share 

of Homes in 

North and 

South-Hot Dry 

Regions

Estimated Share 

of Homes in 

South-Hot 

Humid Region 

No constant fan 0 84% 97%

Year-round 7290 7% 1%

During heating season 1097 2% 0.4%

During cooling season 541 2% 0.4%

Other (some constant fan) 365 5% 1%

Total -- 100% 100%

Morrison stated that not all the energy used in circulation is wasted heat because 

the energy consumed for circulation during the heating season is useful energy. Morrison 

recommended that for a more accurate analysis of energy use in circulation mode, DOE

135
should split heating and cooling hours. (Morrison, No. 108 at p. 2) DOE adjusted its 

analysis so that heat generated by constant-circulation fan operation reduces furnace 

heating energy use in the heating season, and in the cooling season, it adds to the

operating hours of the air conditioner. 

In the NOPR, DOE recognized that the energy savings in cooling mode from 

higher-efficiency furnace fans used in some higher-efficiency CAC and heat pumps was 

already accounted for in the analysis related to the energy conservation standards for

those products. To avoid double-counting, the analysis for furnace fans did not include 

furnace fan electricity savings that were counted in DOE’s rulemaking for CAC and heat 

pump products.34

Several stakeholders stated that DOE may be double-counting energy savings in 

cooling mode in this rulemaking by accounting for the central air conditioner blower 

output used for calculating SEER. (JCI, No. 95 at pp. 4-5; Morrison, No. 108 at p. 2; 

AHRI, No. 98 at p.6; Goodman, No. 102 at p. 5) EEI stated that a large share of the 

estimated furnace fan energy savings are a result of the air conditioner and heat pump 

energy efficiency standards, so some or all of these estimated energy savings should be 

removed from the furnace fan analyses. (EEI, No. 87 at p. 5)

34 U.S. Department of Energy - Energy Efficiency & Renewable Energy, Final Rule Technical Support 

Document: Energy Efficiency Standards for Consumer Products: Central Air Conditioners, Heat Pumps, 

and Furnaces (2011) (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2011-BTSTD-0011-0012).

136

 
DOE’s rulemaking analysis for CAC and heat pump products included savings 

from those households purchasing a CAC or heat pump at SEER 15 or above that would 

need to have a BPM motor-driven fan in the furnace to achieve that efficiency level. The 

base-case efficiency distribution of fans used in the current analysis includes the presence 

of those BPM motor-driven fans in homes with the higher-efficiency CAC or heat pumps. 

Because the energy savings from the considered fan efficiency levels are measured 

relative to the base-case efficiencies, any savings reported here for furnace fans are over 

and above those counted in the CAC and heat pump rulemaking. 

Morrison stated that any reduction in energy use by the fan from this rulemaking 

would be a de facto improvement in SEER and an unlawful change to the current SEER 

regulations. It noted that if there is no change to SEER, then there will be no energy 

savings when operated in the cooling mode. (Morrison, No. 108 at p. 2)

A reduction in energy use by the furnace fan resulting from this rulemaking 

would improve the CAC operating efficiency (for homes with both furnace and CAC), 

but DOE is not increasing the energy conservation standard for CAC or requiring a 

change to the reported current SEER ratings for CAC. DOE has clear and explicit 

statutory authority to regulate furnace fans under 42 U.S.C. 6295(f)(4)(D), and any 

related improvements to CAC efficiency would simply be an added benefit.

Recognizing the possibility of consumers using higher-efficiency furnace fans 

more than baseline furnace fans, DOE included a rebound effect in its preliminary 

137
analysis. DOE used a 2009 program evaluation report from Wisconsin35 to estimate the 

extent to which increased use of constant circulation under a standard requiring BPM 

furnace fans is likely to cancel out some of the savings from such a fan. The specific 

assumptions are described in chapter 7 of the final rule TSD.

Commenting on the average energy use estimates reported in the final rule TSD, 

EEI stated that the baseline energy use values seem to be overstated, because baseline 

values reported in the market and technology assessment are lower than what was used in 

following analyses. Consequently, the estimated energy savings and energy cost savings 

are overstated as well, because they are shown in the NOPR as percentage savings based 

on the design options. (EEI, No. 87 at pp. 4-5) Goodman believes that the calculated 

baseline values, and thus the projected energy savings, are too high based on product 

testing for the April 2013 test procedure SNOPR. (Goodman, No. 102 at p. 8)

The baseline values reported in the market and technology assessment are based 

on the test procedure. The energy use analysis is not based on test procedure conditions, 

but instead reflects actual usage in the field, which is more appropriate for estimating the 

impacts of higher furnace fan efficiency on consumers. Therefore, the estimated energy 

savings and energy cost savings are not overstated.

35 State of Wisconsin, Public Service Commission of Wisconsin, Focus on Energy Evaluation Semiannual 

Report, Final (April 8, 2009) (Available at: 

http://www.focusonenergy.com/files/document_management_system/evaluation/emcfurnaceimpactassessm

ent_evaluationreport.pdf).

138

 
JCI and AHRI stated that DOE needs to ensure that it avoids double-counting 

energy consumption associated with standby mode, noting that there is no standby mode 

and off mode energy use associated with furnace fans that would not already be measured 

by the established test procedures, because they are integrated in the electrical systems of 

the HVAC products in which they are used. (JCI, No. 95 at p. 5; AHRI, No. 98 at p. 6)

The proposed furnace fan energy rating metric would not account for the 

electrical energy consumption in standby mode and off mode, because energy 

consumption in those modes is already accounted for in the energy conservation 

standards for residential furnaces and residential CAC and HP. Accordingly, DOE did not 

include standby mode and off mode energy use associated with furnace fans in the 

present analysis. Consequently, there should not be any problems associated with doublecounting of standby mode and off mode energy consumption.

F. Life-Cycle Cost and Payback Period Analysis

In determining whether an energy conservation standard is economically justified, 

DOE considers the economic impact of potential standards on consumers. The effect of 

new or amended energy conservation standards on individual consumers usually involves 

a reduction in operating cost and an increase in purchase cost. DOE uses the following 

two metrics to measure consumer impacts:

• Life-cycle cost (LCC) is the total consumer cost of an appliance or product, 

generally over the life of the appliance or product. The LCC calculation includes 

total installed cost (equipment manufacturer selling price, distribution chain 

139
markups, sales tax and installation cost), operating costs (energy, repair, and 

maintenance costs), equipment lifetime, and discount rate. Future operating costs 

are discounted to the time of purchase and summed over the lifetime of the 

product.

• Payback period (PBP) measures the amount of time it takes consumers to recover 

the assumed higher purchase price of a more energy-efficient product through 

reduced operating costs. Inputs to the payback period calculation include the 

installed cost to the consumer and first-year operating costs.

DOE analyzed the net effect of potential residential furnace fan standards on 

consumers by calculating the LCC and PBP for each efficiency level for each sample 

household. DOE performed the LCC and PBP analyses using a spreadsheet model 

combined with Crystal Ball (a commercially-available software program used to conduct 

stochastic analysis using Monte Carlo simulation and probability distributions) to account 

for uncertainty and variability among the input variables (e.g., energy prices, installation 

costs, and repair and maintenance costs). It uses weighting factors to account for 

distributions of shipments to different building types and States to generate LCC savings 

by efficiency level. Each Monte Carlo simulation consists of 10,000 LCC and PBP 

calculations. The model performs each calculation using input values that are either 

sampled from probability distributions and household samples or characterized with 

single-point values. The analytical results include a distribution of points showing the 

range of LCC savings and PBPs for a given efficiency level relative to the base-case 

140
efficiency forecast. The results of DOE’s LCC and PBP analysis are summarized in 

section IV.F and described in detail in chapter 8 of the final rule TSD.

1. Installed Cost

The installed cost at each efficiency level is based on the product price, 

distribution chain markups, sales tax, and installation cost.

The current product price comes from the engineering analysis. DOE believes that 

price trends for integral horsepower electric motors are a reasonable proxy for trends in 

prices of furnace fans, and for the NOPR DOE evaluated the historic real (i.e., adjusted 

for inflation) producer price index (PPI) of such motors. DOE found that this index has 

been decreasing except for the last few years, when it started to increase (see appendix 

10-C of the final rule TSD). Given the uncertainty about whether the recent trend will 

continue or instead revert to the historical mean, DOE elected to use constant prices at the 

most recent level as the default price assumption to project future prices of furnace fans. 

78 FR 64068, 64096 (Oct. 25, 2013).

Morrison stated that motor prices have remained flat in the last decade because 

production of motors moved offshore and foreign competitors entered the marketplace. It 

stated that in the coming decades, motor prices will increase at the rate of long run prices 

for commodities (e.g. copper, steel, aluminum). (Morrison, No. 108 at p. 2) Goodman 

believes that it is incorrect to use constant prices at the most recent level of motor cost, 

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which has shown a recent increasing trend, as the default price assumption to project 

future prices of furnace fans. (Goodman, No 102 at p. 9)

DOE continues to believe that it is unclear whether the increasing trend in motor 

prices since 2004 will continue in the future. Part of the recent growth in prices of 

commodities used in motors was due to strong demand from China. Current projections 

envision slower growth in China, which would likely dampen commodity prices. Given 

the uncertainty, DOE continued to use constant prices at the most recent level as the 

default price assumption for the final rule. For the NIA, DOE also conducted sensitivity 

analysis using alternative price growth assumptions.

Because furnace fans are installed in furnaces in the factory, there is generally no 

additional installation cost at the home. However, furnace fans that employ a constantairflow BPM design may require additional installation costs. DOE assumed that all 

constant-airflow BPM furnace fan installations will require extra labor at startup to check 

and adjust airflow.

Goodman stated that it is acceptable for relative product cost comparison to 

include costs only for the components of the HVAC product that impact FER in the 

manufacturing cost, but it disagrees with using the cost of only the furnace fan portion of 

the furnace in the LCC, GRIM, and other aspects of the financial analysis. The real 

upfront costs for the consumer will be significantly higher (likely two to four times more) 

than DOE has included in the analysis using only the furnace fan portion. (Goodman, No. 

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102 at p. 9) DOE believes that the commenter is claiming that the consumer will face 

higher costs when buying a furnace because the proposed furnace fan standards would 

require changes in furnace design. As discussed in section IV.B.1, DOE screened out fan 

housing and airflow path design modifications from further analysis. Accordingly, it is 

unlikely that significant changes in furnace design would be required to accommodate 

furnace fans that meet today’s standards. Therefore, DOE concludes that using the 

incremental costs of the furnace fan portion is reasonable.

2. Operating Costs

To estimate the annual energy costs for operating furnace fans at different 

efficiency levels, DOE used the annual energy use results from the energy use analysis 

and projections of residential energy prices. DOE derived average monthly energy prices 

for a number of geographic areas in the United States using the latest data from EIA36

and monthly energy price factors that it developed. Electricity and natural gas prices were 

adjusted using seasonal marginal price factors to come up with monthly marginal 

electricity and natural gas prices. DOE assigned an appropriate price to each household in 

the sample, depending on its location.

Laclede stated that using average utility rates leads to significantly overstating 

consumer savings. DOE should use marginal energy rates in its consumer energy savings 

calculations. (Laclede, No. 86 at p. 4) As described above, DOE did derive marginal 

36 U.S. Department of Energy - Energy Information Administration, Form EIA-826 Database Monthly 

Electric Utility Sales and Revenue Data, 2013. http://www.eia.doe.gov/cneaf/electricity/page/eia826.html; 

U.S. Department of Energy - Energy Information Administration, Natural Gas Navigator. 2013. 

http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm.

143

 
electricity and natural gas prices based on recent data. (For a discussion of the 

development of marginal energy price factors, see appendix 8-C of the final rule TSD).

To arrive at marginal prices in future years, DOE multiplied the current marginal prices 

by values in the forecastReference case projection of annual average residential 

electricity and natural gas price changes in EIA’s AEO 2013. The price trends projected 

in the AEO 2013 Reference case are shown in chapter 8 of the final rule TSD. For 

electricity prices, which are primarily of interest in this rulemaking, the AEO 2013 

projection shows the average residential price growing from 0.119 $/kWh in 2020 to 

0.122 $/kWh in 2030 and 0.131 $/kWh in 2040 (constant dollars).

To estimate annual maintenance costs, DOE derived labor hours and costs for 

annual maintenance from RS Means data.

37 The frequency with which the maintenance 

occurs was derived from a consumer survey38 on the frequency with which owners of 

different types of furnaces perform maintenance. 

For the NOPR, DOE used the same maintenance costs for furnace fans at different 

efficiency levels. 78 FR 64096. Goodman stated that it is invalid to assume that the 

maintenance costs for all efficiency levels are the same regardless of technology, as 

higher technology products will take a higher skill level of technician, and will require 

more costly equipment for service than baseline products. (Goodman, No 102 at p. 9) 

Allied Air stated that in shifting from a primarily single-stage PSC market to multistage 

37 RS Means Company Inc., Means Facilities Maintenance & Repair Cost Data. 2012. Kingston, MA. 38 Decision Analysts, 2008 American Home Comfort Study: Online Database Tool, 2009. Arlington, Texas. 

http://www.decisionanalyst.com/Syndicated/HomeComfort.dai

Comment [DOE1]: Change recommended by 

OIRA.

144

 
constant torque, the maintenance cost could be two to three times current costs. (Allied 

Air, No. 43 at pp. 252-253)

DOE understands that furnace fans require very little maintenance, and it did not 

find any evidence that there is any additional maintenance cost associated with higher 

efficiency equipment. It seems likely that the commenters are including repair costs 

under the term “maintenance.” DOE’s treatment of repair costs is discussed below.

The most important element of repair costs for furnace fans is replacement of the 

fan motor. For the NOPR, to estimate rates of fan motor failure, DOE developed a 

distribution of fan motor lifetime (expressed in operating hours) by motor size using data 

developed for DOE’s small electric motors final rule. 75 FR 10874 (March 9, 2010). 

DOE then paired these data with the calculated number of annual operating hours for 

each sample furnace, including constant circulation as appropriate. DOE did not have a 

firm basis for quantifying whether constant-torque BPM motors and constant-airflow

BPM motors have different failure rates than PSC motors. Thus, it used the same motor 

lifetime for each fan efficiency level in terms of total operating hours (the lifetime in 

terms of years is lower for constant-torque BPM and constant-airflow BPM motors 

because they are more frequently used in multi-stage heating mode). 78 FR 64097.

Rheem stated that DOE did not justify the assumption that furnace fan motor 

lifetimes are equal to furnace lifetimes. (Rheem, No. 83 at p. 4) DOE modeled overall 

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furnace fan lifetime based on furnace lifetimes (see discussion below), but it used the 

approach described above for furnace fan motor lifetime.

Morrison stated that multi-staged BPM assemblies will have longer operating 

times within a given period (to account for lower fire rates and heat output) and therefore, 

all else being equal, will have a shorter life expectancy. (Morrison, No. 108 at p. 5)

DOE’s approach is consistent with the comment; a multi-staged BPM motor has a shorter 

lifetime measured in years.

A number of stakeholders stated that failure rates are higher for BPM motors than 

for PSC motors, leading to shorter lifetime. Rheem stated that the PSC motor life, which 

it estimated to be 15 years, is much longer than the BPM motor life. (Rheem, No. 83 at 

pp. 2 and 13) Mortex stated that, based on their experience, BPM lifetime is half that of 

PSC motors. (Mortex, No. 104 at p. 2) Lennox estimated that constant-airflow BPM 

motors have failure rates that are 50% higher than PSC motors at 5 and 10 years, and 

furnaces with constant-torque BPM motors have failure rates that are 385% higher than 

PSC motors at 5 and 10 years. (Lennox, No. 100 at p. 8) Ingersoll Rand stated that its 

data indicate that BPM motors fail at 2.3 times the rate of PSC motors in the 5 to 10 year

time frame. (Ingersoll Rand, No. 107 at pp. 6-7) AHRI stated that the failure rate for a 

high efficiency motor is typically higher than that of a PSC motor because the electronics 

added to a high efficiency motor introduce additional failure modes associated with the 

life of electronic controls in damp, very cold and very hot conditions. AHRI has collected 

data from manufacturers that show that the failure rates associated with constant-torque 

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BPM and constant-airflow BPM technologies are higher than PSC motors over an 

extended time period. (AHRI, No. 98 at p. 7) Morrison and Ingersoll Rand cited recent 

data from an AHRI survey of manufacturers that indicate failure rates at 1, 5 and 10 years 

are 24%, 87% and 165% greater for BPM motors than PSC ones. (Morrison, No. 108 at 

p. 5, Ingersoll Rand, No. 107 at p. 6) JCI stated that, based on an analysis of JCI’s 

residential warranty data, failure rates associated with constant-torque BPM and constantairflow BPM technologies are significantly higher than those experienced by standard 

PSC motors due to the added electronic controls that are required as part of the BPM 

motor designs, which are more susceptible to failure due to power fluctuations and other 

factors. (JCI, No. 95 at p. 7) Ingersoll Rand stated that repair of the electronics is not 

possible for the constant-torque BPM motors available today, so an electronics failure 

will result in a complete motor replacement. (Ingersoll Rand, No. 107 at pp. 7-8)

In contrast, NEEA and NPCC believe that the NOPR analysis assumptions may 

unfairly penalize BPM motors, as the Department has insufficient data to properly 

estimate the frequency and nature of BPM motor repair. (NEEA, NPCC, No. 96 at p. 5)

DOE notes that BPM motors had higher level of failure in the late 1990s and early 

2000s when the electronics technologies went through major renovations. The comments 

from furnace manufacturers may reflect this past experience. For example, the cited data 

from an AHRI survey of manufacturers would reflect BPM technology in the early 

2000s. For the final rule, DOE searched for more information on the lifetime of BPM and 

PSC motors. This information (discussed in appendix 8-E) suggests that BPM and PSC 

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motors have similar lifetimes, as BPM designs have improved over the years. While 

BPM motor designs could have additional failures due to the additional controls or 

electronics, furnace fan motor manufacturers claim longer mechanical life for BPM 

designs due to better bearings and less heat generated by inefficiency. Between now and 

the compliance date, future BPM motor enhancements could further strengthen product 

reliability and reduce failures. In this analysis, DOE assumes higher failures for BPM 

designs due to longer operating hours (because of multi-stage operating at more hours 

and more constant circulation operation of BPM motors), as well as additional control 

failures. For example, DOE estimates that 43% for BPM constant torque multi-stage 

designs experience failure during the lifetime of the furnace, compared to 35% of PSC 

designs. 

Recognizing that there exists some uncertainty regarding the lifetime of BPM 

motors, DOE conducted a sensitivity analysis using alternative assumptions, as requested 

in a comment by Mortex. (Mortex, No. 43 at pp. 264-265) This analysis is described in 

appendix 8-E of the final rule TSD.

For the NOPR, the replacement motor costs were based on costs developed in the 

engineering analysis for each motor type, and the labor time and unit costs were based on 

RS Means data.39,78 FR 64097. DOE included additional labor hours to repair constanttorque BPM and constant-airflow BPM motors, as well as higher equipment cost for the 

BPM motors. DOE assumed that when replacement is necessary, consumers replace the 

39 RS Means Company Inc., RS Means Residential Cost Data (2012); RS Means Company Inc., Facilities 

Maintenance & Repair Cost Data (2012).

148

 
failed motor with the same type of motor.

A number of stakeholders stated that the replacement cost of BPM motors is 

higher than the cost DOE used in its analysis. (Morrison, No. 108 at p. 2; Goodman, No 

102 at p. 8; APGA, No. 110 at p. 3) Mortex stated that DOE substantially underestimated 

BPM replacement costs, which in its experience are 2-3 times that of a PSC. (Mortex, 

No. 104 at p. 2) Ingersoll Rand stated that replacement costs are significantly 

underestimated for constant-torque BPM and constant-airflow BPM motors. It added that 

the difference between PSC motor replacement and constant-torque BPM motor 

replacement should be at least $225, and the PSC to constant-airflow BPM difference 

should be at least $295. (Ingersoll Rand, No. 107 at pp. 7-8) JCI stated that outside the 

warranty periods (typically10 years for parts), ECM motors can cost 3 to 5 times the 

replacement costs of PSC motors due to the complexity of those motors and the 

electronic controls required to use them. (JCI, No. 95 at p. 6)

The replacement equipment cost of BPM and PSC motors used in DOE’s LCC 

analysis is based on costs derived in the engineering analysis, which DOE believes are 

accurate. It is possible that the stakeholders believe that the higher BPM replacement 

costs are largely due to extra labor charges by contractors. DOE determined that for a 

constant torque BPM motor any such extra charges would be minimal. In the analysis for 

today’s final rule, on average the replacement cost is $407 for a constant torque multistage BPM (EL 4) and $356 for the PSC design (EL 0). 

149
Several stakeholders stated that the replacement cost of an aftermarket furnace fan 

is 2-3 times higher than DOE’s estimated manufacturer production costs for low-volume 

product classes. They added that DOE’s material cost estimate of $0.00 for furnace fan 

replacements is incorrect. (JCI, No. 95 at p. 6; Morrison, No. 108 at p. 5; AHRI, No. 98 

at p. 8; Lennox, No. 100 at p. 8; Unico, No. 93 at p. 5) 

DOE believes that the first comment above refers to a replacement motor. DOE 

applies markups to the motor MPC, such that the cost to the consumer is two to three 

times higher than the MPC. The material cost is listed as $0.00 in the cited tables because 

these tables refer to labor costs only (as stated in the table captions). 

Ingersoll Rand stated that motors that fail in-warranty are not free, as standard 

product warranties in the HVAC industry cover parts only, and do not typically include 

labor charges, which the homeowner must pay. (Ingersoll Rand, No. 107 at p. 7) DOE 

excluded labor charges only if the consumer has a service contract or if the motor fails 

the first year (which is rare).

Southern Company stated that DOE unrealistically considered component failures 

as independent events rather than interdependent ones. It stated that in actual consumer 

settings, rather than a lab, it is likely that a capacitor failure will not be detected until it 

results in a motor failure. (Southern Company, No. 85 at p. 3) Undetected capacitor 

failure that leads to motor failure (as may occur for PSC motors) is reflected in DOE’s 

distribution of motor lifetimes. 

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3. Furnace Fan Lifetime

DOE used the same modeling for furnace fan lifetime (meaning the life of the 

overall equipment not including the motor) as in the NOPR.78 FR 64097. Chapter 8 of 

the final rule TSD describes the approach. DOE used the same lifetime for furnace fans at 

different efficiency levels because there are no data that indicate variation of lifetime 

with efficiency. For the NOPR analysis, DOE assumed that the lifetime for the fans 

installed in electric furnaces and gas furnaces is the same.

Rheem stated that the lifetime of a residential furnace fan is limited by the 

lifetime of the electronic control, and advanced controls may shorten the lifetime of the 

product. (Rheem, No. 83 at pp. 6, 13) JCI stated that the repair costs for furnace fans are 

generally the cost of replacing the motors used, as there are very few failures of fan 

components other than the motor. (JCI, No. 95 at p. 6)

DOE believes that with current technology there are few failures of the electronic 

control, as stated by JCI. DOE also expects that the reliability of the electronic controls is 

likely to increase as the technology matures. Nonetheless, DOE accounts for failure of 

capacitors and motor electronic controls in its repair cost analysis.

APGA stated that 23.6 years lifetime for gas-fired furnace fans in the LCC 

analysis is unrealistic, and DOE should employ more realistic furnace fan lives based on 

documented motor lives. (APGA, No. 110 at p. 3) It would appear that APGA 

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misinterpreted DOE’s approach. Motor failure, which occurs on average at around 15 

years, is counted as a repair cost. However, DOE believes that the rest of the furnace fan 

would last as long as the furnace itself.

Southern Company stated that because the analysis shows at least 50% greater 

shipments of furnace fans than furnaces, the data seems to indicate a shorter lifetime for 

furnace fans than furnaces. (Southern Company, No. 85 at p. 3) DOE did not calculate 

the shipments of furnace fans. Since furnace fans are a component of furnaces, the 

shipments in the NIA analysis are limited to furnace shipments only.

4. Discount Rates

For the NOPR, DOE used distributions of discount rates based on a variety of 

financial data. . 78 FR 64097. For replacement furnaces, the average rate was 5.0 percent. 

Miller stated that, based on a literature review of consumer discount rates for 

energy-using durables, the 3-percent and 7-percent discount rates used in the analysis 

only represent high-income households; other consumers may use much higher discount 

rates. Consumers with higher discount rates—including median-income Americans, lowincome Americans, and the elderly—are much less likely to benefit from higher 

efficiency furnace fans. (Miller, No. 79 at pp. 10-13)

DOE uses 3-percent and 7-percent discount rates to measure net consumer 

benefits from energy efficiency standards from a national perspective (see section IV.H). 

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DOE recognizes that a wide range of discount rates may be appropriate for consumers, 

and thus it uses distributions of discount rates when it evaluates consumer impacts in the 

LCC analysis. For the final rule, DOE developed specific distributions of discount rates 

for each of six consumer income groups. Chapter 8 of the final rule TSD describes the 

approach. The estimated impacts of today’s standards on low-income households are 

discussed in section V.B.1.40

5. Compliance Date

In the NOPR, DOE proposed a 5-year compliance date for residential furnace fan 

standards. 78 FR 64103. A number of stakeholders encouraged DOE to adopt a threeyear period between the final rule publication and the compliance date rather than the five 

years proposed in the NOPR. (ACEEE, No. 94 p. 6; NEEP, No. 109 at p. 2; Earthjustice, 

No. 101 at p. 3; CA IOU, No. 106 at p. 3; Joint Advocates, No. 105 at p. 4; NEEA, 

NPCC, No. 96 at p. 3) ACEEE, CA IOU, the Joint Advocates, and NEEA and NPCC 

stated that the technologies assumed to be required to meet TSL 4 are well-established in 

the market and commercially available. (ACEEE, No. 94 at p. 6; CA IOU, No. 106 at p. 

3; Joint Advocates, No. 105 at p. 4; NEEA, NPCC, No. 96 at p. 3) NEEP stated that three 

years should provide adequate time for manufacturers to adjust product lines. (NEEP, No. 

109 at p. 2) The Joint Advocates stated that constant-torque BPM motors are essentially 

drop-in replacements for PSC motors, and capital conversion costs are not required. 

40 The comment refers to high discount rates based on studies of implicit consumer discount rates using the 

purchase of energy-using durables (such as air conditioners, dishwashers, and refrigerators) to measure 

consumer time preferences. While these studies of implicit consumer discount rates provide a way of 

characterizing consumer behavior, they do not necessarily measure consumer time preferences. What 

appears to be low valuation of future energy cost savings from higher-efficiency appliances instead may be 

partially a result of lack of information on the magnitude of savings or inability to evaluate the available 

information.

153

 
(Joint Advocates, No. 105 at p. 4) NEEA and NPCC believe that three years of lead time 

should be sufficient to allow a ramping up of motor manufacturing capacity and a gradual 

shift of air handler manufacturing lines to incorporate them. The technology required to 

meet the TSL 4 standards requires little more than expansion of current production 

capacity for these models, which mostly means buying different furnace fan motors and 

the associated controls. (NEEA, NPCC, No. 96 at p. 3) Earthjustice stated that DOE must 

choose a compliance date based on an assessment that includes a consideration of factors 

beyond the impact on manufacturers. (Earthjustice, No. 101 at p. 3)

JCI, Morrison, AHRI, Lennox, and HARDI support the five-year period between 

the final rule publication and the compliance date as proposed in the NOPR. (JCI, No. 95 

at p. 2; Morrison, No. 108 at p. 2; AHRI, No. 98 at p. 2; Lennox, No. 100 at p. 4; 

HARDI, No. 103 at p. 2) JCI, AHRI, and Lennox stated that to comply with the proposed 

standard, manufacturers would not only have to alter the designs and fabrication 

processes for the furnace fan assembly but also modify the broader product design of the 

furnaces, air handlers, modular blowers, and residential single package units that include 

those furnace fans. (JCI, No. 95 at p. 2; AHRI, No. 98 at p. 2; Lennox, No. 100 at pp. 4-

5) AHRI stated that similar products that require similar actions for compliance typically 

have lead times of five years. (AHRI, No. 98 at p 2) Ingersoll Rand agrees with AHRI’s 

comments. (Ingersoll Rand, No. 107 at p. 11)

DOE continues to believe a 5-year lead time is appropriate. Since EPCA does not 

mandate a specific lead time for furnace fan standards, DOE considered the actions 

154
required by manufacturers to comply with today’s standards. As discussed in the NOPR, 

during manufacturer interviews, DOE found that standards would result in 

manufacturers’ extending R&D beyond the furnace fan assembly to understand the 

impacts on the design and performance of the furnace or modular blower in which the 

furnace fan is integrated. 78 FR 64103. To comply with the standards, manufacturers may 

have to alter not only the designs and fabrication processes for the furnace fan assembly, 

but also for the furnace or modular blower into which the furnace fan is integrated. 

Similar products that require similar actions for compliance typically have lead times of 

five years. For these reasons, DOE selected a 5-year lead time, which would place the 

compliance date in 2019. For the purposes of the LCC and PBP analysis, DOE assumed 

that all relevant consumers purchase a furnace fan in 2019.

6. Base-Case Efficiency Distribution

To estimate the share of consumers that would be affected by an energy 

conservation standard at a particular efficiency level, DOE’s LCC and PBP analysis 

considers the projected distribution (i.e., market shares) of product efficiencies in the first 

compliance year under the base case (i.e., the case without new or amended energy 

conservation standards). 

For the NOPR, DOE reviewed the information provided by the manufacturers and 

estimated that the combined market share of constant-torque BPM fans and constantairflow BPM fans will be 35 percent in 2019. The shares are 13 percent for constant155
torque BPM fans and 22 percent for constant-airflow BPM fans. DOE estimated separate 

shares for replacement and new home applications.78 FR 64097.

The market shares of efficiency levels within the constant-torque BPM motor and 

constant-airflow BPM motor categories were derived from AHRI data on number of 

models.41 No such data were available for the PSC fan efficiency levels, so DOE used 

the number of models it tested or could measure using product literature to estimate that 

40 percent of shipments are at the baseline level and 60 percent are improved PSC fans. 

There are currently no models of PSC with a controls design, so DOE assumed zero 

market share for such units. Id

No comments were received on the base case efficiency distribution, and DOE 

retained the NOPR assumptions for the final rule. The details of DOE’s approach are 

described in chapter 8 of the final rule TSD. 

7. Payback Period

To calculate PBPs for the considered efficiency levels, DOE uses the same inputs 

as for LCC analysis, except that discount rates are not required.

Goodman stated that not including repair costs from later years in the PBP does 

not provide a realistic picture of what most consumers will face. It noted that while repair 

costs later in the product life cycle may allow the initial investment to balance out faster, 

41 DOE used the AHRI Directory of Certified Furnace Equipment (Available at: 

http://www.ahridirectory.org/ahridirectory/pages/home.aspx) as well as manufacturer product literature. 

156

 
the overall life-cycle costs can be very negatively impacted by such repairs. (Goodman, 

No 102 at p. 10)

DOE recognizes that the PBP metric does not provide a complete assessment of 

all costs that consumers may face, but it has found that the results are of interest in 

standards rulemakings. The LCC analysis does include all costs, and in part for this 

reason, DOE expresses the share of consumers who benefit from standards in terms of the 

change in LCC.

As discussed in section III.E.2, EPCA provides that a rebuttable presumption is 

established that an energy conservation standard is economically justified if the 

additional cost to the consumer of a product that meets the standard is less than three 

times the value of the first year’s energy savings resulting from the standard, as 

calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(i)) The 

calculation of this so-called rebuttable presumption payback period uses the same inputs 

as the calculation of the regular PBP for each sample household, but it uses average 

values instead of distributions, and the derivation of energy consumption and savings 

only uses the parameters specified by the proposed DOE test procedure for furnace fans 

rather than the method applied in the energy use analysis (described in section IV.E), 

which considers the characteristics of each sample household.

DOE’s LCC and PBP analyses generate values that calculate the payback period 

for consumers of potential energy conservation standards, which includes, but is not 

157
limited to, the three-year payback period contemplated under the rebuttable presumption 

test discussed above. However, DOE routinely conducts a full economic analysis that 

considers the full range of impacts, including those to the consumer, manufacturer, 

Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of 

this analysis serve as the basis for DOE to definitively evaluate the economic justification 

for a potential standard level (thereby supporting or rebutting the results of any 

preliminary determination of economic justification).

G. Shipments Analysis

DOE uses forecasts of product shipments to calculate the national impacts of 

standards on energy use, NPV, and future manufacturer cash flows. DOE develops 

shipment projections based on historical data and an analysis of key market drivers for 

each product. 

The vast majority of furnace fans are shipped installed in furnaces, so DOE 

estimated furnace fan shipments by projecting furnace shipments in three market 

segments: (1) replacements; (2) new housing; and (3) new owners in buildings that did 

not previously have a central furnace.

To project furnace replacement shipments, DOE developed retirement functions 

for furnaces from the lifetime estimates and applied them to the existing products in the 

housing stock. The existing stock of products is tracked by vintage and developed from 

158
historical shipments data. The shipments analysis uses a distribution of furnace lifetimes 

to estimate furnace replacement shipments.

To project shipments to the new housing market, DOE utilized projected new 

housing construction and historic saturation rates of various furnace and cooling product 

types in new housing. For the final rule, DOE used AEO 2013 for projections of new 

housing. Furnace saturation rates in new housing are provided by the U.S. Census 

Bureau’s Characteristics of New Housing.

42

DOE also included a small market segment consisting of households that become 

“new owners” of a gas furnace. This segment consists of households that have central air 

conditioning and non-central heating or central air conditioning and electric heating and 

choose to install a gas furnace.

Lennox stated that the shipment projections do not appear to be supported by the 

record or recent sales figures, as historical shipments data from AHRI for gas and oil 

warm air furnaces show a downward trend in shipments. (Lennox, No. 100 at pp. 6-7)

AHRI stated that DOE’s shipment projections are inaccurate and the projected numbers 

significantly skew the national energy savings estimates. (AHRI, No. 98 at pp. 4-5)

DOE’s shipments projections are based on replacement of furnaces installed over 

the past few decades and furnaces installed in future new homes. Most of the recent 

42 Available at: http://www.census.gov/const/www/charindex.html.

159

 
downward trend in shipments is due to lower new construction in the wake of the 

financial crisis. DOE updated historical shipments with 2013 data, which shows a growth 

in gas furnace shipments. DOE also updated the new construction forecast based on AEO 

2013 projections, which reflect improving economic conditions and a future increase of 

the new construction market. In addition, the replacements reflect an updated furnace 

retirement function based on the latest furnace lifetime data. Oil furnace shipments are 

projected to continue to drop in the future.

JCI and AHRI stated that the projected shipments should account for an echo 

effect loss in replacement sales for the furnaces that were not sold in the years 2008-

2012. (JCI, No. 95 at p. 10; AHRI, No. 98 at pp. 4-5) The projection for today’s final 

rule shows a lower level of replacement shipments in the 2025-2030 period, which is a 

consequence (i.e., an echo) of the decline in historical shipments in 2006-2009. 

JCI believes that the shipment projections for furnaces are too optimistic. It noted 

that during the years prior to 2006, demand for large homes with multiple furnace 

systems was more common than it is today. (JCI, No. 95 at pp. 9-10) Mortex stated that 

forecasts of future shipments are unrealistically high because new homes are smaller and 

less likely to have two furnaces. (Mortex, No. 104 at p. 3) In DOE’s final rule analysis, 

DOE assumed that new homes would not have multiple furnaces. 

It is reasonable to expect that energy conservation standards for residential 

furnace fans that result in higher furnace prices would have some dampening effect on 

160
sales. Some consumers might choose to repair their existing furnace rather than purchase 

a new one, or perhaps install an alternative space heating product. To estimate the impact 

on shipments of the price increase for the considered efficiency levels, DOE used a

relative price elasticity approach. This approach also gives some weight to the operating 

cost savings from higher-efficiency products. 

Ingersoll Rand stated that the shipment projections do not account for a drop off 

in sales due to higher furnace prices that will result from using more expensive 

components. (Ingersoll Rand, No. 107 at p. 9) The comment is incorrect; the relative 

price elasticity approach does estimate the impact on shipments of the price increase for 

the considered efficiency levels for the NOPR and the final rule.

Several stakeholders raised issues with DOE’s relative price elasticity approach. 

They stated that the household income data and data used to derive the elasticity are 

outdated and do not reflect current trends, and the household appliances used to derive 

the relative price elasticity (refrigerators, clothes washers and dishwashers) are 

inappropriate for this rulemaking. (JCI, No. 95 at p 10; Morrison, No. 108 at p. 8; AHRI, 

No. 98 at pp. 12-13; Goodman, No. 102 at p. 13) Rheem expressed similar concerns. 

(Rheem, No. 83 at p. 12)

In response, DOE notes that there are very few estimates of consumer demand 

elasticity for durable goods. Although the data that DOE used to estimate relative price 

elasticity are not current, and the analysis focused on products that differ from furnaces, 

161
DOE believes that consumer behavior with respect to the impact of higher appliance 

price on demand is not likely to have changed significantly. One recent paper suggests 

that demand elasticity for air conditioners is inelastic − holding efficiency constant, a 

10% rise in price leads to a 1.4% decline in sales.

43 This is a lower elasticity than DOE 

uses in its analysis. Therefore, DOE believes that it is reasonable to use the relative price 

elasticity approach for today’s final rule. See chapter 9 in the final rule TSD for a 

description of the method.

Mortex stated that a big increase in the installed cost of a new furnace under the 

proposed energy conservation standards will lead many consumers to repair rather than 

replace with a new furnace. (Mortex, No. 104 at p. 3) In terms of the overall cost of a 

new furnace, the increase attributable to using a more energy-efficient furnace fan is 

relatively small – less than 10 percent−for fans meeting today’s standards. In any case, 

the price elasticity approach described above captures the potential consumer response to 

higher furnace prices, which often would consist of choosing to repair an existing furnace 

rather than replace it with a new furnace.

AGA urged the Department to include a robust fuel switching analysis, including 

the competing economics of natural gas furnaces versus both electric furnaces and heat 

pumps. (AGA, No. 110 at p. 3) There is a possibility that for some consumers 

considering replacement of a non-condensing gas furnace, the higher price of a gas 

43 David Rapson. Durable Goods and Long-Run Electricity Demand: Evidence from Air Conditioner 

Purchase Behavior. Department of Economics, University of California, Davis. Available at: 

www.econ.ucdavis.edu/faculty/dsrapson/Rapson_LR_electricity.pdf.

162

 
furnace due to today’s standards could lead to some switching to heat pumps. However, 

this switching would only occur if the CAC is replaced at the same time as the furnace. 

Furthermore, switching to a heat pump would require additional cost to install backup 

electric resistance heating elements. Based on the above considerations, DOE believes 

that any switching to heat pumps due to today’s standards would be minimal. The 

standards would not create any incentive to switch to electric furnaces because electric 

furnaces are subject to the furnace fan standard and would see a similar incremental cost 

as a gas furnace.

H. National Impact Analysis

The NIA assesses the NES and the NPV from a national perspective of total 

consumer costs and savings expected to result from new or amended energy conservation 

standards at specific efficiency levels. DOE determined the NPV and NES for the 

potential standard levels considered for the furnace fan product classes analyzed. To 

make the analysis more accessible and transparent to all interested parties, DOE prepared 

a computer spreadsheet that uses typical values (as opposed to probability distributions) 

as inputs. To assess the effect of input uncertainty on NES and NPV results, DOE has 

developed its spreadsheet model to conduct sensitivity analyses by running scenarios on 

specific input variables. 

Analyzing impacts of potential energy conservation standards for residential 

furnace fans requires comparing projections of U.S. energy consumption with new or 

amended energy conservation standards against projections of energy consumption 

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without the standards. The forecasts include projections of annual appliance shipments, 

the annual energy consumption of new appliances, and the purchase price of new 

appliances.

A key component of DOE’s NIA analysis is the energy efficiencies projected over 

time for the base case (without new standards) and each of the standards cases. The 

projected efficiencies represent the annual shipment-weighted energy efficiency of the 

products under consideration during the shipments projection period (i.e., from the 

assumed compliance date of a new standard to 30 years after compliance is required). 

For the NOPR, DOE reviewed the information provided by the manufacturers and 

modified its estimate of the long-run trend in market shares of constant-torque BPM and 

constant-airflow BPM motor furnace fans. The NOPR analysis assumes a long-run trend 

that results in market share of the constant-torque BPM and constant-airflow BPM 

furnace fans reaching 45 percent in 2048. 78 FR 64099. No comments were received on 

this issue and DOE retained the same approach for the final rule.

For the NOPR, DOE used a roll-up scenario for estimating the impacts of the 

potential energy conservation standards for residential furnace fans. Under the roll-up 

scenario, DOE assumes: (1) products with efficiencies in the base case that do not meet 

the standard level under consideration would roll up to meet the new standard level; and 

(2) products with efficiencies above the standard level under consideration would not be 

affected. Id.

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Rheem stated that DOE's assumption that the sale of premium products above the 

standard level will be unaffected is unreasonable. (Rheem, No. 83 at p. 3) DOE 

acknowledges that the market shares of fans with efficiency levels above a given standard 

level could change after compliance with the new standards is required. Estimating how 

manufacturers will respond to new standards with regard to their marketing strategy for 

“above-standard” products is very difficult, however. Rather than speculate, DOE 

believes that it is preferable to retain a roll-up scenario for today’s final rule.

For the standards cases, the assumed efficiency trend after the compliance year

varies depending on the particular standard. For the case with today’s standards, the 

overall BPM motor market share goes to 100 percent in 2019 and remains at that level.

The shares of the specific BPM motor designs (i.e., constant-torque BPM, constanttorque BPM motor + multi-stage, constant-airflow BPM motor + multi-stage, and 

constant-airflow BPM motor + multi-stage + backward-inclined impeller) remain at the 

levels of 2019. The details are provided in chapter 10 of the final rule TSD.

1. National Energy Savings Analysis

The national energy savings analysis involves a comparison of national energy 

consumption of the considered products in each potential standards case (TSL) with 

consumption in the base case with no new or amended energy conservation standards.

DOE calculated the national energy consumption by multiplying the number of units 

(stock) of each product (by vintage or age) by the unit energy consumption (also by 

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vintage). Vintage represents the age of the product. DOE calculated annual NES based on 

the difference in national energy consumption for the base case (without new efficiency 

standards) and for each higher efficiency standard. DOE estimated energy consumption 

and savings based on site energy and converted the electricity consumption and savings 

to primary energy. Cumulative energy savings are the sum of the NES for each year over 

the timeframe of the analysis.

DOE calculates primary energy savings (power plant consumption) from site 

electricity savings by applying a factor to account for losses associated with the 

generation, transmission, and distribution of electricity. For the NOPR, DOE derived 

marginal site-to-power plant factors based on the version of the National Energy 

Modeling System (NEMS) that corresponds to AEO 2012. 78 FR 64099. The factors 

change over time in response to projected changes in the types of power plants projected 

to provide electricity to the country.

Commenting on DOE’s approach, AGA stated that it is highly unlikely and 

unrealistic that all of the projected changes in types of power plant used to generate 

electricity in this country will occur between 2019 and 2021 and that essentially no 

change will occur from 2031 through 2048. AGA stated that realistic trend lines to 2048 

including a linear forecast of declining site-to-power plant energy use should be 

provided. (AGA, No. 110 at p. 3)

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For the final rule, DOE derived site-to-power plant factors based on the version of

NEMS that corresponds to AEO 2013. As shown in Figure 10.3.1 in the final rule TSD, 

the factor (expressed as primary energy per site kWh) declines through 2030 as more 

efficient power plants gain share in power generation. After 2035, there is an increase due 

to lower projected share of highly-efficient combined-cycle power plants. DOE 

acknowledges that projections after 2035 are uncertain, but it believes that NEMS 

provides a reasonable projection. 

DOE has historically presented NES in terms of primary energy savings. In 

response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle 

Measurement Approaches to Energy Efficiency Standards” appointed by the National 

Academy of Science, DOE announced its intention to use full-fuel-cycle (FFC) measures 

of energy use and greenhouse gas and other emissions in the national impact analyses and 

emissions analyses included in future energy conservation standards rulemakings. 76 FR 

51281 (August 18, 2011). After evaluating the approaches discussed in the August 18, 

2011 notice, DOE published a statement of amended policy in the Federal Register in 

which DOE explained its determination that NEMS is the most appropriate tool for its 

FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (August 17, 

2012). The approach used for today’s final rule is described in appendix 10-C of the final 

rule TSD.

JCI and AHRI stated that, for cooling mode, the NIA spreadsheet model does not 

indicate how DOE used the average annual electricity use values from the energy use 

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analysis to determine national energy savings. (JCI, No. 95 at pp. 4-5; AHRI, No. 98 at 

p.6) In the NIA spreadsheet, the LCC Inputs worksheet shows how the average annual 

electricity use values are used over the analysis period.

Several stakeholders questioned the accuracy of the doubling in FFC energy 

savings from TSL 3 to TSL 4 from an incremental efficiency level improvement of 8

percent for five of the product classes from adding the multi-staging option. (JCI, No. 95 

at p 4; EEI, No. 91 at pp. 307, 309; Morrison, No. 108 at p. 4; AHRI, No. 98 at p. 4-5; 

Lennox, No. 100 at p. 2; Ingersoll Rand, No. 107 at p. 9) Similarly, AHRI stated that if 

the effect of multi-staging was indeed prominent enough to nearly double the estimated 

FFC energy savings between TSLs 3 and 4, DOE should have evaluated this effect for 

PSC motors as well. (AHRI, No. 98 at p. 5) Morrison stated that for non-weatherized gas 

furnace fans, it is inconsistent that TSL 4 could produce a very large increase in FFC 

energy savings over TSL 3 while TSL 2 and 3 have the same national energy savings;

compared to the difference in energy use between TSL 2 and TSL 3, TSL 4 has a much 

lower incremental average electricity savings and higher additional fuel use compared to 

TSL 3. (Morrison, No. 108 at p. 4)

For the final rule, DOE incorporated new test data on the fan efficiency levels that 

were included in TSL 3 (constant torque BPM motors) and TSL 4 (constant torque BPM 

motors (multi-stage)). These data contributed to a decrease in efficiency for TSL 4 (see 

section IV.C.1) With this change, the increase in savings from TSL 3 to TSL 4 is now 

smaller than in the NOPR. The NIA results are presented in section V.B.3.

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. 

Several stakeholders stated that it is implausible that the furnace fan standard will 

save about as much energy as the 2006 13 SEER rulemaking (76 FR 7185) or the 

2013/2015 90% AFUE furnace and 14 SEER rulemaking (76 FR 37412). (AHRI, No. 98 

at p. 6; Ingersoll Rand, No. 107 at p. 9; Lennox, No. 100 at p. 2; Goodman, No. 102 at p. 

6) Ingersoll Rand stated that the energy savings from the proposed rule claim to be 

greater than savings from the 13 SEER rule, but the energy savings of a furnace 

switching from a PSC motor to a constant torque BPM is nearly an order of magnitude 

less than the energy use of the furnace or heat pump. (Ingersoll Rand, No. 107 at p. 9)

DOE reviewed the methodology used to assess the energy savings estimated for 

the proposed standards, as discussed in previous parts of this notice, and believes that the 

energy savings estimated for the considered TSLs are reasonable. Comparison with other 

rules must be done with caution, as the savings in those rules depends on both the 

stringency of the standards and the base case that was chosen in the analysis. The fact 

that the energy savings of a furnace switching from a PSC motor to a constant torque 

BPM is much less than the energy use of the furnace or heat pump is not relevant to the 

energy savings associated with standards for furnaces or heat pumps.

2. Net Present Value Analysis

The inputs for determining NPV are: (1) total annual installed cost; (2) total 

annual savings in operating costs; (3) a discount factor to calculate the present value of 

costs and savings; (4) present value of costs; and (5) present value of savings. DOE 

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calculated net savings each year as the difference between the base case and each 

standards case in terms of total savings in operating costs versus total increases in 

installed costs. DOE calculated savings over the lifetime of products shipped in the 

forecast period. DOE calculated NPV as the difference between the present value of 

operating cost savings and the present value of total installed costs. DOE used a discount 

factor based on real discount rates of 3 and 7 percent to discount future costs and savings 

to present values.

For the NPV analysis, DOE calculates increases in total installed costs as the 

difference in total installed cost between the base case and standards case (i.e., once the 

standards take effect). 

DOE assumed no change in residential furnace fan prices over the 2019−2048

period. In addition, DOE conducted a sensitivity analysis using alternative price trends, 

specifically one in which prices decline over time, and another in which prices rise. These 

price trends are described in appendix 10-C of the final rule TSD.

DOE expresses savings in operating costs as decreases associated with the lower 

energy consumption of products bought in the standards case compared to the base 

efficiency case. Total savings in operating costs are the product of savings per unit and 

the number of units of each vintage that survive in a given year.

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DOE estimates the NPV of consumer benefits using both a 3-percent and a 7-

percent real discount rate. DOE uses these discount rates in accordance with guidance 

provided by the Office of Management and Budget (OMB) to Federal agencies on the 

development of regulatory analysis.44 The NPV results for the residential furnace fan 

TSLs are presented in section V.B.3 of this document.

I. Consumer Subgroup Analysis

A consumer subgroup comprises a subset of the population that may be affected 

disproportionately by new or revised energy conservation standards (e.g., low-income 

consumers, seniors). The purpose of a consumer subgroup analysis is to determine the 

extent of any such disproportional impacts. 

For today’s final rule, DOE evaluated impacts of potential standards on two 

subgroups: (1) senior-only households and (2) low-income households. DOE identified 

these households in the RECS sample and used the LCC spreadsheet model to estimate 

the impacts of the considered efficiency levels on these subgroups. The consumer 

subgroup results for the residential furnace fan TSLs are presented in section V.B.1 of 

this document.

44 OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs.”

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J. Manufacturer Impact Analysis

1. Overview

DOE performed an MIA to estimate the financial impact of new energy 

conservation standards on manufacturers of residential furnace fans and to calculate the 

potential impact of such standards on employment and manufacturing capacity. The 

MIA has both quantitative and qualitative aspects. The quantitative part of the MIA 

primarily relies on the Government Regulatory Impact Model (GRIM), an industry cashflow model with inputs specific to this rulemaking. The key GRIM inputs are data on the 

industry cost structure, product costs, shipments, and assumptions about markups and 

conversion expenditures. The key output is the industry net present value (INPV). 

Different sets of assumptions (markup scenarios) will produce different results. The 

qualitative part of the MIA addresses factors such as product characteristics, impacts on 

particular subgroups of firms, and important market and product trends. The complete 

MIA is outlined in chapter 12 of the final rule TSD.

For this rulemaking, DOE considers the “furnace fan industry” to consist of 

manufacturers who assemble furnace fans as a component of the HVAC products 

addressed in this rulemaking.

DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the 

MIA, DOE prepared a profile of the residential furnace fans industry that includes a topdown cost analysis of manufacturers used to derive preliminary financial inputs for the 

GRIM (e.g., sales, general, and administration (SG&A) expenses; research and 

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development (R&D) expenses; and tax rates). DOE used public sources of information, 

including company SEC 10-K filings,45 corporate annual reports, the U.S. Census 

Bureau’s Economic Census, 46 and Hoover’s reports. 47

In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis to quantify 

the potential impacts of a new energy conservation standard. In general, energy 

conservation standards can affect manufacturer cash flow in three distinct ways: (1) 

create a need for increased investment; (2) raise production costs per unit; and (3) alter 

revenue due to higher per-unit prices and possible changes in sales volumes. 

In Phase 3 of the MIA, DOE conducted structured, detailed interviews with a 

representative cross-section of manufacturers. During these interviews, DOE discussed 

engineering, manufacturing, procurement, and financial topics to validate assumptions 

used in the GRIM and to identify key issues or concerns. Section IV.J.4 of the NOPR

contains a description of the key issues manufacturers raised during the interviews.78 FR 

64068, 64104-05 (Oct. 25, 2013).

Additionally, in Phase 3, DOE evaluated subgroups of manufacturers that may be 

disproportionately impacted by new standards or that may not be accurately represented 

by the average cost assumptions used to develop the industry cash-flow analysis. For 

45 U.S. Securities and Exchange Commission, Annual 10-K Reports (Various Years) (Available at:

http://sec.gov). 46 U.S. Census Bureau, Annual Survey of Manufacturers: General Statistics: Statistics for Industry Groups 

and Industries (Available at: 

http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t). 47 Hoovers Inc. Company Profiles (Various Companies) (Available at: http://www.hoovers.com). 

173

 
example, small manufacturers, niche players, or manufacturers exhibiting a cost structure 

that largely differs from the industry average could be more negatively affected. DOE 

identified one subgroup (i.e., small manufacturers) for a separate impact analysis.

DOE applied the small business size standards published by the Small Business 

Administration (SBA) to determine whether a company is considered a small business. 

65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) 

and codified at 13 CFR part 121. To be categorized as a small business under North 

American Industry Classification System (NAICS) code 333415, “Air-Conditioning and 

Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment 

Manufacturing,” a residential furnace fan manufacturer and its affiliates may employ a 

maximum of 750 employees. The 750-employee threshold includes all employees in a 

business’s parent company and any other subsidiaries. Based on this classification, DOE 

identified 15 residential furnace fan manufacturers that qualify as small businesses. The 

residential furnace fan small manufacturer subgroup is discussed in chapter 12 of the 

final rule TSD and in section V.B.2.d of this document.

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the changes in cash flow due to new standards 

that result in a higher or lower industry value. The GRIM analysis uses a standard, 

annual cash-flow analysis that incorporates manufacturer costs, markups, shipments, and 

industry financial information as inputs. The GRIM models changes in costs, distribution 

of shipments, investments, and manufacturer margins that could result from new energy 

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conservation standards. The GRIM spreadsheet uses the inputs to arrive at a series of 

annual cash flows, beginning in 2014 and continuing to 2048. DOE calculated INPVs by 

summing the stream of annual discounted cash flows during this period. For residential 

furnace fan manufacturers, DOE used a real discount rate of 7.8 percent, which was 

derived from industry financials and then modified according to feedback received during 

manufacturer interviews.

The GRIM calculates cash flows using standard accounting principles and 

compares changes in INPV between a base case and each standards case. The difference 

in INPV between the base case and a standards case represents the financial impact of the 

new energy conservation standard on manufacturers. As discussed previously, DOE 

collected this information on the critical GRIM inputs from a number of sources, 

including publicly-available data and interviews with a number of manufacturers 

(described in the next section). The GRIM results are shown in section V.B.2.a. 

Additional details about the GRIM, the discount rate, and other financial parameters can 

be found in chapter 12 of the final rule TSD.

a. Government Regulatory Impact Model Key Inputs

Manufacturer Production Costs

Manufacturing a higher-efficiency product is typically more expensive than 

manufacturing a baseline product due to the use of more complex components, which are 

typically more costly than baseline components. The changes in the MPCs of the 

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analyzed products can affect the revenues, gross margins, and cash flow of the industry, 

making these product cost data key GRIM inputs for DOE’s analysis.

In the MIA, DOE used the MPCs for each considered efficiency level calculated in 

the engineering analysis, as described in section IV.C and further detailed in chapter 5 of 

the final rule TSD. In addition, DOE used information from its teardown analysis, 

described in chapter 5 of the TSD, to disaggregate the MPCs into material, labor, and 

overhead costs. To calculate the MPCs for equipment above the baseline, DOE added the 

incremental material, labor, and overhead costs from the engineering cost-efficiency 

curves to the baseline MPCs. These cost breakdowns and product markups were 

validated and revised with manufacturers during manufacturer interviews.

Shipments Forecast

The GRIM estimates manufacturer revenues based on total unit shipment forecasts 

and the distribution of these values by efficiency level. Changes in sales volumes and 

efficiency mix over time can significantly affect manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual shipment forecasts derived from the shipments analysis 

from 2014 (the base year) to 2048 (the end year of the analysis period). See chapter 9 of 

the final rule TSD for additional details.

Product and Capital Conversion Costs

New energy conservation standards would cause manufacturers to incur one-time 

conversion costs to bring their production facilities and product designs into compliance. 

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DOE evaluated the level of conversion-related expenditures that would be needed to 

comply with each considered efficiency level in each product class. For the MIA, DOE 

classified these conversion costs into two major groups: (1) product conversion costs; and 

(2) capital conversion costs. Product conversion costs are one-time investments in 

research, development, testing, marketing, and other non-capitalized costs necessary to 

make product designs comply with the new energy conservation standard. Capital 

conversion costs are one-time investments in property, plant, and equipment necessary to 

adapt or change existing production facilities such that new product designs can be 

fabricated and assembled. 

To evaluate the level of capital conversion expenditures manufacturers would 

likely incur to comply with new energy conservation standards, DOE used manufacturer 

interviews to gather data on the anticipated level of capital investment that would be 

required at each efficiency level. DOE validated manufacturer comments through 

estimates of capital expenditure requirements derived from the product teardown analysis 

and engineering analysis described in chapter 5 of the TSD.

DOE assessed the product conversion costs at each considered efficiency level by 

integrating data from quantitative and qualitative sources. DOE considered marketshare-weighted feedback regarding the potential costs of each efficiency level from 

multiple manufacturers to determine conversion costs such as R&D expenditures and 

certification costs. Manufacturer data were aggregated to better reflect the industry as a 

whole and to protect confidential information. 

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In general, DOE assumes that all conversion-related investments occur between 

the year of publication of the final rule and the year by which manufacturers must comply 

with the new standard. The investment figures used in the GRIM can be found in section 

IV.J.2 of this notice. For additional information on the estimated product and capital 

conversion costs, see chapter 12 of the final rule TSD.

b. Government Regulatory Impact Model Scenarios

Shipment Scenarios

In the NIA, DOE modeled shipments with a roll-up scenario to represent possible 

standards-case efficiency distributions for the years beginning 2019 (the year that 

compliance with new standards would be required) through 2048 (the end of the analysis 

period). The roll-up scenario represents the case in which all shipments in the base case 

that do not meet the new standard would roll up to meet the new standard level, with the 

efficiency of products already at the new standard level remaining unchanged. 

Consumers in the base case who purchase products above the standard level are not 

affected as they are assumed to continue to purchase the same product in the standards 

case. See chapter 9 of the final rule TSD for more information.

Markup Scenarios

As discussed above, MSPs include direct manufacturing production costs (i.e., 

labor, materials, and overhead estimated in DOE’s MPCs) and all non-production costs 

(i.e., SG&A, R&D, and interest), along with profit. To calculate the MSPs in the GRIM, 

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DOE applied non-production cost markups to the MPCs estimated in the engineering 

analysis for each product class and efficiency level. Modifying these markups in the 

standards case yields different sets of impacts on manufacturers. For the MIA, DOE 

modeled two standards-case markup scenarios to represent the uncertainty regarding the 

potential impacts on prices and profitability for manufacturers following the 

implementation of new energy conservation standards: (1) a preservation of gross margin 

percentage markup scenario; and (2) a preservation of per unit operating profit markup 

scenario. These scenarios lead to different markups values that, when applied to the 

inputted MPCs, result in varying revenue and cash flow impacts. 

Under the preservation of gross margin percentage scenario, DOE applied a single 

uniform “gross margin percentage” markup across all efficiency levels, which assumes 

that manufacturers would be able to maintain the same amount of profit as a percentage 

of revenues at all efficiency levels within a product class. As production costs increase 

with efficiency, this scenario implies that the absolute dollar markup will increase as 

well. Based on publicly-available financial information for manufacturers of residential 

furnace fans and comments from manufacturer interviews, DOE assumed the nonproduction cost markup—which includes SG&A expenses, R&D expenses, interest, and 

profit—to be the following for each residential furnace fan product class: 

Table IV.11: Manufacturer Markup by Residential Furnace Fan Product Class

Product Class Markup

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC) 1.30

Non-weatherized, Condensing Gas Furnace Fan (NWG-C) 1.31

Weatherized, Non-condensing Gas Furnace Fan (WG-NC) 1.27

Non-weatherized, Non-condensing Oil Furnace Fan (NWO-NC) 1.35

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Electric Furnace / Modular Blower Fan (EF/MB) 1.19

Mobile Home Non-Weatherized, Non-condensing Gas Furnace Fan (MHNWG-NC) 1.25

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan (MH-NWG-C) 1.25

Mobile Home Electric Furnace/ Modular Blower Fan (MH-EF/MB) 1.15

Because this markup scenario assumes that manufacturers would be able to 

maintain their gross margin percentage markups as production costs increase in response 

to a new energy conservation standard, it represents a high bound to industry 

profitability.

In the preservation of per unit operating profit scenario, manufacturer markups are 

set so that operating profit one year after the compliance date of the new energy 

conservation standard is the same as in the base case on a per unit basis. Under this 

scenario, as the costs of production increase under a standards case, manufacturers are 

generally required to reduce their markups to a level that maintains base-case operating 

profit per unit. The implicit assumption behind this markup scenario is that the industry 

can only maintain its operating profit in absolute dollars per unit after compliance with 

the new standard is required. Therefore, operating margin in percentage terms is 

squeezed (reduced) between the base case and standards case. DOE adjusted the 

manufacturer markups in the GRIM at each TSL to yield approximately the same 

earnings before interest and taxes in the standards case as in the base case. This markup 

scenario represents a low bound to industry profitability under a new energy conservation 

standard.

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3. Discussion of Comments

During the NOPR public meeting, interested parties commented on the 

assumptions and results of the NOPR analysis TSD. Oral and written comments 

addressed several topics, including conversion costs, cumulative regulatory burdens, 

scope of MIA coverage, markups analysis, employment impacts, consumer utility 

impacts, and impacts on small businesses. 

a. Conversion Costs

Several manufacturers expressed concern regarding the DOE’s estimates of the 

capital and product conversion costs, including costs relating to testing and certification. 

Regarding capital conversion costs associated with a furnace fans standard, 

Goodman commented that DOE’s estimate of zero capital conversion costs at TSL 4 does 

not properly reflect feedback from manufacturer interviews. (Goodman, No. 102 at p. 

10) AHRI stated that the technology option associated with TSL 4 would necessitate 

changes in manufacturers’ assembly and subassembly production lines, including the 

modification and/or elimination of current fan housings, heat exchanger types, and 

furnace cabinet sizes, at a cost of $103 million for the industry. (AHRI, No. 98 at p. 10) 

Johnson Controls commented that compliance with the proposed standard would likely 

require them to make a capital investment ranging from $2.8 million to $4 million. (JCI, 

No. 95 at p. 2) 

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In the engineering analysis, most of the technology options being considered 

require only a change in the type of motor used. At the NOPR stage, DOE tentatively 

concluded that TSLs 1 through 5 would not require manufacturers to incur capital 

expenditures for new tooling or equipment. However, in response to the above-mentioned 

public comments received during the NOPR period, DOE has revised its methodology for 

estimating capital conversion costs at all TSLs for the final rule. DOE incorporated all 

capital conversion cost values submitted by manufacturers during the course of MIA 

interviews and used a product listing weighted-average of feedback (based on basic 

model listings in the AHRI directory) to determine conversion costs for the industry. As 

a result, capital conversion costs were revised upward at all TSLs, as shown in Table 

IV.12. 

Table IV.12 Final Rule Capital Conversion Costs (CCC)

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Total Industry CCCs ($ millions) 8.8 11.1 11.8 15.1 15.7 134.7

DOE notes that the conversion costs submitted by AHRI and Johnson Controls 

are generally consistent with DOE’s estimates of conversion costs at TSL 6 in the final 

rule. However, without a more detailed breakdown of the conversion costs by TSL from 

those stakeholders, it was not feasible for DOE to determine the discrepancies in capital 

conversion cost values or to incorporate their feedback into the GRIM model.

With regards to product conversion costs, including costs associated with 

compliance, certification, and enforcement (CC&E), both Trane and Johnson Controls 

provided their own estimates in support of the notion that there will be significant testing 

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burden associated with standards compliance. (Trane, No. 107 at pp. 2, 6, and JCI, No. 

95 at p. 8) Goodman also stated that investments in additional testing equipment may be 

required in order to keep pace with current and future testing requirements. (Goodman, 

No. 102 at p. 11) AHRI and multiple manufacturers commented that the performance 

standard associated with TSL 4 would require total industry product conversion costs of 

$6.2 million. (AHRI, No. 98 at p. 10) 

DOE acknowledges manufacturers’ concerns regarding product conversion cost 

estimates, including those relating to testing and certification. Similar to the capital 

conversion cost analysis, DOE refined its final rule modeling of product conversion costs 

to better reflect information received during manufacturer interviews. DOE used a 

product listing weighted-average (based on basic model listings in the AHRI directory) to 

extrapolate individual manufacturer feedback to an industry value for each efficiency 

level and for each product class. Additionally, for the final rule, DOE explicitly 

incorporated certification costs into the product conversion cost estimates used in the 

GRIM. These certification costs occur in the base case and apply in the standards cases. 

DOE modeled testing and certification costs under the assumption that larger 

manufacturers have would conduct all FER testing in-house, while small manufacturers 

would outsource all certification testing. DOE assumed a cost of $175 per test per basic 

model for large manufacturers (derived from the test procedure estimate of a maximum 

of 4 hours per test) (79 FR 500 (Jan. 3, 2014)) and a cost of $2,000 per test per basic 

model for small manufacturers (77 FR 28674 (May 15, 2012)). See Table IV.13 and 

Table IV.14 below for a summary of testing and certification cost calculations and overall 

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product conversion costs. Conversion costs are discussed in detail in section V.B.2.a of 

today’s document and in chapter 12 of the final rule TSD.

Table IV.13 Testing and Certification Costs

General assumptions: Value

[a] Number of FER tests required per Basic Model 2

[b] Total Industry Number of Basic Models [1] 2,254

[c] Number of Basic Models for Large Manufacturers 1,943

[d] Number of Basic Models for Small Manufacturers 311

Large manufacturer assumptions:

[e] Labor rate ($/hr) [2] 43.73

[f] Time required per test (hours) [3] 4

Small manufacturer assumptions:

[g] Cost per FER test (outsource) ($) [4] = $2,000

[h] FER costs per model for Large Manufacturer ($) = [a]*[e]*[f] $350

[i] FER costs per model for Small Manufacturer ($) = [a]*[g] $4,000

Total Industry FER costs ($ millions) = [h]*[c]+ [i]*[d] $1.9

Total Industry FER costs rescaled to account for EF/MB and MH-EF/MB product classes 

($ millions) [5] $2.2

[1] AHRI Directory: Residential Furnaces.

[2] Bureau of Labor Statistics, 2012 mean hourly wage for all engineers.

[3] 2012-05-15 Test Procedures for Residential Furnace Fans; Notice of proposed rulemaking, section IV, 

part B.

[4] 2012-05-15 Test Procedures for Residential Furnace Fans; Notice of proposed rulemaking, section IV, 

part B.

[5] The AHRI residential furnaces database does not contain electric furnaces/modular blowers. In order to 

account for CC&E costs relates to these products (standard and MH), DOE rescaled the $1.9 value by 12%, 

which is the estimated proportion of shipments for these two categories combined. $2.2 is the value used in 

the GRIM.

Table IV.14 Product Conversion Costs

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Total Number of Basic 

Models [1] 2,254

Average Testing and 

Certification Costs + R&D 

Costs per Basic Model ($)

853 8,449 10,577 11,356 11,434 12,157 13,182

Total Industry PCCs 

($ millions) 2.2 18.8 23.6 25.3 25.5 27.1 29.4

[1] AHRI Directory: Residential Furnaces.

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b. Cumulative Regulatory Burden

Interested parties expressed concern over the cumulative regulatory burden that 

would result from a residential furnace fan energy conservation standard. AHRI, 

Morrison, and Lennox commented that DOE did not account for the cumulative impacts 

of additional DOE regulations, including energy conservation standards or potential 

standards for commercial and industrial fans and blowers, commercial package air 

conditioners and heat pumps, and commercial warm air furnaces. The three stakeholders 

also asserted that DOE did not address testing burdens associated with the recently 

finalized test procedures for two-stage and modulating condensing furnaces and boilers, 

and potential updates to test procedures for residential furnaces and boilers. (AHRI, No. 

98 at p. 8-9; Morrison, No.108 at p. 6; Lennox, No. 100 at p. 8) Rheem argued that DOE 

failed to address cumulative burdens relating to regulations for water heaters, boilers, 

pool heaters, and commercial refrigeration equipment. (Rheem, No. 83 at p. 14) 

DOE notes that the energy conservation standard rulemakings for commercial and 

industrial fans and blowers, commercial package air conditioners and heat pumps, 

commercial warm air furnaces, water heaters, residential boilers, commercial boilers, and 

pool heaters are all regulation currently in progress. No standards have been proposed,

and no final regulations have been issued for these rulemakings. It is DOE’s policy not 

to include the impacts of regulatory proposals until the analyses are complete and the

standards are finalized. Until such rulemaking is complete, it is unclear what, if any, 

requirements will be adopted for the products in question. Consequently, it would be 

speculative to try to include incomplete regulatory actions in an assessment of cumulative 

185
regulatory burden. With regard to the test procedure final rule for residential furnaces 

and boilers published on July 10, 2013, the changes have a compliance date of January 6, 

2014. 78 FR 41265. Because the regulation goes into effect before 2016, it is outside of 

the 3-year window set for consideration in the cumulative regulatory burden analysis. 

With regard to the commercial refrigeration equipment (CRE) energy conservation 

standard rulemaking, at the time of the residential furnace fan rulemaking NOPR 

publication, the final rule for CRE standards had not yet been published. The final rule 

for CRE standards was published on March 28, 2014 and is now included in the final rule 

cumulative regulatory burden review in section V.B.2.e. 79 FR 17725.

Johnson Controls commented that DOE should consider the cumulative impacts 

of State or local weatherization programs that may be restrictive on HVAC equipment 

selections, as well as building code standards at State, national, and international levels. 

In addition, JCI believes DOE should include the impact of commercial product energy 

efficiency standards, alternate refrigeration requirements, and modifications to existing or 

the generation of new building performance standards, such as ASHRAE standards.

(JCI, No. 95 at p. 7). 

DOE considers cumulative regulatory burden pursuant to the directions in the 

Process Rule (10 CFR part 430, subpart C, appendix A). DOE notes that States and 

localities are generally preempted from requiring HVAC standards beyond the Federal 

minimum through building codes or other regulatory requirements. Once finalized, 

Federal commercial energy efficiency standards, alternative refrigeration requirements, 

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and ASHRAE 90.1 standards that go into effect within 3 years of the effective date of 

today’s standard are considered in the cumulative regulatory burden analysis. 

AHRI and Morrison commented that DOE failed to provide quantitative estimates 

of the incremental burden imposed by the additional DOE standards impacting furnace 

fan manufacturers. As a result, both parties do not feel that such impacts were adequately 

reflected in the GRIM. (AHRI, No. 98 at p. 9, and Morrison, No. 108 at p. 7)

In the final rule cumulative regulatory burden section, DOE has provided an 

explicit review of the conversion costs associated with DOE energy conservation 

standards that impact the manufacturers covered under the residential furnace fan 

rulemaking. For more information, please see section V.B.2.e of this document.

c. Scope of MIA Coverage

AHRI and Rheem commented that impacts on motor manufacturers should be 

included in the manufacturing impact analysis. (AHRI, No. 43 at p. 151, and Rheem, No. 

83 at p. 6)

DOE’s manufacturer impact analysis focuses on the manufacturers that have the 

direct burden of complying with the energy conservation standard. In this rulemaking, 

the manufacturer of the residential furnace has the burden of certifying and labeling the 

furnace fan performance. Motors manufacturers are a component supplier but do not 

have a direct compliance burden associated with this rule. 

187
d. Markups Analysis

AHRI provided comments relating to both markup scenarios used in the GRIM.

With regards to the preservation of gross margin percentage markup scenario, AHRI 

commented that it is unreasonable for DOE to assume that, as manufacturer production 

costs increase in response to an energy conservation standard, manufacturers would be 

able to maintain the same gross margin percentage markup as the base case. (AHRI, No. 

98 at p. 10) AHRI continued by commenting that the preservation of operating profit 

scenario is also inaccurate since it implies that manufacturer markups are set so that 

operating profit one year after the compliance date of the new energy conservation 

standards is the same as in the base case. AHRI believes that the one year time period is 

an extremely optimistic assumption and that a five-year time period would be a more 

realistic average for the industry. (AHRI, No. 98 at p. 10)

DOE intends for the preservation of gross margin percentage and preservation of 

per-unit operating profit markup scenarios to represent the upper and lower bounds for 

the performance of the industry as a result of new standards. The preservation of gross 

margin percentage scenario assumes that manufacturers are able to pass on all increases 

in MPC that result from standards to their first customers. Additionally, the scenario 

assumes manufacturers are able to maintain the existing markup on the incremental 

manufacturer production costs that result from the standard, thereby allowing 

manufacturers to recover portions of their conversion cost investments. The preservation 

of per-unit operating profit scenario assumes that manufacturers are not able to generate 

188
greater operating profit per unit sold in the standards case. Additionally, the scenario 

assumes that manufacturers are not able to recover any of their conversion cost 

investments. By applying these two scenarios, DOE models examine the range of 

potential industry impacts that reflect manufacturers’ varying ability to pass costs on to 

customers and recover conversion costs. The scenario described by AHRI appears to 

relate to manufacturers’ ability to recover conversion costs, which is likely not possible 

by one year following the standard year. However, the preservation of operating profit 

per-unit markup scenario assumes only that manufacturers will maintain the same annual 

operating profit as in the base case in the year after the standards go into effect. DOE 

believes that manufacturers’ annual operating profit will be relatively constant in the 

years following the standard, and, accordingly, the choice between a one-year and fiveyear time horizon for this scenario is arbitrary. 

e. Employment Impacts

AHRI and EEI commented that it is unrealistic to assume there would be no 

reductions in domestic production employment at TSLs 1 through 5. This is because 

labor costs will increase with higher design options, and, subsequently, manufacturers 

will try to compensate by reducing labor. (AHRI, No. 98 at p. 10 and EEI, No. 43 at 

p.349) Additionally, AHRI commented that subsection 12.7.1 in the NOPR TSD 

accounts for line-supervisors as production workers who contribute towards the 

manufacture of furnace fans, but should also account for engineers and managers in 

supervisory roles who may not be involved in the day-to-day assembly line operations. 

(AHRI, No. 98 at p. 11)

189
At the NOPR stage, DOE’s employment analysis only provided an upper bound 

to employment changes. These upper bound impacts were directly correlated to changes 

in shipments and changes in per-unit labor inputs. For the final rule, DOE uses the same 

employment model to determine the upper bound of employment impacts. At the lower 

bound, DOE models the scenario in which all production moves to lower production cost 

countries. In reference to AHRI’s second comment, DOE does account for nonproduction workers in the GRIM and presents these results along with revised estimates 

of domestic production employment in chapter 12 of the final rule TSD.

f. Consumer Utility

Morrison commented in support of DOE’s previously-stated concern relating to 

the use of multiple rating systems on a given product. Morrison emphasized that this 

would indeed lead to consumer confusion. (Morrison, No. 108 at p. 2) 

DOE understands manufacturer concern relating to multiple ratings. However, 

DOE is required by legislation to set a separate standard and an associated metric for the 

covered product, furnace fans.

g. Small Businesses

In reference to the Regulatory Flexibility Analysis contained in the NOPR, 

Mortex expressed concern that DOE significantly underestimated capital and product 

conversion costs. According to Mortex, even at the underestimated level, the calculated 

190
impact to small businesses (conversion costs of 5.1 percent of annual revenues) would be 

highly detrimental. (Mortex, No. 104 at pp. 2-3) 

DOE has revised its analysis of conversion costs for the final rule. The increase in 

conversion costs is reflected in the Final Regulatory Flexibility Analysis (FRFA), in 

section VI.B of this notice. To help portray the magnitude of the conversion costs 

relative to the size of the average small business, the conversion costs (which are invested 

over a five-year period) are compared to the financial metric of a single year’s operation. 

K. Emissions Analysis

In the emissions analysis, DOE estimated the reduction in power sector emissions 

of carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) 

from potential energy conservation standards for the considered products (here, furnace 

fans). In addition to estimating impacts of standards on power sector emissions, DOE 

estimated emissions impacts in production activities (extracting, processing, and 

transporting fuels) that provide the energy inputs to power plants. These are referred to as 

“upstream” emissions. Together, these emissions account for the full-fuel-cycle (FFC). In 

accordance with DOE’s FFC Statement of Policy (76 FR 51281 (August 18, 2011) as 

amended at 77 FR 49701 (August 17, 2012)), this FFC analysis also includes impacts on 

emissions of methane (CH4) and nitrous oxide (N2O), both of which are recognized as 

greenhouse gases. 

191
DOE primarily conducted the emissions analysis using emissions factors for CO2

and most of the other gases derived from data in AEO 2013, supplemented by data from 

other sources. DOE developed separate emissions factors for power sector emissions and 

upstream emissions. The method that DOE used to derive emissions factors is described 

in chapter 13 of the final rule TSD.

For CH4 and N2O, DOE calculated emissions reduction in tons and also in terms 

of units of carbon dioxide equivalent (CO2eq). Gases are converted to CO2eq by 

multiplying each ton of the greenhouse gas by the gas’s global warming potential (GWP) 

over a 100-year time horizon. Based on the Fourth Assessment Report of the 

Intergovernmental Panel on Climate Change,48 DOE used GWP values of 25 for CH4 and 

298 for N2O.

EIA prepares the Annual Energy Outlook using the National Energy Modeling 

System (NEMS). Each annual version of NEMS incorporates the projected impacts of 

existing air quality regulations on emissions. AEO 2013 generally represents current 

legislation and environmental regulations, including recent government actions, for 

which implementing regulations were available as of December 31, 2012.

48 Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. 

Lowe, G. Myhre, J. Nganga, R. Prinn,G. Raga, M. Schulz and R. Van Dorland, 2007: Changes in 

Atmospheric Constituents and in Radiative Forcing. In Climate Change 2007: The Physical Science Basis. 

Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on 

Climate Change. S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. 

Miller, Editors (2007) Cambridge University Press, Cambridge, United Kingdom and New York, NY, 

USA. p. 212.

192

 
SO2 emissions from affected electric generating units (EGUs) are subject to 

nationwide and regional emissions cap-and-trade programs. Title IV of the Clean Air Act 

sets an annual emissions cap on SO2 for affected EGUs in the 48 contiguous States (42 

U.S.C. 7651 et seq.) and the District of Columbia (D.C.). SO2 emissions from 28 eastern 

States and D.C. were also limited under the Clean Air Interstate Rule (CAIR; 70 FR 

25162 (May 12, 2005)), which created an allowance-based trading program. CAIR was 

remanded to the U.S. Environmental Protection Agency (EPA) by the U.S. Court of 

Appeals for the District of Columbia, but it remained in effect.49 See North Carolina v. 

EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 

2008). In 2011, EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule 

(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C. Circuit issued a 

decision to vacate CSAPR.50 The court ordered EPA to continue administering CAIR. 

The AEO 2013 emissions factors used for today’s final rule assume that CAIR remains a 

binding regulation through 2040.

The attainment of emissions caps is typically flexible among EGUs and is 

enforced through the use of tradable emissions allowances. Under existing EPA 

regulations, any excess SO2 emissions allowances resulting from the lower electricity 

demand caused by the adoption of a new or amended efficiency standard could be used to 

allow offsetting increases in SO2 emissions by any regulated EGU. In past rulemakings,

DOE recognized that there was uncertainty about the effects of efficiency standards on 

49 See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. 

Cir. 2008).

50 See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).

193

 
SO2 emissions covered by the existing cap-and-trade system, but it concluded that 

negligible reductions in power sector SO2 emissions would occur as a result of standards.

Beginning in 2015, however, SO2 emissions will fall as a result of the Mercury 

and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the 

final MATS rule, EPA established a standard for hydrogen chloride as a surrogate for 

acid gas hazardous air pollutants (HAP), and also established a standard for SO2 (a nonHAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The 

same controls are used to reduce HAP and non-HAP acid gas; thus, SO2 emissions will 

be reduced as a result of the control technologies installed on coal-fired power plants to 

comply with the MATS requirements for acid gas. AEO2013 assumes that, in order to 

continue operating, coal plants must have either flue gas desulfurization or dry sorbent 

injection systems installed by 2015. Both technologies, which are used to reduce acid gas 

emissions, also reduce SO2 emissions. Under the MATS, NEMS shows a reduction in 

SO2 emissions when electricity demand decreases (e.g., as a result of energy efficiency 

standards). Emissions will be far below the cap that would be established by CAIR, so it 

is unlikely that excess SO2 emissions allowances resulting from the lower electricity 

demand would be needed or used to allow offsetting increases in SO2 emissions by any 

regulated EGU. Therefore, DOE believes that energy efficiency standards will reduce 

SO2 emissions in 2015 and beyond.

CAIR established a cap on NOX emissions in 28 eastern States and the District of 

Columbia. Energy conservation standards are expected to have little effect on NOX

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emissions in those States covered by CAIR because excess NOX emissions allowances 

resulting from the lower electricity demand could be used to allow offsetting increases in 

NOX emissions. However, standards would be expected to reduce NOX emissions in the 

States not affected by the caps, so DOE estimated NOX emissions reductions from the 

standards considered in today’s final rule for these States.

The MATS limit mercury emissions from power plants, but they do not include 

emissions caps, and, as such, DOE’s energy conservation standards would likely reduce 

Hg emissions. DOE estimated mercury emissions reduction using emissions factors based 

on AEO 2013, which incorporates the MATS.

JCI and EEI stated that DOE did not consider the impact of the EPA rulemakings 

on new and existing power plants, which likely will materially affect the projections of 

CO2 emissions reductions on which the DOE’s SCC benefit calculations are based. (JCI, 

No. 95 at p. 10-11; EEI, No. 87 at p. 9) Consistent with past practice, DOE has 

concluded that it would not be appropriate for its analysis to assume implementation of

regulations that are not in effect at this time. The shape of any final EPA regulations is 

uncertain, as is the outcome of potential legal challenges to those regulations.

EEI stated that, to be consistent with other rulemakings, DOE should use 

modeling that calculates no emissions reductions as a result of efficiency standards where 

such emissions are capped by State, regional, or Federal regulations. In particular, DOE 

should eliminate any estimated CO2 reductions in California and in the Northeastern / 

195
Mid-Atlantic states that participate in the Regional Greenhouse Gas Initiative (RGGI). 

(EEI, No. 87 at p. 10) Morrison stated that different agencies simultaneously addressing 

similar sources of CO2 emissions should not double-count emissions reductions. 

(Morrison, No. 108 at p. 10)

As stated above, DOE based its emissions analysis on AEO 2013, which 

represents current legislation and environmental regulations, including recent government 

actions, for which implementing regulations were available as of December 31, 2012. 

AEO 2013 accounts for the implementation of regional and State air emissions 

regulations, including those cited by EEI.51 Its analysis also considers the impact of caps 

set by Federal regulations, as discussed above. Consequently, the emissions reductions 

estimated to result from today’s standards are over and above any reductions attributable 

to other State, regional, or Federal regulations.

EEI stated that DOE’s analysis significantly overestimates the future emissions 

from power plants, as coal-fired power plants are being retired and large amounts of wind 

and solar capacity are being added. It stated that due to these factors, along with EPA 

regulations, there will be a significant reduction in the baseline emissions from power 

plants and a reduced emissions impact from any efficiency standard. (EEI, No. 87 at p. 9)

DOE bases its emissions analysis on the latest projections from the AEO, which 

consider retirement of coal-fired power plants, addition of wind and solar capacity, and 

51 See Assumptions to AEO 2013 (Available at: http://www.eia.gov/forecasts/aeo/assumptions/). 

196

 
current EPA regulations. Decline in baseline emissions from power plants does not mean 

that there would be reduced impact from any efficiency standard, however. The impact of 

standards on electricity demand takes place at the margin, and DOE’s analysis endeavors 

to reflect this marginal impact.

EEI stated that it is not clear how or why the power plant emissions factors would 

increase for any regulated emission (SO2, NOX, Hg, and CO2) after 2025 or 2030, based 

on current trends and Federal and State regulations. (EEI, No. 87 at p. 10) DOE agrees 

that average power plant emissions factors for the Nation as a whole would likely not

increase after 2025 or 2030. DOE’s analysis uses marginal emissions factors, however, 

which depend on changes to the mix of generation capacity by fuel type induced by a 

marginal reduction in electricity demand for a particular end use (e.g., residential 

heating). The behavior of marginal emissions factors can be significantly different from 

the behavior of average emissions factors. Marginal emissions factors are very sensitive 

to shifts in the capacity mix relative to the AEO reference case, whereas average 

emissions factors are not affected by these small shifts.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

As part of the development of the standards in this final rule, DOE considered the 

estimated monetary benefits from the reduced emissions of CO2 and NOX that are 

expected to result from each of the TSLs considered. In order to make this calculation 

analogous to the calculation of the NPV of consumer benefit, DOE considered the 

reduced emissions expected to result over the lifetime of equipment shipped in the 

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forecast period for each TSL. This section summarizes the basis for the monetary values 

used for each of these emissions and presents the values considered in this final rule.

For today’s final rule, DOE is relying on a set of values for the SCC that was 

developed by a Federal interagency process. The basis for these values is summarized 

below, and a more detailed description of the methodologies used is provided as an 

appendix to chapter 14 of the final rule TSD.

1. Social Cost of Carbon

The SCC is an estimate of the monetized damages associated with an incremental 

increase in carbon emissions in a given year. It is intended to include (but is not limited 

to) changes in net agricultural productivity, human health, property damages from 

increased flood risk, and the value of ecosystem services. Estimates of the SCC are 

provided in dollars per metric ton of carbon dioxide. A domestic SCC value is meant to 

reflect the value of damages in the United States resulting from a unit change in carbon 

dioxide emissions, while a global SCC value is meant to reflect the value of damages 

worldwide.

Under section 1(b) of Executive Order 12866, agencies must, to the extent 

permitted by law, “assess both the costs and the benefits of the intended regulation and, 

recognizing that some costs and benefits are difficult to quantify, propose or adopt a 

regulation only upon a reasoned determination that the benefits of the intended regulation 

justify its costs.” The purpose of the SCC estimates presented here is to allow agencies 

198
to incorporate the monetized social benefits of reducing CO2 emissions into cost-benefit 

analyses of regulatory actions. The estimates are presented with an acknowledgement of 

the many uncertainties involved and with a clear understanding that they should be 

updated over time to reflect increasing knowledge of the science and economics of 

climate impacts.

As part of the interagency process that developed these SCC estimates, technical 

experts from numerous agencies met on a regular basis to consider public comments, 

explore the technical literature in relevant fields, and discuss key model inputs and 

assumptions. The main objective of this process was to develop a range of SCC values 

using a defensible set of input assumptions grounded in the existing scientific and 

economic literatures. In this way, key uncertainties and model differences transparently 

and consistently inform the range of SCC estimates used in the rulemaking process.

Monetizing Carbon Dioxide Emissions

When attempting to assess the incremental economic impacts of carbon dioxide 

emissions, the analyst faces a number of challenges. A report from the National Research 

Council52 points out that any assessment will suffer from uncertainty, speculation, and 

lack of information about: (1) future emissions of GHGs; (2) the effects of past and future 

emissions on the climate system; (3) the impact of changes in climate on the physical and 

biological environment; and (4) the translation of these environmental impacts into 

economic damages. As a result, any effort to quantify and monetize the harms associated 

52 National Research Council. Hidden Costs of Energy: Unpriced Consequences of Energy Production and 

Use (2009) National Academies Press: Washington, DC.

199

 
with climate change will raise questions of science, economics, and ethics and should be 

viewed as provisional. 

Despite the limits of both quantification and monetization, SCC estimates can be 

useful in estimating the social benefits of reducing CO2 emissions. The agency can 

estimate the benefits from reduced (or costs from increased) emissions in any future year 

by multiplying the change in emissions in that year by the SCC values appropriate for 

that year. The net present value of the benefits can then be calculated by multiplying each 

of these future benefits by an appropriate discount factor and summing across all affected 

years. 

It is important to emphasize that the interagency process is committed to updating 

these estimates as the science and economic understanding of climate change and its 

impacts on society improves over time. In the meantime, the interagency group will 

continue to explore the issues raised by this analysis and consider public comments as 

part of the ongoing interagency process.

Development of Social Cost of Carbon Values

In 2009, an interagency process was initiated to offer a preliminary assessment of 

how best to quantify the benefits from reducing carbon dioxide emissions. To ensure 

consistency in how benefits are evaluated across Federal agencies, the Administration 

sought to develop a transparent and defensible method, specifically designed for the 

rulemaking process, to quantify avoided climate change damages from reduced CO2

200
emissions. The interagency group did not undertake any original analysis. Instead, it 

combined SCC estimates from the existing literature to use as interim values until a more 

comprehensive analysis could be conducted. The outcome of the preliminary assessment 

by the interagency group was a set of five interim values: global SCC estimates for 2007 

(in 2006$) of $55, $33, $19, $10, and $5 per metric ton of CO2. These interim values 

represented the first sustained interagency effort within the U.S. government to develop 

an SCC for use in regulatory analysis. The results of this preliminary effort were 

presented in several proposed and final rules. 

Current Approach and Key Assumptions

After the release of the interim values, the interagency group reconvened on a 

regular basis to generate improved SCC estimates. Specially, the group considered public 

comments and further explored the technical literature in relevant fields. The interagency 

group relied on three integrated assessment models commonly used to estimate the SCC: 

the FUND, DICE, and PAGE models. These models are frequently cited in the peerreviewed literature and were used in the last assessment of the Intergovernmental Panel 

on Climate Change (IPCC). Each model was given equal weight in the SCC values that 

were developed. 

Each model takes a slightly different approach to model how changes in 

emissions result in changes in economic damages. A key objective of the interagency 

process was to enable a consistent exploration of the three models, while respecting the 

different approaches to quantifying damages taken by the key modelers in the field. An 

201
extensive review of the literature was conducted to select three sets of input parameters 

for these models: climate sensitivity, socio-economic and emissions trajectories, and 

discount rates. A probability distribution for climate sensitivity was specified as an input 

into all three models. In addition, the interagency group used a range of scenarios for the 

socio-economic parameters and a range of values for the discount rate. All other model 

features were left unchanged, relying on the model developers’ best estimates and 

judgments.

The interagency group selected four sets of SCC values for use in regulatory 

analyses. Three sets of values are based on the average SCC from the three IAMs, at 

discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile 

SCC estimate across all three models at a 3-percent discount rate, was included to 

represent higher-than-expected impacts from temperature change further out in the tails 

of the SCC distribution. The values grow in real terms over time. Additionally, the 

interagency group determined that a range of values from 7 percent to 23 percent should 

be used to adjust the global SCC to calculate domestic effects,53 although preference is 

given to consideration of the global benefits of reducing CO2 emissions. Table IV.15

presents the values in the 2010 interagency group report,54 which is reproduced in 

appendix 14A of the DOE final rule TSD.

53 It is recognized that this calculation for domestic values is approximate, provisional, and highly 

speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global 

damages over time.

54 Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency 

Working Group on Social Cost of Carbon, United States Government (February 2010) (Available at: 

www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

202

 
Table IV.15 Annual SCC Values from 2010 Interagency Report, 2010–2050 (2007$ 

per metric ton CO2)

Year

Discount Rate

5% 3% 2.5% 3%

Average Average Average 95th

percentile

2010 4.7 21.4 35.1 64.9

2015 5.7 23.8 38.4 72.8

2020 6.8 26.3 41.7 80.7

2025 8.2 29.6 45.9 90.4

2030 9.7 32.8 50.0 100.0

2035 11.2 36.0 54.2 109.7

2040 12.7 39.2 58.4 119.3

2045 14.2 42.1 61.7 127.8

2050 15.7 44.9 65.0 136.2

The SCC values used for today’s notice were generated using the most recent 

versions of the three integrated assessment models that have been published in the peerreviewed literature.55

Table IV.16 shows the updated sets of SCC estimates in 5-year increments from 

2010 to 2050. The full set of annual SCC estimates between 2010 and 2050 is reported in 

appendix 14B of the DOE final rule TSD. The central value that emerges is the average 

SCC across models at the 3-percent discount rate. However, for purposes of capturing the 

uncertainties involved in regulatory impact analysis, the interagency group emphasizes 

the importance of including all four sets of SCC values.

Table IV.16 Annual SCC Values from 2013 Interagency Report, 2010–2050 (2007$ 

per metric ton CO2)

Year Discount Rate

55 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 

12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; 

revised November 2013) (Available at:

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbonfor-regulator-impact-analysis.pdf).

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5% 3% 2.5% 3%

Average Average Average 95th

percentile

2010 11 32 51 89

2015 11 37 57 109

2020 12 43 64 128

2025 14 47 69 143

2030 16 52 75 159

2035 19 56 80 175

2040 21 61 86 191

2045 24 66 92 206

2050 26 71 97 220

It is important to recognize that a number of key uncertainties remain, and that 

current SCC estimates should be treated as provisional and revisable because they will 

evolve with improved scientific and economic understanding. The interagency group also 

recognizes that the existing models are imperfect and incomplete. The 2009 National 

Research Council report mentioned above points out that there is tension between the 

goal of producing quantified estimates of the economic damages from an incremental ton 

of carbon and the limits of existing efforts to model these effects. There are a number of 

analytical challenges that are being addressed by the research community, including 

research programs housed in many of the Federal agencies participating in the 

interagency process to estimate the SCC. The interagency group intends to periodically 

review and reconsider those estimates to reflect increasing knowledge of the science and 

economics of climate impacts, as well as improvements in modeling.

In summary, in considering the potential global benefits resulting from reduced 

CO2 emissions, DOE used the values from the 2013 interagency report adjusted to 2013$ 

using the GDP price deflator. For each of the four sets of SCC values, the values for 

emissions in 2015 were $12.0, $40.5, $62.4, and $119 per metric ton avoided (values 

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expressed in 2013$). DOE derived values after 2050 using the relevant growth rates for 

the 2040-2050 period in the interagency update.

DOE multiplied the CO2 emissions reduction estimated for each year by the SCC 

value for that year in each of the four cases. To calculate a present value of the stream of 

monetary values, DOE discounted the values in each of the four cases using the specific 

discount rate that had been used to obtain the SCC values in each case.

In responding to the NOPR, many commenters questioned the scientific and 

economic basis of the SCC values. 

A number of stakeholders stated that DOE should not use SCC values to establish 

monetary figures for emissions reductions until the SCC undergoes a more rigorous 

notice, review, and comment process. (Morrison, No. 108 at p. 9; JCI, No. 95 at p. 10; 

AHRI, No. 98 at pp. 12-13; The Associations, No. 99 at p. 2; NAM, No. 84 at p. 1-2; 

Cato Institute, No. 81 at p. 2) Ingersoll Rand agrees with AHRI’s comments. (Ingersoll 

Rand, No. 107 at p. 11) Rheem stated that the Federal Interagency Working Group has 

failed to disclose and quantify key uncertainties to inform decision makers and the public 

about the effects and uncertainties of alternative regulatory actions, as required by OMB. 

(Rheem, No. 83 at p. 9) NAM stated that the SCC estimates were developed without 

sufficient transparency, inadequate supporting information related to assumptions and 

other data, and a failure to peer-review critical model inputs. (NAM, No. 84 at pp. 1-2) 

Morrison stated that the SCC estimates are the product of an opaque process and that any 

205
pretensions to their supposed accuracy are unsupportable. (Morrison, No. 108 at p. 9) 

JCI stated that the SCC has not been adequately noticed and reviewed before being used 

in this NOPR or any other rulemaking. JCI added that it is aware that the SCC process is 

undergoing a current review and comment process, which has the potential for significant 

changes in how those SCC calculations are used in any rulemakings. (JCI, No. 95 at p. 

10) Rheem stated that even if the SCC estimate development process were transparent, 

rigorous, and peer-reviewed, the modeling conducted in this effort does not offer a 

reasonably acceptable range of accuracy for use in policymaking. (Rheem, No. 83 at p. 9)

In conducting the interagency process that developed the SCC values, technical 

experts from numerous agencies met on a regular basis to consider public comments, 

explore the technical literature in relevant fields, and discuss key model inputs and 

assumptions. Key uncertainties and model differences transparently and consistently 

inform the range of SCC estimates. These uncertainties and model differences are 

discussed in the interagency working group’s reports, which are reproduced in appendix 

14A and 14B of the final rule TSD, as are the major assumptions. The 2010 SCC values 

have been used in a number of Federal rulemakings in which the public had opportunity 

to comment. In November 2013, the OMB announced a new opportunity for public 

comment on the TSD underlying the revised SCC estimates. See 78 FR 70586 (Nov. 26, 

2013). OMB is currently reviewing comments and considering whether further revisions 

to the 2013 SCC estimates are warranted. DOE stands ready to work with OMB and the 

other members of the interagency working group on further review and revision of the 

SCC estimates as appropriate.

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NAM stated that in using the SCC estimates, DOE fails to adhere to its own 

guidelines for ensuring and maximizing the quality, objectivity, utility, and integrity of 

information disseminated by the DOE. (NAM, No. 84 at pp. 1-2) DOE has sought to 

ensure that the data and research used to support its policy decisions−including the SCC 

values− are of high scientific and technical quality and objectivity, as called for by the 

Secretarial Policy Statement on Scientific Integrity.

56 See section VI.J for DOE’s 

evaluation of today’s final rule and supporting analyses under the DOE and OMB 

information quality guidelines.

Rheem stated that the modeling systems used for the SCC estimates and the 

subsequent analyses were not subject to peer review as appropriate. (Rheem, No. 83 at p. 

9) The Cato Institute stated that the determination of the SCC is discordant with the best 

scientific literature on the equilibrium climate sensitivity and the fertilization effect of 

carbon dioxide—two critically important parameters for establishing the net externality 

of carbon dioxide emissions. (Cato Institute, No. 81 at p. 2) 

The three integrated assessment models used to estimate the SCC are frequently 

cited in the peer-reviewed literature and were used in the last assessment of the IPCC. In 

addition, new versions of the models that were used in 2013 to estimate revised SCC 

values were published in the peer-reviewed literature (see appendix 14B of the final rule 

TSD). The revised estimates that were issued in November, 2013 are based on the best 

56 See

https://www.directives.doe.gov/references/secretarial_policy_statement_on_scientific_integrity/view.

207

 
available scientific information on the impacts of climate change. The issue of

equilibrium climate sensitivity is addressed in section 14A.4 of appendix 14A in the final 

rule TSD. The EPA, in collaboration with other Federal agencies, continues to 

investigate potential improvements to the way in which economic damages associated 

with changes in CO2 emissions are quantified.

Morrison stated that the CO2 emissions reductions benefits are overestimated,

because the SCC values do not account for any prior changes that impact the baseline 

emissions trends in previous years. According to the commenter, DOE fails to take into 

consideration EPA regulations of greenhouse gas emissions from power plants, which 

would affect the SCC values. (Morrison, No. 108 at p. 10)

The SCC values are based on projections of global GHG emissions over many 

decades. Such projections are influenced by many factors, particularly economic growth 

rates and prices of different energy sources. In the context of these projections, the 

proposed EPA regulations of greenhouse gas emissions from new power plants are a 

minor factor. In any case, it would not be appropriate for DOE to account for regulations 

that are not currently in effect, because whether such regulations will be adopted and 

their final form are matters of speculation at this time.

Miller stated that the Department appears to violate the directive in OMB Circular 

A-4, which states: “The analysis should focus on benefits and costs that accrue to citizens 

and residents of the United States. Where the agency chooses to evaluate a regulation that 

208
is likely to have effects beyond the borders of the United States, these effects should be 

reported separately.” Miller stated that instead of focusing on domestic benefits and 

separately reporting any international effects, the Department focused on much-larger 

global benefits in the text of the proposed rule and separately reported the (much smaller) 

domestic effects in a chapter of the TSD. (Miller, No. 79 at pp. 6-7) Similarly, Rheem 

stated that by presenting only global SCC estimates and downplaying domestic SCC 

estimates in 2013, the IWG has severely limited the utility of the SCC for use in benefitcost analysis and policymaking. (Rheem, No. 83 at p. 9) Mercatus stated that OMB 

guidelines specifically require that benefit-cost analysis of Federal regulations be 

reported for domestic estimates, with global estimates being optional. Mercatus argued 

that by using the global estimate at a three-percent discount rate, DOE inflated the 

benefits of reducing carbon emissions by almost double compared to using a domestic 

SCC at five percent. (Mercatus, No. 82 at pp. 7-8) EEI stated that the use of global SCC 

values, which are estimates that are based on many global assumptions and are subject to 

a great deal of uncertainty, may be important in assessing the overall costs and benefits of 

particular regulations, but using these values in the context of setting energy conservation 

standards is problematic, as the geographic and temporal scales of the LCC and SCC 

values are very different. (EEI, No. 87 at p. 10-11)

Although the relevant analyses address both domestic and global impacts, the 

interagency group has determined that it is appropriate to focus on a global measure of 

SCC because of the distinctive nature of the climate change problem, which is highly 

unusual in at least two respects. First, it involves a global externality: emissions of most 

209
greenhouse gases contribute to damages around the world when they are emitted in the 

United States. Second, climate change presents a problem that the United States alone 

cannot solve. The issue of global versus domestic measures of the SCC is further 

discussed in appendix 14A of the final rule TSD.

NAM stated that under DOE's analysis, the cost-benefit results and the proposed 

rule are legally sufficient without the inclusion of the SCC estimate. (NAM, No. 84 at p. 

3) In contrast, JCI stated that the monetary value of the CO2 emissions reduction plays a 

significant role in DOE’s justification to set the TSL 4 levels as the national standards. 

(JCI, No. 95 at p. 10)

DOE disagrees with NAM’s assessment, which suggests that consideration of the 

SCC in the context of this rulemaking is somehow unnecessary or unimportant. When 

selecting a proposed standard level or adopting a final standard level, DOE considers and 

carefully weighs all relevant factors. Thus, the monetary value of the CO2 emissions 

reduction did play a role in DOE’s decision to propose TSL 4 (and to adopt TSL 4 in 

today’s notice), as appropriate. DOE has determined that today’s standards are expected 

to achieve the maximum improvement in energy efficiency that is technologically 

feasible and economically justified, with or without consideration of the economic 

benefits associated with reduced CO2 emissions.

Morrison stated that DOE does not conduct the cost-benefit analysis for NPV and 

SCC values over the same time frame and within the same scope, an important principle 

210
of cost-benefit analysis. (Morrison, No. 108 at p. 9) 

For the analysis of national impacts of standards, DOE considers the lifetime 

impacts of equipment shipped in a 30-year period. With respect to energy and energy cost 

savings, impacts continue past 30 years until all of the equipment shipped in the 30-year 

period is retired. With respect to the valuation of CO2 emissions reductions, the SCC 

estimates developed by the interagency working group are meant to represent the full 

discounted value (using an appropriate range of discount rates) of emissions reductions 

occurring in a given year. DOE is thus comparing the costs of achieving the emissions 

reductions in each year of the analysis, with the carbon reduction value of the emissions 

reductions in those same years. Neither the costs nor the benefits of emissions reductions 

outside the analytic time frame are included in the analysis. 

M. Utility Impact Analysis

The utility impact analysis estimates several effects on the power generation 

industry that would result from the adoption of new or amended energy conservation 

standards. In the utility impact analysis, DOE analyzes the changes in electric installed 

capacity and generation that result for each trial standard level. The utility impact 

analysis uses a variant of NEMS, which is a public domain, multi-sectored, partial 

equilibrium model of the U.S. energy sector. DOE uses a variant of this model, referred 

to as NEMS-BT,57 to account for selected utility impacts of new or amended energy 

57 DOE/EIA approves use of the name NEMS to describe only an official version of the model without any 

modification to code or data. Because this analysis entails some minor code modifications and the model is 

run under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the 

211

 
conservation standards. DOE’s analysis consists of a comparison between model results 

for the most recent AEO Reference Case and for cases in which energy use is 

decremented to reflect the impact of potential standards. The energy savings inputs 

associated with each TSL come from the NIA. Chapter 15 of the final rule TSD describes 

the utility impact analysis in further detail.

EEI stated that it is not possible under most operational scenarios to increase 

electric capacity and decrease the amount of electric generation, as is indicated by DOE's 

analysis. (EEI, No. 87 at p. 8) In response, it would appear that the commenter has 

misinterpreted Table 15.3.1 in the NOPR TSD. The figure shows the capacity reduction 

as a positive value; it is not an increase as it might appear at first glance.

EEI stated that it is ironic that DOE is showing that an estimated reduction of 

renewable power plants provides an economic benefit to the United States. (EEI, No. 87 

at p. 9) DOE reports the projected changes in the installed capacity of different types of 

power plants resulting from potential standards. Since the change in demand occurs at the 

margin, it is not surprising that plant types with relatively high first cost (such as solar 

and wind power) would be affected by standards. When assessing the energy savings 

associated with energy conservation standards, DOE does not claim that any particular 

changes in installed capacity of different types of power plants provide an economic 

benefit to the Nation relative to other types of power plant facilities.

name “NEMS-BT” (“BT” is DOE’s Building Technologies Program, under whose aegis this work has been 

performed). 

212

 
EEI stated that the analysis appears to ignore the impacts of renewable portfolio 

standards in 29 States and the District of Columbia (as well as the renewable power goals 

in 8 other States). (EEI, No. 87 at p. 9) DOE disagrees with EEI’s assertion regarding 

DOE’s consideration of renewable portfolio standards. In the utility impact analysis, 

DOE used the projections of electricity generation by plant type in AEO 2013. These 

projections account for the estimated impacts of all renewable portfolio standards that 

were in place at the end of 2012.

Several stakeholders stated that DOE did not adequately consider power quality 

issues, specifically that DOE did not account for the effect of such a large number of nonlinear power supplies (constant-torque BPM motors and multi-staging controls) without 

power factor correction on the grid. Several of them stated that the non-linear loads 

produced by constant-torque and constant-airflow BPM motors tend to cause harmonic 

distortions in both voltage and current, and could potentially cause voltage control 

problems within a power grid system. (JCI, No. 95 at p. 9; Morrison, No. 108 at p. 7; 

AHRI, No. 98 at p. 11) JCI stated that the Electric Power Research Institute suggests that 

while harmonic emissions from a single system may not have a major impact on the grid, 

the cumulative impact of millions of furnaces could be significant on the grid systems 

within the U.S. (JCI, No. 95 at p. 9) Southern Company stated that the BPM motors 

considered in this rulemaking typically have poor power factors and emit strong 3rd and 

5th order harmonics, which is likely to cause problems with utility systems at a future 

date when most of the older equipment has been retired and replaced by BPM motors. 

(Southern Company, No. 85 at p. 4) JCI, Morrison, and AHRI stated that the mitigation 

213
costs associated with harmonic distortions would have a significant impact on consumers, 

especially related to failure rates, maintenance and repair costs, and the overall economic 

analysis for life-cycle costs. (JCI, No. 95 at p. 9; Morrison, No. 108 at p. 7; AHRI, No. 98 

at p. 11) Southern Company stated that, for furnace fans with BPM motors, DOE could 

assume a percentage of households would require wiring upgrades and some additional 

costs to either the utility or the homeowner for filtering of harmonics or power factor 

correction. (Southern Company, No. 85 at p. 4) APGA stated that DOE should include 

the cost of installation of harmonic filters in the LCC analysis and recalculate the 

economic justification of design options incorporating ECM motors. (APGA, No. 110 at 

p. 3)

Regarding these comments, DOE notes that a number of studies assume that 

output from BPM motors is constant at full load at time of use, similar to operation of 

PSC motors. However, BPM motors are specifically designed to accommodate reducedload operation, and, therefore, most of the time, they will operate at part load (i.e., at

lower speeds and higher efficiency). The current of a BPM motor at lower-speed 

operation is significantly lower than a PSC motor at normal operation; therefore, total 

current contribution will not exceed the existing system grid capacity. In addition, the 

harmonic contribution is a small part of total circuit loading, at the lower current levels. 

For example, motor performance data from GE58 shows an increase in power of 133 voltamperes (VA) from a 1⁄3 HP PSC to BPM at full output. On average, 5 to 20 residential 

customers are served per distribution transformer, which are normally rated between 15 

58 GE Industrial Systems, GE ECM 2.3 Series motors datasheet (Available at: 

http://www.columbiaheating.com/page_images/file/GET-8068.pdf).

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and 50 kVA.

59,60 An increase of this current would result in an increase in loading less 

than 3 percent at the extreme case. (The extreme case is all HVAC at full load 

concurrently, served by the same distribution transformer.) The transformers are 

normally rated approximately 30 percent to 50 percent above predicted peak load.61 In 

this case, the increased current draw (VA) would have negligible impact. Measured 

performance data62 show a decrease in current drawn for cooling functionality (152 VA) 

and an increase for heating functionality (32 VA) from PSC to equivalent BPM, 

confirming the small BPM loading impact. In addition, an evaluation of increased 

penetration of BPM motors in commercial buildings was presented at the ASHRAE 6 

ECM Motor Workshop at the CEC, which reviewed California Utility Codes with regards 

to the BPM-specific issue.

63 It was stated in this study that while the power factor could 

be reduced to 50 percent, a BPM motor will have a lower current draw than a PSC motor 

at 100 percent power factor due to efficiency gains.

Regarding the EPRI study64 referenced in the JCI comment, DOE noticed that the 

59 Farmer, C., Hines, P., Dowds, J., Blumsack, S., Modeling the Impact of Increasing PHEV Loads on the 

Distribution Infrastructure, Proceedings of the 43rd International Conference on System Sciences (2010). 60 NEMA. NEMA TP 1-2002: Guide for Determining Energy Efficiency for Distribution Transformers. 61 NEMA Standards Publication TP 1-2002: Guide for Determining Energy Efficiency for Distribution 

Transformers (Available at: https://www.nema.org/Standards/Pages/Guide-for-Determining-EnergyEfficiency-for-Distribution-Transformers.aspx?#download). 62 Gusdorf, J., M. Swinton, C. Simpson, E. Enchev, S. Hayden, D. Furdas, and B. Castellan, Saving 

Electricity and Reducing GHG Emissions with ECM Furnace Motors: Results from the CCHT and 

Projections to Various Houses and Locations (2004) ACEEE Proceedings (Available at:

http://aceee.org/files/proceedings/2004/data/papers/SS04_Panel1_Paper12.pdf). 63 Taylor Engineering LLC, ASHRAE 6 ECM Motors, August 17th CEC Workshop (2011) California 

Statewide Utility Code and Standard Program (Available at:

http://www.energy.ca.gov/title24/2013standards/prerulemaking/documents/2011-08-

17_workshop/presentations/08%20EC%20Motors.pdf). 64 Sharma, H. M. Rylander, and D. Dorr, Grid Impacts due to Increased Penetration of Newer Harmonic 

Sources, Proceedings of IEEE Rural Electric Power Conference (April 2013) pp. B5-1 - B5-5 (Available at: 

http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=6681854).

215

 
power factor impacts are associated with several types of loads becoming common in the 

modern household: low power factor lighting, modern entertainment systems, and electric 

vehicle chargers, as well as HVAC with BPM motors. This reference indicates that the 

power quality issues caused by the BPM motors are a small contributor to the total 

harmonic distortion experienced at the utility level compared to all contributing loads. 

The study indicated that for devices with an existing 3rd harmonic resonance, the 

contribution of all new devices would require filtering; however, this correction is not 

attributed to the high penetration of EC motors alone. The BPM’s third harmonic 

distortion contributed a 1.5-percent current increase to the circuit. The study showed the 

overall impact on the 3rd, 5th, 7th order and included in total harmonic distortion (THD) 

was within 0.1 percent of the original harmonic profile applied to the studied feeder. In 

summary, the impact of introducing BPM motors for HVAC under a high penetration 

scenario on a residential line was negligible. 

With regards to household power quality, furnaces have a minimum basic 

electrical requirement for THD of 5 percent, and individual harmonic distortion of 3

percent.

65,66 Furnaces supplied with voltages with harmonic distortion greater than 8

percent THD may not be operated.67 The EPRI study, which simulates a harmonic 

spectrum of a large number of BPM-based HVAC, shows that the BPM-related harmonic 

distortions are within the 5 percent THD limit, and within the 3 percent individual 

65 IEEE Standard 519-1992 - IEEE Recommended Practices and Requirements for Harmonic Control in 

Electric Power Systems (April 9 1993) pp. 1-112 (Available at:

http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=210894). 66 Fluke Corporation, Generator power quality and furnaces: The effects of harmonic distortion (2009) 

(Available at: http://support.fluke.com/find-sales/Download/Asset/3497420_6112_ENG_A_W.PDF). 67 Id.

216

 
harmonic limit. Therefore, DOE concludes the BPM-related harmonic distortions would 

not cause the problems cited by the commenters.

In addition to the analysis described above, DOE used NEMS-BT, along with EIA 

data on the capital cost of various power plant types, to estimate the reduction in national 

expenditures for electricity generating capacity due to potential residential furnace fan 

standards. The method used and the results are described in chapter 15 of the final rule 

TSD. 

N. Employment Impact Analysis

Employment impacts from new or amended energy conservation standards 

include direct and indirect impacts. Direct employment impacts are any changes in the 

number of employees of manufacturers of the products subject to standards; the MIA 

addresses those impacts. Indirect employment impacts are changes in national

employment that occur due to the shift in expenditures and capital investment caused by 

the purchase and operation of more-efficient appliances. Indirect employment impacts 

from standards consist of the jobs created or eliminated in the national economy due to: 

(1) reduced spending by end users on energy; (2) reduced spending on new energy supply 

by the utility industry; (3) increased consumer spending on the purchase of new products; 

and (4) the effects of those three factors throughout the economy. 

One method for assessing the possible effects on the demand for labor of such 

shifts in economic activity is to compare sector employment statistics developed by the 

217
Labor Department’s Bureau of Labor Statistics (BLS). BLS regularly publishes its 

estimates of the number of jobs per million dollars of economic activity in different 

sectors of the economy, as well as the jobs created elsewhere in the economy by this 

same economic activity. Data from BLS indicate that expenditures in the utility sector 

generally create fewer jobs (both directly and indirectly) than expenditures in other 

sectors of the economy.68 There are many reasons for these differences, including wage 

differences and the fact that the utility sector is more capital-intensive and less laborintensive than other sectors. Energy conservation standards have the effect of reducing 

consumer utility bills. Because reduced consumer expenditures for energy likely lead to 

increased expenditures in other sectors of the economy, the general effect of efficiency 

standards is to shift economic activity from a less labor-intensive sector (i.e., the utility 

sector) to more labor-intensive sectors (e.g., the retail and service sectors). Thus, based 

on the BLS data alone, DOE believes net national employment may increase because of 

shifts in economic activity resulting from energy conservation standards for residential 

furnace fans.

For the standard levels considered in today’s document, DOE estimated indirect 

national employment impacts using an input/output model of the U.S. economy called 

Impact of Sector Energy Technologies version 3.1.1 (ImSET).69 ImSET is a specialpurpose version of the “U.S. Benchmark National Input-Output” (I–O) model, which was 

68 See Bureau of Economic Analysis, “Regional Multipliers: A User Handbook for the Regional InputOutput Modeling System (RIMS II),” U.S. Department of Commerce (1992).

69 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL18412, Pacific Northwest National Laboratory (2009) (Available at: 

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).

218

 
designed to estimate the national employment and income effects of energy-saving 

technologies. The ImSET software includes a computer-based I–O model having 

structural coefficients that characterize economic flows among the 187 sectors. ImSET’s 

national economic I–O structure is based on a 2002 U.S. benchmark table, specially 

aggregated to the 187 sectors most relevant to industrial, commercial, and residential 

building energy use. DOE notes that ImSET is not a general equilibrium forecasting 

model, and understands the uncertainties involved in projecting employment impacts, 

especially changes in the later years of the analysis. Because ImSET does not incorporate 

price changes, the employment effects predicted by ImSET may over-estimate actual job 

impacts over the long run. For the final rule, DOE used ImSET only to estimate shortterm (2019 and 2024) employment impacts.

For more details on the employment impact analysis, see chapter 16 of the final 

rule TSD.

O. Comments on Proposed Standards

NEEP, CA IOUs, and the Joint Advocates support the selection of DOE’s 

proposed trial standard level, given the limited impact on furnace fan manufacturers, 

positive benefits to consumers, and substantial energy savings. (NEEP, No. 109 at p. 2;

CA IOUs, No. 106 at p. 2; Joint Advocates, No. 105 at p. 1) 

A number of stakeholders disagreed with the proposed selection of TSL 4. 

Rheem argued that TSL 4 is not economically justified. (Rheem, No. 83 at p. 7) Lennox 

219
stated that because TSL 4 likely has costs that are understated, and overly optimistic 

efficiency projections, DOE should not pursue TSL 4, and instead adopt standards based 

on a less-stringent, less-costly technology. (Lennox, No. 100 at p. 2) EEI suggested the 

adoption of TSL 1 or TSL 2 to conserve energy, minimize economic harm to consumers, 

and minimize the possible negative impacts on the electric grid from the motors that 

would be able to meet the proposed standard. (EEI, No. 87 at p. 2)

DOE has addressed specific issues regarding costs, efficiency projections, and

possible negative impacts on the electric grid in previous parts of section IV of this 

document. DOE addresses the economic justification for today’s standards in section V.C 

of this document.

Southern Company believes that under TSL 4, too large a proportion of 

consumers have net costs. Southern Company would prefer that a substantial majority of 

consumers derive benefits from a proposed rule. (Southern Company, No. 85 at p. 3) EEI 

also stated that a much higher percentages of consumers will experience a net cost than is 

the case with many other DOE energy conservation standards. (EEI, No. 87 at p. 2) The 

Mercatus Center stated that the proposed rule will confer net benefits on a majority of the 

consumers for only one product class (i.e., non-weatherized, non-condensing gas furnace 

fans). It added that the aggregate financial benefits to consumers are not spread 

uniformly over the population, but instead are mostly concentrated in a minority of 

households. (Mercatus Center, No. 82 at p. 7)

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As shown in Table V.31 of today’s final rule, more consumers would have a net 

benefit from standards at TSL 4 than would have a net cost for all of the considered 

product classes. For the two largest product classes (non-weatherized non-condensing gas 

furnace fans and non-weatherized condensing gas furnace fans), nearly twice as many 

consumers would have a net benefit from standards at TSL 4 as would have a net cost.

The Mercatus Center stated that seven out of eight proposed standards at TSL 4 

fail the rebuttable payback period benchmark, thereby making it difficult for DOE to 

demonstrate economic justification for the proposed rule. (Mercatus Center, No. 82 at p. 

6) In response, the commenter has misinterpreted the role of the rebuttable payback 

period presumption. As discussed in section III.E.2, EPCA provides that a rebuttable 

presumption is established that an energy conservation standard is economically justified 

if the additional cost to the consumer of a product that meets the standard is less than 

three times the value of the first year’s energy savings resulting from the standard, as 

calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) To 

determine economic justification, DOE routinely conducts an analysis that considers the 

full range of impacts, including those to consumers, manufacturers, the Nation, and the

environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis 

serve as the basis for DOE to definitively evaluate the economic justification for a 

potential standard level, thereby supporting or rebutting the results of any preliminary 

determination of economic justification.

Rheem and Miller stated that the proposed standard may act as a transfer payment 

221
from lower-income households, who are more likely to bear net costs as a result of this 

rule, to higher-income households; and that higher-priced furnace fans resulting from this 

rule will be out of reach for some consumers. They stated that these distributive impacts 

necessitate close scrutiny from the Department in order to determine whether the 

proposed standards will actually improve social welfare. (Rheem, No. 83 at p. 14; Miller, 

No. 79 at p. 14)

DOE’s consumer subgroup analysis indicates that, for non-weatherized gas 

furnace fans, lower-income households would have positive average LCC savings and 

median PBPs less than five years (see section V.B.1). Furthermore, many lower-income 

households rent rather than own their dwelling, and are responsible for utility bills but not 

for purchase of a furnace. To the extent that there is delay in the landlords’ passing of 

extra costs into the rent, consumers that rent will benefit more those who own, all else 

being equal.

Ingersoll Rand stated that promulgating a rule at TSL4 would force the future 

generation of furnaces sold in the U.S. to be less reliable than many of those on the 

market today as a result of eliminating PSC motors from the market. (Ingersoll Rand, No. 

107 at p. 7) DOE notes that furnace fans meeting today’s standards are already widely 

available as a substitute for units with baseline motors. DOE evaluated issues related to 

reliability, as discussed in section IV.F.2, and concluded that the benefits to consumers 

outweigh any costs related to reliability that may be associated with products meeting the 

standards.

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V. Analytical Results and Conclusions

This section addresses the results from DOE’s analyses with respect to potential 

energy conservation standards for residential furnace fans. It addresses the TSLs 

examined by DOE, the projected impacts of each of these levels if adopted as energy 

conservation standards for furnace fans, and the standard levels ultimately adopted by

DOE in today’s final rule. Additional details regarding DOE’s analyses are contained in 

the TSD supporting this document.

A. Trial Standard Levels

DOE developed trial standard levels (TSLs) that combine efficiency levels for 

each product class of residential furnace fans. Table V.1 presents the efficiency levels for 

each product class in each TSL. TSL 6 consists of the max-tech efficiency levels. TSL 5 

consists of those efficiency levels that provide the maximum NPV using a 7-percent 

discount rate (see section V.B.3 for NPV results). TSL 4 consists of those efficiency 

levels that provide the highest NPV using a 7-percent discount rate, and that also result in 

a higher percentage of consumers that receive an LCC benefit than experience an LCC 

loss (see section V.B.1 for LCC results). TSL 3 uses efficiency level 3 for all product 

classes. TSL 2 consists of efficiency levels that are the same as TSL 3 for nonweatherized gas furnace fans, weatherized gas furnace fans, and electric furnace fans, but 

are at efficiency level 1 for oil-fired furnace fans and mobile home furnace fans. TSL 1 

consists of the most common efficiency levels in the current market. In summary, Table 

V.1 presents the six TSLs which DOE has identified for residential furnace fans, 

223
including the efficiency level associated with each TSL, the technology options 

anticipated to achieve those levels, and the expected resulting percentage reduction in 

FER from the baseline corresponding to each efficiency level.

Table V.1 Trial Standard Levels for Residential Furnace Fans

Product Class

Trial Standard Levels

(Efficiency Level)*

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas

Furnace Fan 

1 3 3 4 4 6

Non-weatherized, Condensing 

Gas Furnace Fan 1 3 3 4 4 6

Weatherized Non-Condensing 

Gas Furnace Fan 1 3 3 4 4 6

Non-Weatherized, NonCondensing Oil Furnace Fan 1 1 3 1 3 6

Non-weatherized Electric 

Furnace/Modular Blower Fan 1 3 3 4 4 6

Mobile Home NonWeatherized, Non-Condensing 

Gas Furnace Fan 

1 1 3 1 3 6

Mobile Home NonWeatherized, Condensing Gas 

Furnace Fan 

1 1 3 1 3 6

Mobile Home Electric 

Furnace/Modular Blower Fan 1 1 3 4 4 6

* Efficiency level (EL) 1 = Improved PSC (12 percent). (For each EL, the percentages given refer to 

percent reduction in FER from the baseline level.) EL 2 = Inverter-driven PSC (25 percent). EL 3 = 

Constant-torque BPM motor (38 percent). EL 4 = Constant-torque BPM motor + Multi-Staging (51 

percent). EL 5 = Constant-airflow BPM motor (57 percent). EL 6 = Constant-airflow BPM motor + MultiStaging (61 percent).

224
B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers

Life-Cycle Cost and Payback Period

To evaluate the economic impact of the considered efficiency levels on 

consumers, DOE conducted an LCC analysis for each efficiency level. More-efficient 

residential furnace fans would affect these consumers in two ways: (1) annual operating

expense would decrease; and (2) purchase price would increase. Inputs used for 

calculating the LCC include total installed costs (i.e., equipment price plus installation 

costs), operating expenses (i.e., energy costs, repair costs, and maintenance costs),

product lifetime, and discount rates. 

The output of the LCC model is a mean LCC savings (or cost) for each product 

class, relative to the base-case efficiency distribution for residential furnace fans. The 

LCC analysis also provides information on the percentage of consumers for whom an 

increase in the minimum efficiency standard would have a positive impact (net benefit), a 

negative impact (net cost), or no impact.

DOE also performed a PBP analysis as part of the LCC analysis. The PBP is the 

number of years it would take for the consumer to recover the increased costs of higherefficiency products as a result of energy savings based on the operating cost savings. The 

PBP is an economic benefit-cost measure that uses benefits and costs without 

discounting. Chapter 8 of the final rule TSD provides detailed information on the LCC 

and PBP analyses. 

225
DOE’s LCC and PBP analyses provide five key outputs for each efficiency level 

above the baseline, as reported in Table V.2 through Table V.9 for the considered TSLs. 

(Results for all efficiency levels are reported in chapter 8 of the final rule TSD.) These 

outputs include the proportion of residential furnace fan purchases in which the purchase 

of a furnace fan compliant with the new energy conservation standard creates a net LCC 

increase, no impact, or a net LCC savings for the consumer. Another output is the 

average LCC savings from standards-compliant products, as well as the median PBP for 

the consumer investment in standards-compliant products. Savings are measured relative 

to the base-case efficiency distribution (see section IV.F.4), not the baseline efficiency 

level.

Table V.2 LCC and PBP Results for Non-Weatherized, Non-Condensing Gas

Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $347 $2,194 $2,541 $0 0% 100% 0% ---

1 1 $359 $1,933 $2,292 $85 1% 68% 30% 1.1 

2 $408 $1,655 $2,063 $263 25% 25% 50% 3.8 

3 2, 3 $423 $1,367 $1,791 $471 17% 25% 58% 2.6 

4 4, 5 $501 $1,249 $1,750 $506 30% 14% 56% 5.4 

5 $658 $1,244 $1,902 $373 47% 12% 41% 10.6 

6 6 $694 $1,150 $1,844 $431 50% 0% 50% 10.2 

226
Table V.3 LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace 

Fans 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $343 $2,134 $2,478 $0 0% 100% 0% ---

1 1 $355 $1,909 $2,264 $58 1% 75% 24% 1.2 

2 $403 $1,666 $2,070 $182 21% 41% 38% 4.2 

3 2, 3 $416 $1,402 $1,818 $335 11% 41% 48% 2.9 

4 4, 5 $493 $1,319 $1,812 $341 23% 34% 43% 5.8 

5 $652 $1,334 $1,987 $219 42% 29% 30% 12.0 

6 6 $687 $1,250 $1,937 $268 51% 0% 49% 11.0 

Table V.4 LCC and PBP Results for Weatherized, Non-Condensing Gas Furnace 

Fans

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $333 $2,667 $3,000 $0 0% 100% 0% ---

1 1 $345 $2,329 $2,674 $67 0% 81% 19% 0.7 

2 $393 $2,025 $2,418 $189 8% 56% 36% 3.2 

3 2, 3 $406 $1,609 $2,015 $378 3% 56% 41% 1.8 

4 4, 5 $481 $1,434 $1,914 $447 16% 33% 51% 4.4 

5 $633 $1,476 $2,109 $304 38% 27% 35% 10.3 

6 6 $668 $1,354 $2,022 $391 41% 0% 59% 8.2 

227
Table V.5 LCC and PBP Results for Non-weatherized, Non-Condensing Oil 

Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $417 $2,510 $2,927 $0 0% 100% 0% ---

1 1, 2, 

4 $427 $2,356 $2,783 $46 13% 71% 17% 1.7 

2 - $501 $2,090 $2,592 $181 46% 28% 26% 10.3 

3 3, 5 $507 $1,979 $2,486 $259 44% 28% 28% 4.6 

4 - $589 $1,920 $2,509 $244 48% 28% 24% 8.1 

5 - $813 $1,922 $2,736 $80 56% 28% 16% 18.3 

6 6 $863 $1,873 $2,736 $80 78% 0% 22% 18.6 

Table V.6 LCC and PBP Results for Non-Weatherized Electric Furnace/Modular 

Blower Fans

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $244 $1,211 $1,455 $0 0% 100% 0% ---

1 1 $255 $1,079 $1,335 $29 4% 73% 22% 1.9 

2 - $299 $941 $1,241 $88 27% 37% 36% 6.2 

3 2, 3 $292 $797 $1,089 $181 17% 37% 45% 2.6 

4 4, 5 $309 $747 $1,055 $204 23% 25% 51% 3.2 

5 - $444 $796 $1,240 $66 48% 25% 27% 12.0 

6 6 $477 $748 $1,225 $81 60% 0% 39% 11.5 

228
Table V.7 LCC and PBP Results for Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$*

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $256 $1,118 $1,374 $0 0% 100% 0% ---

1 1, 2, 4 $268 $1,026 $1,293 $36 10% 56% 34% 2.7 

2 - $313 $930 $1,243 $87 62% 0% 38% 10.2 

3 3, 5 $318 $867 $1,185 $144 55% 0% 45% 6.8 

4 - $390 $831 $1,222 $108 67% 0% 33% 12.7 

5 - $530 $853 $1,383 ($54) 81% 0% 19% 24.3 

6 6 $563 $824 $1,388 ($58) 80% 0% 20% 24.4 

*Parentheses indicate negative values.

Table V.8 LCC and PBP Results for Mobile Home Non-Weatherized, Condensing 

Gas Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period 

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$*

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $274 $1,283 $1,556 $0 0% 100% 0% ---

1 1, 2, 4 $285 $1,170 $1,454 $35 5% 68% 27% 2.3 

2 - $330 $1,061 $1,391 $79 43% 29% 28% 9.7 

3 3, 5 $339 $977 $1,316 $133 37% 29% 33% 6.6 

4 - $411 $936 $1,347 $103 66% 4% 29% 15.8 

5 - $558 $953 $1,510 ($53) 80% 4% 16% 33.3 

6 6 $591 $917 $1,508 ($51) 82% 0% 18% 31.3 

*Parentheses indicate negative values.

229
Table V.9 LCC and PBP Results for Mobile Home Electric Furnace/Modular 

Blower Fan 

Efficiency 

Level TSL

Life-Cycle Cost 

2013$ Life-Cycle Cost Savings

Median 

Payback 

Period

years

Installed 

Cost

Discounted 

Operating 

Cost

LCC

Average 

Savings 

2013$*

% of Consumers that 

Experience

Net

Cost

No 

Impact

Net 

Benefit

Baseline $194 $643 $837 $0 0% 100% 0% ---

1 1, 2 $204 $575 $778 $19 7% 71% 22% 2.1 

2 - $245 $531 $777 $20 36% 38% 26% 8.9 

3 3 $237 $466 $702 $70 26% 38% 37% 3.6 

4 4, 5 $251 $433 $685 $85 32% 26% 43% 4.1 

5 - $375 $487 $862 ($48) 57% 26% 18% 15.0 

6 6 $406 $462 $868 ($54) 75% 0% 25% 14.9 

* Parentheses indicate negative values.

Consumer Subgroup Analysis

DOE estimated the impacts of the considered efficiency levels (TSLs) on the 

following consumer subgroups: (1) senior-only households; and (2) low-income 

households. The results of the consumer subgroup analysis indicate that for residential 

furnace fans, senior-only households and low-income households experience lower 

average LCC savings and longer payback periods than consumers overall, with the 

difference being larger for low-income households. The difference between the two 

subgroups and all consumers is larger for non-weatherized, non-condensing gas furnace 

fans (see Table V.10) than for non-weatherized, condensing gas furnace fans (see Table 

V.11). Chapter 11 of the final rule TSD provides more detailed discussion on the 

consumer subgroup analysis and results for the other product classes.

230
Table V.10 Comparison of Impacts for Consumer Subgroups with All Consumers, 

Non-Weatherized, Non-Condensing Gas Furnace Fans 

Average Life-Cycle Cost Savings

2013$ Median Payback Period

years

Efficiency 

Level

TSL SeniorOnly

LowIncomeAll 

Consumers

SeniorOnlyLowIncomeAll 

Consumers

1 1 $65 $48 $85 1.6 1.7 1.1 

2 $209 $133 $263 5.2 6.3 3.8 

3 2, 3 $366 $251 $471 3.7 3.6 2.6 

4 4, 5 $373 $234 $506 7.6 7.8 5.4 

5 $226 $77 $373 14.5 15.9 10.6 

6 6 $264 $96 $431 13.7 15.3 10.2 

Table V.11 Comparison of Impacts for Consumer Subgroups with All Consumers, 

Non-Weatherized, Condensing Gas Furnace Fans 

Average Life-Cycle Cost Savings

2013$ Median Payback Period

years

Efficiency 

Level

TSL SeniorOnly

LowIncomeAll 

Consumers

SeniorOnlyLowIncomeAll 

Consumers

1 1 $49 $38 $58 1.5 2.0 1.2 

2 $155 $121 $182 5.5 7.1 4.2 

3 2, 3 $288 $230 $335 3.7 4.4 2.9 

4 4, 5 $275 $202 $341 7.5 9.7 5.8 

5 $141 $66 $219 15.4 19.5 12.0 

6 6 $178 $90 $268 12.2 17.0 11.0 

Rebuttable Presumption Payback

As discussed in section III.E.2, EPCA provides a rebuttable presumption that, in 

essence, an energy conservation standard is economically justified if the increased 

purchase cost for a product that meets the standard is less than three times the value of 

the first-year energy savings resulting from the standard. However, DOE routinely 

conducts a full economic analysis that considers the full range of impacts, including those 

to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 

231
6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively 

evaluate the economic justification for a potential standard level, thereby supporting or 

rebutting the results of any preliminary determination of economic justification. For 

comparison with the more detailed analytical results, DOE calculated a rebuttable 

presumption payback period for each TSL. Table V.12 shows the rebuttable presumption 

payback results to determine whether any of them meet the rebuttable presumption 

conditions for the residential furnace fans product classes. 

Table V.12 Rebuttable Presumption Payback Periods for Residential Furnace Fan 

Product Classes

Product Class Rebuttable Presumption Payback 

years

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Non-Weatherized, NonCondensing Gas Furnace Fan 3.3 5.3 5.3 10.3 10.3 19.4

Non-weatherized, Condensing 

Gas Furnace Fan 3.1 4.9 4.9 9.6 9.6 18.2

Weatherized Non-Condensing 

Gas Furnace Fan 3.0 4.8 4.8 9.4 9.4 17.6

Non-Weatherized, NonCondensing Oil Furnace Fan 2.3 2.3 5.9 2.3 5.9 19.8

Non-weatherized Electric 

Furnace/Modular Blower Fan 3.2 5.1 5.1 5.8 5.8 15.4

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 

3.8 3.8 6.1 3.8 6.1 22.1

Mobile Home NonWeatherized, Condensing Gas 

Furnace Fan 

3.5 3.5 5.7 3.5 5.7 20.9

Mobile Home Electric 

Furnace/Modular Blower Fan 4.3 4.3 6.8 7.7 7.7 20.2

232
2. Economic Impact on Manufacturers

As noted above, DOE performed an MIA to estimate the impact of new energy 

conservation standards on manufacturers of residential furnace fans. The following 

section describes the expected impacts on manufacturers at each considered TSL. 

Chapter 12 of the final rule TSD explains the analysis in further detail.

Industry Cash-Flow Analysis Results

Table V.13 and Table V.14 depict the financial impacts (represented by changes in 

INPV) of new energy standards on manufacturers of residential furnace fans, as well as 

the conversion costs that DOE expects manufacturers would incur for all product classes 

at each TSL. To evaluate the range of cash flow impacts on the residential furnace fans 

industry, DOE modeled two different mark-up scenarios using different assumptions that 

correspond to the range of anticipated market responses to potential new energy 

conservation standards: (1) the preservation of gross margin percentage; and (2) the 

preservation of per-unit operating profit. Each of these scenarios is discussed 

immediately below. 

To assess the lower (less severe) end of the range of potential impacts, DOE 

modeled a preservation of gross margin percentage markup scenario, in which a uniform 

“gross margin percentage” markup is applied across all potential efficiency levels. In this 

scenario, DOE assumed that a manufacturer’s absolute dollar markup would increase as 

production costs increase in the standards case.

233
To assess the higher (more severe) end of the range of potential impacts, DOE 

modeled the preservation of per-unit operating profit markup scenario, which assumes 

that manufacturers would be able to earn the same operating margin in absolute dollars

per-unit in the standards case as in the base case. In this scenario, while manufacturers 

make the necessary investments required to convert their facilities to produce new 

standards-compliant products, operating profit does not change in absolute dollars per 

unit and decreases as a percentage of revenue.

The set of results below shows potential INPV impacts for residential furnace fan 

manufacturers; Table V.13 reflects the lower bound of impacts, and Table V.14

represents the upper bound.

Each of the modeled scenarios results in a unique set of cash flows and 

corresponding industry values at each TSL. In the following discussion, the INPV results 

refer to the difference in industry value between the base case and each standards case 

that results from the sum of discounted cash flows from the base year 2014 through 2048, 

the end of the analysis period. To provide perspective on the short-run cash flow impact, 

DOE includes in the discussion of the results below a comparison of free cash flow 

between the base case and the standards case at each TSL in the year before new 

standards would take effect. This figure provides an understanding of the magnitude of 

the required conversion costs relative to the cash flow generated by the industry in the 

base case.

234
Table V.13 Manufacturer Impact Analysis for Residential Furnace Fans -

Preservation of Gross Margin Percentage Markup Scenario*

Units Base 

Case

Trial Standard Level

1 2 3 4 5 6

INPV $M 349.6 336.6 360.0 359.1 397.8 397.6 422.4 

Change in INPV $M - (13.0) 10.4 9.4 48.2 48.0 72.8 

(%) - (3.7) 3.0 2.7 13.8 13.7 20.8

Product 

Conversion Costs $M 2.2 18.8 23.6 25.3 25.5 27.1 29.4

Capital 

Conversion Costs $M - 8.8 11.1 11.8 15.1 15.7 134.7

Total Conversion 

Costs $M 2.2 27.7 34.7 37.1 40.6 42.8 164.2

Free Cash Flow 

(2018) $M 20.3 11.3 8.8 8.0 6.4 5.6 (48.6)

Free Cash Flow 

(change from Base 

Case) (2018)

% 0.0 (44.5) (56.7) (60.8) (68.3) (72.2) (339.8)

* Values in parentheses are negative values. All values have been rounded to the nearest tenth.

 M = millions.

Table V.14 Manufacturer Impact Analysis for Residential Furnace Fans -

Preservation of Operating Profit Markup Scenario*

Units Base 

Case

Trial Standard Level

1 2 3 4 5 6

INPV $M 349.6 332.3 313.2 311.0 290.6 288.8 147.2 

Change in INPV $M - (17.3) (36.4) (38.6) (59.0) (60.8) (202.5)

(%) - (5.0) (10.4) (11.0) (16.9) (17.4) (57.9)

Product 

Conversion Costs $M 2.2 18.8 23.6 25.3 25.5 27.1 29.4

Capital 

Conversion Costs $M - 8.8 11.1 11.8 15.1 15.7 134.7

Total Conversion 

Costs $M 2.2 27.7 34.7 37.1 40.6 42.8 164.2

Free Cash Flow $M 20.3 11.3 8.8 8.0 6.4 5.6 (48.6)

Free Cash Flow 

(change from Base 

Case)

% 0.0 (44.5) (56.7) (60.8) (68.3) (72.2) (339.8)

* Values in parentheses are negative values. All values have been rounded to the nearest tenth.

 M = millions.

TSL 1 represents the most common efficiency levels in the current market for all 

product classes. At TSL 1, DOE estimates impacts on INPV for residential furnace fan 

manufacturers to range from -$17.3 million to -$13.0 million, or a change in INPV of -

5.0 percent to -3.7 percent. At this potential standard level, industry free cash flow is 

235
estimated to decrease by as much as 44.5 percent to $11.3 million, compared to the basecase value of $20.3 million in the year before the compliance date (2018). DOE 

anticipates industry conversion costs totaling $27.7 million at TSL 1.

TSL 2 represents EL 1 for the oil and mobile home product classes, and EL 3 for 

all other product classes. At TSL 2, DOE estimates impacts on INPV for residential 

furnace fan manufacturers to range from -$36.4 million to $10.4 million, or a change in 

INPV of -10.4 percent to 3.0 percent. At this potential standard level, industry free cash 

flow is estimated to decrease by as much as 56.7 percent to $8.8 million, compared to the 

base-case value of $20.3 million in the year before the compliance date (2018). DOE 

anticipates industry conversion costs of $34.7 million at TSL 2. 

TSL 3 represents EL 3 for all product classes. At TSL 3, DOE estimates impacts 

on INPV for residential furnace fan manufacturers to range from -$38.6 million to $9.4

million, or a change in INPV of -11.0 percent to 2.7 percent. At this potential standard 

level, industry free cash flow is estimated to decrease by as much as 60.8 percent to $8.0

million, compared to the base-case value of $20.3 million in the year before the 

compliance date (2018). DOE anticipates industry conversion costs of $37.1 million at 

TSL 3.

TSL 4 represents the efficiency levels that provide the highest NPV using a 7-

percent discount rate, and that also result in a higher percentage of consumers receiving 

an LCC benefit rather than an LCC loss. At TSL 4, DOE estimates impacts on INPV for 

236
residential furnace fan manufacturers to range from -$59.0 million to $48.2 million, or a

change in INPV of -16.9 percent to 13.8 percent. At this potential standard level, 

industry free cash flow is estimated to decrease by as much as 68.3 percent to $6.4

million, compared to the base-case value of $20.3 million in the year before the 

compliance date (2018). DOE anticipates industry conversion costs totaling $40.6

million at TSL 4.

TSL 5 represents the efficiency levels that provide the maximum NPV using a 7-

percent discount rate. At TSL 5, DOE estimates impacts on INPV for residential furnace 

fan manufacturers to range from -$60.8 million to $48.0 million, or a change in INPV of -

17.4 percent to 13.7 percent. At this potential standard level, industry free cash flow is 

estimated to decrease by as much as 72.2 percent to $5.6 million, compared to the basecase value of $20.3 million in the year before the compliance date (2018). DOE 

anticipates industry conversion costs of $42.8 million at TSL 5.

TSL 6 represents the max-tech efficiency level for all product classes. At TSL 6, 

DOE estimates impacts on INPV for residential furnace fan manufacturers to range from 

-$202.5 million to $72.8 million, or a change in INPV of -57.9 percent to 20.8 percent. 

At this potential standard level, industry free cash flow is estimated to decrease by as 

much as 339.8 percent to -$48.6 million, compared to the base-case value of $20.3

million in the year before the compliance date (2018). DOE anticipates industry 

conversion costs totaling $164.2 million at TSL 6.

237
DOE anticipates very high capital conversion costs at TSL 6 because 

manufacturers would need to make significant changes to their manufacturing equipment 

and production processes in order to accommodate the use of backward-inclined 

impellers. This design option would require modifying, or potentially eliminating, current 

fan housings. DOE also anticipates high product conversion costs to develop new designs 

with backward-inclined impellers for all their products. Some manufacturers may also 

have stranded assets from specialized machines for building fan housing that can no 

longer be used.

Impacts on Employment

To quantitatively assess the impacts of energy conservation standards on direct 

employment in the residential furnace fan industry, DOE used the GRIM to estimate the 

domestic labor expenditures and number of employees in the base case and at each TSL 

from 2014 through 2048. DOE used statistical data from the U.S. Census Bureau’s 2011 

Annual Survey of Manufacturers (ASM),70 the results of the engineering analysis, and 

interviews with manufacturers to determine the inputs necessary to calculate industrywide labor expenditures and domestic employment levels. Labor expenditures related to 

manufacturing of the product are a function of the labor intensity of the product, the sales 

volume, and an assumption that wages remain fixed in real terms over time. The total 

labor expenditures in each year are calculated by multiplying the MPCs by the labor 

percentage of MPCs. 

70 "Annual Survey of Manufactures (ASM)," U.S. Census Bureau (2011) (Available at: 

http://www.census.gov/manufacturing/asm/).

238

 
The total labor expenditures in the GRIM were then converted to domestic 

production employment levels by dividing production labor expenditures by the annual 

payment per production worker (production worker hours times the labor rate found in 

the U.S. Census Bureau’s 2011 ASM). The estimates of production workers in this 

section cover workers, including line-supervisors who are directly involved in fabricating 

and assembling a product within the manufacturing facility. Workers performing 

services that are closely associated with production operations, such as materials handling 

tasks using forklifts, are also included as production labor. DOE’s estimates only 

account for production workers who manufacture the specific products covered by this 

rulemaking.

The total direct employment impacts calculated in the GRIM are the sum of the 

changes in the number of production workers resulting from the new energy conservation 

standards for residential furnace fans, as compared to the base case.

Table V.15 Potential Changes in the Number of Furnace Fan Industry Employment 

in 2019

Trial Standard Level*

Base 

Case 1 2 3 4 5 6

Total Number of 

Domestic Production 

Workers in 2019 

(assuming no changes 

in production 

locations)

303 303 303 303 301 301 349

Total Number of 

Domestic NonProduction Workers in 

2019 

107 107 107 107 106 106 123

239
Range of Potential 

Changes in Domestic 

Workers in 2019**

-

(410) to 

0

(410) to 

0

(410) to 0 (410) to 

(3)

(410) to 

(3)

(410) to 62

*Numbers in parentheses represent negative values.

**DOE presents a range of potential employment impacts, where the lower range represents the scenario in 

which all domestic manufacturers move production to other countries.

The employment impacts shown in Table V.15 represent the potential production

and non-production employment changes that could result following the compliance date 

of a new energy conservation standard for residential furnace fans. The upper end of the 

results in the table estimates the maximum increase in the number of production and nonproduction workers after the implementation of new energy conservation standards, and it 

assumes that manufacturers would continue to produce the same scope of covered 

products within the United States. The lower end of the range indicates the total number 

of U.S. production and non-production workers in the industry who could lose their jobs 

if all existing production were moved outside of the United States or if companies exited 

the market. This scenario is highly conservative. Even if all production was relocated 

overseas, manufacturers would likely maintain large portions of domestic non-production 

staff (e.g., sales, marketing, technical, and management employees). The industry did not 

provide sufficient information for DOE fully quantify the percentage of the nonproduction workers that would leave the country or be eliminated at each evaluated 

standard level. 

For residential furnace fans, DOE does not expect significant changes in domestic 

employment levels from baseline to TSL 5. Based on the engineering analysis, DOE has 

concluded that most product lines could be converted to meet the standard with changes 

240
in motor technology and the application of multi-staging designs. While such designs 

require more controls and have more complex assembly, DOE does not believe the perunit labor requirements for the furnace fan assembly would change significantly. 

The only standard level at which significant changes in employment would be 

expected is at TSL 6, the max-tech level. At TSL 6, DOE estimates increases in labor 

costs because backwards-inclined impeller assemblies are heavier and require more 

robust mounting approaches than are currently used for forward-curved impeller 

assemblies. Backward-inclined impeller assemblies could require manufacturers to 

adjust their assembly processes, with the potential for increases in per-unit labor

requirements. However, DOE received limited feedback from manufacturers regarding 

the labor required to produce furnace fans with backward-curved impellers, because they 

generally do not have any experience in working with this design option. 

 

DOE notes that the employment impacts discussed here are independent of the 

indirect employment impacts to the broader U.S. economy, which are documented in 

chapter 15 of the final rule TSD.

Impacts on Manufacturing Capacity

According to the residential furnace fan manufacturers interviewed, the new 

energy conservation standards being adopted in today’s final rule would not significantly 

affect manufacturers’ production capacity, or throughput levels. Some manufacturers 

noted in interviews that testing resources could potentially be a bottleneck to the 

241
conversion process and cited the potential need for adding in-house testing capacity. 

However, in written comments, stakeholders generally agreed that a five-year lead time 

between the publication date and compliance date is appropriate for this rulemaking. 

Impacts on Subgroups of Manufacturers

Small manufacturers, niche equipment manufacturers, and manufacturers 

exhibiting a cost structure substantially different from the industry average could be 

affected disproportionately. As discussed in section IV.J, using average cost assumptions 

developed for an industry cash-flow estimate is inadequate to assess differential impacts 

among manufacturer subgroups. 

For the residential furnace fans industry, DOE identified and evaluated the impact of 

new energy conservation standards on one subgroup, specifically small manufacturers. 

The SBA defines a “small business” as having 750 employees or less for NAICS 333415, 

“Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial 

Refrigeration Equipment Manufacturing.” Based on this definition, DOE identified 15 

manufacturers in the residential furnace fans industry that qualify as small businesses. 

For a discussion of the impacts on the small manufacturer subgroup, see the regulatory 

flexibility analysis in section VI.B of this notice and chapter 12 of the final rule TSD.

Cumulative Regulatory Burden

While any one regulation may not impose a significant burden on manufacturers, 

the combined effects of recent or impending regulations may have serious consequences 

242
for some manufacturers, groups of manufacturers, or an entire industry. Assessing the 

impact of a single regulation may overlook this cumulative regulatory burden. In 

addition to energy conservation standards, other regulations can significantly affect 

manufacturers’ financial operations. Multiple regulations affecting the same 

manufacturer can strain profits and lead companies to abandon product lines or markets 

with lower expected future returns than competing products. For these reasons, DOE 

conducts an analysis of cumulative regulatory burden as part of its rulemakings 

pertaining to appliance efficiency. 

During previous stages of this rulemaking, DOE identified a number of 

requirements in addition to new energy conservation standards for residential furnace 

fans. The following section briefly summarizes those identified regulatory requirements 

and addresses comments DOE received with respect to cumulative regulatory burden, as 

well as other key related concerns that manufacturers raised during interviews.

While the cumulative regulatory burden analysis contained in the NOPR reflects 

manufacturers’ concerns regarding CC&E costs, DOE has decided to exclude CC&E 

costs from the cumulative burden analysis for the final rule. The furnace fan test 

procedure changed from the NOPR to the final rule. Much of the concern relating to 

CC&E costs expressed by stakeholders, and summarized in the NOPR, had to do with the 

old test procedure. The new test procedure reduces burden substantially. Also, for the 

final rule, CC&E costs have been explicitly incorporated into product conversion costs 

243
inputted into the GRIM, so they are no longer considered separately in the cumulative 

regulatory burdens section.

DOE Energy Conservation Standards 

Companies that produce a wide range of regulated products and equipment may 

face more capital and product development expenditures than competitors with a 

narrower scope of products and equipment. Many furnace fan manufacturers also 

produce other residential and commercial equipment. In addition to the amended energy 

conservation standards for furnace fans, these manufacturers contend with several other 

Federal regulations and pending regulations that apply to other products and equipment.

DOE recognizes that each regulation can significantly affect a manufacturer’s financial 

operations. Multiple regulations affecting the same manufacturer can quickly strain 

manufacturers’ profits and possibly cause an exit from the market. Table V.16 lists the 

other DOE energy conservation standards that could also affect manufacturers of furnace 

fans in the 3 years leading up to and after the compliance date of the new energy 

conservation standards for this equipment. Additionally, at the request of stakeholders, 

DOE has listed several DOE rulemakings in the table below that are currently in process 

but that have not been finalized.

Table V.16 Other DOE Regulations Impacting Furnace Fan Manufacturers

Regulation Compliance 

Year

Number of 

Impacted 

Companies

Estimated Total 

Industry Conversion 

Costs

Commercial Refrigeration Equipment 2017 4 $184.0 million (2012$)

Commercial Packaged Air-Conditioning and 

Heating Equipment 2018* 24 N/A**

Commercial/Industrial Fans and Blowers 2019* 29 N/A**

Residential Boilers 2019* 9 N/A**

Residential Non-weatherized Gas Furnaces n/a 38 N/A**

244
* The dates listed are an approximation. The exact dates are pending final DOE action.

** For energy conservation standards that have not been issued, DOE does not have finalized industry conversion 

cost data available.

EPA Phase-out of Hydrochlorofluorocarbons (HCFCs)

The U.S. is obligated under the Montreal Protocol to limit production and 

consumption of HCFCs through incremental reductions, culminating in a complete 

phase-out of HCFCs by 2030. On December 15, 2009, EPA published the “2010 HCFC 

Allocation Rule,” which allocates production and consumption allowances for HCFC-22 

for each year between 2010 and 2014. 74 FR 66412. On January 4. 2012, EPA 

published the “2012 HCFC Allocation Proposed Rule,” which proposes to lift the 

regulatory ban on the production and consumption of HCFC-22 (following a court 

decision71 in August 2010 to vacate a portion of the “2010 HCFC Allocation Rule”) by 

establishing company-by-company HCFC-22 baselines and allocating allowances for 

2012-2014. 77 FR 237.

HCFC-22, which is also known as R-22, is a popular refrigerant that is commonly 

used in air-conditioning products. Manufacturers of residential furnace fans who also 

manufacture residential central air conditioners must comply with the allowances 

established by the allocation rule, thereby facing a cumulative regulatory burden.

EPA ENERGY STAR

71 See Arkema v. EPA, 618 F.3d 1 (D.C. Cir. 2010).

Comment [DOE2]: Change recommended by 

OIRA.

245

 
During interviews, some manufacturers stated that ENERGY STAR 

specifications for residential furnaces, central air conditioners, and heat pumps would be 

a source of cumulative regulatory burden. ENERGY STAR specifications are as follows:

Table V.17: ENERGY STAR Specifications for HVAC Products that Use Furnace 

Fans

Gas Furnaces Rating of 90% AFUE or greater for U.S. South gas furnaces

Rating of 95% AFUE or greater for U.S. North gas furnaces

Less than or equal to 2.0% furnace fan efficiency*

Oil Furnaces Rating of 85% AFUE or greater

Less than or equal to 2.0% furnace fan efficiency*

Air-Source Heat Pumps >= 8.2 HSPF/ >=14.5 SEER/ >=12 EER for split systems

>= 8.0 HSPF/ >=14 SEER/ >=11 EER for single-package 

equipment 

Central Air Conditioners >=14.5 SEER/ >=12 EER for split systems

>=14 SEER/ >=11 EER for single-package equipment

* Furnace fan efficiency in this context is furnace fan electrical consumption as a 

percentage of total furnace energy consumption in heating mode.

DOE realizes that the cumulative effect of several regulations on an industry may 

significantly increase the burden faced by manufacturers that need to comply with 

multiple regulations and certification programs from different organizations and levels of 

government. However, DOE notes that certain standards, such as ENERGY STAR, are 

optional for manufacturers. As they are voluntary standards, they are not considered by 

DOE to be part of manufacturers’ cumulative regulatory burden.

DOE discusses these and other requirements (e.g., Canadian Energy Efficiency 

Regulations, California Title 24, Low NOx requirements), and includes the full details of 

the cumulative regulatory burden analysis, in chapter 12 of the final rule TSD. DOE also 

246
discusses the impacts on the small manufacturer subgroup in the regulatory flexibility 

analysis in section VI.B of this final rule.

3. National Impact Analysis

Significance of Energy Savings

For each TSL, DOE projected energy savings for residential furnace fans 

purchased in the 30-year period that begins in the first full year of compliance with 

amended standards (2019-2048). The savings are measured over the entire lifetime of 

products purchased in the 30-year period. DOE quantified the energy savings attributable 

to each TSL as the difference in energy consumption between each standards case and the 

base case. Table V.18 presents the estimated primary energy savings for each considered 

TSL, and Table V.19 presents the estimated FFC energy savings for each considered 

TSL. The energy savings in the tables below are net savings that reflect the subtraction of 

the additional gas or oil used by the furnace associated with higher-efficiency furnace 

fans. The approach for estimating national energy savings is further described in section 

IV.H.1.

The difference between primary energy savings and FFC energy savings for all 

TSLs is small (less than 1 percent), because the upstream energy savings associated with 

the electricity savings are partially or fully offset by the upstream energy use from the 

additional gas or oil used by the furnace due to higher-efficiency furnace fans.

247
Table V.18 Cumulative National Primary Energy Savings for Trial Standard Levels 

for Residential Furnace Fans Sold in 2019-2048

Product Class Trial Standard Level

1 2 3 4 5 6

quads

Non-Weatherized, NonCondensing Gas Furnace Fan 0.296 1.341 1.341 1.796 1.796 2.426

Non-weatherized, Condensing 

Gas Furnace Fan 0.278 1.188 1.188 1.614 1.614 2.324

Weatherized Non-Condensing 

Gas Furnace Fan 0.048 0.224 0.224 0.330 0.330 0.462

Non-Weatherized, NonCondensing Oil Furnace Fan 0.006 0.006 0.022 0.006 0.022 0.046

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.032 0.143 0.143 0.193 0.193 0.264

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.009 0.009 0.023 0.009 0.023 0.053

Mobile Home NonWeatherized, Condensing Gas 

Furnace Fan 0.001 0.001 0.003 0.001 0.003 0.008

Mobile Home Electric 

Furnace/Modular Blower Fan 0.009 0.009 0.030 0.044 0.044 0.055

Total – All Classes 0.679 2.922 2.974 3.994 4.024 5.639

Note: Components may not sum to total due to rounding.

248
Table V.19 Cumulative National Full-Fuel-Cycle Energy Savings for Trial 

Standard Levels for Residential Furnace Fans Sold in 2019-2048

Product Class Trial Standard Level

1 2 3 4 5 6

quads

Non-Weatherized, NonCondensing Gas Furnace Fan 0.297 1.338 1.338 1.793 1.793 2.428

Non-weatherized, Condensing 

Gas Furnace Fan 

0.278 1.176 1.176 1.604 1.604 2.314

Weatherized Non-Condensing 

Gas Furnace Fan 

0.048 0.225 0.225 0.331 0.331 0.463

Non-Weatherized, NonCondensing Oil Furnace Fan0.006 0.006 0.020 0.006 0.020 0.044

Non-weatherized Electric 

Furnace/Modular Blower Fan 

0.032 0.145 0.145 0.196 0.196 0.268

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.009 0.009 0.022 0.009 0.022 0.052

Mobile Home NonWeatherized, Condensing Gas 

Furnace Fan 

0.001 0.001 0.003 0.001 0.003 0.008

Mobile Home Electric 

Furnace/Modular Blower Fan

0.010 0.010 0.030 0.045 0.045 0.056

Total – All Classes 0.680 2.909 2.958 3.986 4.014 5.635

Note: Components may not sum to total due to rounding.

OMB Circular A-472 requires agencies to present analytical results, including 

separate schedules of the monetized benefits and costs that show the type and timing of 

benefits and costs. Circular A-4 also directs agencies to consider the variability of key 

elements underlying the estimates of benefits and costs. For this rulemaking, DOE 

undertook a sensitivity analysis using nine, rather than 30, years of product shipments. 

The choice of a nin-year period is a proxy for the timeline in EPCA for the review of 

certain energy conservation standards and potential revision of and compliance with such 

72 U.S. Office of Management and Budget, "Circular A-4: Regulatory Analysis" (Sept. 17, 2003) (Last 

accessed September 17, 2013 from http://www.whitehouse.gov/omb/circulars_a004_a-4/).

249

 
revised standards.73 The review timeframe established in EPCA is generally not 

synchronized with the product lifetime, product manufacturing cycles, or other factors 

specific to residential furnace fans. Thus, such results are presented for informational 

purposes only and are not indicative of any change in DOE’s analytical methodology. 

The NES results based on a 9-year analytical period are presented in Table V.20. The 

impacts are counted over the lifetime of products purchased in 2019–2027.

73 Section 325(m) of EPCA requires DOE to review its standards at least once every 6 years, and requires, 

for certain products, a 3-year period after any new standard is promulgated before compliance is required, 

except that in no case may any new standards be required within 6 years of the compliance date of the 

previous standards. While adding a 6-year review to the 3-year compliance period adds up to 9 years, DOE 

notes that it may undertake reviews at any time within the 6-year period and that the 3-year compliance 

date may yield to the 6-year backstop. A 9-year analysis period may not be appropriate given the variability 

that occurs in the timing of standards reviews and the fact that for some consumer products, the compliance 

period is 5 years rather than 3 years.

250

 
Table V.20 Cumulative National Primary Energy Savings for Trial Standard Levels 

for Residential Furnace Fans Sold in 2019-2027

Product Class Trial Standard Level

1 2 3 4 5 6

quads

Non-Weatherized, NonCondensing Gas Furnace Fan 0.099 0.454 0.454 0.611 0.611 0.838

Non-weatherized, Condensing 

Gas Furnace Fan 0.075 0.316 0.316 0.429 0.429 0.612

Weatherized Non-Condensing 

Gas Furnace Fan 0.016 0.075 0.075 0.108 0.108 0.150

Non-Weatherized, NonCondensing Oil Furnace Fan 0.002 0.002 0.009 0.002 0.009 0.020

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.009 0.043 0.043 0.058 0.058 0.080

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.003 0.003 0.007 0.003 0.007 0.018

Mobile Home NonWeatherized, Condensing Gas 

Furnace Fan 0.000 0.000 0.001 0.000 0.001 0.002

Mobile Home Electric 

Furnace/Modular Blower Fan 0.003 0.003 0.009 0.013 0.013 0.017

Total – All Classes 0.207 0.897 0.914 1.225 1.236 1.737

Note: Components may not sum to total due to rounding.

Net Present Value of Consumer Costs and Benefits

DOE estimated the cumulative NPV of the total costs and savings for consumers 

that would result from the TSLs considered for residential furnace fans. In accordance 

with OMB’s guidelines on regulatory analysis,74 DOE calculated NPV using both a 7-

percent and a 3-percent real discount rate. Table V.21 shows the consumer NPV results 

for each TSL considered for residential furnace fans. In each case, the impacts cover the 

lifetime of products purchased in 2019-2048.

74 OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 

http://www.whitehouse.gov/omb/circulars_a004_a-4). 

251

 
Table V.21 Cumulative Net Present Value of Consumer Benefit for Trial Standard 

Levels for Residential Furnace Fans Sold in 2019-2048 

Product Class

Discount 

Rate

%

Trial Standard Level

1 2 3 4 5 6

billion 2013$*

Non-Weatherized, NonCondensing Gas Furnace Fan

3%

2.150 12.031 12.031 13.309 13.309 11.943

Non-weatherized, 

Condensing Gas Furnace Fan 1.842 10.769 10.769 11.444 11.444 10.156

Weatherized NonCondensing Gas Furnace Fan 0.335 1.849 1.849 2.288 2.288 2.082

Non-Weatherized, NonCondensing Oil Furnace Fan 0.028 0.028 0.154 0.028 0.154 0.078

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.215 1.237 1.237 1.480 1.480 0.615

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.045 0.045 0.171 0.045 0.171 (0.039)

Mobile Home NonWeatherized, Condensing 

Gas Furnace Fan 0.007 0.007 0.025 0.007 0.025 (0.005)

Mobile Home Electric 

Furnace/Modular Blower Fan 0.047 0.047 0.168 0.209 0.209 (0.099)

Total – All Classes 4.668 26.013 26.403 28.810 29.079 24.731

Non-Weatherized, NonCondensing Gas Furnace Fan

7%

0.823 4.502 4.502 4.713 4.713 3.381

Non-weatherized, 

Condensing Gas Furnace Fan 0.677 3.856 3.856 3.876 3.876 2.686

Weatherized NonCondensing Gas Furnace Fan 0.129 0.702 0.702 0.825 0.825 0.604

Non-Weatherized, NonCondensing Oil Furnace Fan 0.012 0.012 0.061 0.012 0.061 0.006

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.078 0.438 0.438 0.515 0.515 0.014

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.017 0.017 0.058 0.017 0.058 (0.071)

Mobile Home NonWeatherized, Condensing 

Gas Furnace Fan 0.003 0.003 0.008 0.003 0.008 (0.010)

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Mobile Home Electric 

Furnace/Modular Blower Fan 0.017 0.017 0.054 0.065 0.065 (0.102)

Total – All Classes 1.754 9.545 9.679 10.024 10.120 6.509

* Numbers in parentheses indicate negative NPV.

The NPV results based on the aforementioned 9-year analytical period are 

presented in Table V.22. The impacts are counted over the lifetime of products purchased 

in 2019–2027. As mentioned previously, this information is presented for informational 

purposes only and is not indicative of any change in DOE’s analytical methodology or 

decision criteria. 

Table V.22 Cumulative Net Present Value of Consumer Benefit for Trial Standard 

Levels for Residential Furnace Fans Sold in 2019-2027

Product Class Discount 

Rate %

Trial Standard Level

1 2 3 4 5 6

billion 2013$*

Non-Weatherized, NonCondensing Gas Furnace Fan

3%

0.893 5.028 5.028 5.527 5.527 4.908

Non-weatherized, 

Condensing Gas Furnace Fan 0.652 3.784 3.784 4.005 4.005 3.550

Weatherized NonCondensing Gas Furnace Fan 0.139 0.777 0.777 0.945 0.945 0.864

Non-Weatherized, NonCondensing Oil Furnace Fan 0.015 0.015 0.082 0.015 0.082 0.064

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.080 0.463 0.463 0.549 0.549 0.217

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.019 0.019 0.073 0.019 0.073 (0.012)

Mobile Home NonWeatherized, Condensing 

Gas Furnace Fan 0.003 0.003 0.010 0.003 0.010 (0.001)

Mobile Home Electric 

Furnace/Modular Blower Fan 0.017 0.017 0.061 0.074 0.074 (0.052)

Total – All Classes 1.819 10.106 10.278 11.137 11.266 9.537

Non-Weatherized, NonCondensing Gas Furnace Fan 7% 0.444 2.433 2.433 2.531 2.531 1.799

Non-weatherized, 0.325 1.840 1.840 1.845 1.845 1.290

253
Condensing Gas Furnace Fan

Weatherized NonCondensing Gas Furnace Fan 0.070 0.384 0.384 0.446 0.446 0.333

Non-Weatherized, NonCondensing Oil Furnace Fan 0.008 0.008 0.040 0.008 0.040 0.015

Non-weatherized Electric 

Furnace/Modular Blower Fan 0.039 0.220 0.220 0.257 0.257 0.001

Mobile Home NonWeatherized, NonCondensing Gas Furnace Fan 0.009 0.009 0.033 0.009 0.033 (0.037)

Mobile Home NonWeatherized, Condensing 

Gas Furnace Fan 0.001 0.001 0.004 0.001 0.004 (0.005)

Mobile Home Electric 

Furnace/Modular Blower Fan 0.008 0.008 0.026 0.031 0.031 (0.059)

Total – All Classes 0.905 4.904 4.980 5.128 5.186 3.338

* Numbers in parentheses indicate negative NPV.

As noted in section IV.H.2, DOE assumed no change in residential furnace fan 

prices over the 2019−2048 period. In addition, DOE conducted a sensitivity analysis 

using alternative price trends: one in which prices decline over time, and one in which 

prices increase over time. These price trends, and the NPV results from the associated 

sensitivity cases, are described in appendix 10-C of the final rule TSD.

Indirect Impacts on Employment

DOE expects energy conservation standards for residential furnace fans to reduce 

energy costs for consumers, with the resulting net savings being redirected to other forms 

of economic activity. Those shifts in spending and economic activity could affect the 

demand for labor. As described in section IV.N, DOE used an input/output model of the 

U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered 

in this rulemaking. DOE understands that there are uncertainties involved in projecting 

employment impacts, especially changes in the later years of the analysis. Therefore, 

254
DOE generated results for near-term time frames (2019 and 2024), where these 

uncertainties are reduced. 

The results suggest that today’s standards would be likely to have negligible 

impact on the net demand for labor in the economy. The net change in jobs is so small 

that it would be imperceptible in national labor statistics and might be offset by other, 

unanticipated effects on employment. Chapter 16 of the final rule TSD presents more 

detailed results about anticipated indirect employment impacts.

4. Impact on Product Utility or Performance 

DOE has concluded that the standards it is adopting in this final rule would not lessen 

the utility or performance of residential furnace fans. 

5. Impact of Any Lessening of Competition 

EPCA directs DOE to consider any lessening of competition that is likely to result 

from standards. It also directs the Attorney General of the United States (Attorney 

General) to determine the impact, if any, of any lessening of competition likely to result 

from a proposed standard and to transmit such determination in writing to the Secretary 

within 60 days of the publication of a proposed rule, together with an analysis of the 

nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))

To assist the Attorney General in making such a determination for today’s

standards, DOE provided the Department of Justice (DOJ) with copies of the NOPR and 

255
the TSD for review. In its assessment letter responding to DOE, DOJ concluded that the 

proposed energy conservation standards for residential furnace fans are unlikely to have a 

significant adverse impact on competition. DOE is publishing the Attorney General’s 

assessment at the end of this final rule.

6. Need of the Nation to Conserve Energy 

An improvement in the energy efficiency of the products subject to this rule is 

likely to improve the security of the nation’s energy system by reducing overall demand 

for energy. Reduction in the growth of electricity demand resulting from energy 

conservation standards may also improve the reliability of the electricity system. 

Reductions in national electric generating capacity estimated for each considered TSL are 

reported in chapter 15 of the final rule TSD.

Energy savings from standards for the residential furnace fan products covered in 

today’s final rule could also produce environmental benefits in the form of reduced 

emissions of air pollutants and greenhouse gases associated with electricity production. 

Table V.23 provides DOE’s estimate of cumulative emissions reductions projected to 

result from the TSLs considered in this rulemaking. The table includes both power sector 

emissions and upstream emissions. The emissions were calculated using the multipliers 

discussed in section IV.K. DOE reports annual emissions reductions for each TSL in 

chapter 13 of the final rule TSD.

256
As discussed in section IV.K, DOE did not include NOX emissions reduction from 

power plants in States subject to CAIR, because an energy conservation standard would 

not affect the overall level of NOX emissions in those States due to the emissions caps 

mandated by CAIR. For SO2, under the MATS, projected emissions will be far below the 

cap established by CAIR, so it is unlikely that excess SO2 emissions allowances resulting 

from lower electricity demand would be needed or used to permit offsetting increases in 

SO2 emissions by any regulated EGU. Therefore, DOE believes that efficiency standards 

will reduce SO2 emissions.

Table V.23 Cumulative Emissions Reduction for Potential Standards for 

Residential Furnace Fans

TSL

1 2 3 4 5 6

Primary Energy Emissions*

CO2 (million metric tons) 29.3 124.5 126.3 171.1 172.0 241.5

SO2 (thousand tons) 38.1 174.3 178.0 232.5 235.2 323.5

NOX (thousand tons) (5.2) (32.4) (33.8) (38.7) (40.2) (51.1)

Hg (tons) 0.1 0.3 0.3 0.4 0.4 0.5

N2O (thousand tons) 1.0 4.5 4.6 6.0 6.1 8.4

CH4 (thousand tons) 5.2 23.4 23.9 31.3 31.6 43.7

Upstream Emissions

CO2 (million metric tons) 1.7 6.7 6.7 9.6 9.5 13.7

SO2 (thousand tons) 0.5 2.4 2.4 3.2 3.2 4.4

NOX (thousand tons) 22.5 84.9 85.0 122.8 122.0 177.5

Hg (tons) 0.0 0.0 0.0 0.0 0.0 0.0

N2O (thousand tons) 0.0 0.1 0.1 0.1 0.1 0.2

CH4 (thousand tons) 127.0 447.7 455.4 663.7 666.1 984.3

Total FFC Emissions

CO2 (million metric tons) 31.0 131.2 133.1 180.6 181.5 255.2

SO2 (thousand tons) 38.6 176.7 180.4 235.7 238.4 327.9

NOX (thousand tons) 17.2 52.6 51.2 84.0 81.8 126.4

Hg (tons) 0.1 0.3 0.3 0.4 0.4 0.5

N2O (thousand tons) 1.0 4.6 4.7 6.2 6.2 8.6

N2O thousand tons CO2eq** 302.2 1378.9 1402.4 1843.7 1859.3 2569.2

CH4 (thousand tons) 132.1 471.1 479.3 695.0 697.7 1028.0

CH4 million tons CO2eq** 3303.3 11778 11982 17375 17442 25700

* Includes emissions from additional gas use associated with more-efficient furnace fans.

257
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

 Note: Parentheses indicate negative values.

As part of the analysis for this final rule, DOE estimated monetary benefits likely 

to result from the reduced emissions of CO2 and NOX estimated for each of the TSLs 

considered for residential furnace fans. As discussed in section IV.L, for CO2, DOE used 

four sets of values for the SCC developed by an interagency process. Three sets of values 

are based on the average SCC from three integrated assessment models, at discount rates 

of 2.5 percent, 3 percent, and 5 percent. The fourth set represents the 95th-percentile SCC 

estimate across all three models at a 3-percent discount rate. The SCC values for CO2

emissions reductions in 2015, expressed in 2013$, are $12.0/ton, $40.5/ton, $62.4/ton, 

and $119/ton. The values for later years are higher due to increasing damages as the 

magnitude of projected climate change increases. Table V.24 presents the global value of 

CO2 emissions reductions at each TSL. DOE calculated domestic values as a range from 

7 percent to 23 percent of the global values, and these results are presented in chapter 14 

of the final rule TSD.

258
Table V.24 Global Present Value of CO2 Emissions Reduction for Potential 

Standards for Residential Furnace Fans

TSL

SCC Case*

5% 

discount 

rate, 

average

3% 

discount 

rate, 

average

2.5% 

discount rate, 

average

3% discount 

rate, 95th

percentile

million 2013$

Primary Energy Emissions**

1 184 880 1,409 2,722

2 785 3,755 6,007 11,612

3 797 3,811 6,096 11,784

4 1,077 5,152 8,245 15,934

5 1,083 5,181 8,291 16,023

6 1,517 7,265 11,628 22,467

Upstream Emissions

1 10.2 50.1 81 155

2 40.0 196 315 607

3 40.0 196 316 608

4 57.0 279 449 866

5 56.6 278 447 861

6 81.7 401 644 1,241

Total FFC Emissions

1 194 930 1,489 2,878

2 825 3,951 6,323 12,219

3 837 4,007 6,412 12,392

4 1,134 5,432 8,694 16,799

5 1,140 5,459 8,737 16,884

6 1,599 7,666 12,272 23,709

* For each of the four cases, the corresponding SCC value for emissions in 2015 is 

$12.0, $40.5, $62.4, and $119 per metric ton (2013$). The values are for CO2 only (i.e., 

not CO2eq of other greenhouse gases).

** Includes site emissions from additional use of natural gas associated with moreefficient furnace fans.

DOE is well aware that scientific and economic knowledge about the contribution 

of CO2 and other greenhouse gas (GHG) emissions to changes in the future global 

climate and the potential resulting damages to the world economy continues to evolve 

rapidly. Thus, any value placed in this rulemaking on reducing CO2 emissions is subject 

to change. DOE, together with other Federal agencies, will continue to review various 

259
methodologies for estimating the monetary value of reductions in CO2 and other GHG 

emissions. This ongoing review will consider the comments on this subject that are part 

of the public record for this and other rulemakings, as well as other methodological 

assumptions and issues. However, consistent with DOE’s legal obligations, and taking 

into account the uncertainty involved with this particular issue, DOE has included in this 

final rule the most recent values and analyses resulting from the interagency review 

process.

DOE also estimated a range for the cumulative monetary value of the economic 

benefits associated with NOX emissions reductions anticipated to result from standards 

for the residential furnace fan products that are the subject of this final rule. The dollarper-ton values that DOE used are discussed in section IV.L. Table V.25 presents the 

present value of cumulative NOX emissions reductions for each TSL calculated using the 

average dollar-per-ton values and 7-percent and 3-percent discount rates.

260
Table V.25 Present Value of NOX Emissions Reduction for Potential Standards for 

Residential Furnace Fans

TSL

3% Discount 

Rate

7% Discount 

Rate

million 2013$

Power Sector and Site Emissions*

1 (3.8) 0.0

2 (27.1) (3.7)

3 (28.6) (4.1)

4 (31.0) (2.8)

5 (32.5) (3.3)

6 (39.4) (2.1)

Upstream Emissions

1 25.9 10.2

2 98.1 38.7

3 98.3 38.8

4 141.8 55.9

5 140.9 55.6

6 205.5 81.4

Total FFC Emissions**

1 22.1 10.2

2 71.0 35.1

3 69.7 34.7

4 110.8 53.1

5 108.4 52.3

6 166.1 79.3

* Includes site emissions from additional use of natural gas 

associated with more-efficient furnace fans.

** Components may not sum to total due to rounding.

Note: Parentheses indicate negative values.

The NPV of the monetized benefits associated with emissions reductions can be 

viewed as a complement to the NPV of the consumer savings calculated for each TSL 

considered in this rulemaking. Table V.26 presents the NPV values that result from 

adding the estimates of the potential economic benefits resulting from reduced full-fuelcycle CO2 and NOX emissions in each of four valuation scenarios to the NPV of 

consumer savings calculated for each TSL considered in this rulemaking, at both a 7-

percent and a 3-percent discount rate. The CO2 values used in the columns of each table 

261
correspond to the four scenarios for the valuation of CO2 emission reductions discussed 

above.

Table V.26 Potential Standards for Residential Furnace Fans: Net Present Value of 

Consumer Savings Combined with Present Value of Monetized Benefits from CO2

and NOX Emissions Reductions 

TSL

Consumer NPV at 3% Discount Rate added with:

SCC Case

$12.0/metric ton 

CO2

* and Low 

Value for NOX

**

SCC Case

$40.5/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$62.4/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$119/metric ton 

CO2

* and High 

Value for NOX

**

billion 2013$

1 4.9 5.6 6.2 7.6

2 26.9 30.0 32.4 38.3

3 27.3 30.5 32.9 38.9

4 30.1 34.4 37.6 45.7

5 30.3 34.6 37.9 46.1

6 26.5 32.6 37.2 48.6

TSL

Consumer NPV at 7% Discount Rate added with:

SCC Case

$12.0/metric ton 

CO2

* and Low 

Value for NOX

**

SCC Case

$40.5/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$62.4/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$119/metric ton 

CO2

* and High 

Value for NOX

**

billion 2013$

1 2.0 2.7 3.3 4.6

2 10.4 13.5 15.9 21.8

3 10.6 13.7 16.1 22.1

4 11.2 15.5 18.8 26.9

5 11.3 15.6 18.9 27.1

6 8.2 14.3 18.9 30.3

* These label values represent the global SCC in 2015, in 2013$. ** Low Value corresponds to $476 per ton of NOX emissions. Medium Value corresponds to $2,684 per 

ton, and High Value corresponds to $4,893 per ton.

Although adding the value of consumer savings to the values of emission 

reductions provides a valuable perspective, two issues should be considered. First, the 

national operating cost savings are domestic U.S. consumer monetary savings that occur 

262
as a result of market transactions, while the value of CO2 reductions is based on a global 

value. Second, the assessments of operating cost savings and the SCC are performed with 

different methods that use quite different time frames for analysis. The national operating 

cost savings is measured for the lifetime of products shipped in 2019–2048. The SCC 

values, on the other hand, reflect the present value of future climate-related impacts 

resulting from the emission of one metric ton of CO2 in each year. Because of the long 

residence time of CO2 in the atmosphere, these impacts continue well beyond 2100.

7. Other Factors 

The Secretary of Energy, in determining whether a standard is economically 

justified, may consider any other factors that the Secretary deems to be relevant. (42 

U.S.C. 6295(o)(2)(B)(i)(VI)) No other factors were considered in this analysis.

C. Conclusions

When considering proposed standards, the new or amended energy conservation 

standard that DOE adopts for any type (or class) of covered product shall be designed to 

achieve the maximum improvement in energy efficiency that the Secretary determines is 

technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In 

determining whether a standard is economically justified, the Secretary must determine 

whether the benefits of the standard exceed its burdens by, to the greatest extent 

practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 

6295(o)(2)(B)(i)) The new or amended standard must also result in significant 

conservation of energy. (42 U.S.C. 6295(o)(3)(B))

263
For today’s final rule, DOE considered the impacts of standards at each TSL, 

beginning with the maximum technologically feasible level, to determine whether that 

level was economically justified. Where the max-tech level was not justified, DOE then 

considered the next most efficient level and undertook the same evaluation until it 

reached the highest efficiency level that is both technologically feasible and economically 

justified and saves a significant amount of energy.

To aid the reader in understanding the benefits and/or burdens of each TSL, tables 

in this section summarize the quantitative analytical results for each TSL, based on the 

assumptions and methodology discussed herein. The efficiency levels contained in each 

TSL are described in section V.A. In addition to the quantitative results presented in the 

tables, DOE also considers other burdens and benefits that affect economic justification. 

These include the impacts on identifiable subgroups of consumers who may be 

disproportionately affected by a national standard, and impacts on employment. Section 

V.B.1.b presents the estimated impacts of each TSL for these subgroups. DOE discusses 

the impacts on direct employment in residential furnace fan manufacturing in section 

V.B.2.b, and discusses the indirect employment impacts in section V.B.3.c.

DOE also notes that the economics literature provides a wide-ranging discussion 

of how consumers trade off upfront costs and energy savings in the absence of 

government intervention. Much of this literature attempts to explain why consumers 

appear to undervalue energy efficiency improvements. There is evidence that consumers 

264
undervalue future energy savings as a result of: (1) a lack of information; (2) a lack of 

sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings 

to warrant delaying or altering purchases; (4) excessive focus on the short term, in the 

form of inconsistent weighting of future energy cost savings relative to available returns 

on other investments; (5) computational or other difficulties associated with the 

evaluation of relevant tradeoffs; and (6) a divergence in incentives (for example, renter 

versus owner or builder versus purchaser). Other literature indicates that with less than 

perfect foresight and a high degree of uncertainty about the future, consumers may trade 

off at a higher than expected rate between current consumption and uncertain future 

energy cost savings. This undervaluation suggests that regulation that promotes energy 

efficiency can produce significant net private gains (as well as producing social gains by, 

for example, reducing pollution).

In DOE’s current regulatory analysis, potential changes in the benefits and costs 

of a regulation due to changes in consumer purchase decisions are included in two ways. 

First, if consumers forego a purchase of a product in the standards case, this decreases 

sales for product manufacturers and the cost to manufacturers is included in the MIA. 

Second, DOE accounts for energy savings attributable only to products actually used by 

consumers in the standards case; if a standard decreases the number of products 

purchased by consumers, this decreases the potential energy savings from an energy 

conservation standard. DOE provides estimates of changes in the volume of product 

purchases in chapter 9 of the final rule TSD. DOE’s current analysis does not explicitly 

control for heterogeneity in consumer preferences, preferences across subcategories of 

265
products or specific features, or consumer price sensitivity variation according to 

household income.

75

While DOE is not prepared at present to provide a fuller quantifiable framework 

for estimating the benefits and costs of changes in consumer purchase decisions due to an 

energy conservation standard, DOE is committed to developing a framework that can 

support empirical quantitative tools for improved assessment of the consumer welfare 

impacts of appliance standards. DOE has posted a paper that discusses the issue of 

consumer welfare impacts of appliance standards, and potential enhancements to the 

methodology by which these impacts are defined and estimated in the regulatory 

process.76 DOE welcomes comments on how to more fully assess the potential impact of 

energy conservation standards on consumer choice and how to quantify this impact in its 

regulatory analysis.

1. Benefits and Burdens of Trial Standard Levels Considered for Residential Furnace 

Fans

Table V.27 through Table V.29 summarize the quantitative impacts estimated for 

each TSL for residential furnace fans. The national impacts are measured over the 

lifetime of furnace fans purchased in the 30-year period that begins in the first full year of 

75 P.C. Reiss and M.W. White, Household Electricity Demand, Revisited, Review of Economic Studies

(2005) 72, 853–883. 76 Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice. 

Lawrence Berkeley National Laboratory (2010) (Available at:

http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (Last accessed 

May 3, 2013).

266

 
compliance with amended standards (2019-2048). The energy savings, emissions 

reductions, and value of emissions reductions refer to full-fuel-cycle results. Results that 

refer to primary energy savings are presented in chapter 10 of the final rule TSD.

Table V.27 Summary of Analytical Results for Residential Furnace Fan Standards: 

National Impacts

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

National Full-Fuel-Cycle Energy Savings quads

0.680 2.909 2.958 3.986 4.014 5.635

NPV of Consumer Benefits 2013$ billion

3% discount rate 4.668 26.013 26.403 28.810 29.079 24.731

7% discount rate 1.754 9.545 9.679 10.024 10.120 6.509

Cumulative Emissions Reduction (FFC Emissions)

CO2 million metric tons 31.0 131.2 133.1 180.6 181.5 255.2

SO2 thousand tons 38.6 176.7 180.4 235.7 238.4 327.9

NOX thousand tons 17.2 52.6 51.2 84.0 81.8 126.4

Hg tons 0.1 0.3 0.3 0.4 0.4 0.5

N2O thousand tons 1.0 4.6 4.7 6.2 6.2 8.6

N2O thousand tons

CO2eq*

302.2 1378.9 1402.4 1843.7 1859.3 2569.2

CH4 thousand tons 132.1 471.1 479.3 695.0 697.7 1028.0

CH4 million tons CO2eq* 3303 11778 11982 17375 17442 25700

Value of Emissions Reduction (FFC Emissions) 2013$ billion

CO2 ** 0.194 to 

2.878

0.825 to 

12.219

0.837 to 

12.392

1.134 to 

16.799

1.140 to 

16.884

1.599 to 

23.709

NOX – 3% discount rate 0.0221 0.0710 0.0697 0.1108 0.1084 0.1661

NOX – 7% discount rate 0.0102 0.0351 0.0347 0.0531 0.0523 0.0793

* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

** Range of the economic value of CO2 reductions is based on interagency estimates of the global benefit 

of reduced CO2 emissions.

267
Table V.28 Summary of Analytical Results for Residential Furnace Fan Standards: 

Manufacturer and Average or Median Consumer Impacts

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Manufacturer Impacts

Industry NPV (baseline value 

is 349.6) (2013$ in millions)

332.3 

to 

336.6

313.2

to 

360.0

311.0

to 

359.1

290.6

to 

397.8

288.8

to 

397.6

147.2

to 

422.4

Change in Industry NPV (% 

change)

(5.0) 

to 

(3.7)

(10.4) 

to 3.0

(11.0) 

to 2.7

(16.9) 

to 13.8

(17.4) 

to 13.7

(57.9) 

to 20.8

Consumer Average LCC Savings (2013$)

Non-weatherized, Noncondensing Gas Furnace Fan $85 $471 $471 $506 $506 $431

Non-weatherized, Condensing 

Gas Furnace Fan $58 $335 $335 $341 $341 $268

Weatherized Non-Condensing 

Gas Furnace Fan $67 $378 $378 $447 $447 $391

Non-Weatherized, NonCondensing Oil Furnace Fan $46 $46 $259 $46 $259 $80

Non-weatherized Electric 

Furnace/Modular Blower Fan $29 $181 $181 $204 $204 $81

Mobile Home Nonweatherized, Non-condensing 

Gas Furnace Fan

$36 $36 $144 $36 $144 ($58)

Mobile Home Nonweatherized, Condensing Gas 

Furnace Fan

$35 $35 $133 $35 $133 ($51)

Mobile Home Electric 

Furnace/Modular Blower Fan $19 $19 $70 $85 $85 ($54)

Consumer Median PBP (years)

Non-weatherized, Noncondensing Gas Furnace Fan 1.12 2.60 2.60 5.41 5.41 10.16

Non-weatherized, Condensing 

Gas Furnace Fan 1.18 2.87 2.87 5.78 5.78 11.01

Weatherized Non-Condensing 

Gas Furnace Fan 0.73 1.79 1.79 4.42 4.42 8.19

Non-Weatherized, NonCondensing Oil Furnace Fan 1.70 1.70 4.65 1.70 4.65 18.56

Non-weatherized Electric 

Furnace/Modular Blower Fan 1.94 2.64 2.64 3.21 3.21 11.45

Mobile Home Nonweatherized, Non-condensing 

Gas Furnace Fan

2.72 2.72 6.84 2.72 6.84 24.38

Mobile Home Nonweatherized, Condensing Gas 

Furnace Fan

2.31 2.31 6.65 2.31 6.65 31.27

268
Mobile Home Electric 

Furnace/Modular Blower Fan 2.07 2.07 3.58 4.09 4.09 14.90

Note: Parentheses indicate negative values.

Table V.29 Summary of Analytical Results for Residential Furnace Fan Standards: 

Distribution of Consumer LCC Impacts

Product Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Non-Weatherized, Non-Condensing Gas Furnace Fan

Net Cost 1% 17% 17% 30% 30% 50%

No Impact 68% 25% 25% 14% 14% 0%

Net Benefit 30% 58% 58% 56% 56% 50%

Non-weatherized, Condensing Gas Furnace Fan

Net Cost 1% 11% 11% 23% 23% 51%

No Impact 75% 41% 41% 34% 34% 0%

Net Benefit 24% 48% 48% 43% 43% 49%

Weatherized Non-Condensing Gas Furnace Fan

Net Cost 0% 3% 3% 16% 16% 41%

No Impact 81% 56% 56% 33% 33% 0%

Net Benefit 19% 41% 41% 51% 51% 59%

Non-Weatherized, Non-Condensing Oil Furnace Fan

Net Cost 13% 13% 44% 13% 44% 78%

No Impact 71% 71% 28% 71% 28% 0%

Net Benefit 17% 17% 28% 17% 28% 22%

Non-weatherized Electric Furnace/Modular Blower Fan

Net Cost 4% 17% 17% 23% 23% 60%

No Impact 73% 37% 37% 25% 25% 0%

Net Benefit 22% 45% 45% 51% 51% 39%

Mobile Home Non-Weatherized, Non-Condensing Gas Furnace Fan

Net Cost 10% 10% 55% 10% 55% 80%

No Impact 56% 56% 0% 56% 0% 0%

Net Benefit 34% 34% 45% 34% 45% 20%

Mobile Home Non-Weatherized, Condensing Gas Furnace Fan

Net Cost 5% 5% 37% 5% 37% 82%

No Impact 68% 68% 29% 68% 29% 0%

Net Benefit 27% 27% 33% 27% 33% 18%

Mobile Home Electric Furnace/Modular Blower Fan

Net Cost 7% 7% 26% 32% 32% 75%

No Impact 71% 71% 38% 26% 26% 0%

Net Benefit 22% 22% 37% 43% 43% 25%

Note: Components may not sum to total due to rounding.

269
First, DOE considered TSL 6, which would save an estimated total of 5.63 quads 

of energy, an amount DOE considers significant. TSL 6 has an estimated NPV of 

consumer benefit of $6.51 billion using a 7-percent discount rate, and $24.7 billion using 

a 3-percent discount rate. 

The cumulative CO2 emissions reduction at TSL 6 is 255.2 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $1.60 billion 

to $23.71 billion. The other emissions reductions are 327.9 thousand tons of SO2, 126.4

thousand tons of NOX, 0.5 tons of Hg, 8.6 thousand tons of N2O, and 1,028.0 thousand 

tons of CH4.

At TSL 6, the average LCC savings are positive for: (1) non-weatherized, noncondensing gas furnace fans; (2) non-weatherized, condensing gas furnace fans; (3)

weatherized non-condensing gas furnace fans; (4) non-weatherized, non-condensing oil 

furnace fans; and (5) non-weatherized electric furnace/modular blower fans. The LCC

savings are negative for: (1) mobile home non-weatherized, non-condensing gas furnace 

fans; (2) mobile home non-weatherized, condensing gas furnace fans; and (3) mobile 

home electric furnace/modular blower fans. The median payback period is lower than the 

median product lifetime (which is 21.2 years for gas and electric furnace fans) for all of 

the product classes except for: (1) mobile home non-weatherized, non-condensing gas 

furnace fans, and (2) mobile home non-weatherized, condensing. The share of consumers 

experiencing an LCC cost (increase in LCC) is higher than the share experiencing an 

270
LCC benefit (decrease in LCC) for all of the product classes except for weatherized noncondensing gas furnace fans. 

At TSL 6, manufacturers may expect diminished profitability due to increases in 

product costs, stranded assets, capital investments in equipment and tooling, decreases in 

unit shipments, and expenditures related to engineering and testing. The projected 

change in INPV ranges from a decrease of $202.5 million to an increase of $72.8 million

based on DOE’s manufacturer markup scenarios. The upper bound of $72.8 million is 

considered an optimistic scenario for manufacturers because it assumes manufacturers 

can fully pass on substantial increases in product costs and maintain existing mark ups.

DOE recognizes the risk of large negative impacts on industry if manufacturers’ 

expectations concerning reduced profit margins are realized. TSL 6 could reduce INPV 

in the residential furnace fan industry by up to 57.9 percent if impacts reach the lower 

bound of the range.

Accordingly, the Secretary concludes that at TSL 6 for residential furnace fans, 

the benefits of significant energy savings, positive NPV of consumer benefit, emission 

reductions and the estimated monetary value of the CO2 emissions reductions, as well as 

positive average LCC savings for most product classes would be outweighed by the high 

percentage of consumers that would experience an LCC cost in all of the product classes, 

and the substantial reduction in INPV for manufacturers. Consequently, DOE has 

concluded that TSL 6 is not economically justified. 

271
Next, DOE considered TSL 5, which would save an estimated total of 4.01 quads 

of energy, an amount DOE considers significant. TSL 5 has an estimated NPV of 

consumer benefit of $10.1 billion using a 7-percent discount rate, and $29.1 billion using 

a 3-percent discount rate. 

The cumulative CO2 emissions reduction at TSL 5 is 181.5 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $1.14 billion 

to $16.88 billion. The other emissions reductions are 238.4 thousand tons of SO2, 81.8

thousand tons of NOX, 0.4 tons of Hg, 6.2 thousand tons of N2O, and 697.7 thousand tons 

of CH4.

At TSL 5, the average LCC savings are positive for all of the product classes. The 

median payback period is lower than the average product lifetime for all of the product 

classes. The share of consumers experiencing an LCC benefit (decrease in LCC) is higher 

than the share experiencing an LCC cost (increase in LCC) for five of the product classes 

(non-weatherized, non-condensing gas furnace fans; non-weatherized, condensing gas 

furnace fans; weatherized non-condensing gas furnace fans; non-weatherized electric 

furnace/modular blower fans; and mobile home electric furnace/modular blower fans), 

but lower for the other three product classes.

At TSL 5, the projected change in INPV ranges from a decrease of $60.8 million 

to an increase of $48.0 million. At TSL 5, DOE recognizes the risk of negative impacts if 

manufacturers’ expectations concerning reduced profit margins are realized. If the lower 

272
bound of the range of impacts is reached, as DOE expects, TSL 5 could result in a net 

loss of 17.4 percent in INPV for residential furnace fan manufacturers.

Accordingly, the Secretary concludes that at TSL 5 for residential furnace fans, 

the benefits of significant energy savings, positive NPV of consumer benefit, positive 

average LCC savings for all of the product classes, emission reductions and the estimated 

monetary value of the CO2 emissions reductions, would be outweighed by the high 

percentage of consumers that would be negatively impacted for some of the product 

classes, and the substantial reduction in INPV for manufacturers. Consequently, DOE has 

concluded that TSL 5 is not economically justified.

Next, DOE considered TSL 4, which would save an estimated total of 3.99 quads 

of energy, an amount DOE considers significant. TSL 4 has an estimated NPV of 

consumer benefit of $10.0 billion using a 7-percent discount rate, and $28.8 billion using 

a 3-percent discount rate. 

The cumulative CO2 emissions reduction at TSL 4 is 180.6 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $1.13 billion 

to $16.8 billion. The other emissions reductions are 235.7 thousand tons of SO2, 84.0

thousand tons of NOX, 0.4 tons of Hg, 6.2 thousand tons of N2O, and 695.0 thousand tons 

of CH4.

273
At TSL 4, the average LCC savings are positive for all of the product classes. The 

median payback period is lower than the average product lifetime for all of the product 

classes. The share of consumers experiencing an LCC benefit (decrease in LCC) is higher 

than the share experiencing an LCC cost (increase in LCC) for all of the product classes.

At TSL 4, the projected change in INPV ranges from a decrease of $59.0 million 

to an increase of $48.2 million. At TSL 4, DOE recognizes the risk of negative impacts if 

manufacturers’ expectations concerning reduced profit margins are realized. If the lower 

bound of the range of impacts is reached, as DOE expects, TSL 4 could result in a net 

loss of 16.9 percent in INPV for residential furnace fan manufacturers.

After considering the analysis and weighing the benefits and the burdens, the 

Secretary concludes that at TSL 4 for residential furnace fans, the benefits of significant 

energy savings, positive NPV of consumer benefit, positive average LCC savings for all 

of the product classes, emission reductions and the estimated monetary value of the CO2

emissions reductions would outweigh the reduction in INPV for manufacturers. The 

Secretary has concluded that TSL 4 would save a significant amount of energy and is 

technologically feasible and economically justified. Therefore, DOE today is adopting the 

energy conservation standards for residential furnace fans at TSL 4. Table V.30 presents 

the energy conservation standards for residential furnace fans.

274
Table V.30 Energy Conservation Standards for Residential Furnace Fans

Product Class Standard:

FER* (W/1000 cfm)

Non-Weatherized, Non-Condensing Gas 

Furnace Fan FER = 0.044 x QMax + 182

Non-weatherized, Condensing Gas 

Furnace Fan FER = 0.044 x QMax + 195

Weatherized Non-Condensing Gas 

Furnace Fan FER = 0.044 x QMax + 199

Non-Weatherized, Non-Condensing Oil 

Furnace Fan FER = 0.071 x QMax + 382

Non-weatherized Electric Furnace / 

Modular Blower Fan FER = 0.044 x QMax + 165

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan FER = 0.071 x QMax + 222

Mobile Home Non-Weatherized, 

Condensing Gas Furnace Fan FER = 0.071 x QMax + 240

Mobile Home Electric Furnace/Modular 

Blower Fan FER = 0.044 x QMax + 101

Mobile Home Weatherized NonCondensing Gas Furnace Fan Reserved

Mobile Home Non-Weatherized NonCondensing Oil Furnace Fan Reserved

* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test 

procedure. 79 FR 500, 524 (Jan. 3, 2014).

2. Summary of Benefits and Costs (Annualized) of Today’s Standards

The benefits and costs of today’s standards can also be expressed in terms of 

annualized values. The annualized monetary values are the sum of: (1) the annualized 

national economic value, expressed in 2013$, of the benefits from operating products that 

meet the standards (consisting primarily of operating cost savings from using less energy, 

minus increases in equipment purchase costs, which is another way of representing 

consumer NPV), and (2) the monetary value of the benefits of emission reductions, 

275
including CO2 emission reductions.77 The value of the CO2 reductions, otherwise known 

as the Social Cost of Carbon (SCC), is calculated using a range of values per metric ton 

of CO2 developed by a recent interagency process. 

Although combining the values of operating savings and CO2 reductions provides 

a useful perspective, two issues should be considered. First, the national operating 

savings are domestic U.S. consumer monetary savings that occur as a result of market 

transactions while the value of CO2 reductions is based on a global value. Second, the 

assessments of operating cost savings and SCC are performed with different methods that 

use different time frames for analysis. The national operating cost savings is measured for 

the lifetime of products shipped in 2019–2048. The SCC values, on the other hand, 

reflect the present value of future climate-related impacts resulting from the emission of 

one metric ton of CO2 in each year over a very long period. 

Table V.31 shows the annualized values for today’s standards for residential 

furnace fans. The results under the primary estimate are as follows. (All monetary values 

below are expressed in 2013$.) Using a 7-percent discount rate for benefits and costs 

other than CO2 reduction (for which DOE used a 3-percent discount rate along with the 

77 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized 

values. First, DOE calculated a present value in 2013, the year used for discounting the NPV of total 

consumer costs and savings, for the time-series of costs and benefits using discount rates of 3 and 7 percent

for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used a range of 

discount rates. From the present value, DOE then calculated the fixed annual payment over a 30-year

period, starting in 2013, that yields the same present value. The fixed annual payment is the annualized 

value. Although DOE calculated annualized values, this does not imply that the time-series of cost and 

benefits from which the annualized values were determined would be a steady stream of payments.

276

 
SCC series corresponding to a value of $40.5/ton in 2015), the cost of the residential 

furnace fan standards in today’s rule is $358 million per year in increased equipment 

costs, while the benefits are $1,416 million per year in reduced equipment operating 

costs, $312 million in CO2 reductions, and $5.61 million in reduced NOX emissions. In 

this case, the net benefit amounts to $1,376 million per year.

Using a 3-percent discount rate for all benefits and costs and the SCC series 

corresponding to a value of $40.5/ton in 2015, Table V.31 shows the cost of the 

residential furnace fans standards in today’s rule is $355 million per year in increased 

equipment costs, while the benefits are $2010 million per year in reduced operating costs, 

$312 million in CO2 reductions, and $6.36 million in reduced NOX emissions. In this 

case, the net benefit amounts to $1,973 million per year.

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Table V.31 Annualized Benefits and Costs of Standards (TSL 4) for Residential 

Furnace Fans

Discount 

Rate

Primary 

Estimate*

Low Net 

Benefits 

Estimate

High Net 

Benefits 

Estimate

million 2013$/year

Benefits

Consumer Operating Cost 

Savings

7% 1416 1167 1718

3% 2010 1626 2467

CO2 Reduction Monetized 

Value ($12.0/t case)** 5% 90 77 108

CO2 Reduction Monetized 

Value ($40.5/t case)** 3% 312 268 377

CO2 Reduction Monetized 

Value ($62.4/t case)** 2.5% 459 393 555

CO2 Reduction Monetized 

Value ($119/t case)** 3% 965 828 1166

NOX Reduction Monetized 

Value (at $2,684/ton)**

7% 5.61 4.80 6.82

3% 6.36 5.35 7.86

Total Benefits†

7% plus 

CO2 range

1,512 to 2,387 1,249 to 2,000 1,833 to 2,891

7% 1,734 1,439 2,102

3% plus 

CO2 range

2,106 to 2,981 1,708 to 2,459 2,583 to 3,641

3% 2,328 1,899 2,852

Costs

Consumer Incremental 

Product Costs

7% 358 314 410

3% 355 304 419

Net Benefits

Total†

7% plus 

CO2 range

1,154 to 2,029 935 to 1,685 1,423 to 2,481

7% 1,376 1,125 1,692

3% plus 

CO2 range

1,750 to 2,625 1,404 to 2,155 2,164 to 3,222

3% 1,973 1,595 2,433

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* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 

2019−2048. These results include benefits to consumers which accrue after 2048 from the products 

purchased in 2019−2048. Costs incurred by manufacturers, some of which may be incurred in preparation 

for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. 

The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing 

starts from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. Incremental 

product costs reflect a constant product price trend in the Primary Estimate, an increasing price trend in the 

Low Benefits Estimate, and a decreasing price trend in the High Benefits Estimate. 

** The CO2 values represent global values of the SCC, in 2013$, in 2015 under several scenarios. The first 

three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, 

respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% 

discount rate. The SCC values increase over time. The value for NOX (in 2013$) is the average of the low 

and high values used in DOE’s analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the SCC value 

of $40.5/t in 2015. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost 

and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range 

of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

Section 1(b)(1) of Executive Order 12866, “Regulatory Planning and Review,” 58 

FR 51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to 

address, including, where applicable, the failures of private markets or public institutions 

that warrant new agency action, as well as to assess the significance of that problem. The 

problems that today’s standards address are as follows: 

(1) There is a lack of consumer information and/or information processing capability 

about energy efficiency opportunities in the home appliance market.

(2) There is asymmetric information (one party to a transaction has more and better 

information than the other) and/or high transactions costs (costs of gathering 

information and effecting exchanges of goods and services).

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(3) There are external benefits resulting from improved energy efficiency of 

residential furnace fans that are not captured by the users of such equipment. 

These benefits include externalities related to environmental protection and 

energy security that are not reflected in energy prices, such as reduced emissions 

of greenhouse gases.

 In addition, DOE has determined that today’s regulatory action is an

“economically significant regulatory action” under section 3(f) of Executive Order 

12866. Accordingly, section 6(a)(3) of the Executive Order requires that DOE prepare a 

regulatory impact analysis (RIA) for this rule and that the Office of Information and 

Regulatory Affairs (OIRA) in the OMB review this rule. DOE presented to OIRA for 

review the draft rule and other documents prepared for this rulemaking, including the 

RIA, and has included these documents in the rulemaking record. The assessments 

prepared pursuant to Executive Order 12866 can be found in the technical support 

document for this rulemaking. 

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued 

on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). Executive Order 13563 is supplemental 

to and explicitly reaffirms the principles, structures, and definitions governing regulatory 

review established in Executive Order 12866. To the extent permitted by law, agencies 

are required by Executive Order 13563 to: (1) propose or adopt a regulation only upon a 

reasoned determination that its benefits justify its costs (recognizing that some benefits 

and costs are difficult to quantify); (2) tailor regulations to impose the least burden on 

society, consistent with obtaining regulatory objectives, taking into account, among other 

280
things, and to the extent practicable, the costs of cumulative regulations; (3) select, in 

choosing among alternative regulatory approaches, those approaches that maximize net 

benefits (including potential economic, environmental, public health and safety, and other 

advantages; distributive impacts; and equity); (4) to the extent feasible, specify 

performance objectives, rather than specifying the behavior or manner of compliance that 

regulated entities must adopt; and (5) identify and assess available alternatives to direct 

regulation, including providing economic incentives to encourage the desired behavior, 

such as user fees or marketable permits, or providing information upon which choices can 

be made by the public. 

DOE emphasizes as well that Executive Order 13563 requires agencies to use the 

best available techniques to quantify anticipated present and future benefits and costs as 

accurately as possible. In its guidance, the Office of Information and Regulatory Affairs 

has emphasized that such techniques may include identifying changing future compliance 

costs that might result from technological innovation or anticipated behavioral changes. 

For the reasons stated in the preamble, DOE believes that today’s final rule is consistent 

with these principles, including the requirement that, to the extent permitted by law, 

benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an 

final regulatory flexibility analysis (FRFA) for any rule that by law must be proposed for 

public comment, unless the agency certifies that the rule, if promulgated, will not have a 

281
significant economic impact on a substantial number of small entities. As required by 

Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 

67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 

2003, to ensure that the potential impacts of its rules on small entities are properly 

considered during the rulemaking process. 68 FR 7990. DOE has made its procedures 

and policies available on the Office of the General Counsel’s website 

(http://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for 

the products that are the subject of this rulemaking.

1. Description and Estimated Number of Small Entities Regulated 

Methodology for Estimating the Number of Small Entities

For the manufacturers of residential furnace fans, the Small Business 

Administration (SBA) has set a size threshold, which defines those entities classified as 

“small businesses” for the purposes of the statute. DOE used the SBA’s small business 

size standards to determine whether any small entities would be subject to the 

requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 

53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size standards are 

listed by NAICS code and industry description and are available at: 

www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 

Residential furnace fan manufacturing is classified under NAICS 333415, “AirConditioning and Warm Air Heating Equipment and Commercial and Industrial 

Refrigeration Equipment Manufacturing.” The SBA sets a threshold of 750 employees or 

less for an entity to be considered as a small business for this category.

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To estimate the number of companies that could be small business manufacturers 

of products covered by this rulemaking, DOE conducted a market survey using available 

public information to identify potential small manufacturers. DOE’s research involved 

public databases (e.g., AHRI Directory,78 the SBA Database79), individual company 

websites, and market research tools (e.g., Hoovers website80) to create a list of companies 

that manufacture or sell products covered by this rulemaking. DOE also asked 

stakeholders and industry representatives if they were aware of any other small 

manufacturers during manufacturer interviews and at DOE public meetings. DOE 

reviewed publicly-available data and contacted select companies on its list, as necessary, 

to determine whether they met the SBA’s definition of a small business manufacturer of 

covered residential furnace fans. DOE screened out companies that do not offer products 

covered by this rulemaking, do not meet the definition of a “small business,” or are 

foreign owned and operated. 

DOE initially identified 38 manufacturers of residential furnace fan products sold 

in the U.S. DOE then determined that 23 were large manufacturers or manufacturers that

are foreign owned and operated. DOE was able to determine that 15 domestic 

manufacturers meet the SBA’s definition of a “small business” and manufacture products 

covered by this rulemaking.

78 See www.ahridirectory.org/ahriDirectory/pages/home.aspx. 79 See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. 80 See Hoovers: http://www.hoovers.com/.

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Manufacturer Participation

Before issuing this Notice, DOE attempted to contact all the small business 

manufacturers of residential furnace fans it had identified. One of the small businesses 

consented to being interviewed during the MIA interviews. DOE also obtained 

information about small business impacts while interviewing large manufacturers.

Industry Structure

The 15 identified domestic manufacturers of residential furnace fans that qualify 

as small businesses under the SBA size standard account for a small fraction of industry 

shipments. Generally, manufacturers of furnaces are also manufacturers of furnace fan 

products. The market for residential gas furnaces is almost completely held by seven 

large manufacturers, and small manufacturers in total account for only 1 percent of unit 

sales in the market. These seven large manufacturers also control 97 percent of the 

market for central air conditioners. The market for mobile home furnaces is primarily 

held by one large manufacturer. In contrast, the market for domestic oil furnaces is 

almost entirely comprised of small manufacturers.

Comparison Between Large and Small Entities

Today’s standards for residential furnace fans could cause small manufacturers to 

be at a disadvantage relative to large manufacturers. One way in which small 

manufacturers could be at a disadvantage is that they may be disproportionately affected 

by product conversion costs. Product redesign, testing, and certification costs tend to be 

fixed per basic model and do not scale with sales volume. For each model, small 

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businesses must make investments in research and development to redesign their 

products, but because they have lower sales volumes, they must spread these costs across 

fewer units. In addition, because small manufacturers have fewer engineers than large 

manufacturers, they would need to allocate a greater portion of their available resources 

to meet a standard. Since engineers may need to spend more time redesigning and testing 

existing models as a result of the new standard, they may have less time to develop new 

products.

Furthermore, smaller manufacturers may lack the purchasing power of larger 

manufacturers. For example, since motor suppliers give discounts to manufacturers 

based on the number of motors they purchase, larger manufacturers may have a pricing 

advantage because they have higher volume purchases. This purchasing power 

differential between high-volume and low-volume orders applies to other furnace fan 

components as well, including the impeller fan blade, transformer, and capacitor. 

2. Description and Estimate of Compliance Requirements 

Since the standard in today’s final rule for residential furnace fans could cause 

small manufacturers to be at a disadvantage relative to large manufacturers, DOE cannot 

certify that today’s standards would not have a significant impact on a significant number 

of small businesses, and consequently, DOE has prepared this FRFA.

At TSL 4, the level adopted in today’s document, DOE estimates capital 

conversion costs of $0.14 million and product conversion costs of $0.23 million over a 

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five-year conversion period for a typical small manufacturer. This is compared to capital 

conversion costs of $0.59 and product conversion costs of $1.00 million over a five-year 

conversion period for a typical large manufacturer. These costs and their impacts are 

described in detail below.

To estimate how small manufacturers would be potentially impacted, DOE used 

the market share of small manufacturers to estimate the annual revenue, earnings before 

interest and tax (EBIT), and research and development (R&D) expense for a typical small 

manufacturer. DOE then compared these costs to the required product conversion costs 

at each TSL for both an average small manufacturer and an average large manufacturer. 

Table VI.1 and VI.2 show the capital and product conversion costs for a typical small

manufacturer versus those of a typical large manufacturer. Tables VI.3 and VI.4 report

the total conversion costs as a percentage of annual R&D expense, annual revenue, and 

EBIT for a typical small and large manufacturer, respectively. In the following tables, 

TSL 4 represents the adopted standard.

Table VI.1: Comparison of Typical Small and Large Manufacturer’s Capital 

Conversion Costs

Capital Conversion Costs 

for Typical Small 

Manufacturer

(in 2013$ millions)

Capital Conversion Costs 

for Typical Large 

Manufacturer

(in 2013$ millions)

TSL 1 0.08 0.35

TSL 2 0.10 0.44

TSL 3 0.11 0.46

TSL 4 0.14 0.59

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TSL 5 0.14 0.62

TSL 6 1.24 5.28

Table VI.2: Comparison of Typical Small and Large Manufacturer’s Product 

Conversion Costs

Product Conversion Costs 

for Typical Small 

Manufacturer

(in 2013$ millions)

Product Conversion Costs 

for Typical Large 

Manufacturer

(in 2013$ millions)

TSL 1 0.17 0.74

TSL 2 0.22 0.93

TSL 3 0.23 0.99

TSL 4 0.23 1.00

TSL 5 0.25 1.06

TSL 6 0.27 1.15

Table VI.3: Impacts of Conversion Costs on a Small Manufacturer

Capital Conversion 

Cost as a Percentage 

of Annual Capital 

Expenditures

Product Conversion 

Cost as a Percentage 

of Annual R&D 

Expense

Total Conversion 

Cost as a 

Percentage of 

Annual Revenue

Total Conversion 

Cost as a 

Percentage of 

Annual EBIT

TSL 1 69% 185% 5% 72%

TSL 2 86% 232% 6% 90%

TSL 3 92% 249% 7% 96%

TSL 4 117% 250% 8% 105%

TSL 5 122% 266% 8% 111%

TSL 6 1048% 289% 31% 427%

Table VI.4: Impacts of Conversion Costs on a Large Manufacturer

Capital Conversion 

Cost as a Percentage 

of Annual Capital 

Expenditures

Product Conversion 

Cost as a Percentage 

of Annual R&D 

Expense

Total Conversion 

Cost as a 

Percentage of 

Annual Revenue

Total Conversion 

Cost as a 

Percentage of 

Annual EBIT

TSL 1 3% 8% 0% 3%

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TSL 2 4% 10% 0% 4%

TSL 3 4% 11% 0% 4%

TSL 4 5% 11% 0% 5%

TSL 5 5% 11% 0% 5%

TSL 6 45% 12% 1% 18%

Based on the results in Table VI.1 and Table VI.2, DOE understands that the 

potential conversions costs faced by small manufacturers may be proportionally greater 

than those faced by larger manufacturers. Small manufacturers have less engineering staff 

and lower R&D budgets. They also have lower capital expenditures annually. As a 

result, the conversion costs incurred by a small manufacturer would likely be a larger 

percentage of its annual capital expenditures, R&D expenses, revenue, and EBIT, than 

those for a large manufacturer. 

3. Duplication, Overlap, and Conflict with Other Rules and Regulations 

DOE is not aware of any rules or regulations that duplicate, overlap, or conflict 

with the rule being adopted today.

4. Significant Alternatives to the Rule

The discussion above analyzes impacts on small businesses that would result from 

the other TSLs DOE considered. Although TSLs lower than the proposed TSLs would 

be expected to reduce the impacts on small entities, DOE is required by EPCA to 

establish standards that achieve the maximum improvement in energy efficiency that is 

technologically feasible and economically justified, and result in a significant 

conservation of energy. Thus, DOE rejected the lower TSLs. 

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In addition to the other TSLs being considered, the NOPR TSD includes a 

regulatory impact analysis in chapter 17. For residential furnace fans, this report 

discusses the following policy alternatives: (1) no standard, (2) consumer rebates, (3) 

consumer tax credits, (4) manufacturer tax credits, and (5) early replacement. DOE does 

not intend to consider these alternatives further because they are either not feasible to 

implement without authority and funding from Congress, or are expected to result in 

energy savings that are much smaller (ranging from less than 1 percent to less than 31 

percent) than those that would be achieved by the considered energy conservation 

standards. 

C. Review Under the Paperwork Reduction Act

Manufacturers of furnace fans, or their third party representatives, must certify to 

DOE that their products comply with any applicable energy conservation standard. In 

certifying compliance, manufacturers or their third-party representatives must test their 

equipment according to the DOE test procedure for furnace fans, including any 

amendments adopted for that test procedure. Manufacturers or their third-party 

representatives must then submit certification reports and compliance statements using 

DOE’s electronic Web-based tool, the Compliance and Certification Management System 

(CCMS), regarding product characteristics and energy consumption information 

regarding basic models of furnace fans distributed in commerce in the U.S. CCMS uses 

product-specific templates that manufacturers are required to use when submitting 

certification data to DOE. See http://www.regulations.doe.gov/ccms. 

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The collection-of-information requirement for furnace fan certification is subject 

to review and approval by OMB under the Paperwork Reduction Act (PRA). This 

requirement has been submitted to OMB for approval. Public reporting burden for the 

certification is estimated to average 30 hours per response, including the time for 

reviewing instructions, searching existing data sources, gathering and maintaining the 

data needed, and completing and reviewing the collection of information. Note that the 

certification and recordkeeping requirements for certain consumer products in 10 CFR 

part 430 have previously been approved by OMB and assigned OMB control number 

1910–1400; the certification requirement for furnace fans will be included in this 

collection once approved by OMB. DOE will notify the public of OMB approval 

through a Federal Register notice. 

Public comment is sought regarding: whether this proposed collection of 

information is necessary for the proper performance of the functions of the agency, 

including whether the information shall have practical utility; the accuracy of the burden 

estimate; ways to enhance the quality, utility, and clarity of the information to be 

collected; and ways to minimize the burden of the collection of information, including 

through the use of automated collection techniques or other forms of information 

technology. Send comments on these or any other aspects of the collection of information 

to the DOE program official listed in the ADDRESSES section above, and e-mail to 

Chad_S._Whiteman@omb.eop.gov.

290
Notwithstanding any other provision of the law, no person is required to respond 

to, nor shall any person be subject to a penalty for failure to comply with, a collection of 

information subject to the requirements of the PRA, unless that collection of information 

displays a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969 

Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has 

determined that this rule fits within the category of actions included in Categorical 

Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. See 

10 CFR Part 1021, App. B, B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The rule fits 

within the category of actions because it is a rulemaking that establishes energy 

conservation standards for consumer products or industrial equipment, and for which 

none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX 

determination for this rulemaking, and DOE does not need to prepare an Environmental 

Assessment or Environmental Impact Statement for this rule. DOE’s CX determination 

for this rule is available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

Executive Order 13132, “Federalism.” 64 FR 43255 (August 10, 1999) imposes 

certain requirements on Federal agencies formulating and implementing policies or 

regulations that preempt State law or that have Federalism implications. The Executive 

Order requires agencies to examine the constitutional and statutory authority supporting 

any action that would limit the policymaking discretion of the States and to carefully 

291
assess the necessity for such actions. The Executive Order also requires agencies to have 

an accountable process to ensure meaningful and timely input by State and local officials 

in the development of regulatory policies that have Federalism implications. On March 

14, 2000, DOE published a statement of policy describing the intergovernmental 

consultation process it will follow in the development of such regulations. 65 FR 13735. 

DOE has examined this final rule and has determined that it would not have a substantial 

direct effect on the States, on the relationship between the national government and the 

States, or on the distribution of power and responsibilities among the various levels of 

government. EPCA governs and prescribes Federal preemption of State regulations as to 

energy conservation for the products that are the subject of today’s final rule. States can 

petition DOE for exemption from such preemption to the extent, and based on criteria, set 

forth in EPCA. (42 U.S.C. 6297) No further action is required by Executive Order 

13132.

F. Review Under Executive Order 12988

With respect to the review of existing regulations and the promulgation of new 

regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on 

Federal agencies the general duty to adhere to the following requirements: (1) eliminate 

drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a 

clear legal standard for affected conduct rather than a general standard; and (4) promote 

simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review 

required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that 

Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly 

292
specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal 

law or regulation; (3) provides a clear legal standard for affected conduct while 

promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; 

(5) adequately defines key terms; and (6) addresses other important issues affecting 

clarity and general draftsmanship under any guidelines issued by the Attorney General. 

Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations 

in light of applicable standards in section 3(a) and section 3(b) to determine whether they 

are met or it is unreasonable to meet one or more of them. DOE has completed the 

required review and determined that, to the extent permitted by law, this final rule meets 

the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each 

Federal agency to assess the effects of Federal regulatory actions on State, local, and 

Tribal governments and the private sector. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 

1531). For a proposed regulatory action likely to result in a rule that may cause the 

expenditure by State, local, and Tribal governments, in the aggregate, or by the private 

sector of $100 million or more in any one year (adjusted annually for inflation), section 

202 of UMRA requires a Federal agency to publish a written statement that estimates the 

resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), 

(b)) The UMRA also requires a Federal agency to develop an effective process to permit 

timely input by elected officers of State, local, and Tribal governments on a “significant 

intergovernmental mandate,” and requires an agency plan for giving notice and 

293
opportunity for timely input to potentially affected small governments before establishing 

any requirements that might significantly or uniquely affect them. On March 18, 1997, 

DOE published a statement of policy on its process for intergovernmental consultation 

under UMRA. 62 FR 12820. DOE’s policy statement is also available at 

http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.

Although today’s final rule, which adopts new energy conservation standards for 

residential furnace fans, does not contain a Federal intergovernmental mandate, it may 

require annual expenditures of $100 million or more by the private sector. Specifically, 

the final rule could require expenditures of $100 million or more, including: (1) 

investment in research and development and in capital expenditures by residential 

furnace fans manufacturers in the years between the final rule and the compliance date 

for the new standards, and (2) incremental additional expenditures by consumers to 

purchase higher-efficiency residential furnace fans, starting at the compliance date for the 

applicable standard. 

Section 202 of UMRA authorizes a Federal agency to respond to the content 

requirements of UMRA in any other statement or analysis that accompanies the final rule. 

2 U.S.C. 1532(c). The content requirements of section 202(b) of UMRA relevant to a 

private sector mandate substantially overlap the economic analysis requirements that 

apply under section 325(o) of EPCA and Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of this final rule and the “Regulatory 

Impact Analysis” section of the TSD for this final rule respond to those requirements. 

294
Under section 205 of UMRA, the Department is obligated to identify and consider 

a reasonable number of regulatory alternatives before promulgating a rule for which a 

written statement under section 202 is required. 2 U.S.C. 1535(a). DOE is required to 

select from those alternatives the most cost-effective and least burdensome alternative 

that achieves the objectives of the rule unless DOE publishes an explanation for doing 

otherwise, or the selection of such an alternative is inconsistent with law. As required by 

42 U.S.C. 6295(f) and (o), today’s final rule establishes energy conservation standards for 

residential furnace fans that are designed to achieve the maximum improvement in 

energy efficiency that DOE has determined to be both technologically feasible and 

economically justified. A full discussion of the alternatives considered by DOE is 

presented in the “Regulatory Impact Analysis” section of the TSD for this final rule.

H. Review Under the Treasury and General Government Appropriations Act, 1999

Section 654 of the Treasury and General Government Appropriations Act, 1999 

(Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment 

for any rule that may affect family well-being. This rule would not have any impact on 

the autonomy or integrity of the family as an institution. Accordingly, DOE has 

concluded that it is not necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

Pursuant to Executive Order 12630, “Governmental Actions and Interference with 

Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), DOE has 

295
determined that this regulation would not result in any takings that might require 

compensation under the Fifth Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 2001

Section 515 of the Treasury and General Government Appropriations Act, 2001 

(44 U.S.C. 3516 note) provides for Federal agencies to review most disseminations of 

information to the public under information quality guidelines established by each agency 

pursuant to general guidelines issued by OMB. OMB’s guidelines were published at 67 

FR 8452 (Feb. 22, 2002), and DOE’s guidelines were published at 67 FR 62446 (Oct. 7, 

2002). DOE has reviewed today’s final rule under the OMB and DOE guidelines and has 

concluded that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211

Executive Order 13211, “Actions Concerning Regulations That Significantly 

Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires 

Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects 

for any proposed significant energy action. A “significant energy action” is defined as 

any action by an agency that promulgates or is expected to lead to promulgation of a final 

rule, and that: (1) is a significant regulatory action under Executive Order 12866, or any 

successor order; and (2) is likely to have a significant adverse effect on the supply, 

distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a 

significant energy action. For any proposed significant energy action, the agency must 

give a detailed statement of any adverse effects on energy supply, distribution, or use 

296
should the proposal be implemented, and of reasonable alternatives to the action and their 

expected benefits on energy supply, distribution, and use.

DOE has concluded that today’s regulatory action, which sets forth energy 

conservation standards for residential furnace fans, is not a significant energy action 

because the new standards are not likely to have a significant adverse effect on the 

supply, distribution, or use of energy, nor has it been designated as such by the 

Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy 

Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in consultation with the Office of Science and 

Technology Policy (OSTP), issued its Final Information Quality Bulletin for Peer Review 

(the Bulletin). 70 FR 2664 (Jan. 14, 2005). The Bulletin establishes that certain scientific 

information shall be peer reviewed by qualified specialists before it is disseminated by 

the Federal Government, including influential scientific information related to agency 

regulatory actions. The purpose of the bulletin is to enhance the quality and credibility of 

the Government’s scientific information. Under the Bulletin, the energy conservation 

standards rulemaking analyses are “influential scientific information,” which the Bulletin 

defines as “scientific information the agency reasonably can determine will have or does 

have a clear and substantial impact on important public policies or private sector 

decisions.” Id. at 2667.

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In response to OMB’s Bulletin, DOE conducted formal in-progress peer reviews 

of the energy conservation standards development process and analyses and has prepared 

a Peer Review Report pertaining to the energy conservation standards rulemaking 

analyses. Generation of this report involved a rigorous, formal, and documented 

evaluation using objective criteria and qualified and independent reviewers to make a 

judgment as to the technical/scientific/business merit, the actual or anticipated results, 

and the productivity and management effectiveness of programs and/or projects. The 

“Energy Conservation Standards Rulemaking Peer Review Report” dated February 2007 

has been disseminated and is available at the following Web site: 

www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of 

this rule prior to its effective date. The report will state that it has been determined that 

the rule is a “major rule” as defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of this final rule.

List of Subjects 

10 CFR Part 429

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Administrative practice and procedure, Commercial equipment, Confidential 

business information, Energy conservation, Household appliances, Imports, Reporting 

and recordkeeping requirements. 

10 CFR Part 430

Administrative practice and procedure, Confidential business information, Energy 

conservation, Household appliances, Imports, Intergovernmental relations, Small 

businesses. 

Issued in Washington, DC, on 

________________________________

David T. Danielson

Assistant Secretary

Energy Efficiency and Renewable Energy

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For the reasons stated in the preamble, DOE amends parts 429 and 430 of chapter 

II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below: 

PART 429— CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR 

CONSUMER PRODUCTS AND COMMERCIAL AND INDUSTRIAL 

EQUIPMENT

1. The authority citation for part 429 continues to read as follows:

Authority: 42 U.S.C. 6291-6317.

2. Section 429.12 is amended by:

a. Removing in paragraph (b)(13) “429.54” and adding in its place “429.58”; 

b. Removing in paragraph (d) table, first column, second row (i.e., for products with a 

submission deadline of May 1st) the word “and” and adding “and Residential furnace 

fans” at the end of the listed products.

3. Section 429.58 is amended by:

a. Adding in paragraph (a)(2) “within the scope of appendix AA of subpart B of part 430” 

after “basic model of furnace fan”; and

b. Adding paragraph (b).

The addition reads as follows:

§ 429.58 Furnace fans.

* * * * *

. 

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(b) Certification reports. (1) The requirements of §429.12 are applicable to 

residential furnace fans; and

(2) Pursuant to §429.12(b)(13), a certification report shall include the following 

public product-specific information: The fan energy rating (FER) in watts per thousand 

cubic feet per minute (W/1000 cfm); the calculated maximum airflow at the reference 

system external static pressure (ESP) in cubic feet per minute (cfm); the control system 

configuration for achieving the heating and constant-circulation airflow-control settings 

required for determining FER as specified in the furnace fan test procedure (10 CFR part 

430, subpart B, appendix AA); the measured steady-state gas, oil, or electric heat input 

rate (QIN) in the heating setting required for determining FER; and for modular blowers, 

the manufacturer and model number of the electric heat resistance kit with which it is 

equipped for certification testing.

PART 430 - ENERGY CONSERVATION PROGRAM FOR CONSUMER 

PRODUCTS

4. The authority citation for part 430 continues to read as follows:

Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

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5. Section 430.2 is amended by adding definitions for “small-duct high-velocity (SDHV) 

electric furnace” and “small-duct high-velocity (SDHV) modular blower” in alphabetical 

order to read as follows:

§ 430.2 Definitions.

* * * * *

Small-duct high-velocity (SDHV) electric furnace means an electric furnace that:

(1) Is designed for, and produces, at least 1.2 inches of external static pressure when 

operated at the certified air volume rate of 220-350 CFM per rated ton of cooling in 

the highest default cooling airflow-control setting; and

(2) When applied in the field, uses high velocity room outlets generally greater than 

1,000 fpm that have less than 6.0 square inches of free area.

Small-duct high-velocity (SDHV) modular blower means a modular blower that:

(1) Is designed for, and produces, at least 1.2 inches of external static pressure when 

operated at the certified air volume rate of 220-350 CFM per rated ton of cooling in 

the highest default cooling airflow-controls setting; and

(2) When applied in the field, uses high velocity room outlets generally greater than 

1,000 fpm that have less than 6.0 square inches of free area. 

* * * * *

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6. Section 430.32 is amended by adding paragraph (y) to read as follows:

§430.32 Energy and water conservation standards and their effective dates.

* * * * *

(y) Residential furnace fans. Residential furnace fans incorporated in the products listed 

in Table 1 of this paragraph and manufactured on and after [INSERT DATE FIVE 

YEARS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], shall 

have a fan energy rating (FER) value that meets or is less than the following values:

Table 1: Energy Conservation Standards for Covered Residential Furnace Fans*

Product Class FER** (Watts/cfm)

Non-Weatherized, Non-Condensing Gas 

Furnace Fan (NWG-NC) FER = 0.044 x QMax + 182

Non-Weatherized, Condensing Gas Furnace 

Fan (NWG-C) FER = 0.044 x QMax + 195

Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC) FER = 0.044 x QMax + 199

Non-Weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC) FER = 0.071 x QMax + 382

Non-Weatherized Electric Furnace / Modular 

Blower Fan (NWEF/NWMB) FER = 0.044 x QMax + 165

Mobile Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWG-NC) FER = 0.071 x QMax + 222

Mobile Home Non-Weatherized, Condensing 

Gas Furnace Fan (MH-NWG-C) FER = 0.071 x QMax + 240

Mobile Home Electric Furnace / Modular 

Blower Fan (MH-EF/MB) FER = 0.044 x QMax + 101

Mobile Home Non-Weatherized Oil Furnace 

Fan (MH-NWO) Reserved

Mobile Home Weatherized Gas Furnace Fan 

(MH-WG)** Reserved

* Furnace fans incorporated into hydronic air handlers, SDHV modular blowers, SDHV electric furnaces, 

and CAC/HP indoor units are not subject to the standards listed in this table.

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** QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the final DOE test 

procedure at 10 CFR part 430, subpart B, appendix AA.

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