Wednesday

August 9, 1989

W

Part

Department

Energy

Office of Conservation and Renewable

Energy

10 CFR Part 430

Energy Conservation Program for

Consumer Products; Proposed Rule and

Notice

CE-RM-88-101 COMMENT 02
a„ 744 Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1909 / Proposed Rules

DEPARTMENT OF ENERGY

Office of Conservation and

Renewable Energy

10 CFR Part 430

[Docket No. CE-RN-88-loll

The purpose of this notice of proposed

rulemaking is to provide interested

persons an opportunity to comment on

the proposed rule, and to invite

interested persons to participate in the

appliance energy conservation

standards rulemaking process.

DATES: Written comments on the

Energy Conservation Program for proposed rule must be received by the

Consumer Products: Proposed Department by October 10, 1989.

Rulemaking and Public Hearing oral views, data, and arguments may

Regarding Energy Conservation be presented at the public hearing to be

Standards for Three Types of held in Washington, DC, on September

Consumer Products 20, 1939. Requests to speak at the

AGENCY: Office of Conservation and hearing must be received by the

Renewable Energy, DOE. Department no later than 4:00 p.m.,

P,CTION: Proposed rule and public September 18, 1989. hearing. The hearing will begin at 9:30 a.m., on

September 20, 1989.

SUMMAnY: The Energy Policy and The length of each presentation is

Conservation Act (EPCA), as amended limited'to 20 minutes.

by the National Energy Conservation ADDRESSES: Written comments, oral

Policy Act (NECPA), the National statements, requests to speak at the

Appliance Energy Conservation Act hearing and requests for speaker lists

(NAECA) and the National Appliance are to be submitted to U.S. Department

Energy Conservation Amendments of of Energy, Office of Conservation and

1988 (NAECA 1988), prescribes energy Renewable Energy, CE-43.1.

conservation standards for certain Hearings and Dockets, Energy

major household appliances, and Conservation Program for Consumer

requires the Department of Energy Products, Docket No. CE-RM-88-101,

(DOE) to administer an energy Room 6B-025, Forrestal Building, 1000

conservation program for these Independence Avenue, SW.,

products. Among other things, NAECA Washington, DC 20585, (202) 586-9320.

requires DOE to consider amending the The h earing will be held at the U.S.

energy conservation standards for Department of Energy, Forrestal

dishwashers, clothes washers, and Building, Room 1E-245,1000

clothes dryers. Independence Avenue, SW.,

EPCA, as amended, prescribed Washington, DC.

standards for dishwashers, clothes Copies of the transcript of the public

washers and clothes dryers, effective hearing and public comments received

January 1, 1988. In accordance with may be read at the DOE Freedom of

NAECA, the Department has reviewed Information Reading Room, U.S.

amendments to the prescribed Department of Energy, Forrestal

standards. As a result of its review, Building, Room 1E-190, 1000

DOE proposes that revised standards for Independence Avenue, SW.,

dishwashers, clothes washers and Washington, DC 20585, (202) 586-6020,

clothes dryers would result in a

significant conservation of energy and

would be economically justified.

For clothes washers, the Department

is not proposing a specific level within

the range considered; rather, DOE is

soliciting comments and information

from the public to be considered in

promulgating the final rule, which will

specify a specific level for clothes

washers; the level selected could

include no change to the standard level

prescribed by NAECA.

For dishwashers, the Department is

proposing a minimum energy efficiency

standard.

For clothes dryers, the Department is

proposing a prescriptive standard that

would require clothes dryers to be Washington, DC 20585, (202) 586-9507.

equipped with an automatic termination U.S. Department of Energy, CE-43.1,

device, either a moisture termination or Docket No. CE-RM-88-101, Forrestal

temperature termination device. Building, Room 6B-025, 1000

between the hours of 8:00 a.m. and 4:00

p.m., Monday through Friday, except

Federal holidays.

For more information concerning

public participation in this rulemaking

proceeding, see section V, "Public

Comment Procedures," of this notice.

FOR FURTHER INFORtSATtOFN CONTACT:

Michael J. McCabe, U.S. Department of

Energy, Office of Conservation and

Renewable Energy, Forrestal Building,

Mail Station CE-132, 1000

Independence Avenue, SW.,

Washington, DC 20585, (202) 586-9127.

Eugene Margolis, Esq., U.S. Department

of Energy, Office of General Counsel,

Forrestal Building, Mail Station GC12, 1000 Independence Avenue, SW.,

Independence Avenue, SW.,

Washington, DC 20585, (202) 586-9320.

SUPPLEMENTARY INFORMATiON:

1. Introduction

a. Authority

b. Background

II. General Discussion

a. Test Procedures

b. Technological Feasibility

1. General

2. Maximum Technologically Feasible

Levels

c. Energy Savings

1. Determination of Savings

2. Significance of Savings

d. Rebuttable Presumption

e. Economic justification

1. Economic Impact on Manufacturers and

Consumers

2. Life-Cycle Costs

3. Energy Savings

4. Lessening of Utility of Performance of

Products

5. Impact of Lessening of Competition

6. Need of The Nation to Conserve Energy

7. Other Factors

III. Product-Specific Discussion

a. Dishwashers

1. Classes

2. Design Options

3. Comments on the Advance Notice of

Proposed Rulemaking

4. Efficiency Levels Analyzed

b. Clothes Washers

1. Classes

2. Designs Options

3. Comments on the Advance Notice of

Proposed Rulemaking

4. Efficiency Levels Analyzed

c. Clothes Dryers

1. Classes

2. Design Options

3. Comments on the Advance Notice of

Proposed Rulemaking

4. Efficiency Levels Analyzed

IV. Environmental, Regulatory Impact,

Takings Assessment, Federalism and

Regulatory Flexibility Reviews

a. Environmental Review

b. Regulatory Impact Review

c. "Takings" Assessment Review

d. Federalism Review

e. Regulatory Flexibility Review

V. Public Comment Procedures

a. Participation in Rulemaking

b. Written Comment Procedures

c. Public Hearing

d. Issues Requested for Comment

1. Introduction

a. Authority

Part B of Title III of the Energy Policy

and Conservation Act (EPCA), Pub. L.

94-163, as amended by the National

Energy Conservation Policy Act

(`ECPA), Pub. L. 95-619, by the National

Appliance Energy Conservation Act

(NAECA), Pub. L. 100-12, and by the

National Appliance Energy

CE-RM-88-101 COMMENT 02
Federal Register / Vol. 54, No. 152 / Wednesday, Augus 9, 1989 / Proposed Rules 32745

Conservation Amendments of 1988

(N AECA 1988), Pub. L.10C 357,1 created

the Energy Conservation program for

Consumer Products other than

Automobiles. The consumer products

subject to this program (often referred to

hereafter as "covered products") are:

refrigerators, refrigerator-freezers and

freezers; dishwashers; clothes dryers;

water heaters; central air conditioners

and central air conditioning heat pumps;

furnaces; direct heating equipment;

television sets; kitchen ranges and

ovens; clothes washers; room air

conditioners; fluorescent lamp ballasts;

and pool heaters; as well as any other

consumer product classified by the

Secretary of Energy. Section 322. To

date, the Secretary has not so classified

any additional products.

Under the Act, the program consists

essentially of three parts: testing,

labeling, and mandatory energy

conservation standards, The

Department of Energy (DOE or

Department), it consultation with the

National Institute of Standards and

Technology (NIST), is required to amend

or establish new test procedures as

appropriate for each of the covered

products. Section 323. The purpose of

the test procedures is to provide for test

results that reflect the energy efficiency,

energy use, or estimated annual

operating costs of ea h of the covered

products. Section 323(b)(3). A test

procedure is not required if DOE

determines by rule that one cannot be

developed. Section 323(d)(1). One

hundred and eighty days after a test

procedure for a product is adopted, no

manufacturer may represent the energy

consumption of, or the cost of energy

consumed by the product except as

reflected in a test conducted according

to the DOE test procedure. Section

323(c)(2),

The Federal Trade Commission (FTC)

is required by the Act to prescribe rules

governing the labeling of covered

products for which test procedures have

been prescribed by DOE. Section 324(a).

These rules are to require that each

particular model of a covered product

bear a label that indicates its annual

operating cost and the range of

estimated annual operating coats for

other models of that product. Section

324(c)(1). Disclosure of estimated

operating cost is not required under

section 324 if the FTC determines that

such disclosure is not likely to a_s,i.s't

i Part B of Title M of EPCA, as amended by

NEC: A, TLS CA. and NAECA 1958, is referred to in

this notice as the "Act." Part B of Title Li is codified

at 42 U.S.C. 8281 at seq. Part B of Title Ill of EPCA,

as amended by NECPA only, is referred to in this

notice as NECPA.

consumers in making purchasing

decisions or is riot economically

feasible. In such a case, FTC must

require a different useful measure of

energy consumption. Section 324(c). At

the present time there are FTC rules

requiring labels for the following

products: room air conditioners,

furnaces, clothes washers, dishwashers,

water heaters, freezers, refrigerators and

refrigerator-freezers, and central air

conditioners. 44 FR 6345, November 19,

1919, and 52 FR 46888, December 10,

1987.

For each of 12 of the covered

products, the Act prescribes an initial

Federal energy conservation standard.

Section 325 (b)-(h). The Act establishes

effective dates for the standards in 1988,

1990,1992 or 1993, depending on the

product, and specifies that the standards

are to be reviewed by the Department

within three to ter: years, also depending

on the product. Section 325 (b)-(h). After

the specified three- to ten-year period,

DOE may promulgate new standards for

each product; however, the Secretary

may not prescribe any amended

standard which increases the maximum

allowable energy use, or decreases the

minimum required energy efficiency, of

a covered product. Section 325(1)(1). The

Department's current review of

standards is for dishwashers, clothes

washers, and clothes dryers.

Any new or amended standard is

required to be designed so as to achieve

the maximum improvement in energy

efficiency that is technologically

feasible and economically justified.

Section 325(1)(2)(A).

Section 325(1)(2)(;3)(i) provides that

before DOE determines whether a

standard is economically justified, it

must first solicit comments on a

proposed standard. After reviewing

comments on the proposal, DOE must

then determine that the benefits of the

standard exceed its burdens, based, to

the greatest extent practicable, on a

weighing of the following seven factors:

(1) The economic impact of the

standard on the manufacturers and on

the consumers of the products subject to

such standard;

(2) The savings in operating costs

throughout the estimated average life of

the covered product in the type for

class) compared to any increase in the

price of, ct its the initial charges for, or

maintenance expenses of the covered

products which are likely to result

directly from the imposition of the

standard:

(3) The total projected amount of

energy savings likely to result directly

from the imposition of the standard;

(4) Any lessening of the utility or the

performance of the covered products

likely to result from the imposition of the

standard;

(5) The impact of any lessening of

competition, determined in writing by

the Attorney General, that is likely to

result from the imposition of the

standard;

(6) The need for national energy

conservation; and

(7) Other factors the Secretary

considers relevant.

In addition, the Act specifies criteria for

petitions to DOE in regard to

amendments to standards. Section

325(k). Under the Act, any person may

petition the Department to conduct a

rulemaking to amend a Federal energy

conservation standard for any covered

product. Section 325(k)(1). The

Department must grant such a petition if

it determines that an amended standard

will result in significant conservation of

energy, is technologically feasible and is

cost-effective. Section 325(k)(2).

Sections 325(k)(3) (A) and (E) stipulate

that in no case may an amended

standard apply to products

manufactured within three years or five

years, depending or. the product, after

publication of the final rule establishing

a standard.

Prior to proposing a new or amended

standard, DOE is required to publish an

advance notice of proposed rulemaking

which specifies the type (or class) of

covered product to which the rule may

apply and which provides a 60-day

period during which interested persons

may submit written comments. Section

325[-)(1) (A) and (B).

Section 326 of the Act authorizes the

Secretary to require manufacturers to

submit information or reports to assure

that each covered product to which a

standard applies meets the required

energy efficiency level. The Act also

specifies that in determining information

requirements, DOE consider existing

sources of information, including

nationally recognized trade association

certification programs. Section 326(d).

Enforcement-related provisions of the

Act provide for: (1) DOE to prescribe

rules requiring manufacturers to allow

the Department to observe testing and

inspect results of testing conducted by

the manufacturer (section 326(b)(5)); (21

manufacturers to supply to DOE a

reasonable number of products for

testing purposes (section 326(b)(3)); (3)

manufacturers to submit information or

reports necessary to ensure compliance

(section 326(d)); and (4) injunctive relief

against any prohibited act, including

distribution of noncomplying products

(section 334).

CE-RM-88-101 COMMENT 02
32746 Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules

b. Background

NECPA required DOE to establish

mandatory energy efficiency standards

for each of 13 covered nroducts.2 These

standards were to be designed to

achieve the maximum improvement in

energy efficiency that was

technologically feasible and

economically justified.

NECPA provided, however, that no

standard for a product be established if

there were no test procedure for the

product, or if DOE determined by rule

either that a standard would not result

in significant conservation of energy, or

that a standard was not technologically

feasible or economically justified. In

determining whether a standard was

economically justified, the Department

was directed to determine whether the

benefits of the standard exceeded its

burdens by weighing the seven factors

discussed above.

NECPA specified the priorities and

procedures to be followed in adopting

efficiency standards. Nine of the 13

covered products were given priority.

These nine products were: refrigerators

and refrigerator-freezers; freezers;

clothes dryers; water heaters; room air

conditioners; home heating equipment

not including furnaces; kitchen ranges

and ovens; central air conditioners; and

furnaces.

The Depart m ent published an

advance notice of proposed ru.lernaking

for the nine priority products on January

2, 1979. 44 FR 20. On December 13, 1979,

DOE published an advance notice of

proposed rulemaking for dishwashers;

television sets; clothes washers; and

humidifiers and dehumidifiers. 44 FR

72276. An advance notice for central air

conditioners (heat pumps) was

published on January 23, 1980. 45 FR

5602.

After receiving comments on the

January 2, 1979, advance notice, DOE

published, on June 30, 1980, its first

proposed rulemaking for the nine

products. 45 FR 43976. (Hereafter

referred to as the June 1980 proposal.)

This NOPR set forth DOE's proposal

concerning energy efficiency standards

for the covered products. It also

proposed comprehensive requirements

for certification and enforcement of the

standards, procedures for processing

petitions by States that sought

exemption for regulations subject to the

2 The consumer products covered by NECPA

include; refrigerators and refrigerator-freezers;

freezers; dishwashers; clothes dryers; water heaters;

room air conditioners; home heating equipment not

including furnaces; television sets; kitchen ranges

and ovens; clothes washers; humidifiers and

dehumidifiers; central air conditioners; and

furnaces.

general preemption requirements of

NECPA, and small business exemptions.

On April 2, 1982, DOE issued a further

notice of proposed rulemaking with

respect to the nine priority products. 47

FR 14424. (Hereafter referred to as the

April 1982 proposal), With respect to

eight of the products, DOE proposed to

make a determination that a standard

would not result in significant

conservation of energy and would not

be economically justified.3 The April

1982 proposal also proposed rules

governing petitions to DOE both by

States to obtain exemption from

preemption of State or local energy

efficiency standards, as well as by

manufacturers to obtain preemption of

State or local standards. -

On December 22,1982, DOE published

a final rule in which the Department

determined that efficiency standards

were not warranted for clothes dryers

and kitchen ranges and ovens. 47 FR

57198. (Hereafter referred to as the

December 1982 final rule.) At that time,

DOE also adopted final procedures by

which States might obtain exemption for

State or local efficiency standards from

Federal preemption, and by which.

manufacturers might obtain preemption

of a State or local standard not

otherwise preempted.

On August 30, 1983, DOE published a

final rule with respect to the remaining

six covered products: refrigerators and

refrigerator-freezers, freezers, water

heaters, furnaces, room air conditioners

and central air conditioners. 48 FR

39376. (Hereafter referred to as the

August 1983 final rule.) For each of the

six products covered by the August 1983

final rule, except central air

conditioners, DOE determined that an

energy efficiency standard would not

result in significant conservation of

energy and would not be economically

justified. With respect to central air

conditioners, DOE found that an energy

efficiency standard would result hi

significant conservation of energy, but

would not be economically justified.

On April 1, 1985, DOE published a

proposed rule with respect to four

covered products: dishwashers,

television sets, clothes washers and

humidifiers and dehumidifiers. 50 FR

12966. (Hereafter referred to as the April

1985 proposal). For each of th.e four

products covered by the April 1985

proposal, DOE proposed that an energy

efficiency standard would not be

2 The April 1982 proposal did not propose any

rule with respect to the product type "home heating

equipment, not including furnaces," or with respect

to that class of the product water heaters made up

of heat pump water heaters, or with respect to those

classes of the product central air conditioners that

are heat pumps.

economically justified and would not

result in a significant conservation of

energy.

During 1983, DOE's December 1982

.and August 1983 final rules were

challenged in a lawsuit brought by the

Natural Resources Defense Council

(NRDC) and others against the

Department. On July 16,1985, the U.S.

-Court of Appeals set aside DOE's

December 1982 and August 1983 final

rules. NPDC v. Herringion, 768 F.2d 1355

(1).C. Cir. 1985).

Consequently, on March 5, 1986, DOE

published notices in the Federal Register

removing the December 1982 and August

1983 final n ales and withdrawing the

April 1985 proposal. 51 FR 7549 and 51

FR 7582.

The National Appliance Energy

Conservation Act, which became law on

March 17, 1987, amended EPCA in part

by: redefining "covered products"

(specifically, refrigerators, refrigeratorfreezers, and freezers were combined

into one product type from two;

humidifiers and dehumidifiers were

deleted; and pool heaters were added);

establishing Federal energy

conservation standards for 11 of the 12

Covered products; and creating a

schedule, according to which each

standard is to be reviewed to determine

if an amended standard is required.

The National Appliance Energy

Conservation Amendments of 1988,

which became law on June 28, 1988,

established Federal energy conservation

standards for fluorescent lamp ballasts.

These amendments also created a

review schedule for DOE to determine if

an amended standard for fluorescent

lamp ballasts is required.

As directed by the Act, DOE

published an advance notice of

proposed rulemaking, with a 60-day

comment period that ended July 18, 1988.

53 FR 17712, May 18, 1988. (Hereafter

referred to as the advance notice). The

advance notice presented the product

classes that DOE planned to analyze,

and provided a detailed discussion of

the analytical methodology and

analytical models that the Department

expected to use in performing the

analysis to support this rulemaking. The

Department invited comments and data

on the accuracy and feasibility of the

planned methodology and encouraged

interested persons to recommend

improvements or alternatives to DOE's

approach. The comments in response to

the advance notice are addressed in

sections II and III of this notice.

II. General Discussion

As stated above, NAECA requires

DOE to determine if the legislated

CE-RM-88-101 COMMENT 02
Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules 32747

standards for dishwashers, clothes

washers, and clothes dryers should be

amended.

Tlie Act prohibits DOE from

promulgating a standard for a product if:

(1) There is no test procedure for the

product (except in the case of clothes

washers, clothes dryers, dishwashers,

and kitchen ranges and ovens), (2) a

standard is not technologically feasible,

(3) DOE determines that a standard

would not be economically justified, (4)

if a standard would not result in a

significant conservation of energy or (5)

if the Secretary has made a finding that

such a standard will likely result in the

unavailability of currently available

performance characteristics. To measure

possible energy savings and economic

justification, DOE analyzed several

possible standard levels for each

product type. Furthermore, the Act

stipulates that any adjustment of a

standard may only be toward more

stringent levels. With respect to each

appliance, DOE analyzed various

specific design options, including

prototypes. A prototype can be either an

individual component, e.g., an improved

food filter, or a complete assembly with

the design option installed, e.g., heat

pump clothes dryers. While a prototype

design may be technologically feasible

as an individual component or as part of

a bread-board 4 assembly, it does not

necessarily follow that techniques have

been developed for mass production of

the prototype design.

a. Test Procedures

For each product discussed in today's

proposed rulemaking there is an

applicable DOE test procedure to

evaluate its energy efficiency.

b; Technological Feasibility

1. General. For those products and

classes of products discussed in today's

notice, DOE believes that the efficiency

levels analyzed, while not necessarily in

production, are technologically possible,.

The technological feasibility of the

design options is addressed in the

product specific discussion. DOE's

criteria for evaluating design options for

technological feasibility are that the

design options are already in use by the

respective industry or that research has

progressed to the likely development of

a prototype.

One comment on the advance notice

addressed the subject of technological

feasibility. Whirlpool Corporation

(Whirlpool) contended that a design

option is not technologically feasible

unless it is acceptable to the consumer

and commercially workable. (Whirlpool,

No. T, at 17).5 DOE considers a design

option to be technologically feasible, if,

based on the Department's analysis,

DOE believes it is capable of being

carried out.

2. Maximum Technologically Feasible

Levels. The Act requires that in

considering any new or amended

standards, the Department must

consider those that "shall be designed to

achieve the maximum improvement in

energy efficiency which the Secretary

determines is technologically feasible

and economically justified." (Section 325

(1)(2)(A)). Accordingly, for each class of

product under consideration in this

rulemaking, a maximum technologically

feasible design option was identified.

This is the most efficient model of a

class for which at least a prototype

exists. In comments on the advance

notice, Whirlpool and the Association of

Home Appliance Manufacturers

(AHAM) stated that any determination

of maximum technological feasibility

include only those options that are

"commercially workable." (AHAM, No.

5 at 7; Whirlpool, No. 1, at 17). While the

Department will consider the

commercial workability "of a maximum

technologically feasible" design in the

economic justification analysis, such a

consideration is not relevant in

determining the maximum

technologically feasible design, which is

largely an engineering determination.

DOE considers a design option to be

technologically feasible, if, based err the

Department's analysis, DOE believes it

is capable of being carried out.

A complete discussion of each

maximum technologically feasible level,

and the design options included in each,

is found in the Engineering Analysis.

See Technical Support Document,

Chapter 3, specifically sections 3.2.5,

3.3.5, and 3.4.5. These are presented in

Table 2-1, below.

TABLE 2-1-MAXIMUM TECHNOLOGICALLY

FEASIBLE LEVELS

Products and product classes

Dishwashers:

Compact, 115V .............................

Standard, 115V ............................

Standard water heating . 115V...

Clothes washers:

Top loading, compact r ..............

Top loading, standard capacity 2.

Top loading, large capacity'.....

Unit energy

consumption

525 kWh/yr.

742 kWh/yr.

704-5 kWh/yr.

576 kWh' lyr.

743 kWh/yr.

1,010 kWh/yr.

4 A bread-board unit is an experimental 5 Comments on the advance notice have been

arrangement of the design made to test its assigned docket numbers and have been numbered

feasibility. consecutively.

TABLE 2-1-MAXIMUM TECHNOLOGICALLY

FEASIBLE LEVELS-Continued

Products and product classes

Clothes dryers:

Compact, electric, 11 OV 4............

Compact, electric, 240V 4............

Standard electric 6 ........................

Electric heat pump 6 ....................

Gas 5 ..............................................

Unit energy

consumption

347 kWh/yr.

324 kWh/yr.

859 kWhlyr.

336 kWh/yr.

Standard

3.27iMMBtu/yr.

kWh/yr.=kilowatt hours per year

MMBtu/yr._million British thermal units per year.

' Capacity equals 1.45 1 1.3

2 Capacity equals 2.4 ft.'

' Capacity equals 3.0 ft.'

4 Capacity equals 3.45 ft.'

5 Capacity equals 5.9 ft.'

DOE proposes that the maximum

technologically feasible level is one that

can be carried out by the addition of

design options, both commercially

feasible and prototypes, to the baseline

units without affecting the product's

utility. DOE believes that there are no

products available with the same utility

and capacity that are more efficient than

the maximum technological level.

Each maximum technologically

feasible level was evaluated to

determine if it would be economically

justified at the time of the effective date

of the standard. Standards that have

unacceptable impacts on consumers or

manufacturers or result in the changing

of the utility of the product were

rejected.

DOE provided lists of design options

for the engineering analysis in the

advance notice. The comments on these

design options resulted in more detailed

design options for DOE review. DOE has

considered these suggestions and has

addressed them in the product specific

discussions in this notice.

The analysis process is described

fully in the Technical Support

Document. Computer models and

manufacturers' data were used to

predict improvements in product

efficiencies and the costs associated

with these improvements.

The Engineering Analysis addresses

two statutory requirements, The first

requirement is the Department's

evaluation of the maximum

improvements in energy efficiency that

are technologically feasible. The second

requirement relates to the lessening of

utility to the consumer of any of the

covered products due to the imposition

of standards, The Engineering Analysis

also provides information on efficiencies

and manufacturing costs to other

sections of the overall analysis. The

product specific sections of this notice

CE-RM-88-101 COMMENT 02
32748 Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules

include the method of analysis for each,

product.

c. Energy So ving3

1. Determination of Savings. The

Department forecasts energy

consumption through the use of the

Lawrence Berkeley Laboratory

Residential Energy Model (LBL-REM).

The LBL-REAM forecasts energy

consumption over the period of analysis

for candidate standards and the base

case.6 The Department quantified the

energy savings that would be

attributable to a standard as the

difference in energy consumption

between the candidate standard's case

and the base case.

The LBL-REM is an improve {ent of

the Oak Ridge National Laboratory

Residential Energy End Use Model

(OReNL Model), which was used by DOE

in previous standards rulemakings. The.

LBL-REM is fully explained in the

Technical Support Document. Appendix

B to that document addresses the LBLREM in detail. The LBL-REM contains

algorithms to project average

efficiencies, usage behavior, and market

shares for each product.

The market share calculations

contains the following steps: potential

purchasers may purchase any competing

technology within an end-use, or none.

For clothes washers and dishwashers,

the decision. to purchase or not is

modeled, and the fraction of the total

that chooses each class, e.g., standard

115V, standard water heating 115V, etc.,

is specified exogenousiy. For clothes

dryers, the decision to purchase or not

and the choice of fuel is modeled, and

the fraction of the total that chooses

each class is'specificd exogenously.

Long-term market share elasticities have

been assumed wits respect to equipment

price, operating expense, and income.

The effects of standards are expected to

be lower operating expense and higher

equipment price. The percentage

changes in these quantities are used,

together with the elasticities, to

determine changes in market share

resulting from standards. Higher

equipment prices will decrease market

shares, while lower operating expenses

will increase market shares. The net

result depends on the standard level

selected, and associated equipment

prices and operating expenses.

The LBL -RE'M is used to project

residential energy use over the relevant

time periods for these three products

with and without amended standards.

By comparing the energy consumption

6 The base case for these three products

represents NAECA's 1988 standards, which are

design standards only.

projection at alternative standard levels,

or NAECA's 1983 standards, the

Department estimated the amount of

energy projected to be saved during the

period 1993--20155.7 The energy saved is

expressed in Quads, i.e., quadrillion

Btu's. With respect to electricity, the

savings are quads of source or primary

energy, which is the energy necessary to

generate and transmit electricity. The

Act defines "energy use" as the quantity

of energy directly consumed by a

consumer product at point of use. This is

generally called "site" energy, as

opposed to "source" energy. There are

major differences between these types

of energy. In 1987, the amount of

electrical energy consumed at the site

was less than one-third of the amount of

source energy that was required to

generate and transmit the site electrical

energy-11 Therefore, It is important to

identify whether the electricity involved

is site or source energy.

The LBL-REM projections are

dependent on many assumptions.

Among the most important are

responsiveness of household appliance

purchases to changes in energy prices

and consumer income, future energy

prices, future levels of housing

construction, and options that exist for

improving the energy efficiency of

appliances. As is the case with any

complicated computer model simulation,

the validity of the outputs is critically

dependent on the inputs.

Comments that DOE received

questioned several of the assumptions

that were described in the advance

notice. These included the following:

Rebound Effect

In the analysis, the Department

assumed that greater efficiency in these

three product types would not cause

them to be used more intensively

because of the efficiency improvements.

Therefore, in estimating energy savings

from different standard levels for

dishwashers, clothes washers, and

clothes dryers, the Department did not

use a rebound effect. The Department

has no data indicating that changes in

either energy prices or efficiency will

LBL-REM was programmed to analyze a single

standard level or alternative levels, over the entire

period. That is, the fact that a standard might be

revised during subsequent rulemakhigs was not

considered by the model. The Department believes

that it is not possible to predict what result such

reviews may have, and therefore it would be

speculative to model any particular result.

Therefore, for purposes of this rulemaking, each

standard level that was analyzed was projected to

have been in place from the time of implementation

to the year 2015.

"Energy Info_•matitn Administration, Electric

Power Annual 1937, Tables 25 and 32, DOE, 1131A0348(87).1987,

cause consumers to use these products

any differently.

Discount Rate

The Natural Resources Defense

Council (NRDC) questioned the

Department's use of consumer discount

rates for calculating the cost of

conserved energFT and suggested,

instead, that DOE use a discount rate

that is based on "real financial

markets." (NRDC, No, 3, at 9). The

Department agrees, and notes that the

discount rate that was used in this and

earlier rulemakings (seven percent) is

based on "real financial markets." 9

Since a dollar in the future is worth

less than a dollar today, that future

dollar must be discounted to deter: amine

its value today. If the discount rate

chosen is too high, the present-value of

future dollars will be understated, Thus,

higher discount rates tend to preclude

more capital-intensive candidate

standard levels. Nevertheless, the

Department does not believe that the

seven percent rate that was used in the

analysis is artificially high. From the

business perspective, a reasonable

discount rate would be one that

represented the private opportunity cost

of capital used to meet any appliance

conservation standard. A gauge of the

private opportunity cost of capital is the

most profitable alternative use of that

capital: One measure of that cost could

be the prime rate, that is, the interest

rate that is offered by lending

institutions to their most credit-worthy

customers. in early March 1989, the

prime rate was 11.5 percent, If such a

business secured a loan at one of those

rates of interest, and repaid it in the

1990-1995 time period, the real rate of

interest would be 6.5 percent. This

results because the expected annual rate

of price increases in that time period is

approximately five percent. Most

businesses, however, are not eligible for

loans at the prime rate of interest, so the

estimated real rate of interest for these

firms would probably be slightly higher.

Similarly, from the consumer

perspective, one approach to selecting

an appropriate discount rate is to look at

the interest payable on a consumer loan

and depreciate that interest by the

inflation rate. if a consumer secures a

loan at 12 percent interest, and repays it

in the 1990-1995 time period, the real

rate of interest will be seven percent.

Thus. DOE believes that from both the

business and consumer perspectives, a

o DOE in'ihe calculation of life-cycle cost and net

present value, discounted the value of energy; the

Department did not discount other measures, e.g..

energy and emissions.

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seven percent discount rate is

reasonable.

On the other hand, it may not be

reasonable to require consumers to

make an investment where there are

inherent risks. For example, if

consumers perceive a risk because of

the uncertainty of energy prices and

reliability and longevity of the

equipment, they would require a greater

return on their investment, i.e., a higher

discount rate. It has been argued that

the discount rate should be as high as 15

percent. Dubin and McFadden, "An

Econometric Analysis of Residential

Electric Appliance Holdings and

Consumption," Econometrica March

1984, pp. 345-361. DOE requests

comments on the approach taken to

select an appropriate discount rate,

alternative approaches, and the

consumer and business risks to be

considered.

Several of the inputs, e.g., energy and

equipment prices, were tested in

sensitivity analyses to determine the

effects of varying certain assumptions

on the results of the analysis. By such

sensitivity analyses, it is possible to

determine those inputs where changes,

including possible errors, are meaningful

to the model's output, and those inputs

for which changes are not meaningful.

See Technical Support Document, § § 4.3

and 5.4.

The savings attributable to the

different standard levels are identified

for each product in section III of this

notice.

Modeling

Several comments offered suggestions

on the LBL-REM modeling efforts.

NYSEO critiqued the use of "old data"

in LBL-REM in developing the baseline

units for analysis, and contended that

use of such old data could

underestimate the impact that increased

efficiency standards could have on

saving energy. (NYSEO, No. 2 at 3).

While historical data were used as a

starting point for the analysis of these

three product types, all of the data bases

were updated to reflect current prices

and levels of efficiency in the

marketplace. These data were then used

to calculate annual energy consumption

for the LBL-REM and life-cycle cost

(LCC) analyses. For example, in the LCC

analysis, DOE used both the cycles of

operation and the more recent, 1986,

Proctor and Gamble (Part 5) data to

calculate the life-cycle cost. This

calculation does not account for

variability in consumer usage patterns,

nor does it reflect any changes in typical

consumer usage behavior since the test

procedures were developed. While the

adoption of out-of-date usage values

may affect the results of the LBL-REM

and LCC analysis, DOE is not certain to

what extent the results would be

affected since, for example, the energy

savings and net present value

calculation of the LBL-REM would use

the dated usage values in both the base

case and standards case.

It is important to note out the

difference between "baseline unit" and

"base case." In the engineering analysis,

the baseline unit for each product class

under consideration is identified. These

are units that are representative of units

that are expected to be offered for sale

in the beginning year of the analysis, 10

Baseline refers only to the engineering

analysis and is the first point identified

in each cost-efficiency curve. It is the

product to which design options are

added to create more efficient units. On

the other hand, "base case" refers to the

economic analysis forecast with only

those standards mandated by the Act.

Two comments raised issues about

the Department's modeling of utility

impacts. First, NYSEO suggested that

utility impacts be analyzed for smaller

areas in order to capture better the

differences among individual power

pools. (NYSEO, No. 2, at 9). While the

Department agrees with this point in

principle, data limitations prevent the

implementation of this suggestion.

NYSEO also stated that inclusion of

all planned generating facilities as

available capacity is inappropriate.

(NYSEO, No. 2, at 9-10). The

Department notes that the National

Electricity Reliability Council (NERC)

forecast assumed that certain Dower

plants, e.g., Shoreham and Seabrook,

will operate, even though these plants

may be delayed, cancelled, or shut

down. The Department's estimate of

capacity benefits is conservative,

because cancelling these plants would

increase the reliability benefits of the

appliance standards.

On another point, NYSEO contended

that the Department underestimates

reliability benefits when adequate

reserve margins have been forecasted.

(NYSEO, No. 2, at 10). The Department

believes that such benefits could be

estimated for individual utilities, but is

unable to do so for larger regions.

NSPC also contended that use of a

combustion turbine, which is typically a

peak-load generator, in estimating the

capacity impact measures of baseload

10 The baseline units are those with estimated

average shipment-weighted energy factors (SWEF's)

in 1967. The baseline clothes dryer efficiencies are

estimated from very limited data , while the

efficiencies for dishwashers and clothes dryers are

estimated from more extensive data which was

available because these products are covered by the

FTC labeling program.

appliances undervalues the cost of new

generating capacity. (NSPC, Id.). While

there are several alternative methods for

valuing capacity impacts, the

Department's utility analysis is one that

has been adopted by many utilities. For

more detailed explanations of, and

justification for, the valuation of

capacity impacts, see Technical Support

Document, chapter 8 and Appendix D.

2. Significance of Savings. Under

section 325(1)(3)(B) of the Act, the

Department is prohibited from adopting

a standard for a product if that standard

would not result in significant energy

savings. While the term "significant"

has never been defined precisely in the

Act, the Department believes that a

standard level option need not meet a

threshold level of energy savings to be

considered a significant saver of energy,

The U.S. Court of Appeals, NRDC v.

Herrington, supra, concluded that

Congressional intent in using the word

"significant" was to mean "non-trivial."

Id, at 30. Thus, DOE believes that each

candidate standard considered results in

significant energy savings.

at Rebuttable Presumption

NAECA established new criteria for

determining whether a standard level is

economically justified. Section

325(1)(2)(B)(iii) states:

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, there shall be a

rebuttable presumption that such standard

level is economically justified. A

determination by the Secretary that such

criterion is not met shall not be taken into

consideration in the Secretary's

determination of whether a stamdard is

economically justified.

DOE believes this provision means

that if the added price of an appliance,

caused by a conservation standard,

would repay itself to the consumer in

energy savings in less than three years,

then it can be presumed that such

standard is economically justified.1

This presumption of economic

justification can be rebutted by the

seven factors of economic justification.

11 For this calculation , the Department calculated

cost-of-operation based on the DOE test procedures.

Therefore, the consumer is assumed to be an

"average" consumer as defined by the DOE test

procedures. Consumers that use the products less

than the test procedure assumes will experience a

longer payback while those that use them more than

the test procedure assumes will have a shorter

payback.

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e. Economic Justification

As noted earlier, section 325(1)(2)(B)(i)

of the Act provides seven factors to be

evaluated in determining whether a

conservation standard is economically

justified.

The Association of Home Appliance

Manufacturers (Ai-LAM) proposed a

methodology that the Department could

use in evaluating candidate standard

amendments. (Al-LAM, No. 5, at 11-12).

Except for its proposal that the

maximum technologically feasible

design options be chosen only from

those that are "commercially workable,"

the Department's planned methodology

is consistent with the A HAM's proposal.

NRDC suggested that the Department

rank design options in ascending order

of cost of conserved energy. (NRDC, No.

3, at 9). The Department, with one

exception, clothes dry automatic

termination, has ranked the design

options in ascending order of

incremental payback period; this is

equivalent to NRDC's suggestion.

NRDC also suggested that any water

savings that could result from amended

standards be included in the costeffectiveness, environmental, and

economic impact analyses. (NRDC, No.

3, at 8). The Department has included

estimates not only of the potential water

savings for amended standards, but also

of the foregone water disposal expenses

that such water savings would cause.

1. Economic Impact on Manufacturers

and Consumers. The engineering

analysis identified improvements in

efficiency along with the associated

costs, o manufacturers for each class of

product. For each design option, these

costs constitute the increased per unit

cost to manufacturers to achieve the

indicated energy efficiency levels.

Manufacturer, wholesaler, and retailer

markups will result in a consumer

purchase price higher than the

manufacturer cost.

To assess the likely impacts of

standards on manufacturers, the

Department used a computer model that

simulated hypothetical firms in the three

industries under consideration. This

model, the Lawrence Berkeley

Laboratory Manufacturer Impact :Model

(I.BL-MIM), is explained fully in the

Technical Support Document. LBi,-MIM

provides a broad array of outputs,

including shipments, price, revenue, net

income, and return-on-equity (ROE). An

"Output Table" lists values for all these

outputs in the base case and in each of

the standards cases under

consideration. It also gives a range for

each of these estimates. A "Sensitivity

Chart" shows how ROE would be -

affected by a change in any one of the

model's nine control variables.

For consumers, a measure of

economic impact is the life -cycle cost of

a product, because it accounts for the

increased first price, any increased

maintenance expenses, and the reduced

fuel expenses resulting from the

product's greater efficiency. Under

section 325 of the Act, life-cycle cost

analysis is a separate factor to be

considered in determining economic

justification.

2. Life-Cycle Costs (LCC). One

measure of the effect of proposed

standards on consumers is the change in

operating expense as compared to the

change in purchase price, both resulting

from standards. This is quantified by the

difference in life-cycle cost (LCC)

between the base and standards case

for the appliance classes analyzed. The

LCC is the sum of the purchase price

and the operating expense, including

maintenance expenditures, discounted

over the lifetime of the appliance.

The LCC is calculated at the

estimated average efficiency for each

class in the year standards are imposed

using consumer discount rates of five,

seven, and 10 percent. The purchase

price is based on the factory costs in the

Engineering Analysis and includes a

factory markup plus a distributor and

retailer markup. Energy price forecasts

are inputs that are taken from the 1987

Annual Energy Outlook of the Energy

Information Administration. Appliance

usage inputs are taken from the relevant

-test procedures and recent P and G data.

The Department seeks comments on the

input to the LCC analysis, including the

discount rate and energy price forecasts.

The differences in life-cycle costs

between the base case and various

levels of standards for dishwashers,

clothes washers, and clothes dryers are

presented in Tables 6.1--6.3 of the

Technical Support Document. These

LCC's are calculated at a seven percent

discount rate; a higher rate, e.g., 10

percent, gives a smaller difference,

while a lower rate, e .g., five percent,

produces a greater difference. As

discussed above, it has been argued that

discount rates as high as 15 percent

should be used. The Department did not

use 15 percent in the LCC analysis;

however, as can be seen in the various

LCC curves, the use of a higher discount

rate would result in a flatter curve with

the minimum life-cycle cost dropping,

i.e., approaching the baseline unit. If a

higher discount rate were used, e.g., 15

percent, and energy prices were lower

than average, the minimum life-cycle

cost point could be less efficient than

the baseline units.

When the LCC numbers are plotted

graphically (on the Y axis) against unit

energy consumption (on the X axis), the

data generally produce a curve that is

concave from above in shape. This

means that at first the LCC curve will

decline as efficiency improvements are

made, will reach a minimum (which may

or may not be discrete ), and then rise.

This indicates that the first efficiency

improvements will produce energy

savings, the value of which will more

than pay for the design change. As

efficiency improvements are made,; t

becomes increasingly costly to save

more energy, and, eventually, the value

of the energy savings will not cover the

expenditures for the design

improvements. See Technical Support

Document, section 3.5.

The minimum of the LCC curve was of

particular interest in the analysis. The

minimum of the curve represents that

level of efficiency improvements that

maximizes the difference between the

value of energy saved and the additional

consumer expenditures for the relevant

efficiency improvements. Therefore,

design options that corresponded to the

minimum point were of special

consideration in establishing standard

levels. Efficiency levels exceeding the

LCC minima were generally rejected as

standards as not being economically

justified, At efficiency levels beyond the

LCC minima, the incremental first cost

of the product exceeds the value of the

energy savings such that the average

consumer does not realize an

incremental benefit from the investment

beyond the LCC minimum.

The Department conducted a net

present value (NPV) analysis to assess

the differential economic impacts on

consumers that world occur from the

adoption of amended standards for

these three products compared to a base

case with no change in the NAECAimposed 1988 standards. See Technical

Support Document, Chapter 5. The LBLRFSvi: calculates the total expenditure for

each product (discounted total value of

energy consumption from 1993 through

the last year of use for those products

purchased through the year 21015), pins

the total discounted expenses for

equipment purchased from 1993 through

2915, with more stringent standards and

with ii4ECA 1988 standards. The NPPB%

analysis is similar to the LCC analysis,

in that the greatest NPV should occur at

the standard level that corresponds to

the LCC minimum for the product. 12 The

+= The net present value (NPV) of .a standard, per

appliance, is calculated for all affected appliances

that are purchased in the projection period. while

ConScued

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Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules 32751

NPV for each product at the different

standard levels is identified in section

III of this notice. The NPV calculation, is

based on average efficiency from P and

G and usage values.13 This analysis

does not take into account variations in

appliance usage rates, local energy

prices and consumer energy efficiency

choices. Instead, the model assumes that

nationwide average appliance usage

rates, energy prices and efficiency apply

to all consumers in all areas of the

nation. In other words, it assumes that.

consumers who face high energy prices

or expect to make extensive use of their

appliances, will, on average, purchase

the same distribution of appliance

efficiencies as consumers facing low

energy prices or low appliance usage

rates. To the extent that individual

consumer decisions are influenced by

local (rather than national average)

energy prices or by their individual

(rather than national average) usage

rates, the model could yield inaccurate

results.

if, as DOE believes, consumers who

face below-average energy prices are

more likely to purchase less-efficient

appliances, then the analysis is likely to

understate the energy savings resulting

from standards for these consumers.

Likewise, for those consumers who

would purchase more-efficient

appliances, the analysis would overstate

the energy savings resulting from

standards. If the consumers who live in

low- and high-energy cost areas would

purchase less-efficient and moreefficient appliances, respectively, then

valuing all energy savings at the

national average energy price could

overstate the value of energy savings to

the former by more than it understates

the value of energy savings to the latter,

Thus, under these circumstances, the net

effect of assuming a national average

energy price would be to overestimate

the total value of energy saved.

Similarly, if consumers who live in

low- and high-energy usage areas would

purchase less-efficient and moreefficient appliances, respectively, then

using the national average energy usage

rate could overstate the energy savings

to the former by more than it

understates the energy savings to the

latter. Thus, under these circumstances,

the net effect of assuming a national

average energy usage rates could be to

the life-cycle cost (LCC) is calculated only for the

lifetime of an appliance that is purchased in the first

year of the relevant standard. Therefore. NPV and

LCC estimates, per appliance, may not correlate

exactly.

19 The NPV usage values are taken from recent

Proctor and Gamble data, while the LCC usage

values were taken from both the DOE test

procedures and the Proctor and Gamble data.

overestimate the total amount of energy

saved.

In either case, to the extent that the

model inaccurately predicts the value

and/or quantity of energy savings, then

it could lead to an inaccurate estimate

of life-cycle cost savings and a standard

that is different from the optimal

standards. DOE does not have the data

to determine if, or to what extent, the

NPV calculations are affected by using

average energy prices, usage rates and

efficiency. DOE requests comments on

this issue,

Specifically, DOE requests data on the

effects of energy prices and usage rates

on consumer energy efficiency choice.

Such data could include manufacturer

warranty and/or registration data that

includes appliance efficiency and

purchase location. Similarly, DOE also

requests data on the effect of energy

efficiency on usage rates. DOE also

solicits comments on the likely

improvements to the analysis that would

result from the incorporation of such

data and, in the absence of relevant

data, alternative analytic approaches to

capture the effect of these variations.

3. Energy Savings. While the

significant conservation of energy is a

separate statutory requirement for

imposing an energy conservation

standard, the Act requires DOE, in

determining the economic justification

of a standard, to consider the total

projected savings that are expected to

result directly from revised standards.

DOE used the LBL-REM results,

discussed earlier, in its consideration of

total projected savings. The savings for

the three products are provided in

section III of this notice.

4. Lessening of Utility or Performance

of Products. This factor cannnot be

quantified. Whirlpool and AHAM both

urged that the Department not establish

any amended standards that could

lessen the utility of the affected product

to the consumer. (Whirlpool, No. 1, at 16;

AHAM, No. 5, at 8). The'Department

believes that it has met this concern by

a careful selection of product classes, as

discussed below.

In establishing classes of products

and design options, the Department tried

to eliminate any degradation of utility or

performance in the three products under

consideration in this rulemaking. That

is, to the extent that comments or DOE's

own research indicated that a product

included a utility or performance-related

feature that affected energy efficiency, a

separate class with a different efficiency

standard was created for that product.

In this way the Department attempted to

minimize the impact of this factor as a

result of the standards that were

analyzed.

5. Impact of Lessening of Competition.

It is important to note that this factor

has two parts; on' he one hand, it

assumes that there could be some

lessening of competition as a result of

standards; and, on the other hand, it

directs the Attorney General to gauge

the impact, if any, of that effect.

In order to assist the Attorney

General in making such a determination,

the Department studied the affected

appliance industries to determine their

existing concentrations, levels of

competitiveness, and financial

performances. This information will be

sent to the Attorney General. See

Technical Support Document, Chapter 7.

The Department has also provided the

Attorney General with copies of this

notice and the Technical Support

Document for his review.

6. Need of the Nation to Conserve

Energy. One measure of the need of the

Nation to conserve energy is the

country's reliance on energy in the form

of oil, especially imported oil. This was

documented in 1987 in a DOE report

(Energy Security.-A Report to The

President of The United States,

Washington, D.C.: U.S. Department of

Energy, March 1987). In that report, U.S.

energy security essentially was

considered to be a function of free oil

markets. The three products being

considered in this rulemaking

(dishwashers, clothes washers, and

clothes dryers) are all fueled by energy

forms other than oil, specifically

electricity for all three and natural gas

for some clothes dryers. While some oil

is used to generate the electricity on

which these products operate, that is a

very small part of our national energy

picture. Specifically, only 4.6 percent of

net electricity was generated by

petroleum in 1987. DOE requests

comments on this issue.

7. Other Factors. This provision

allows the Secretary of Energy, in

determining whether a standard is

economically justified, to consider any

other factors that he deems to be

relevant. To date, the Department has

not identified any such factors with

regard to these three products.

III. Product-Specific Discussion

a. Dishwashers

1. Classes

In the advance notice, the Department

discussed its methodology for reviewing

the energy conservation standards for

dishwashers that were established by

the Act, to determine if the standards

should be amended. NAECA currently

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32752 Federal Register Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules

prescribes a design standard for

dishwashers; units manufactured after

January 1, 1988, are required to have an

option to dry without heat.

The following are the classes of

dishwashers that have been identified:

(A) Compact Dishwasher (115V)

(B) Standard Dishwasher (115V)

(C) Water Heating Dishwasher,

Compact (115V)

(D) Water Heating Dishwasher,

Standard (115V)

(E) Water Heating Dishwasher,

Compact (230V)

(F) Water Heating Dishwasher,

Standard (230V)

2. Design Options

The following is a list of design

options that were examined:

(A) Improved Food Filters

(B) Improved Fill Control

(C) Improved Motor Efficiency

3. Comments on the Advance Notice of

Proposed Rulemaking

Whirlpool commented that after

reviewing all of the design options for

dishwashers included in the advance

notice, it found that-not one could be

utilized to improve the energy efficiency

of those machines. Whirlpool claimed

that many of the possible configurations

of design options identified by DOE

have already been developed and have

achieved the maximum energy

efficiency possible; in other cases, the

design improvements are so costly that

the' extra expense would outweigh any

conservation benefits. (Whirlpool, No. 1,

at 3-7).

After reviewing the potential energy

conservation improvements of the

design options for dishwashers, the

Department has found that several, i.e.,

improved food filters, motors, and water

fill controls, do exhibit the potential to

save energy above what Whirlpool

claims is possible.

NRDC stated that DOE should

consider the "broadest possible range of

measures." For dishwashers, NVRDC

suggested the Ecotech I prototype; heat

pumps for water heating dishwashers;

and the range of designs currently

available. (NRDC, No. 3, at 4-6). The

Department analyzed the Ecotech I, and

performed literature reviews on new

designs. In addition, data were sought

from manufacturers on current and

proposed designs. Heat pump

dishwashers have not been analyzed

because the Department could not

determine if design is technologically

feasible since no data have been

presented and no prototypes exist.

4. Efficiency, Levels Analyzed

DOE Examined a range of standard

levels, including the 1988 NAECA

standard. As discussed above, the

impacts of any revised standards were

compared to the 1988 NAECA standard;

therefore, the impacts of the base case

are generally not presented because

they are calculated to be zero.

Table 3-1 presents the efficiency

levels, other than the base case, selected

for analysis for 1993. Alternate levels

were selected to generate a range of

impacts for analysis. Initially, the levels

were selected for the class of standard

dishwasher (115 volt). Level 3

corresponds to the highest efficiency

level identified in the engineering

analysis. Levels 2 and 1 correspond to

lower efficiencies than that of level 3.

Each level was analyzed discretely in

the engineering analysis. Standard

levels for the other class of dishwashers

were based on the combination of

design options for the standard

dishwasher (115 volt).

The Department did not analyze

compact and standard-sized water

heating dishwashers (115 volt)

separately. Nevertheless, the impacts for

those classes are expected to be similar

since the design options that would be

adopted would be the same.

Because of the small. amount of

empirical data on compact waterheating dishwashers (115V and 230V)

and on standard water-heating

dishwashers (230V), the Department

was unable to analyze these classes. As

a result, the Department is not proposing

any amended standard for them.

Nevertheless, the standards that require

dishwashers of all classes to have an

option today without heat will remain in

effect for these three classes.

TABLE 3-1-ALTERNATIVE EFFICIENCY

LEVELS FOR 1993 FOR DISHWASHERS

[Energy Factor=LoadslkWVh/Yr.J

Product class

Compact dishwashers (11511) .........

Standard dishwasher (115V) ...........

Standard water heating dishwasher (1161) ...............................

Level analyzed

2

0.58

.41

.44

3

0.660 0.61

.42 .43

.451 .46

Payback Period Table 3-2 presents

the payback period for the efficiency

levels analyzed for the most prevalent

class of product (standard water heating

dishwasher (115 volt)). Standard level 1

involves efficiencies achievable with an

improved food filter, level 2 involves

additional efficiencies achievable with

an improved motor, and level 3 adds an

improved water fill control. All three

standard levels meet the rebuttable

presumption test in that the payback is

less than three years. Standard level 3 is

also the maximum technologically

feasible design option identified in the

analysis. See Technical Support

Document, Table'5.5.

TABLE 3-2-PAYBACK PERIODS (YEARS)

STANDARD WATER HEATING DISHWASHER (115 VOLTS)

Payback

period

Standard level:

1 ........................................................ 0.9

2 ........................................................ 1.3

3 ........................................................ . 2.1

Significance of Energy Savings. By the

year 2000, the weighted average energy

consumption of new dishwashers sold in

the absence of revised standards is not

projected to change compared to the

year 1993. The weighted average energy

consumption is projected to decline

between the year 2000 and 2015.

Overall, the average energy

consumption is projected to decrease

slightly from 1993 to 2015. See Technical

Support Document, Table 5.2. This is

because residential electricity rates are

projected to decline from 1984 to 1995,

then increase, reaching 1985 levels by

2015 (in real terms). See Technical

Support Document, Table 4.5 and DOE/

EIA-0383(37) Annual Energy Outlook

198..", Table A.3. Without upward

pressure on operating expenses, the

LBL--REM projects that there will be no

major energy consumption

improvements. The LBL-REM projects,

for the period 1993-2015,"the following

energy savings would result from the

increased standards:

Level 1-0.39 Quads

Level 2-0.52 Quads

Level 3--0.65 Quads

See Technical Support Document,

Table 5.3

On the basis of the above, DOE

believes that the increased standard

levels considered for dishwashers

would result in a significant

conservation of energy. However, DOE

believes that the LBL-REM base case

projections of no improvement in the

efficiency of dishwashers compared to

the year 2000 is unlikely. Between 1972

and 1983, the average efficiency of

dishwashers increased nearly 55

percent. During this time, the nation

experienced both declining and

increasing real energy prices. DOE

believes there is no reason to conclude

that the average efficiency of

dishwashers will not increase. Changes

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in shipment weighted energy factor

(SWEF) can be brought about by a

number of factors including heightened

consumer awareness. DOE requests

comments on this issue particularly the

LBL-REM's forecast of dishwasher

efficiency.

Economic Justification- A. Economic

impact on Manufacturers and

Consumers. The per unit increased cost

to manufacturers to meet the level 1

efficiency (improved food filter) is $7.50,

while the addition of improved motor

efficiency in standard level 2 costs an

additional $4.00. Standard level 3

provides efficiencies obtained with an

improved fill control, which adds

another $8.00. See Technical Support

Document, Tables 3.3 and 3.4.

For consumers, standard level 1 would

cause a price increase of $10.75 for a

standard dishwasher; standard level 2

would add an additional $6.21, while

level 3 would be $12.57 more. The price

increases caused by standard levels for

water-heating dishwashers are the

same. See Technical Support Document,

Tables 3.18 and 3.19.

The Lawrence Berkeley Laboratory

Manufacturers Impact Model'(LBLMIIvI), in the base case, projects

manufacturers' long-run return-on-equity

(ROE) to be 6.80 percent for

dishwashers. At level 1, the LBL-MiM

predicts that a prototypical dishwasher

manufacturer would have an ROE of

6.64 percent, a loss of 2.4 percent. At

level 2, the manufacturer's ROE is

expected to be 6.72 percent, a 1.2

percent decline. At level 3, however, the

LBL-MIM projects that the prototypical

dishwasher manufacturer's ROE would

be 6.97 percent, an increase of 2.5

percent over the base case. See

Technical Support Document, Table 7.9.

This industry has displayed

continuing consolidation for several

decades, especially during periods of

low earnings. By increasing profitability,

as DOE projects at standard level 3,

standards could lead to a reduction in

the rate of such consolidations, thereby

possibly contributing to more robust

competitiveness than is likely in the

base case.

The Department's characterization of

the prototypical manufacturer in the

base case assumes that manufacturers'

typical dishwasher designs are based on

the combination of options presented in

the Engineering Analysis for the

baseline unit. If manufacturers use a

different combination of design options

to produce dishwashers that minimally

comply with the 1993 standard, the

Department may have inappropriately

characterized the financial position of

the prototypical manufacturer in the

LBL-MIM. Furthermore, since financial

data of the type needed to characterize

the prototypical manufacturer are

generally not available, DOE had to

make a number of assumptions based on

the limited data publicly available, e.g.,

Securities and Exchange Commission

10K reports and company annual

reports. Because of the significant

impact that these assumptions could

have on the results of the analysis, DOE

requests comments on these issues,

particularly from small manufacturers.

The sensitivity analysis, however,

indicates that the dishwasher industry is

sensitive to price and operating expense

elasticities. For example, the high price

and low operating cost scenario

indicates that the effects of standards

would be to decrease return-on-equity

for dishwasher manufacturers by 2.5

percent. See Technical Support

Document, Table 7.13. While these`

scenarios are theoretically possible, the

Department expects that the original

analysis will be the likely outcome.

B. Life Cycle Cost and Net Present

Value. The LCC analysis indicates that

for each possible standard level the

increase in purchase price would be

offset by savings in operating expenses.

Standard level 3 corresponds to the

minima of the life-cycle cost curves. See

Technical Support Document, Figures

3.17 and 3.18. This indicates that the

standard level would not cause any

economic burden on the average

consumer. For consumers, standard

level 1 would cause a reduction in lifecycle cost of $98.56 for a standard

dishwasher; standard level 2 would

reduce life-cycle cost an additional

$5.45, while level 3 would result in a

further decrease of $ 96 compared to

level 2. For standard water heating

dishwashers standard level 1 would

cause a reduction in life-cycle cost of

$92.09; standard level 2 would reduce

life-cycle cost an additional $5.45, while

level 3 would result in an increase of

$.02 compared to level 2. See Technical

Support Document, Table 6.3.

While DOE examined the effect of

different discount rates, five, seven, and

10 percent, on the LCC curves and

generally found little impact, the

Department did not consider higher

discount rates. Similarly, DOE did not

consider different energy prices,

including regional prices, in the LCC

analysis. However, DOE did examine

the effect of a usage rate that was

different from the 322 cycles per year set

by the DOE test procedure: Recent

Procter and Gamble data appear to

indicate that national average

dishwasher annual usage rate is 260

cycles per year, nearly 20 percent less

than the test procedure representative

average use cycle. The lower usage

numbers tend to result in lower lifecycle cost estimates, with the purchase

price carrying greater weight in the

calculations. For standard dishwashers,

at the lower usage rate, standard level 2

becomes the minimum life-cycle cost

point. Standard level I would cause a

reduction of $69.23 for a standard

dishwasher; standard level 2 would

reduce life-cycle cost an additional

$3.21, while level 3 would result in an

increase of $1.42 compared to level 2.

See Technical Support Document, Table

6.3. As can be seen, not only does the

minimum life-cycle cost point change

but the overall reduction in life-cycle

costs would be reduced by

approximately 10 percent. The

Department requests comments on the

effects of usage rates.

Another way to compare the costs

and benefits that would be associated

with any standard level is to estimate

the net impact on life-cycle cost. Such a

comparison for each standard level is

shown below. The incremental

consumer price for each standard level

for all equipment purchased in the first

year after the standard goes into effect;

the total operating expense savings

calculated at a 5, 7 and 10 percent

discount rates; and the net difference in

discounted savings and incremental

prices paid are presented. The results

show that, for each standard level, there

is a positive net reduction in life-cycle

cost; which indicates that, using

national average values, the benefits of

each candidate standard level exceed

the increase in price paid for the

appliance by the affected consumers.

DISHWASHER NET PRESENT VALUES

Gn millions of dollars, 19671

Standard level

Rice

in.

operating expense

savings LCc

differcrease

_

5% 7% 10, % antes

1 ....._ ...................... 25.79 266.61 240.42 205.90 210.64

2_ ........ ................. 51.05 304.65 272.67 233. 51 221.62

3 ......................„..... 95.27 346.47 310.13 265.57 214.86

The LBL-REM employs national

average energy prices and usage rates.

The appropriateness of this approach

depends on the relationship between

energy prices and consumer choice of

efficiency levels and the relationship

between consumers' expected usage and

choice of energy efficiency level. If those

consumers who face higher energy

prices and/or expect to use their

dishwashers more intensively, are on

average, more likely to buy higher

efficiency dishwashers, then a.modeling

approach that assumes that national

average energy prices and usage rates

apply to all consumers will yield results

CE-RM-88-101 COMMENT 02
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ZMINB^

Federal Regiter / Vol. 54; No. 152 / Wednesday, August 9, 1989 / Proposed Rules

that overstate the net benefits that could

be expected. As discussed above, recent

Procter and Gamble data have shown,

declines in usage rates for dishwashers.

The Department requests comments and

data on the effects of energy prices and

expected usage rates on the consumer's

choice of efficiency level.

The NPV analysis indicates that if a

stand were adopted at level 1, there

would be a net present value of $710

million from energy savings over the

period 1993-2015. At levels 2 and 3, the

corresponding NPV's would be $811

million and $609 million, respectively.

See Technical Support Document, Table

5.6.

C. Energy Savings. As discussed

above, DOE proposes that standards, at

each candidate standard level, would

result in a significant saving of energy.

The Department conducted several

sensitivity cases, one of which was to

assume that after 1993, the market

would produce dishwashers of an

efficiency that increases more than the

standards would otherwise require.

The base case projects that there will

be only slight increases in the SWEF of

dishwashers after 1993, i.e., that the

private sector will not continue to

improve the efficiency of these

appliances much beyond the mandated

levels. The sensitivity case assumes that

after the 1993 standards are in place, the

base case efficiency o owth will

increase from 0.5 percent annually to 2.0

percent. The Department believes that

the maximum improvement in market-

.induced dishwasher energy efficiency

after 1993 would be the historical

improvement rate , 3.1'percent annually.

The Department does not have any

reason to assume that energy efficiency

would improve at a greater than

historical rate.

The Department believes that the

range of market-induced efficiencies

that would occur after 1993 in the

absence of additional Federal standards

would be from a low of no improvement

to a high of an historical average growth

rate. If SWEF increases, the energy

savings due to standards would be less

than calculated.

D. Lessening of Utility or Performance

of Products. As indicated above, DOE

established classes of products in order

to assure that the standards analyzed

would not lessen the existing utility or

performance of dishwashers. However,

there is no assurance that future utility

or performance of dishwashers would

not be lessened as a result of standardsinduced disincentives to investments in

energy-using new features.

In addition, the Department believes

adoption of any of the design options

considered will not affect utility or

performance.

E. Impact of Lessening Competition.

The determination of this factor must be

made by the Attorney General.

F. Need to Save Energy. Dishwashers

use electricity as a primary energy

source, both for operation of the motors

and for the electric coils that are used in

the drying cycle. In addition, that

portion of water heater electricity

consumption that provides hot water to

the dishwasher is considered to be

indirect dishwasher electricity

consumption. Similarly, since some of

the hot water that is supplied to

dishwashers comes from gas water

heaters, dishwashers are responsible for

indirect gas consumption, too.

In 1987, source electricity generation

in the United States totaled 27.6

quadrillion Btu's, and gas consumption

totaled 17.18 quadrillion Btu's.

Dishwashers accounted for.8 percent

(or .22 Quads) of the electricity

generation and .4 percent (or .069

Quads) of the gas consumption: over six

percent of that dishwasher energy

consumption would be saved by

standard level 1, and over eight percent

of that consumption would be saved at

level 2. Furthermore, standard level 3

would save over 10 percent of the 1987

dishwasher energy consumption. The

sensitivity analysis on the LBL-REM

indicates that if market improvements

and consumer awareness of appliance

efficiencies continue at their historical

rates, then the projected savings at level

3 would be.17 Quads as compared to.65

Quads. -

Conclusion. After careful

consideration of the analysis, the

Department is proposing a revision of

the dishwasher standard to standard

level 1. The Department proposes that

standard level 1 for dishwashers saves a

significant amount of energy, and is

economically justified.

As discussed above, DOE's analysis

indicates that there would be a

significant energy savings at each

candidate standard level. For standard

level 1, during the period 1993-2015, this

savings would be .39 Quad of primary

electricity compared to the base case.

This represents five percent of the

expected dishwasher energy

consumption over that period.

Although standard level 1 would

cause an increase in the initial price to

the consumer of $10.75, the standard is

estimated to reduce the typical

consumer's life-cycle cost by $99. In

addition, with a payback of 0.9 years,

the candidate standard level satisfies

the rebuttable presumption test, i.e., it

has a value of energy savings that

repaid the initial purchase price increase

to the average consumer in less than

three years.

The technologies that may be

necessary to meet the standard are

available now in the form of improved

food filters used by some manufacturers.

For manufacturers, the standard is

expected to result in long-run returns on

equity of 6.64 percent.

The results of the analysis discussed

above, could change if a different

discount rate were used, energy prices

drop, or if the uses of national average

energy prices and national appliance

usage rates have introduced an

uncertainty into the analysis.

Standard levels 2 and 3 were both

found to save a significant amount of

energy but the Department proposes

that neither is economically justified.

Standard levels 2 and 3 result in

marginal benefits compared to standard

level 1. The life-cycle cost savings

compared to standard level 1 are

calculated to be $5.45 and $6.41

respectively. While the energy savings

are projected to be 0.52 and 0.65 Quads.

The payback period for standard levels

2 and 3 are less than 3 years; however,

the bulk of the consumer benefits are

due to standard level 1 benefits.

Furthermore , if energy prices were to

drop from the projected or usage rates

were lower than assumed, standard

level 1 could become the minimum lifecycle cost point. If this were to occur,

DOE is concerned that consumers would

be precluded from purchasing the most

cost-effective unit.

Level 3 standards, the maximum

technologically feasible level, involves

technologies that the Department

believes are generally available, i.e.,

improved food filter, improved motor

and improved fill control. However, the

Department finds that the price of the

improved fill control, $12.57, results in a

$13.53 reduction in lifetime operating

cost which yields the life-cycle

operating cost savings of $.96, or less

than $.10 per year over the average

dishwasher lifetime. While the benefits

of standards, on a life-cycle cost basis,

are calculated to exceed the cost to

consumers, the Department believes the

risks of standards at this level exceed

the possible benefits. As can be seen in

Figure 3.15 of the Technical Support

Document, the life-cycle cost curve for

standard dishwashers is relatively flat

between standard levels 1 and 3; DOE

believes that the differences in the lifecycle costs between points 1, 2, and 3

are probably less significant than the

possible inaccuracy of the analysis. For

example, if usage is lower than that

assumed, or if energy prices are lower

than those used in the analysis,

CE-RM-88-101 COMMENT 02
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incremental increases in price to meet

standard level 3, as compared to

standard level 2, would likely not be met

by the value of the energy saved.

Furthermore, the analysis predicts

energy savings of .65 Quads, or .13

Quads over standard level 2. The

Department believes that the marginal

energy saving benefits of level 3, as

compared to the uncertain nature of the

analysis as discussed, particularly with

respect to the LBL-REM's forecast of

relatively small improvements in SWEF

over the period of analysis and the

questions surrounding dishwasher usage

and appropriate discount rates do not

justify standards at this level. Therefore,

the Department concludes for the

reasons discussed above, that revised

dishwasher standards at standard level

3 are not economically justified.

Level 2 standards involve

technologies that the Department

believes are widely available, i.e.,

improved food filter and improved

motor. However, the Department finds

that the price of the improved motor,

$6.21, results in a $11.66 reduction in

lifetime operating ' cost or a life-cycle

cost savings of $5.45; approximately $.50

per year over the average dishwasher

lifetime. As discussed above, the

Department does not believe that these

marginal savings justify standards at

this level, because of the associated

risks at this level. Therefore, the

Department concludes that revised

dishwasher standards at standard level

2 are not economically justified.

In weighing the costs and benefits of

standards, the Department gave

considerable weight to the impacts on

consumers as measured in the life-cycle

cost analysis. The major impact of

standards on life-cycle cost occurs at

standard level 1. Because of the

uncertainty of the analysis, i.e., energy

price forecasts and usage rates,

consumers may not receive the marginal

benefits in life-cycle costs projected at

levels 2 and 3. Furthermore, DOE

believes that standard levels 2 and 3

could be beyond the minimum life-cycle

cost . point, precluding consumers from

purchasing the most cost-effective unit.

Therefore, DOE is proposing standard

level 1. The Department request

comments on the above, including

DOE's weighing of the factors.

b. Clothes T4rrashers

1. Classes

In the advance notice, the Department

discussed its methodology for reviewing.

the energy conservation standards for

clothes washers that were established

by the Act, to determine if the standards

should be amended. NAECA prescribed

a design standard for clothes washers;

units manufactured after January 1, 1988,

are required to have an option for a cold

water rinse.

The following are the classes of

clothes washers that have been

identified:

Top Loading, Compact (1.6 ft.3 capacity

or less)

Top Loading, Standard (1.61 to 2.74 ft.3

capacity)

Top Leading, Large (2.75 ft.3 capacity or

greater)

Top Loading, Semi-Automatic

Front Loading

Suds Savers

A review of the characteristics and

data regarding fully automatic top

loading washers indicates that class

distinction by capacity may be

appropriate. Compact washers offer the

utility of small cabinet size allowing

them to be placed in size-restricted

spaces. Larger washers offer the utility

of time savings for users that have large

laundry loads. However, the energy use

characteristics of existing machines

indicates that energy use is not a linear

function of capacity as might be

expected. This seems to preclude having

one standard for all capacities. From the

data collected to date, the Department is

unable to discern exactly why energy

usage varies disproportionately with

capacity, but suspects that different

-mixes of temperature control functions

may play a major role. If this is the case,

temperature control function may be a

better criteria than capacity by which to

distinguish classes. The Department

seeks comments on this subject.

Furthermore, since the last three of

these classes collectively represent less

than 5 percent of total industry

shipments, the Department did not

analyze them and is therefore not

proposing amended standards for these

classes; however, the existing standard

requiring a cold water rinse option is

proposed to remain in effect.

2. Design Options

The following is a list of design

options that were examined:

Warm Rinse Elimination

Improved Fill Control

Reduced Thermal Mass

Increased Mo tor Efficiency

Thermostatically Controlled Mixing Valves

Employed

3. Comments on the Advance Notice of

Proposed Rulemaking

For clothes washers, NRDC suggested

that the Department consider: (a)

Reduced wash cycle temperatures; (b)

insulation of the drum, (c) a combination

of (a) and (b); and (d) the wide range of

currently available designs for energy

efficiency in clothes washers. (NRDC,

No. 3, at 6). In its analysis, the

Department did consider each of these

energy conserving options. Reduced

wash cycle temperatures were

dismissed since studies have shown that

such lowered water temperatures affect

performance. Otherwise the Department

did examine all energy-concerning

designs in clothes washers that could be

found through literature searches,

discussions with industry personnel and

researchers, both domestically and

abroad.

NRDC suggested that the "suds

savings" feature of certain clothes

washers be considered a conservation

measure, rather than a separate class.

(NRDC, No. 3, at 3).

The Department believes that "suds

savings" provides a unique utility to the

consumer, both as a feature in itself, and

as a water and detergent saver.

Furthermore, because of the fact that

"suds savings" requires a nearby sink or

other storage device, its applicability as

a conservation measure could not be

universally employed. Therefore, the

Department has concluded that "suds

savings" clothes washers should be a

separate class.

The Speed Queen Company (Speed

Queen) suggested that the large capacity

clothes washer not be considered as a

separate class, but rather it should

remain in the class as standard

machines so as to reflect their higher

actual energy usage. (Speed Queen, No.

4, at 1-2). The Department agrees with

Speed Queen that large capacity

washers use more energy. The

Department, however, is proposing to

retain large capacity washers as a

separate class because of their utility as

discussed above. If large washers were

to be grouped together With standard

size washers and required to meet a

single standard, the large washers

would likely have more difficulty in

meeting that standard because energy

use is a function of volume.

4. Efficiency Levels Analyzed

Table 3-3 presents the efficiency

levels that have been selected for

analysis for 1993. These efficiency

estimates are for a standard capacity.

top-loading clothes washer. Alternate

levels were selected to generate a range

of impacts for analysis. As noted earlier,

standard level 1 corresponds to

efficiencies achieved by elimination of a

warm water rinse; level 2 corresponds to

efficiencies achieved by thermostatic

mixing valves; level 3 adds a more

efficient motor; and, level 4 substitutes a

plastic tub.

CE-RM-88-101 COMMENT 02
32756 Federal Register '/ Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules

TABLE 3-3--STANDARD LEVELS ANALYZED FOR TOP-LOADING CLOTHES

WASHERS

Size

Compact ^ ...:............ 0.761 0.96

Standard z............ .96 123

Large' ...................... 90 1.13

,ergy Factor (cu. ft.

Base" E c kWh)

line. I ,

11 2 3 4

1 Capacity less than 1.6 ft.'

2 Capacity 1.6 ft.3 to 2.75 ft.3

3 Capacity greater than 2.75 ft.'

1.02

1.32

1.21

1.04 1

1.05

1.34 1.35

1.23 1.24

Payback Period. Table 3-4 presents

the payback period for the efficiency

levels analyzed. Standard level 1

involves efficiencies achievable with

eliminating warm water rinse altogether,

level 2 involves additional efficiencies

achievable with thermostatic mixing

values, level 3 adds an improved motor,

and level 4 replaces the metal_ tab with a

plastic one. For standard capacity, toploading clothes washers, each standard

level satisfies the rebuttable

presumption test, i.e., the additional cost

of purchasing a product at each

efficiency level will be less than three

times the value of the energy savings

that the consumer will receive during

the first year. See Technical Support

Document Table 6.5.

TABLE 3-4.-PAYBACK PERIODS OF DESIGN

OPTIONS (YEARS) FOR STANDARD SIZE,

TOP-LOADING CLOTHES WASHERS

Payback

Period

Standard Level:

2 ....................................................... 0

2 ....................................................... 0.9

3 ....................................................... 1.2

4 ....................................................... 1.6

Significance of Energy Savings. By the

year 2015, the weighted average energy

consumption of new clothes washers

sold in the absence of amended

standards is projected to be 923 kilowatt

hours per year (kWh/yr) a decline from

1152 kWh/yr in 1937. See Technical

Support Document, Table 5.9. At

standard levels 1 through 4, the average

consumption is expected to be 895, 867,

860, and 858 kWh/yr, respectively. See

Technical Support Document, Table

5.10. The LBL-REM projects, for the

period 1993-2015, the following energy

savings would result from the increased

standards:

Level 1-0.70 Quad

Level 2-1.21. Quads

Level 3-1.38 Quads

Level 4-1.50 Quads

Economic Justification.-.r'r. Economic

impact on Manufacturers and

Consumers. The per unit increased cost

to manufacturers to meet the level I

efficiency is $0; to meet Ievels 2- 4, the

manufacturers' cost increases, as

compared to the base case, are $13, $17,

and $23, respectively, for a standard,

top loading clothes washer. See

Technical Support Document, Table 3.8.

At those levels of efficiency, the

incremental consumer price increases

are $0, $19, $25.30, and $33.80 for

standard levels 1-4, respectively. See

Technical Support Document, Table

3.16.

The LBL-IMUM results for clothes

washers show that standard level 1

would cause manufacturers to have a

decline in ROE from 6.64 percent in the

base case to 6.45 percent (a decline of

2.9 percent). Standard levels 2-4,

however, are projected to improve

manufacturers' ROE's by 3.5 percent, 6.3

percent, and 8.4 percent, respectively.

See Technical Support Document, Table

7.17. This industry has displayed

continuing consolidation for several

decades, especially during periods of

low earnings. By increasing profitability,

as DOE projects at standards levels 2, 3,

and 4, standards could lead to a

reduction in the rate of such

consolidations, thereby possibly

contributing to more robust

competitiveness than is likely in the

base case.

The Department's characterization of

the prototypical manufacturer in the

base case assumes that manufacturers'

typical clothes washer designs are

based on the combination of options

presented in the Engineering Analysis

for the baseline unit. If manufacturers

use a different combination of design

options to produce clothes washers that

minimally comply with the 1993

standard, the Department may have

inappropriately characterized the

financial position of the prototypical

manufacturer in the LBL-MiM.

Furthermore, since financial data of the

type needed to characterize the

prototypical manufacturer are generally

not available, DOE had to make a

number of assumptions based on the

limited data publicly available, e.g.,

Securities and Exchange Commission

1OK reports and company annual

reports. Because of the significant

impact that these assumptions could

have on the results of the analysis, DOE

requests comments on these issues,

particularly from small manufacturers.

B. Life Cycle Cost and Net Present

Value. The LCC analysis indicates that

at each possible standard level the

increase in purchase price would be

offset by savings in operating expenses.

See Technical Support Document,

Tables 3.16 and 3.17. Also, of the four

candidate standard levels, level 3 had

the lowest consumer life-cycle cost. This

indicates that the standard level would

not cause any economic burden on the

average consumer because of the

decreasing life-cycle costs.

Standard level 1 would cause a

reduction in life-cycle cost of $147 for a

top loading standard-sized clothes

washer; standard level 2 would reduce

life-cycle cost an additional $19,

standard level 3, the minimum life-cycle

cost point, an additional $4, while

standard level 4 would result in an

increase of $7 compared to standard

level 3. While DOE examined the effect

of different discount rates, 5, 7, and 10

percent, on the LCC curves and

generally found little impact, the

Department did not consider higher

discount rates. Similarly, DOE did not

consider different energy prices,

including regional prices, in the LCC

analysis. However, DOE did examine

the effect of a usage rate different from

the 416 cycles per year set by the DOE

test procedure. Recent Procter and

Gamble data appear to indicate that the

national average clothes washer annual

usage rate is 406 cycles per year,

approximately 3 percent less than the

test procedure representative average

use cycle. The slightly lower usage

numbers tend to result in lower lifecycle cost estimates, with the initial

purchase price increase carrying greater

weight in the calculations. See Technical

Support Document, Tables 3.16 and 3.17.

Another way to compare the costs

and benefits that would be associated

with any standard level is to estimate

the net impact on life-cycle cost. Such a

comparison for each standard level is

shown. below. The incremental

consumer price for each standard level

for all equipment purchased in the first

year after the standard goes into effect;

the total operating expense savings

calculated at a 5, 7 and 10 percent

discount rates; and the net difference in

discounted savings and incremental

prices paid are presented. The results

show that, for each standard level, there

is a positive net reduction in life-cycle

cost; which indicates that, using

national average values, the benefits of

each candidate standard level exceed

the increase in price paid for the

appliance by the affected consumers.

CE-RM-88-101 COMMENT 02
Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules 32757

CLOTHES WASHER NET PRESENT VALUES

[in millions of dollars, 19871

Operating expense

Price savings LCC

Standard level in.

crease

5 7 10 differences

per- per- per.

cent cent cant

............................. 29.27 461.70 407.12 342.03 377.85

2 ..........................._i 64.39 726.58 640.75 538.09 576.36

3 ............................. 99.11 783.79 691 .19 580.67 592.08

4- ........................... 153.77 803.95 709.01 595.63 555.23

The LBL-REM employs national

average energy prices and usage rates.

The appropriateness of this approach

depends on the relationship between

energy prices and consumer choice of

efficiency levels and the relationship

between consumers' expected usage and

choice of energy efficiency level. If those

consumers who face higher energy

prices and/or expect to use their

dishwashers more intensively, are, on

average, more likely to buy higher

efficiency dishwashers, then a modeling

approach that assumes that national

average energy prices and usage rates

apply to all consumers will yield results

that may overstate the net benefits that

could be expected. As discussed above,

recent Procter and Gamble data have

shown declines in usage rates for

clothes washers. The Department

requests comments and data on the

effects of energy prices and expected

usage rates on consumer's choice of

efficiency level,

The NPV analysis indicates that

standard level 1 would produce a net

present value of $1.45 billion to

consumers. The corresponding NPV

numbers for levels 2-4 are $2.47 billion,

$2.62 billion, and $2.47 billion;

respectively. See Technical Support

Document, Table 5.14.

C. Energy Savings. As indicated

above, standards will result in savings

of electricity consumption for clothes

washers. If, however, the marketplace

continues to demand changes in

efficiency at the same rate as

historically, the LBL-REM projects that

energy savings from standards over the

1993-2015 period will be reduced by .43

Quads.

D. Lessening of Performance of

Products. As indicated above, DOE

established classes of products in order

to assure that the standards analyzed

would not lessen the existing utility or

performance of clothes washers.

Standard level 1 involves an

efficiency level that was attained by

eliminating the warm water rinse option.

It could be argued that if manufacturers

chose to achieve the standard's

efficiency levels by eliminating that

option, the utility of the clothes washer

could be lessened. DOE appreciates that

concern, but considers the utility of a

clothes washer is its ability to clean

clothes. The Department welcomes

comments about the utility of a warm

water rinse option in a clothes washer.

E. Impact of Lessening Competition.

The determination of this factor must be

made by the Attorney General.

F. Need to Save Energy. Like

dishwashers, clothes washers use

electricity directly, and are responsible

for the water heater energy consumption

that is necessary to supply the heated

water to the clothes washer. That water

heater energy consumption is primarily

either electricity or natural gas,

depending upon how the water heater is

fueled. Consequently, clothes washers

are responsible for both gas and

electricity consumption. In 1987, 1.6

percent of source electricity (or,.442

Quads) and 1.4 percent of natural gas

consumption (or, .241 Quads) were

consumed by clothes washers. Standard

level 1 would save nearly five percent of

the .683 Quads that clothes washers

consumed in 1987. Standard levels 2

through 4 would save 8.1 percent, 9.2

percent, and 10.0 percent, respectively.

The sensitivity analysis on the LBLREM indicates, however, that if

consumer awareness of, and concern

with, appliance efficiencies were to

continue at their historic averages, the

projected savings from standard level 3

would be 1.07 Quads over the 1993-2015

period.

Conclusion. After careful

consideration of the analysis, the

Department is proposing a revision of

the clothes washer standard to include a

range of standards that includes

continuing the 1988 NAECA standards

to standard level 2. The Department

proposes that each candidate standard

level for clothes washers saves a

significant amount of energy and that

standard levels 1 and 2 are

economically justified. However,

because of the analytical issues

discussed above, the Department is not

proposing specific standard levels

within the above range. Rather, DOE is

presenting the results of the analysis

and is soliciting additional comment and

information to be considered in

promulgating the final rule. The final

rule will specify a specific level for

clothes washers; the level selected could

include no change to the 1988 NAECA

standards.

As discussed above, DOE's analysis

indicates that there would be a

significant energy savings at each

candidate standard level of efficiency.

During the period 1993-2015, the

cumulative energy savings would be .7

Quads of primary electricity for level 1,

and 1.2 Quads for level 2.

For standard level 1 these estimated

savings can be achieved by eliminating

warm water rinse options; if so, the

standard would cause no extra costs to

manufacturers and zero consumer

financial expenditure. In fact, if the

savings are attained by this change in

feature, the standard is estimated to

reduce the typical consumer's life-cycle

costs by $144, from $3,870 to $3,726, with

a zero payback period (since there are

no additional expenses that are possible

to pay back). For standard level 2 these

savings would be achieved by adding

thermostatic mixing values resulting in

an increase in consumer expenditure of

$19 with a corresponding reduction in

life-cycle costs of $19.

Although these standards were

assumed to eliminate warm water rinse,

some consumers may continue to want

clothes washers with a warm water

rinse. If some manufacturers responded

to these consumer demands by

continuing to provide that feature, then

those producers would have to meet the'

energy conservation standard by some

other efficiency improvement. In doing

that, there would be some additional

manufacturing costs and higher

consumer prices, the amounts of which

would depend on the energy

conservation improvement made. In

addition, while the same amount of

energy would conceivably be saved,

there would be some positive payback

period for the consumer, the length of

which would also depend on the extra

expense of the other efficiency

improvement.

DOE believes the technologies that

may be necessary to meet each standard

level will be commercially available by

1993. The technologies to meet standard

levels 1-3 are considered to be presently

widely available or capable of being

carried out. For manufacturers, level I

standards are expected to produce

increases in their return-on-equity of

6.45 percent, a decline of nearly 3

percent from the baseline. Standard

level 2 will result in a return-on-equity

of 6.87 percent. DOE considers the

decline in ROE for level 1 to be an

anomaly of the LBL-MIM which is

caused by the no additional

manufacturer cost of the eliminate warm

rinse design option.

In the base case (1988 NAECA

standards), DOE believes the analysis

may not accurately estimate the impacts

of amended standards. As discussed

above, the Department believes that the

LBL-REM overestimates energy

consumption in the base case by

forecasting moderate increases in

CE-RM-88-101 COMMENT 02
32758 Federal Register / Vol. 54, No. 152 -/ Wednesday, August 9, 1989 / Proposed Rules

clothes washer efficiency. Furthermore,

characterization of the prototypical firm

in the LBL-MIM does not account for

manufacturers electing to continue to

provide a warm water rinse option, and

adding other, presumably more costly

design options.

For standard level 1, the Department

proposes that there would be a

significant conservation of energy and

that the standards are projected to have

little economic impact on manufacturers.

In addition, the standards would likely

not cause an increase in price to

consumers. However, standards at this

level, eliminating warm water rinse,

may be viewed as negatively affecting

the utility of the product. Also, the

analysis may underestimate the

economic impacts on consumers and

manufacturers as discussed above, if

manufacturers elect to retain the warm

water rinse option and incorporate other

design options.

For standard level 2, the Department

proposes that there would be significant

conservation of energy and that the

standards are projected to have little

economic impact on manufacturers.

Standards at this level would likely be

met with existing technology and would

reduce consumer life-cycle costs.

More stringent standard levels were

examined and rejected for the following

reasons: First, the level 4 standard, the

maximum technologically feasible level,

is beyond the minimum life-cycle cost

point; this would preclude the average

consumer from purchasing the most

cost-effective product; i.e., the minimum

life-cycle cost unit. In addition, the

results of the analysis could change if

different annual cycles of operation

were used, thereby reducing benefits of

standards. While standard level 4 would

save additional amounts of energy, 1.5

Quads as compared to 0.7 Quads, level

1, and would appear to have positive

economic impacts on manufacturersstandards are forecast to cause an

increase in manufacturers' return-onequity-DOE does not consider these

benefits to outweigh the consumer lifecycle cost impacts.

Level 3 standards, the minimum lifecycle cost point, involves technologies

the Department believes to be widely

available, i.e., warm rinse elimination,

,and use of thermostatic mixing valves

and improved motors. However, the

Department believes that the additional

price of the improved motor, $5.30, and

the corresponding decrease in life-cycle

costs, $4 or approximately $.30 per year

over the average clothes washer

lifetime, do not justify standards at this

level. DOE believes the risks of

standards at this level exceed the

possible benefits. As can be seen in

Figure 3.17 of the Technical Support .

Document, the life-cycle cost curve for

top-loading standard size clothes

washers is relatively flat between

standard levels 2 and 4; DOE believes

that the differences in the life-cycle

costs between these levels are likely

less significant than the uncertainty of

the analysis. For example, for

consumers whose usage is lower than

assumed by the test procedures or

whose energy prices are lower than

those used in the analysis, the

incremental price increase to meet

standard level 3, compared to standard

level 2, would likely not be met by the

value of the energy saved. In addition,

the analysis predicts energy savings of

1.38 Quads, or.17 Quads over standard

level 2. Finally, the impact of this

standard on manufacturers is likely to

increase manufactarers'return-onequity. The Department believes that the

marginal benefits as compared to the

uncertainty in the analysis as discussed

above, do not economically justify

standards at this level. Therefore, the

Department concludes that revised

clothes washer standards at standard

level 3 are not economically justified.

c. Clothes Dryers

1. Classes

In the advance notice, the Department

discussed its methodology for reviewing

energy conservation standards for

clothes dryers that were established by

the Act, to determine if the standards

should be amended. NAECA prescribed

a design standard for gas clothes dryers;

standing pilot lights are prohibited on

units manufactured after January 1, 1988.

The following classes of clothes dryers

have been identified:

Electric, Standard

Electric, Compact (120x)

Electric, Compact (24OV )

Electric Heat Pump

Gas, Standard

Gas, Compact

Compact gas clothes dryers and heat

pump clothes dryers were not analyzed

for this rulemaking. In these instances

the product classes represent 'a very

small segment of the market and

manufacturer or industry cost and

performance data were not available,

Therefore, cost and performance

estimates were not performed. Compact

,

gas clothes dryers will retain the ban on

standing pilot lights and heat pump

clothes dryers will have no standards

imposed in this rulemaking. Both of

these classes will be addressed in the

next rulemaking cycle.

2. Design Options

The following is a list of design

options that were examined:

Automatic Termination by Temperature

Sensing

Automatic Termination by Moisture Sensing

Added Insulation

Recycle Heat Exchanger Used

3. Comments on the Advance Notice of

Proposed Rulemaking

The Department received one

comment concerning clothes dryers. In

its comments, NRDC suggested

consideration of both condensing and

non-condensing heat exchangers, a

variety of efficiencies of heat pump and

microwave dryers, as well as spinassisted drying. (I'NRDC, No. 3, at 7-8).

The Department has analyzed both

condensing and non-condensing heat

exchangers. In addition, DOE identified

and analyzed one prototype heat pump

dryer, which the Department believes

largely captures the likely energy

savings possible. The Department has

placed heat pump clothes dryers in a

separate class because such units are

likely to be relatively larger than

conventional dryers, relatively slower in

drying time, and would probably need a

drain (thereby preventing their universal

applicability, and, as a consequence,

affecting their utility).

DOE does not believe that a

microwave dryer is technologically

feasible. DOE requested data on

microwave dryers in the advance notice,

no information has been submitted.

Therefore, this design option has not

been evaluated.

Standard levels I and 2 represent

efficiencies achieved by two different

forms of automatic termination,

temperature-sensing and moisturesensing, respectively. The test procedure

gives both moisture-sensing and

temperature-sensing 'termination the

same energy savings credit. In the

analysis the Department gave moisturesensing approximately 78 percent more

credit than temperature-sensing

termination. Nevertheless, in evaluating

the results, the Department treated them

as having the same energy savings

impact. The Department requests

comments about the relative energy

efficiencies of these two forms of

automatic termination in clothes dryers,

4. Efficiency Levels Analyzed

Tables 3-5 and 3-6 present the

efficiency levels that have been selected

for analysis for 1993.

CE-RM-88-101 COMMENT 02
Federal Register / Vol. 5A, No. 152 / Wednesday, August 9, 1989 / Proposed Rules 32759

TABLE 3-5.-STANDARD LEVELS ANALYZED FOR STANDARD CAPACITY ELECTRIC AND GAS CLOTHES DRYERS

Standard level

Energy

factor lib/

k7'Stt)

Energy

Baseline ...........................^

1 ................................

3 ................................

4 ................................

factor (lb/

kWh)

2.75

2.95

2.49

2226

.,.

The LEI---REM projects. for the period

ai2 2.82 199,3-2015the following energy saving

3.19 233 would result from the increased

3.39 .3.04 standards:

TABLE 3-6. -STANoARD LEVELS MALYZED FOR COMPACT CLOTHES DRYERS

Compact

11r3Y

Goncact,

24'd

Standard' level energy energy

factor (lbl

kWta)

factor (%P/

kWh)

aline ...._ ............._._..^ 2.91 263

t .............................. 3.13 2.82

. ... .... .

2.--- -

.. .... -- .. .. . 3.31 2.99

3 .......................... 2.30 3.05

4 ..................... _......... 1 3.60 3.25

Payback Period.

Table 3-7 presants the payback

periods for the efficiency levels

analyzed. Fbr standard-size electric

clothes dryers, only standard level 4

does not satisfy the rebuttable

presumption test; levels 1-3 all will

result in paybacks to the consumer in

less than 3 years.

For standard gas clothes dryers,

however, there is no standard level

whose efficiency improvement will

repay itself to the consumer in less than

3 years.

TABLE 3-7-PAYBACK PERIODS OF €)ESIGN OPTIONS (YEARS) FOR STANDARD

ELECTRIC AND GAS CLOTHES DRYERS

Payback

Standard level:

1 ............... ............. _..

Electric

2.0

1.9

2.5

4.7

periods

Gas

7.2

6.5

8.8

16.5

See Technical Support Document, Table 6.4.

Significance of &&terg Savings. By the

year 2015, the weighted average energy

consumption of new electric and gas

clothes dryers sold in the absence of

amended standards is projected to be

933 kWh/yr and 3.52 million Btu's f year,

respectively. See Technical Support

Document, Tables 5.15 and 5.16.

The majority of the savings due to

standards is electricity, since the LBLREM projects that between 1993 and

1996 gas clothes dryer average energy

consumption;-in the base case, will

decrease by over 10 percent (the base

case electric clothes dryer energy

consumption is not expected to change

until after 2005). This is because

residential electricity rates are projected

to decline from 1984 to 1995, then

increase, reaching 1985 levels by 2015

' term-)

Electricity Cos

Le;=e. i.... ... .... 0.50 Q lad .................... 0

Level 2..... ......... 0.67 Q-uad .................... 0

Level 3......... _.... 1.08 Quads .................. 0.02 Quarts

Lvel 4 ............... 1.70 Quads.................. 0.08 Quads

On the basis of the above, DOE

believes that the standard levels -.

considered for clothes dryers would

result in a significant conservation of

energy (iotal gas and electricity).

Economic j ustifzcat on-A. Economic

impact on Manufacturers and

Consumers. The per unit increased cost

to manufacturers to meet the level 1

efficiency is $8 for a standard electric or

gas unit. To meet levels 2-4, the

incremental cost increases are $5, $6.60,

and $30, respectively. See Technical

Support Document, Tables 3.12 and 3.13.

At those levels of efficiency, the

incremental consumer price increases

for an electric or gas dryer are $11.60,

$7.10, $10.00, and $46.90, respectively.

See Technical Support Document, tables

3.14 and 3.15.

The LBL-hIM results for clothes

dryers estimate that standard level I

would cause manufacturers to have an

increase in ROE from 6.6 percent in the

base case to 8.1 percent (a gain of 23

percent). At standard level 2 through 4,

the percentage changes in ROE

(compared to the base case ROE) are 42,

14, and minus 145 percent, respectively.

See Technical Support Document, Table

7.25.

The reason for the striking decline in

ROE under standard level 4 is thought to

be the industry's price elasticity of

demand. standard level 4 causes such a

large price increase that a significant

decline in the quantity of dryers

demanded occurs. In LBL-MIM, this fall

in unit sales causes a greater reduction

in revenue than in variable costs and, as

a result, profit and ROE decline.

This industry has displayed

continuing consolidation for several

decades, especially during periods of

low earnings. By increasing profitability,

as DOE projects at standard levels-1, 2

and 3 standards could lead to a

reduction in the rate of such -

consolidations, thereby possibly

contributing to more robust

competitiveness than is likely in the

base case.

The Department's characterization of

the prototypical manufacturer in the

base case assumes that manufacturers'

typical clothes dryer designs are based

on the combination of options presented

in the Engineering Analysis for the

baseline unit. If manufacturers use a

different combination of design options

to produce clothes dryers that minimally

comply with the 1993 standard, the

Department 'may have inappropriately

characterized the financial position of

the prototypical manufacturer in the

LI3L-1t31M. Furthermore, since financial

data of the type needed to characterize

the prototypical manufacturer are

generally not available, DOE had to

make a number of assumptions based on

the limited data publicly available, e.g.,

Securities and Exchange Commission

10K reports and company annual

reports. Because of the significant

impact that these assumptions could

have on the results of the analysis, DOE

requests comments on these issues,

particularly from small manufacturers.

B. L fe Cycle Cast and Net Present

Value. For clothes dryers, the LCC

analysis indicates that at each possible

standard level, except level 4 for gas

clothes dryers, the increase in purchase

price would be offset by savings in

operating expenses. See Technical

Support Document, Tables 3.18 and 3.19.

Also, of the four candidate standard

levels, standard Ievel3 for electric

clothes dryers and standard level 2 for

gas clothes dryers had the lowest lifecycle cost. This indicates at these levels

the standard would not cause any

economic burden on the average

consumer because of the decreasing lifecycle costs.

Standard level I would cause a

reduction in life-cycle costs of $45.62 for

electric standard clothes dryers and

$7.68 for gas standard clothes dryers;

standard level 2 would reduce life-cycle

cost an additional $37.22 and $7.88

respectively; standard level 3 would

result in a $5.28 reduction and $5.03

increase for standard electric and gas

clothes dryers, respectively; standard

level 4 would result in an increase of

$1.59 and $30.84 respectively.

While DOE examined the effect of

different discount rates, 5, 7, and 10

percent, on the LCC curves and

generally found little impact, the

Department did not consider higher

discount rates. Similarly, DOE did not

consider different energy prices,

including regional prices, in the LCC

analysis. However, DOE did examine

CE-RM-88-101 COMMENT 02
32760 Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 j Proposed Rules

the effect of a usage rate different from

the 416 cycles per year set by the DOE

test procedure. Recent Procter and

Gamble clothes washer data, when

applied to clothes dryers, appear to

indicate that the national average

clothes dryer annual usage rate is 406

cycles per year, approximately 3 percent

less than the test procedure

representative average use cycle. The

slightly lower usage numbers tend to

result in lower life-cycle cost estimates,

with the initial purchase price increase

carrying slightly greater weight in the

calculations. See Technical Support

Document, Tables 3.18 and 3.19.

Another way to compare the costs

and benefits that would be associated

with any standard level is to estimate

the net impact on life-cycle cost. Such a

comparison for each standard level is

shown below. The incremental

consumer price for each standard level

for all equipment purchased in the first

year after the standard goes into effect;

the total operating expense savings

calculated at a 5, 7 and 10 percent

discount rates; and the net difference in

discounted savings and incremental

prices paid are presented. The results

show that, for each standard level, there

is a positive net reduction in life-cycle

cost; which indicates that, using

national average values, the benefits of

each candidate standard level exceed

the increase in price paid for the

appliance by the affected consumers.

CLOTHES DRYER NET PRESENT VALUES

(In millions of 1987 dollars]

Price

Operating expense

savings LCC

Standard level In. 5 7 10 differcrease per- per- per- .noes

cent cent cent

t ............................. 50.07 213.24 184.00 150.43 193.93

2- * ........... . ..........

80.77 378.45 326.59 266.96 245.82

3 ............................. 124.17 435.39 375.71 307. 11 251.54

4 ............................. 322.83 600.60 518.26 423.66 195.43

The LBL-REM employs national

average energy prices and usage rates.

The appropriateness of this approach

depends on the relationship between

energy prices and consumer choice of

efficiency levels and the relationship

between consumers' expected usage and

choice of energy efficiency level. If those

consumers who face higher energy

prices and/or expect to use their

dishwashers more intensively, are, on

average, more likely to buy higher

efficiency dishwashers, then a modeling

approach that assumes that national

average energy prices and usage rates

apply to all consumers will yield results

that overstate the net benefits that could

be expected. As discussed above, recent

Procter and Gamble data, when applied

to clothes dryers, would appear to show

a decline in usage rates for clothes

dryers. The Department requests

comments and data on the effects of

energy prices and expected usage rates

on consumer's choice of efficiency level.

The NPV analysis indicates that

standard level 1 would produce a net

present value of $856 million over the

forecast period (all of the $856 million

would be attributed to the standard on

electric dryers). At standard level 2, the

NPV would be $1,646 million, of which

$1,625 would come from the standard on

electric dryers. Standard level 3 would

produce an electric dryer NPV of $1,711

million and a gas dryer NPV of minus

$21 million, for a total NPV for the

standard of $1,690 million. Lastly,

standard level 4 produces the same

$1,711 million NPV for electric dryers,

but, under this standard level, the NPV

for gas dryers is a negative $229 million,

leaving the standard's NPV at $1,482

million. See Technical Support

Document, Table 5.21.

C. Energy Savings. As indicated

above, standards will result in savings

of energy consumption by clothes

dryers. The cumulative energy savings

over the 1993-2015 period would range

from 0.5 Quads at standard level 1 to

1.78 Quads at standard level 4.

B. Lessening of Utility or Performance

of Products. As indicated above, DOE

established classes of products in order

to assure that the standards analyzed

would not lessen the existing utility or

performance of clothes dryers.

E. Impact of Lessening Competition.

The determination of this factor must be

made by the Attorney General.

F. Need to Save Energy. Clothes

dryers use electricity and natural gas as

their energy sources. Approximately 1.8

percent of the nation's 1987 source

electricity generation, and 0.3 percent of

that year's natural gas consumption

were used to operate clothes dryers.

This represented a total of .55 Quads of

energy, of which standard level 1 would

save 4.1 percent. Standard levels 2

through 4 would save 7.2 percent, 9.0

percent, and 14.8 percent, respectively.

The LBL-REM sensitivity analysis

indicates, however, that if consumer

awareness of, and concern with,

appliance efficiency were to continue at

its historical rate, the projected savings

at standard level 2 would be .09 Quads

over the 1993-2015 period.

Conclusion. After careful

consideration of the analysis, the

Department is proposing a revision of

the clothes dryers standard to require all

clothes dryers manufactured after

January 1, 1993, to be equipped with an

automatic termination device, either a

temperature or moisture sensing

termination control. The Department

proposes that this prescriptive standard

saves a significant amount of energy

and is economically justified.

As discussed above, DOE's analysis

indicates that there would be a

significant energy savings at the

candidate standard levels of efficiency.

During the period 1993-2015, the

cumulative energy saving is expected to

be between.50 Quads (level 1) and.87

Quads (level 2) of primary electricity.

This represents three to six percent of

the expected clothes dryer electricity

consumption over that period. DOE's

analysis indicates that there would not

be any gas saved due to the imposition

of the proposed standard. However,

DOE believes this is due to the LBLREM forecast that between 1993 and

1996 the average energy consumption of

new gas clothes dryers is to decrease

which the Department believes is due to

the incorporation of automatic

termination devices.

Therefore, DOE believes that for gas

clothes dryers the marketplace forces

will demand automatic termination

devices. While the analysis would

appear to indicate that level 2, moisture

termination, would save more energy,

and do so at lower consumer life-cycle

costs than level 1, temperature

termination, the Department's clothes

dryer test procedures treats both as

having the same energy conservation

potential. DOE's analysis of the

available data indicates that either the

two technologies have the same energy

conservation potential or that the test

procedure gives too much credit to

temperature termination. There are

presently no data available to DOE to

indicate that the test procedure should

give moisture termination a larger

energy conservation credit. Finally, as

indicated above, the data are not

conclusive that the test procedure

should be revised. Therefore, DOE is

proposing a prescriptive standard that

would allow manufacturers to choose

either type of automatic termination

device.

Although a prescriptive standard for

electric clothes dryers would cause an

increase in the initial price to the

consumer of $11.57 and $18.67 for

temperature-termination and moisturetermination, respectively, the standard

is calculated to reduce the typical

consumer's life-cycle costs of $38.80 and

$69 for temperature-termination and

moisture-termination, respectively. For

gas clothes dryers, a prescriptive

standard would cause an increase in the

initial purchase price to the consumer by

the same amount as electric clothes

CE-RM-88-101 COMMENT 02
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dryers and with a corresponding

decrease in life-cycle cost of $7.68 and

$15.56 for temperature-termination and

moisture-termination, respectively.

The technologies that may be

necessary to meet the standard are

available now in the form of

temperature-sensing and moisturesensing termination controls that are

presently installed in many electric

clothes dryers. For manufacturers, the

standard is expected to result in an

increase in long-run returns-on-equity

from 6.60 percent to between 8.10

percent and 9.40 percent.

As discussed above, there. is

uncertainty about the forecasting effort;

for example, the results of the analysis

could have been different if energy

prices changed differently from the

energy price forecasts or if use of

national energy prices and appliance

usage rates introduced a bias.

The Department examined more

stringent standard levels and rejected

them for the following reasons: First the

level 4 standard, the maximum

technologically feasible level, is beyond

the minimum life-cycle cost point for

both gas and electric clothes dryers; this

would preclude the average consumer

from purchasing the most cost-effective

.product, i.e., the minimum life-cycle cost

unit. Furthermore, the analysis indicates

that the standard would cause an

increase in the initial price to the

consumer of nearly $46.00 for both

electric and gas clothes dryers. This

increase in price is expected to preclude

many consumers from purchasing

clothes dryers and would also cause the

negative return-on-equity projected by

the LBl --MIM. While standard level 4

would save additional amounts of

energy (1.78 Quads as compared to 0.5

Quads, level 1); the Department believes

standards at this level would have

negative impacts on manufacturers and

consumers as discussed above.

Level 3 standards involve

technologies the Department believes to

be generally available, i.e., automatic

termination devices and 1 inch

insulation. However, for gas clothes

dryers the standard is beyond the

minimum life-cycle cost point, which

would prevent some consumers from

being able to purchase the cost-effective

units for them. For electric clothes

dryers, the Department believes that the

additional price of the insulation, $10.02,

and the corresponding minimal decrease

in life-cycle costs, $5.03 or less than $.50

per year over the average clothes dryer

lifetime, do not justify standards at this

level. DOE believes the risks of

standards at this level exceed the

possible benefits. As can be seen in

Figure 3.19 of the Technical Support.

Document, the life-cycle cost curve for

standard electric clothes dryers is

relatively flat between standard levels 2

and 3; DOE believes that the difference

in the life-cycle costs between these

levels are likely less significant than the

accuracy of the analysis. For example,

for consumers whose usage is lower

than assumed by the test procedures or

whose energy prices are lower than

used in the analysis, the incremental

price increase to meet standard level 3,

as compared to standard level 2, would

likely not be met by the value of the

energy saved. In addition, the analysis

predicts electricity savings of 1.06

Quads, or.19 Quads over standard level

2. Finally, the impact of the standards on

manufacturers is to reduce their returnon-equity from 9.4 percent at level 2 to

7.5 percent. The Department believes

.that the marginal benefits as compared

to the burdens of the standards and the

questionable nature of the analysis as

discussed above do not justify

standards at this level. Therefore, the

Department concludes that revised

clothes dryer standards at the standard

level 3 are not economically justified.

IV. Environmental, Regulatory Impact,

Takings Assessment, Federalsla and

Regulatory Flexibility Reviews

The Department has reviewed today's

proposed action in accordance with the

Department's obligations under:

'• The National Environmental Policy

Act of 1969 (NEPA) (42 U.S.C. 4321 at

seq.), the Council on Environmental

Quality regulations implementing the

procedural provisions of NEPA

regulations (40 CFR Part 1500 et seq.),

and the Department's own NEPA

regulations (10 CFR Part 1021);

• Executive Order 12291 (46 FR 13193,

February 19,1981) which pertains to

agency review of the impact of Federal

regulations;

• Executive Order 12630 (53 FR 8859,

March 18, 1988) which pertains to

agency consideration of Federal actions

that interfere with constitutionally

protected property rights;

• Executive Order 12612 (52 FR 41685,

October 30,1987) which pertains to

agency consideration of federal actions

that would have a substantial direct

effect on States, on the relationship

between the National Government and

the States, and on the distribution of

power and responsibilities among the

various levels of government; and

• The Regulatory Flexibility Act (5

U.S.C. 601 et. seq.) which requires, in

part, that an agency prepare an initial

regulatory flexibility analysis for any

proposed rule unless it determines that

the rule will not have a "significant

economic impact on a substantial

number of small entities." In the event

that such an analysis is not required for

a particular rule, the agency must

publish a certification and explanation

of that determination in the Federal

Register.

a. Environmental Review

DOE prepared-an Environmental

Assessment (EA) on the proposed

standards pursuant to the National.

Environmental Policy Act of 1969, as

amended, Pub. L. 91-190,40 U.S.C. 4221

et seq., and the implementing

regulations of the Council on

Environmental Quality (40 CFR Parts

1500 through 1808). The EA addresses

the possible incremental environmental

effects attributable to the application of

the proposed standards to the design of

three types of covered products:

dishwashers, clothes washers, and

clothes dryers.

A Finding of No Significant Impact

(FONSI) is published in today's Federal

Register. The FONSI concludes that the

proposed standards would result in no

significant environmental impacts and

that an environmental impact statement

is not required.

The EA is part of the Technical

Support Document and is available at

the DOE Freedom of Information

Reading Room at the address provided

at the beginning of this notice.

b. Regulatory Impact Review

Executive Order 12291 (46 FR 13193,

February 19, 1981) directs that, in

proposing a major rule,' 4. an agency

perform a regulatory analysis. Such an

analysis presents major alternatives to

the regulation that could substantially

achieve the same regulatory goal at

lower cost, as well as a description of

the costs and benefits (including

potential net benefits) of the proposed

rule.

DOE has determined that this

proposed rule is a "major rule."

Accordingly, a Draft Regulatory Impact

Review has been prepared.

The Regulatory Analysis is

summarized below. This summary

focuses on the major alternatives

considered in arriving at the proposed

approach to improving the energy

efficiency of consumer products. The

" "Major rule" means any regulation that is

likely to result in. (1) An annual effect on the

economy of $100 million or more: (2) A major -

increase in costs or prices for consumers, individual

industries, Federal, State, or focal government

agencies, or geographic regions; or (3) Significant

adverse effects on competition, employment,

investment, productivity, innovation, or on the

ability of United States-based enterprises to

compete with foreign-based enterprises in domestic

or export markets.

CE-RM-88-101 COMMENT 02
32762 Federal Register / Vol. 54, No. 152 / Wednesday, August 9, 1989 / Proposed Rules

reader is referred to the complete draft

"Regulatory Impact Analysis," which is

contained in the Technical Support

Document, available as indicated at the

beginning of this notice. It consists of:

(1) A statement of the problem

addressed by this regulation, and the

mandate for government action; (2) a

description and analysis of the feasible

policy alternatives to this regulation; (3)

a quantitative comparison of the

impacts of the alternatives; and (4) the

economic impact of the proposed

standard.

It should be noted at the outset that

none of the alternatives that were

examined for these three products saved

as much energy as the proposed rule.

Also, most of the alternatives would

require that enabling legislation be

enacted, since authority to carry out

those alternatives does not presently

exist.

Alternatives for Achieving Consumer

Product Energy Conservation

Six major alternatives were identified

by DOE as representing feasible policy

alternatives for achieving consumer

product energy efficiency. These

alternatives include:

• No New Regulatory Action

• Informational Action

-Product labeling

-Consumer education

• Prescriptive Standards

• Financial Incentives

-Tax credits

-Rebates

• Voluntary Energy Efficiency Targets

• The Proposed Approach

(Performance Standards)

Each alternative has been evaluated

in terms of its ability to achieve

significant energy savings at reasonable

costs, and has been compared to the

effectiveness of the proposed regulation.

If no new regulatory action were

taken, then no new standards would be

implemented for dishwashers, clothes

washers, and clothes dryers. This is

essentially the "base case" for each

appliance. In this case, between the

years 1993 and 2015 there would be

expected energy use of 40.54 Quads of

primary energy, with no energy savings

and a zero net present value.

Several alternatives to the base case

can be grouped under the heading of

informational action. They include

consumer product labeling and DOE's

public education and information

program. Both of these alternatives are

mandated by the Act. One base case

alternative would be to estimate the

energy conservation potential of

enhancing these programs. To model

this possibility, the Department assumed

that market discount rates would be

lowered by five percent for purchasers

of these three products. This resulted in

energy savings equal to 2.32 Quads,

with expected consumption equal to

38.22 Quads. The net present value is

estimated to be $3.05 billion.

Another method of setting standards

would entail requiring that certain

design options be used on each product,

i.e., prescriptive standards. For these

three products, this involved assuming

level 1 standards, i.e., improved food

filters for dishwashers, elimination of

warm rinse options for clothes washers,

and temperature termination for clothes

dryers. This resulted in energy

consumption, between 1993 and 2015, of

38.95 Quads, and savings of 1.59 Quads.

The net present value, in 1987 dollars,

was $3.02 billion.

Various financial incentive

alternatives were tested. These included

tax credits and rebates to consumers, as

well as tax credits to manufacturers.

The tax credits to consumers were

assumed to be 15 percent of the

increased cost of higher energy

efficiency features of these appliances,

while the rebates were assumed to be 15

percent of the increase in equipment

prices. The tax credits to consumers

showed a sizable change from the base

case, i.e., this alternative would save

2.30 Quads with a net present value of

$3.22 billion. Consumer rebates also

showed sizable changes; they would

save 2.29 Quads with a net present

value of $3.42 billion.

Another financial incentive that was

considered was tax credits to

manufacturers for the production of

energy-efficient dishwashers, clothes

washers, and clothes dryers. In this

scenario, an investment tax credit (ITC)

of 20 percent was assumed. The tax

credits to manufacturers had almost no

effect, since the energy consumption

estimates are 39.99 Quads with savings

equal to .55 Quad, and a net present

value equal to $52 million.

The impact of this scenario is so small

because the ITC was applicable only to

the tooling and machinery costs of the

firms, i.e., the firms' fixed costs, and

most of the design improvements that

would likely be adopted to manufacture

more efficient versions of these products

would involve purchased parts.

Expenses for purchased parts would not

be eligible for an ITC.

Two scenarios of voluntary energy

efficiency targets were examined; in the

first one, the proposed energy

conservation standards were assumed

to be voluntarily adopted by all the

relevant manufacturers in five years,

and, in the second scenario, the

proposed standards were assumed to be

adopted in 10 years. In these scenarios.

the five year delay would result in

energy consumption by these appliances

of 39.19 Quads, energy savings of 1.35

Quads, and a net present value of $2.22

billion; the 10 year delay would result in

40.04 Quads of energy being consumed,

.50 Quad being saved, and a net present

value of $940 million.

These scenarios assume that there

would be universal voluntary adoption

of the energy conservation standards by

these appliance manufacturers, an

assumption for which there is no

reasonable assurance.

Lastly, all of these alternatives must

be gauged against the performance

standards that are being proposed in

this notice. Such performance standards

would result in energy consumption of

dishwashers, clothes washers, and

clothes dryers to total an estimated

38.07 Quads of primary energy over the

1993-2015 time period. Savings would be

2.47 Quads, and the net present value

would be an expected $4.83 billion.

As noted at the beginning of this

section, none of the alternatives that

were considered for these products

would save as much energy as the

proposed rule.

c, "Takings"Assessment Review

Executive Order 12630 (53 FR 8859.

March 18, 1988) directs that, in

proposing a regulation, an agency

conduct a "takings" review. Such a

review is intended to assist agencies in.

avoiding unnecessary takings and help

such agencies account for those takings

that are necessitated by statutory

mandate.

For purposes of the Order:

"Policies that have takings implications"

refers to Federal regulations, proposed

Federal regulations, proposed Federal

legislation, comments on proposed Federal

legislation, or other Federal policy statements

that, if implemented or enacted, could effect a

taking, such as rules and regulations that

propose or implement licensing, permitting, or

other condition requirements or limitations

on private property use, or that require

dedications or exactions from owners of

private property.

It appears that there are three parts of

the appliance standards program that

conceivably could be viewed as having

"takings implications." These are testing

and certification requirements, the

impacts of standard levels, and possible

DOE testing of products for validation.

With regard to the first.part, namely,

testing and certification, the Department

believes that such a requirement,

implementing a long-established

statutory mandate in a manner

calculated to minimize adverse

CE-RM-88-101 COMMENT 02
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economic impacts, does not constitute a

"taking" of private property.

Similarly, the Department's possible

validation testing does not constitute a

"taking," within the limitations

described above.

Lastly, the impact of standards could

be viewed by some as a "taking."

Nevertheless, the Department believes

that the fact that while an energy

conservation standard may limit some

manufacturers in the range of appliance

efficiencies that they can produce, such

narrowing of the energy efficiency range

does not constitute a "taking" in the

sense described above.

In short, in none of the three parts of

the appliance standards program does

the Department believe that the

provisions of &0. 12630 pertain.

d. Federalism Review

Executive Order 12612 (52 FR 41685,

October 30, 1987) requires that

regulations or rules be reviewed for any

substantial direct effects on States, on

the relationship between the National

Government and the States, or on the

distribution of power and

responsibilities among various levels of

government. If there are sufficient

substantial direct effects, then Executive

Order 12612 requires preparation of a

federalism assessment to be used in all

decisions involved in promulgating and

implementing a regulation or a rule.

The Department believes that today's

regulation, when finalized, would not

have a substantial direct effect on State

governments. Firstly, State regulations

that may have existed on these three

products were preempted by the Federal

standards established in NAECA;

secondly, States could have petitioned

the Department for exemption from such

preemption, and none has done that;

lastly, today's regulation, when

finalized, amends (or, in one case

reaffirms) the Federal standards from

NAECA.

e. Regulatory.FlexibilityReview

The Regulatory Flexibility Act of 1980

(Pub. L. 96-354) requires an assessment

of the impact of proposed regulations on

small businesses. Small businesses are

defined as those firms within an

industry that are privately owned and

less dominant in the market.

In this rulemaking, three different

products and, hence, industries, are

being addressed. Regulatory flexibility

issues will be discussed for the

dishwasher, clothes washer, and clothes

dryer industries for which standards are

being proposed.

First, the energy conservation

standard of an improved food filter on

those dishwasher manufacturers, who

could be considered small businesses,

will-he discussed.

-Dishwasher manufacturing firms may

be divided into two groups: those that

compete on large sales-volume products

and those that compete in small,

specialized markets. Small firms are

generally forced to specialize in small

market niches that o ffer some protection

from the cost advantage that large firms

hold when they can produce in volume.

This effect can even be observed among

the major producers in the tendency of

the smaller major producers to produce

somewhat more specialized products.

There are significant differences

among the major firms. As learned from

discussions with industry consultants,

average cost decreases with firm size.

Thus, the industry has economies of

scale, and large firms (to the extent that

their facilities are up-to-date) have

lower average costs than small firms.

This fact, coupled with increasing

competitiveness of the national and

international markets, probably

accounts for the continuing

consolidation that has been occurring

for several decades. The fact that the

consolidation has been producing larger

firms strongly corroborates the finding

that large firms have a cost advantage.

A principal implication of

consolidation is that the smaller of the

major firms will be, on average , in more

danger of failing or being bought out

than will the large firms. Because of the

greater precariousness of smaller firms,

any decrease in average profitability is

more likely to damage seriously a

smaller firm, and an increase in average

profitability is more likely to mean the

difference between success and failure

for a smaller firm.

From the point of view of

competitiveness, a decrease in average

profitability could speed up the process

of consolidation, producing a less

competitive industry, while an increase

in average profitability could help

maintain the current levels of

competition. Either effect might well be

temporary, because, in the long-run, the

number of firms should be determined

by the industry's cost structure and by

the way a single firm's elasticity of

demand relates to the number of

competing firms.

Although larger firms have a cost

advantage due to economies of scale,

the very small firms in the dishwasher

manufacturing industry have found

market niches in which to survive

profitably. The small firms sell

dishwashers primarily to the

replacement and kitchen remodel

markets, which tend to offer higher

profit margins than does the builder

market. As a result, it is possible,

32763

according to industry consultants, that

small firms would have an easier time

passing through increased variable costs

that result from the proposed standard,

and thus may be affected more

positively than the large firms.

Therefore, the fact that this energy

conservation standard on dishwashers

is not likely to "have a significant

economic impact on a substantial

number of small entities " suggests that

the provisions of section 605.(b) of the

Regulatory Flexibility Act pertain. These

provisions state that neither an initial

nor a final regulatory flexibility analysis

need be performed for a proposed or

final rule "if the head of the agency

certifies that the rule will not, if

promulgated, have a significant

economic impact on a substantial

number of small entities."

Secondly, the proposed energy

conservation standards on clothes

washer manufacturers needs to be

addressed. The proposed standard is an

efficiency level that was achieved by

the elimination of a warm rinse option.

For those manufacturers who choose to

meet the standard by eliminating that

option, there will be essentially a zero

cost increase resulting from the

standard. Consequently, since this

standard may have no effect on any

manufacturer, large or small, the

Department believes that in this

industry, too, the provisions of section

605.(b) of the Regulatory Flexibility Act

pertain.

Lastly, the proposed energy

conservation standards on electric

clothes dryer manufacturers need to be

addressed. It is not at all clear that the

prescriptive standard levels being

proposed will "have a significant

economic impact on a substantial

number of small entities." The LBL-MIM

indicates, through its prediction on an

increase in typical ROE, that the

proposed standards are likely to slow

down the consolidation process

temporarily. This would lead to a

temporary slowing down of the

continuing decrease in this industry's

competitiveness. However, this

prediction would be tempered by the

observation that if standards were

technologically difficult to meet they

could hurt some smaller firms the most,

since smaller firms tend to have less

sophisticated research and development

capabilities. This should not be a

serious consideration for regulatory

flexibility, since the proposed standard

levels on clothes dryers will not be

technologically difficult to meet.

Therefore, since the prescriptive

standards that are being proposed are

expected to increase the clothes dryer

CE-RM-88-101 COMMENT 02
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manufacturers' ROE, and slow down the

industry-'s consolidation, the Department

believes that section 605.(b) of the

Regulatory Flexibility Act pertains here,

also.

Thus, for each of these three

industries, the Department is concluding

that the proposed standard level will not

"have a significant economic impact on

a substantial number of small entities,"

and that preparation of neither an initial

nor a final regulatory flexibility analysis

need be performed. DOE welcomes

comments on this conclusion.

V. Public Comment Procedures

a. Participation in Rulemaking.

DOE encourages the maximum level

of public participation possible in this

rulemaking. Individual consumers,

representatives of consumer groups,

manufacturers, associations, States or

other governmental entities, utilities,

retailers, distributors, manufacturers,

and others are urged to submit written

statements on the proposal. The

Department also encourages interested

persons to participate in the public

hearing to be, held in Washington, DC, at

the time and place indicated at the

beginning of this notice.

The DOE has established a comment

period of 60 days following publication

of this notice for persons to comment on

this proposal. All public comments

received and the transcript of the public

hearing will be available for review in

the DOE Freedom of Information

Reading Room.

b. Written Comment Procedures

Interested persons are invited to

participate in this proceeding by

submitting written data, views or

arguments with respect to the subjects

set forth in this notice. Instructions for

submitting written comments are set

forth at the beginning of this notice and

below,

Comments should be labeled both on

the envelope and on the documents,

"Three Products Rulemaking (Docket

No. CE-RM-.88-101)," and must be

received by the date specified at the

beginning of this notice. Ten copies are

requested to be submitted. All

comments received by the date specified

at the beginning of this notice and other

relevant information will be considered

by DOE before final action is taken on

the proposed regulation.

All written comments received on the

proposed rule will be available for

public inspection at the Freedom of

Information Reading Room, as provided

at the beginning of this notice.

Pursuant to the provisions of 10 CFR

1004.11, any person submitting

information or data that is believed to

be confidential and exempt by law from

public disclosure should submit one

complete copy of the document and 10

copies, if possible, from which the

information believed to be confidential

has been deleted. DOE will make its

own determination with regard to the

confidential status of the information or

data and treat it according to its

determination.

Factors of interest to DOE, when

evaluating requests to treat information

as confidential include: (1) A description

of the item; (2) an indication as to

whether and why such items of

information have been treated by the

submitting party as confidential, and

whether and why such items are

customarily treated as confidential, and

whether and why such items are

customarily treated as confidential

within the industry; (3) whether the

information is generally known or

available from other sources; (4)

whether the information has previously

been available to others without

obligation concerning its confidentiality;

(5) an explanation of the competitive

injury to the submitting person that

would result from public disclosure; (6)

an indication as to when such

information might lose its confidential

character due to the passage of time;

and (7) whether disclosure of the

information would be in the public

interest.

c. Public Hearing

1. Procedure for Submitting Requests

to Speak. The time and place of the

public hearing are indicated at the

beginning of this notice. DOE invites

any person who has an interest in these

proceedings, or who is a representative

of a group or class of persons having an

interest, to make a written request for

an opportunity to make an oral

presentation at the public hearing. Such

requests should be labeled both on the

letter and the envelope, "Three Products

Rulemaking (Docket No. CE-RM-88-

101)," and should be sent to the address,

and must be received by the time

specified, at the beginning of this notice.

Requests may be hand-delivered or

telephoned in to such address between

the hours of 8:30 a.m. and 4:30 p.m.,

Monday through Friday, except Federal

holidays.

The person making.the request should

briefly describe the interest concerned

and, if appropriate, state why he or she

is a proper representative of the group

or class of persons that has such an

interest, and give a telephone number

where he or she may be contacted. Each

person selected to be heard will be so

notified by DOE as to the time they will

be speaking.

Each person selected to be heard is

requested to submit 10 copies of the

statement at the beginning of the

hearing. In the evert any persons

wishing to testify cannot meet this

requirement, that person may make

alternative arrangements with the Office

of Hearings and Dockets in advance by

so indicating in the letter requesting to

make an oral presentation.

2. Conduct of Hearing. DOE reserves

the right to select the persons to be

heard at the hearing, to schedule the

respective presentations, and to

establish the procedures governing the

conduct of the hearing. The length of

each presentation is limited to 20

minutes.

A DOE official will be designated to

preside at the hearing. The hearing will

not be a judicial or an evidentiary-type

hearing, but will be conducted in

accordance with 5 U.S.C. 533 and

section 336 of the Act. At the conclusion

of all initial oral statements at each day

of the hearing, each person who has

made an oral statement will be given the

opportunity to make a rebuttal

statement, subject to time limitations.

The rebuttal statement will be given in

the order in which the initial statements

were made. The official conducting the

hearing will accept additional comments

or questions from those attending, as

time permits. Any interested person may

submit, to the presiding official, written

questions to be asked of any person

making a statement at the hearing. The

presiding official will determine whether

the question is relevant, and whether

time limitations permit it to be presented

for answer.

Further questioning of speakers will

be permitted by DOE. The presiding

official will afford any interested person

an opportunity to question, with respect

to disputed issues of material fact, other

interested persons who made oral

presentations, as well as employees of

the United States Government who have

made written or oral presentations,

relating to the proposed rule. This

opportunity will be afforded after any

rebuttal statements, to the extent that

the presiding official determines that

such questioning is likely to result in a

more timely and'effective resolution of

disputed issues of material fact. If the

time provided is insufficient or

inconvenient, DOE will consider

affording an additional opportunity for

questioning at a mutually convenient

time. Persons interested in making use

of this opportunity must submit their

request to the presiding official no later

than shortly after the completion of any

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rebuttal statements and be prepared to

state specific justification, including

why the issue is one of disputed fact and

how the proposed questions would

expedite their resolution.

Any further procedural rules regarding

proper conduct of the hearing will be

announced by the presiding official.

A transcript of the hearing will be

made, and the entire record of this

rulemaking, including the transcript, will

be retained by DOE and made available

for inspection at the DOE Freedom of

Information Reading Room as provided

at the beginning of this notice. Any

person may purchase a copy of the

transcript from the transcribing reporter.

d. Issues Requested for Cowmen t

As discussed above in today's notice,

DOE has identified a number of issues

where comments are requested. These

issues include, but are not limited to the

following:

• The baseline units and the base

cases;

• Market share elasticities;

• Usage elasticities;

or changes' in usage of features such as

no-heat dry options on dishwashers.

In consideration of the foregoing, it is

proposed to amend Part 430 of Chapter

II of Title 10, Code of Federal

Regulations, as set forth below.

Issued in Washington, DC, July 13, 1989.

John R. Berg,

Assistant Secretary, Conservation and

Renewable Energy.

List of Subjects in 10 CFR Part 430

Administrative practice and

procedure, Energy conservation,

Household appliances.

Product class

PART 430-EMERGY CONSERVATION

PROGRAM FOR CONSUMER

PRODUCTS

The authority citation for Part 430

continues to read as follows:

Authority: Energy Policy and Conservation

Act, Title III, Part B, as amended by National

Energy Conservation Policy Act, Title IV, Part

2, National Appliance Energy Conservation

Act of 1987, and National Appliance Energy

Conservation Amendments of 1988 (42 U.S.C.

• Appropriate discount rates, 6291-6309).

including. those for consumer analyses * * * *

(LCC and LBL-REM) and the use of a 2. Section 430.32 is amended by

social discount rate (LBL-REM); revising paragraphs (f), (g), and (h) to

• Energy price forecasts;

• Th h i f l

read as follows:

e c aracter zation o prototypica

firms for the manufacturer impact § 430.32 Energy conservation standards.

analysis (LBL-MIM); The energy conservation standards

• Efficiency forecasts for these three for the covered product classes are:

products; * * * *

• Any lessening of product utility, (f) Dishwashers.

especially with respect to the

elimination of warm water rinse in

clothes washers; Product class

Energy factor (loads/

kWh) effective January

• The effects on forecasts due to the 1,1993

use of national average energy prices

and usage rates; 1. Compact Dishwasher 0.58.

• The effects of standards on (11 SV).

2. Standard Dishwasher 0.41. manufacturer's incentives to develop (115V).

innovative products and product 3. Water Heating Must be equipped with

features; and Dishwasher, Compact option to dry without

• Any uncertainties in modeling (116'.'). heat.

especially product usage, e.g., changes 4. Water Heating

Dishwasher, Standard

0.44.

in usage rates as shown by survey data (115V).

5. Water Heating

Dishwasher, Compact

(220V).

6. Water Heating

Dishwasher, Standard

(220V).

32765

Energy factor (loads!

kWh) effective January

1, 1983

Must be equipped with

option to dry without

heat.

Must be equipped with

option to dry without

heat.

(g) Clothes washers.

Product class

Energy factor (cu. ft./

kWh/cycle) effective

January 1, 1993

1. Top Loading, Compact

(1.6 ft.' capacity or

less).

2. Top Loading,

Standard (1.61 to 2.74

ft.3 capacity or

greater).

3. Top Loading, Large

(2.75 ft.3 capacity or

greater).

4. Top Loading, SemiAutomatic.

5. Front Loading .................

6. Suds Saver .....................

Must have an unheated

rinse option to 1.02 cu.

ft./kWh/cycle.

Must have an unheated

rinse option to 1.32 cu.

ft./kWh/cycle.

Must have an unheated

rinse option to 1.21 cu.

ft./kWh/cycle.

Must have an unheated

rinse option.

Must have an unheated

rinse option.

Must have an unheated

rinse option.

(h) Clothes dryers.

Product class

1. Electric, Standard.......

2. Electric, Compact

(120V).

3. Electric, Compact

(240V).

4. Electric Heat Pump

[Reserved].

5. Gas, Standard ............

6. Gas, Compact.............

Requirement-January 1,

1993

Shall have moisture or

temperature termination.

Shall have moisture or

temperature termination.

Shall have moisture or

temperature termination.

Shall have moisture or

temperature termination.

Shall have moisture or

temperature termination.

[FR Doc. 89-18537 Filed 8.8•-89; 8:45 am]

BILLING CODE 5450-O1-M

CE-RM-88-101 COMMENT 02