8-i CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

................................ ................................ ................................ ....... 8

- 1

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analysis

........................... 8

- 1

8.1.2 Overview of Life

- Cycle Cost and Payback Period Inputs

................................ ............. 8

- 2

8.2 INPUTS TO LIFE

- CYCLE COST ANALYSIS

................................ ........................... 8

- 6

8.2.1 Total Installed Cost Inputs

................................ ................................ ........................... 8

- 7

8.2.1.1 Forecasting Future Product Prices

................................ .............................. 8

- 8

8.2.1.2 Baseline Manufacturer Selling Price

................................ ........................... 8

- 9

8.2.1.3 Increases in Manufacturer Costs

................................ ................................ . 8

- 9

8.2.1.4 Overall Markup

................................ ................................ ........................ 8

- 10

8.2.1.5 Installation Cost

................................ ................................ ....................... 8

- 10

8.2. 1.6 Total Installed Cost

................................ ................................ .................. 8

- 11

8.2.2 Operating Cost Inputs

................................ ................................ ................................ . 8

- 12

8.2.2.1 Annual Energy and Water Consumption

................................ ................... 8

- 13

8.2.2.2 Energy and Water Prices

................................ ................................ .......... 8

- 15

8.2.2.3 Energy and Water Price Trends

................................ ................................ 8

- 19

8.2.2.4 Repair and Maintenance Costs

................................ ................................ .. 8

- 21

8.2.3 Product Lifetimes

................................ ................................ ................................ ....... 8

- 21

8.2.4 Discount Rates

................................ ................................ ................................ ............ 8

- 23

8.2.4.1 Residential Discount Rates for Products Purchased in Existing

Households

................................ ................................ .............................. 8

- 23

8.2.4.2 Residential Discount Rates for Products Instal led in New Housing

........... 8

- 27

8.2.5 Compliance Date

................................ ................................ ................................ ........ 8

- 28

8.2.6 Product Assignment for the Base Case

................................ ................................ ........ 8

- 29

8.3 INPUTS TO PAYBACK PE RIOD ANALYSIS

................................ ......................... 8

- 31

8.4 RESULTS OF LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSES

.......... 8

- 32

8.4.1 Distributions of Life

- Cycle Cost for Baseline Units

................................ .................... 8

- 33

8.4.2 Distributions of Life

- Cycle Cost Under New Standard Levels

................................ .... 8

- 34

8.4.3 Distribution of Payback Period Under New Standard Level

................................ ........ 8

- 36

8.4.4 Life

- Cycle Cost and Payback Period Summary Results

................................ ............... 8

- 37

8.5 REBUTTABLE PAYBACK P ERIOD

................................ ................................ ........ 8

- 40

8.5.1 Inputs

................................ ................................ ................................ ......................... 8

- 41

8.5.2 Results

................................ ................................ ................................ ........................ 8

- 41

LIST OF TABLES

Table 8.1.1 Dishwashers: Summary of LCC and PBP Inputs

................................ .............. 8

- 5

Table 8.2.1 Dishwashers: Baseline Manufacturer Selling Price

................................ ........... 8

- 9

Table 8.2.2 Standard

- Sized Dishwashers: Standard

- Level Manufacturer Cost Increases

.... 8

- 108-ii Table 8.2.3 Compact Dishwashers: Standard

- Level Manufacturer Cost Increases

.............. 8

- 10

Table 8.2.4 Dishwashers: Overall Markups

................................ ................................ ....... 8

- 10

Table 8.2.5 Dishwashers: Baseline Installation Costs

................................ ......................... 8

- 11

Table 8.2.6 Standard

- Sized Dishwashers: Consumer Product Prices, Installation Costs,

and Total Installed Costs

................................ ................................ ................. 8

- 11

Table 8.2.7 Compact Dishwashers: Consumer Product Prices, Installation Costs, and

Total Installed Costs

................................ ................................ ........................ 8

- 11

Table 8.2.8 Standard Dishwashers: Annual Energy and Water Use by Efficiency Level

.... 8

- 1 4

Table 8.2.9 Compact Dishwashers: Annual Energy and Water Use by Efficiency Level

.... 8

- 15

Table 8.2.10 Average Residential Electricity Prices

................................ ............................. 8

- 16

Table 8.2.11 Average Residential Natural Gas Prices

................................ .......................... 8

- 17

Table 8.2.12 Average Monthly Residential Oil Prices in 2009

................................ ............. 8

- 18

Table 8.2.13 Average Water and Wastewater Prices per Unit Volume

................................ . 8

- 19

Table 8.2.14 Average Shares of C onsidered Household Debt and Equity Types: %

............. 8

- 24

Table 8.2.15 Average Nominal Interest Rates for Household Debt

................................ ...... 8

- 25

Table 8.2.16 Average Real Effective Interest Rates for Household Debt

.............................. 8

- 25

Table 8.2.17 Average Nominal and Real Interest Rates for Household Equity

..................... 8

- 26

Table 8.2.18 Shares and Interest or Return Rates Used for Household Debt and Equity

....... 8

- 27

Table 8.2.19 Data Used to Calculate Real Effective Mor tgage Rates

................................ ... 8

- 28

Table 8.2.20 Standard Dishwashers: Efficiency Market Share Data and Base

- Case

Forecast: %

................................ ................................ ................................ ..... 8

- 30

Table 8.2.21 Standard

- Sized Dishwashers: Base

- Case Efficiency Market Shares for

2018

................................ ................................ ................................ ................ 8

- 31

Table 8.2.22 Compact Dishwashers: Base Case Efficiency Market Shares for 2018

............. 8

- 31

Table 8.4.1 Standard

- Sized Dishwashers: Life

- Cycle Cost and Payback Period Results

..... 8

- 37

Table 8.4.2 Compact Dishwashers: Life

- Cycle Cost and Payback Period Re sults

.............. 8

- 37

Table 8.5.1 Standard

- Sized Dishwashers: Rebuttable Payback Periods

.............................. 8

- 41

Table 8.5.2 Compact Dishwashers: Rebuttable Payback Periods

................................ ........ 8

- 42

LIST OF FIGURES

Figure 8.1.1 Flow Diagram for the Determination of LCC and PBP

................................ ..... 8

- 4 Figure 8.2.1 Electricity Price Trends

................................ ................................ ................... 8

- 20 Figure 8.2.2 Inflation

- Adjusted Water Price Trend

................................ .............................. 8

- 21 Figure 8.2.3 Weibull Retirement Function for Dishwashers

................................ ................ 8

- 22 Figure 8.2.4 Historic and Projected Base Case Trend in Dishwasher Average Energy

Use

................................ ................................ ................................ ................. 8

- 30 Figure 8.4.1 Standard

- Sized Dishwashers: Base

- Case LCC Distribution

............................. 8

- 33 Figure 8.4.2 Compact Dishwashers: Base

- Case LCC Distribution

................................ ....... 8

- 34 Figure 8.4.3 Standard

- Sized Dishwashers: Distribution of LCC Impac ts for Efficiency

Level 2

................................ ................................ ................................ ............ 8

- 35 Figure 8.4.4 Compact Dishwashers: Distribution of LCC Impacts for Efficiency Level

1

................................ ................................ ................................ ..................... 8

- 358-iii Figure 8.4.5 Standard

- Sized Dishwashers: Distribution of PBPs for Efficiency Level 2

...... 8

- 36 Figure 8.4.6 Compact Dishwashers: Distribution of PBPs for Efficiency Level 1

................ 8

- 37 Figure 8.4.7 Range of LCC Savings for Standard

- Sized Dishwashers

................................ . 8

- 38 Figure 8.4.8 Range of LCC Savings for Compact Dishwashers

................................ ........... 8

- 39 Figure 8.4.9 Range of Payback Peri ods for Standard

- Sized Dishwashers

............................ 8

- 39 Figure 8.4.10 Range of Payback Periods for Compact Dishwashers

................................ ...... 8

- 408-1 CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

8.1 INTRODUCTION

This chapter describes the Department of Energy (DOE)’s methodology for analyzing the

econ omic impacts of possible energy efficiency standards on individual consumers. Impacts include a change in operating expense (usually decreased) and a change in purchase price (usually increased). This chapter describes three metrics DOE used in the consume r analysis to

determine the effect of standards on individual consumers:

• Life

- cycle cost (LCC) is the total consumer expense over the life of an appliance, including purchase expense and operating costs (including energy expenditures). DOE

discounts futu re operating costs to the time of purchase and sums them over the lifetime

of the product

.

• Payback period (PBP) measures the amount of time it takes customers to recover the assumed higher purchase price of more energy

- efficient products through lower operating

costs.

• Rebuttable payback period is a special case of the PBP. Where LCC and PBP are estimated over a range of inputs that reflect real

- world conditions, rebuttable payback period is based on laboratory conditions, specifically those representative of the DOE test procedure.

Inputs to the LCC and PBP are discussed in sections 8.2 and 8.3, respectively, of this chapter. Results of the LCC and PBP are presented in section 8.4. The rebuttable PBP is discussed in section 8.5. Key v ariables and calculations are presented for each metric. DOE performed the calculations discussed here us i ng a series of Microsoft Excel spreadsheets

, which are accessible on the Internet ( http://www.eere.energy.gov/buildings/appliance_standards/ ). Details and instructions for using the spreadsheets are discussed in a ppendix 8A

.

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analysis

Recognizing that several inputs to the an alysis of consumer LCC and PBP are either
variable or uncertain, DOE used Monte Carlo simulation and probability distributions to define inputs when appropriate

. A ppendix 8B provides a detailed explanation of Monte Carlo simulation and the use of probabili ty distributions . DOE developed LCC and PBP spreadsheet

models that incorporat e both Monte Carlo simulation and probability distributions by using Microsoft Excel spreadsheets combined with Crystal Ball (a commercially available add

- in program).8-2 In addition to using probability distributions to characterize several of the inputs to the analysis, DOE developed a sample of individual households that use dishwashers, which

includes 2, 480 household records. By developing household samples, DOE was abl e to perform the LCC and PBP calculations for each household to account for the variability in energy and water consumption and/or energy price associated with each household. As described in c hapter

7 , DOE used the DOE Energy Information Administration (E IA)’s 200 5 Residential Energy Consumption Survey (RECS) to develop household samples for standard and compact

dishwashers

. 1 The 200 5 RECS is a national sample survey of housing units that collects statistical information on the consumption of and expenditu res for energy in housing units along with data on energy

- related characteristics of the housing units and occupants. The 200 5 RECS

, which represents 4, 382 housing units

, was constructed by EIA to be a national representation of the household population in the U.S. Although the standard error of the sub

- samples is three

times the size of the entire 2005 RECS, it is still less than five percent. DOE believes a standard error of less than five percent is still small enough to yield meaningful results. Theref ore, DOE believes the results generated from the household samples for dishwashers are representative of U.S. households using these appliances.

DOE used RECS to establish the variability in annual energy use

, energy pricing

, annual

water use

, and water pricing. By using RECS, DOE was able to assign a unique annual energy use and/or energy price to each household in the sample. T he large number of households considered in the LCC and PBP analysis resulted in a large range of annual energy and water use

an d /or prices (the actual ranges of energy consumption were presented and discussed in c hapter 7). The variability in annual energy and water use and pricing across all households contributes to the range of LCCs and PBPs calculated for each standard level. As described later in this chapter, DOE characterized the variability and uncertainty in energy and water prices through regional differences.

DOE displays the LCC and PBP results as distributions of impacts compared to the base

case . Results are presen ted at the end of this chapter and are based on 10,000 samples per Monte Carlo simulation run. To illustrate the implications of the analysis, DOE generated a frequency chart depicting the variation in LCC and PBP for each standard level considered.

8.1.2 Overvi ew of Life

- Cycle Cost and P ayback Period Inputs

The LCC is the total consumer expense over the life of the product , including purchase expense and operating expense (including energy and water expenditures). DOE discounts future operating expenses to the time of purchase and sums them over the lifetime of the product . The PBP is the change in purchase expense due to an increased efficiency standard divided by the change in annual operating cost that results from the standard. It represents the number of years it will take the customer to recover the increased purchase expense through decreased operating

expenses.

DOE categorizes inputs to the LCC and PBP analysis as follows: (1) inputs for

e stablishing the total installed cost, including the purchase price , and (2) inputs for calculating the operating cost.8-3 The primary inputs for establishing the total installed cost are:

• Baseline manufacturer cost is the c ost incurred by the manufacturer to produce products meeting existing minimum efficiency standards , or the baseline product

.

• Standard

- level manufacturer cost increases represent t he change in manufacturer cost associated with producing products to meet a particular standard level.

• Markups and sales tax are costs associated with converting the manufacturer cost to a

consumer product price. The markups and sale tax are described in detail in C hapter 6

, Markups for Equipment Price Determination.

• Installation cost is t he cost to the c onsumer of installing the product after purchase, including costs for labor, overhead, and any miscellaneous materials and parts

. Thus, the total installed cost equals the consumer product price plus the installation cost.

The primary inputs for calcula ting the operating cost are:

• Product energy and water consumption quantify the energy and water use associated with operating the product

. Chapter 7 , Energy and Water Use Analysis , details how DOE used

various data sources to determine the product energy and water consumption of standard and compact dishwashers

.

• Product efficiency dictates the energy and water consumption associated with a standard

level product (i.e., a product having an efficienc y greater than a baseline product ). Chapter 7 deta ils how energy and water consumption change with increasing product efficiency.

• Energy and water prices are the prices consumers pay for energy (i.e., electricity, gas, or oil) and water. DOE determined current energy prices based on data from the DOE

- E IA

and Natural Gas Monthly (see section 8.2.2.2) . DOE determined water prices based on data from the American Water Works Association (AWWA) and the Raftelis Financial Consultants (see section 8.2.2.2)

. 2

• Energy and water price trends : DOE used the refere nce case in EIA ’s Annual Energy

Outlook 20 1 1 ( AEO20 1 1 ) to forecast future energy prices f or the results presented in this chapter . DOE used the Bureau of Labor Statistics’ consumer price index (CPI) data specific to water and sewage services to forecast fu ture water prices.

• Repair and maintenance costs : Repair costs are associated with repairing or replacing components that have failed. Maintenance costs are associated with maintaining the operation of the product

. Section 8.2.2.4 details DOE’s method for estimating repair and

maintenance costs.8-4 • Lifetime is t he age at which the product is retired from service. Section 8.2.3 describes the distribution DOE developed for product lifetimes.

• Discount rate is t he rate at which DOE discounted future expenditures to establish their present value.

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating cost inputs used to c alculat e the LCC and PBP. In the figure, the yellow boxes indicate the inputs, the green bo xes indicate intermediate outputs, and the blue boxes indicate the final outputs (the LCC and PBP).

Figure 8.1.1 Flow Diagram for the Determination of LCC and PBP

Table 8.1.1 summarize s the input values that DOE used to calculate the LCC and PBP for standard and compact dishwashers. Inputs to calculate the total installed cost and operating cost

includ e the lifetime, discount rate, and energy and water price trends. DOE char acterized all of the total cost inputs with single

- point values, but characterized several of the operating cost inputs with probability distributions that capture the input’s uncertainty and/or variability. For those inputs characterized with probability distributions, the values provided in the following B a s e l i n e
M a n u f a c t u r e r C o s t

S t d

- L e v e l

M a n u f a c t u r e r C o s t

M a n u f a c t u r e r
M a r k u p

R e t a i l e r o r
D i s t r i b u t o r

M a r k u p

S a l e s T a x I n s t a l l a t i o n C o s t T o t a l I n s t a l l e d

C o s t

W a t e r P r i c e s

E n e r g y a n d

W a t e r C o n s u m p t i o n E q u i p m e n t

P r i c e

L i f e t i m e
O p e r a t i n g
E x p e n s e A n n u a l E n e r g y

a n d W a t e r
E x p e n s e

L i f e t i m e R e p a i r a n d

M a i n t e n a n c e C o s t

D i s c o u n t R a t e

E n e r g y a n d

W a t e r P r i c e

T r e n d s A n n u a l

O p e r a t i n g
E x p e n s e P a y b a c k

P e r i o d L i f e

- C y c l e C o s t

E n e r g y P r i c e s8-5 tables are the average or typical values. Table 8.1.1 also includes the section of th is technical support docum ent (TSD) that contains more detailed information on the inputs.

Table 8.1.1 Dishwashers: Summary of LCC and PBP Input s

Input Product

Class Average or Typical Value Characterization TSD Section

Reference

Total Installed Cost Inputs

Baseline

Manufacturer

Cost Standard 355 AEU = $ 190.98 Single

- Point Value 8.2.1.1 Compact 260 AEU = $185.72

Standard

- Level

Manufacturer

Cost Increase Standard 324 AEU = $ 18.27

307 AEU = $ 31.82

295 AEU = $ 69.23

234 AEU = $ 75.18

180 AEU = $ 82.95 Single

- Point Value 5.5.1

Compact 222 AEU = $ 1.00

154 AEU = $ 12.11

Manufacturer Markup Both 1.2 4 Single

- Point Value 6 .2

Retailer Markup Both Baseline = 1.45

Incremental = 1.1 7 Single

- Point Value 6 .3

Sales Tax Both 7.17% (average) Variable based on

location 6

. 4

Installation Cost Both $ 303.00 Single

- Point Value 8.2.1. 5
Operating Cost Inputs

Usage Both 215 cycles/year Variability determined

from househ old sample. Usage ranges

from 4 to 612 cycles/year 7

. 4

Annual Energy

Use* Standard Baseline use** = 2 11 kWh Variability based on

usage 7

. 3 Compact Baseline use** = 160 kWh

Annual Water

Use Standard Baseline use** = 1. 40 10 3

gallon Variability based on

usage 7

. 3 Compact Baseline use** = 0.97 10 3

gallon

Energy Prices Both Electricity = 0.12 ¢/kWh

Gas = 14.3 5 $/MMBtu

Oil = 17.09 $/ MMBtu Variable based on

location 8.2.2.2

Water and

Wastewater Both Water = 3.30 $/10 3 gallon Wastewater = 3.87 $/10 3 Variable based on

location 8.2.2.28-6 Input Product

Class Average or Typical Value Characterization TSD Section

Reference

Prices gallon

Repair and

Maintenance

Costs Both Not included No appreciable

difference between baseline and efficiency level repair costs 8.2.2.4

Lifetime Both 15.4 years Weibull distribution 8.2.3

Discount Rate Both 4.91 % Custom distribution 8.2.4
Energy Price

Trend Both AEO 201 1 AEO reference case 8.2.2.3

Water and

Wastewater

Price Trend Both Extrapolated based on growth

in 1970

– 2009 for CPI for water and sewerage. Single forecast 8.2.2.3

* Annual use based on electric water heating.
** Annual use provided for baseline product only. Annual use decreases with increased product efficiency.

8.2 INPUTS TO LIFE

- CYCLE COST ANALYSIS

Life

- cycle cost is the total customer expense over the life of an appliance, including purchase price and operating costs (including energy and water costs ). DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product

. DOE defines LCC by the following equation:



## ( **)** 

# ∑

**=** 

### + **+ =**  N

t t t



### r OC IC LCC

1 

### 1

W here:

LCC = l ife

- cycle cost in dollars,

IC = t otal installed cost in dollars, ∑ = s um over the lifetime, from year 1 to year N,

N = l ifetime of appliance in years,

OC = o perating cost in dollars,

r = d iscount rate, and

t = y ear for which operating cost is being determined.

Because DOE gathered most of its data for the LCC and PBP analysis in 20 10 , DOE expresses dollar values in 20 10 $. The following sections discuss total installed cost, operating
cost, lifetime, and discount rate.8-7 8.2.1 Total Installed Cost Inputs

DOE defines the total installed cost using the followi ng equation:



### INST EQP IC **+ =** 

W here:

EQP = Product price (i.e., price the consumer pays for the product , including taxes ), expressed in dollars, and

INST = Installation cost (i.e., the cost to the consumer to install the product, including labor and materials), also in dollars.

The product price is based on how the consumer purchases the product . As discussed in

c hapter 6 , DOE defined markups and sales taxes for converting manufacturing costs into

consumer product prices. The inputs for th e total installed cost are:

• B aseline manufacturer cost is the cost incurred by the manufacturer to produce a product meeting existing minimum efficiency standards.

• Standard

- level manufacturer cost increases are the change in manufacturer cost

associated with producing a product at a standard level.

• Manufacturer and retailer m arkups and sales tax convert the manufacturer cost to a

consumer product price.

• I nstallation cost is the cost to the consumer of installing the product and represents all

costs re quired to install the product other than the marked

- up consumer product price. The installation cost includes labor, overhead, and any miscellaneous materials and parts

.

Thus, the total installed cost equals the consumer product price plus the installa tion cost. DOE calculated the total installed cost for baseline products based on the following equation:

BASE BASE OVERALL MFG BASE BASE BASE


### INST MU COST INST EQP IC

**+ ×**  **= +**  **=**

_

W here:

IC BASE = t otal installed cost for baseline product

, EQP BASE = c onsumer product price for baseline product

, INST BASE = i nstallation cost for baseline product

, COST MFG = m anufacturer cost for baseline product , and

MU OVERALL_BASE = o verall b aseline markup (product of manufacturer markup, baseline retailer markup, and sales tax).

DOE calculated the total installed cost for standard

- level products based on the following equation:8-8 

## ( **) (**  **) (**  **) (**  **)** 

# ( **)**

STD INCR OVERALL MFG BASE STD STD BASE BASE STD BASE STD BASE STD STD STD



### INST MU COST IC INST EQP INST EQP INST INST EQP EQP INST EQP IC

**∆ +**  **× ∆**  **+ =**  **∆ +**  **∆ +**  **+ =**  **∆ +**  **+ ∆**  **+ =**  **+ =** 

_

W here:

IC STD = s tandard

- level total installed cost

, EQP STD = c onsumer product price for standard

- level models,

INST STD = s tandard

- level installation cost, EQP BASE = c onsumer product price for baseline models,

Δ EQP STD = c hange in product price for standard

- level models,

INST BASE = b aseline installation cost,

Δ INST STD = c hange in installation cost for standard

- level models,

IC BASE = b aseline total installed cost

, Δ COST MFG = c hange in manufacturer cost for standard

- level models, and

MU OVERALL_INCR = i ncremental overall markup (product of manufacturer markup, incremental retailer or distributor markup, and sales tax).

The remain der of this section provides information about each of the above input

variables that DOE used to calculate the total installed cost for standard and compact residential

dishwashers.

8.2.1.1 Forecasting Future Product Prices

Examination of historical price data for certain appliances and products that have been subject to energy conservation standards indicates that the assumption of constant real prices and costs may, in many cases, overestimate long

- term trends in appliance and product price s

. Economic literat ure and historical data suggest that the real costs of these products may in fact trend downward over time according to “learning” or “experience” curves. On February 22, 2011, DOE published a notice of data availability (NODA, 76 FR 9696) stating that DOE may consider improving regulatory analysis by addressing product price trends. In the NODA, DOE proposed that when sufficiently long

- term data are available on the cost or price trends for a given product, it would analyze the available data to forecast f uture trends.

For the default price trend f or this final rule, DOE estimated an experience rate for

residential dishwashers based on an analysis of long

- term historical data. DOE derived a dishwasher price index from 1988 to 2010 using Producer Price Index (PPI) data for miscellaneous household appliances from the Bureau of Labor Statistics’ (BLS). (PPI data specific to residen tial dishwashers were not available.) An inflation

- adjusted price index was calculated using the GDP price deflator for the same years. This proxy for historic price data was then regressed on the quantity of dishwashers produced, based on a corresponding series for total shipments of dishwashers.8-9 To calculate an experience rate , a least

- squares power

- law fit was performed on the

dishwasher price index versus cumulative shipments. DOE then derived a price factor index

, with the price in 2010 equal to 1 , to forecast prices in the year of compliance for amended energy conservation standards in the LCC and PBP analysis, and for the NIA, for each subsequent year through 2047. The index value in each year is a function of the experience rate and the

cumulati ve production through that year. To derive the latter, DOE used projected shipments

from the base

- case projections made for the NIA (see section IV.G.1 of this notice)

. The average annual rate of price decline in the default case is 1.27 percent. DOE’s for ecast of product prices

for dishwashers in the LCC and PBP analysis is described further in appendix 8 C

.

8.2.1.2 Baseline Manufacturer Selling Price

DOE used data from AHAM to develop the baseline manufacturer selling pr ices for

standard

- sized and compact dishwash ers. 3

Table

8.2.1 Based on a manufacturer markup of 1.2 4 for all

dish washers (see section 6.2 of chapter 6 ) , DOE arrived at a baseline manufacturer selling price (MSP) of $ 190.98 for standard

- size dish washers and $ 185.72 for compact dish washers.

presents the baseline manufacturer costs along with the associated baseline annual energy

use for the product classes of residential dish washers.

Table 8.2.1 Dish washers: Baseline Manufacturer Selling Price

Product

Class Baseline Annual Energy Use Baseline Water

Use kWh/year Baseline

Manufacturer Cost gallons/cycle

Standard 2010$

355 6.50 190.98
Compact 260 4.50 185.72

8.2.1.3 Increases in Manufacturer Cost s

DOE used cost data submitted by AHAM, along with a reverse engineering analysis, to develop manufacturer cost increases associated with increases in standard levels for residential

dish washers. Refer to C hapter 5

, Engineering Analysis, for details. Table 8.2.2 and Table 8.2.3 present the standard

- level manufacturer cost increa ses and associated annual energy use for the product classes

.8-10 Table 8.2.2 Standard

- Sized Dishwashers: Standard

- Level Manufacturer Cost Increases

Efficiency

Level Annual Energy

Use Water Use

kWh/year Standard

- Level

Manufacturer Cost Increases gallons/cycle

Baseline 2010$

355 6.50

-- 1 324 5.80 18.27

2 307 5.00 31.82

3 295 4.25 69.23

4 234 3.80 75.18

5 180 1.60 82.95

Table 8.2.3 Compact Dishwashers: Standard

- Level Manufacturer Cost Increases

Efficiency

Level Annual Energy

Use Water Use Standard

- Level

Manufacturer Cost Increases kWh/year gallons/cycle

Baseline 2010$

260 4.50

-- 1 222 3.50 1.00

2 154 2.10 12.11

8.2.1.4 Overall Markup

The overall markup is the value determined by multiplying the manufacturer and retailer markups and the sales tax together to arrive at a single markup v alue. Table 8.2.4 shows the

overall baseline a nd incremental markups for dishwashers. Refer to C hapter 6

, Markups for Equipment Price Determination, for details.

Table 8.2.4 Dishwashers: Overall Markups

Markup Baseline Incremental

Manufacturer 1.2 4

Retailer 1.45 1.17

Sales Tax 1.0717

Overall 1.9 3 1.5 5

8.2.1.5 Installation Cost

DOE derived baseline installation costs for dishwashers from data in the RS Means Plumbing Cost Data, 2010

, 4

Table 8.2.5 which provides estimates on the labor required to install reside ntial

dishwashers. summarizes the nationally representative average bare costs and

installat ion costs of a four

- or

- more

- cycle dishwasher. DOE determined that installation costs would not be impacted with increased standard levels.8-11 Table 8.2.5 Dishwashers: Baseline Installation Costs

Bare Costs Including Overhead & Profit 20 10 $ 20 10 $

Installation Type Material Labor Total Total Material* Labor**

Average 370 202 572 710 4 07 303

Average 303 20 10 $

* Material costs including O&P equal bare costs plus 10% profit.

** DOE derived labor costs including O&P by subtracting material with O&P from total with O& P.

Source: RS Means, Plumbing Cost Data, 20 10

.

8.2.1.6 Total Installed Cost

The total installed cost is the sum of the consumer product price and the installation cost.

Re call section 8.2.1 for the equations DOE used to calculate the total installed cost for baseline

and standard

- level products.

Table 8.2.6 and Table 8.2.7 present the consumer product price, installation cost, and

total installed cost for standard

- sized and compact dishwashers , respectively, at the baseline level

and each standard level.

Table 8.2.6 Standa rd

- Sized Dishwashers: Consumer Product Prices, Installation Costs,

and Total Installed Costs

Efficiency

Level Annual Energy Use Water Use

kWh/year Product

Price gallons/cycle Installation

Cost 2010$ Total Installed

Cost 2010$

Baseline 2010$

355 6.50 327.45 303.00 630.45

1 324 5.80 352.73 303.00 655.73

2 307 5.00 371.47 303.00 674.47

3 295 4.25 423.23 303.00 726.23

4 234 3.80 431.47 303.00 734.47

5 180 1.60 442.22 303.00 745.22

Table 8.2.7 Compact Dishwashers: Consumer Product Prices, Installation Costs, and

Total Installed Costs

Efficiency

Level Annual Energy Use Water Use

kWh/year Product

Price gallons/cycle Installation

Cost 2010$ Total Installed

Cost 2010$

Baseline 2010$

260 4.50 318.43 303.00 621.43

1 222 3.50 319.82 303.00 622.82

2 154 2.10 335.19 303.00 638.198-12 8.2.2 Operating Cost Inputs

DOE uses the following equation to define the operating cost of an appliance :

MC RC WC EC OC **+ +**  **+ =**  W here:

OC = o perating cost,

EC = e nergy cost associated with operating the product

, WC = w ater cost associated with operating the product

, RC = r epair cost s associated with component failure, and

MC = s ervice cost s for maintaining product operation.

The inputs for calculating operating costs a re also necessary to determin e lifetime operating cost s, which include the energy and water price trends, product lifetime, discount rate,

and effective date of the standard.

• A nnual energy consumption is the site energy use associated with operating the product

.

• A n nual water consumption is the site water use associated with operating the product

. Both t he annual energy and water consumption vary with the product efficiency. That is, the energy and water consumption associated with standard

- level products (i.e., products

havin g efficiencies greater than baseline product ) are less than the consumptions

associated with baseline products

.

• Energy and water prices are the prices paid by consumers for energy (i.e., electricity, gas, or oil) and water. Multiplying the annual energy a nd water consumption by the energy and water prices yields the annual energy cost and water cost, respectively.

• Repair costs are associated with repairing or replacing components that have failed.

• Maintenance costs are associated with maintaining the o peration of the product

.

• DOE used energy and water price trends to forecast energy and water prices into the future and, along with the product lifetime and discount rate, to establish the lifetime energy and water costs.

• P roduct l ifetime is the age at which the product is retired from service.

• The d iscount rate is the rate at which DOE discounted future expenditures to establish their present value.

DOE calculated the operating cost for baseline products based on the following equation:

BASE BASE WATER BASE ENERGY BASE BASE BASE BASE BASE BASE


### MC RC PRICE AWC PRICE AEC MC RC WC EC OC

**+ +**  **× +**  **× =**  **+ +**  **+ =** 

W here:

O C BASE = o perating cost for the baseline product

, EC BASE = e nergy cost associated with operating the baseline product

,8-13 WC BASE = w ater cost associated with operating the baseline product

, RC BASE = r epair cost associated with component failure for the baseline product

, MC BASE = s ervice cost for maintaining baseline product operation,

AE C BASE = a nnual energy consumption for baseline product

, PRICE ENERGY = e nergy price,

A WC BASE = a nnual water consum ption for baseline product

, and

PRICE WATER = w ater price.

DOE calculated the operating cost for standard

- level products based on the following equation:



# ( **) (**  **)**
**( )**  **( )** 

STD BASE STD BASE WATER STD BASE ENERGY STD BASE STD STD WATER STD ENERGY STD STD STD STD STD STD



### MC MC RC RC PRICE AWC AWC PRICE AEC AEC MC RC PRICE AWC PRICE AEC MC RC WC EC OC

**∆ +**  **+ ∆**  **+ +**  **× ∆**  **+ ×**  **∆ =**  **+ +**  **× +**  **× =**  **+ +**  **+ =** 

__ __

W here:

O C STD = o perating cost for standard

- level product

, EC STD = e nergy cost associated with operating standard

- level product

, WC STD = w ater cost associated with operating standard

- level product

, RC STD = r epair cost associated with component failure for standard

- level product

, MC STD = s ervice cost for maintaining standard

- level product operation,

AE C STD = a nnual energy consumption for standard

- level product

, PRICE ENERGY = e nergy price,

A WC STD = a nnual water consumption for standard

- level product

, PRICE WATER = w ater price,

Δ

AE C STD = c hange in annual energy consumption caused by standard

- level product

, Δ

A WC STD = c hange in annual water consumption caused by standard

- level product

, Δ RC STD = c hange in repair cost caused by standard

- level product , and

Δ MC STD = c hange in maintenance cos t caused by standard

- level product

.

The remainder of this section provides information about each of the above input variables that DOE used to calculate the operating costs for dishwashers.

8.2.2.1 Annual Energy and Water Consumption

Chapter 7 , Energy and Wa ter Use Analysis , details how DOE determined the annual energy and water consumption for baseline and standard

- level products.

As described in section 7.4 of c hapter 7 and section 8.1.1, DOE developed a sample of

individual households that use one of the product classes of dishwashers . By developing household samples, DOE was able to perform the LCC and PBP calculations for each household to account for the variability in the usage and price of both energy and water associated with8-14 each household. DOE used EIA’s 20 05 RECS to develop the household samples and, in turn, to establish the variability in both annual energy and water consumption and energy and water pricing. Refer to c hapter 6 to review the variability of annual energy consumption for

dishwas hers.

The tables presented below are based on the energy and water use analysis described in

c hapter 7

. Keep in mind that the annual energy and water consumption values in the tables below

are averages. DOE captured the variability in energy and water consumption in the LCC and PBP analysis.

Table 8.2.8 and Table 8.2.9 provide the average annual energy and water consumption by efficiency level for standard

- sized and compact dishwashers , respectively . The se table s are simil ar to those in section 7

. 3 o f c hapter 7 with the exception that , in Table 8.2.8 a nd Table 8.2.9

, the electric, gas, and oil water

- heating consumption takes into account th e percentage of

households in the U nited States that use electric, gas, and oi l water heaters, respectively. In others words, the electric, gas, and oil water hea ting consumption is weighted by the share of

households that use electri c, gas, and oil water heaters. Based on data from the RECS, 37.2 percent of households use electric water heaters, 58.9 percent use gas, and 3.9 percent use oil.

Table 8.2.8 Standard Dishwashers: Annual Energy and Water Use by Efficiency Level

Efficiency

Level Annual Energy Use Annual Energy Use Annual

Water

Use Water Heating*

1

, 000 gal/year Electric Gas kWh/year Oil MMBtu/year

Baseline MMBtu/year

355 211 0.62 0.04 1.40

1 324 195 0.55 0.04 1.25

2 307 196 0.47 0.03 1.08

3 295 201 0.40 0.03 0.92

4 234 150 0.36 0.02 0.82

5 180 145 0.15 0.01 0.35

* Electric, gas, and oil water heating based on water heater efficiencies of 100% for electric,

75% for gas, 75% for oil.8-15 Table 8.2.9 Compact Dishwashers: Annual Energy and Water Use by Efficiency Level

Efficiency

Level Annual Energy Use Annual Energy Use Annual

Water

Use Water Heating*

1

, 000 gal/year Electric Gas kWh/year Oil MMBtu/year

Baseline MMBtu/year

260 160 0.43 0.03 0.97

1 222 144 0.33 0.02 0.75

2 154 107 0.20 0.01 0.45

* Electric, gas, and oil water heating based on water heater efficiencies of 10 0% for electric,

75% for gas, 75 % for oil.

8.2.2.2 Energy and Water Prices

DOE used probability distributions to characterize the regional variability in energy and water prices. DOE developed the probability associated with each regional energy and water price based on the population weight of each region. DOE’s method for deriv ing energy and water prices is described below.

Electricity Prices

DOE derived average energy prices from data that are published annually based on EIA
Form 861. Those data include, for every utility that serves final consumers, annual electricity

sales in kilowatt

- hours; revenues from electricity sales; and number of customers in the residential, commercial, and industrial sectors. DOE calculated prices for each of 13 geographic areas: the nine U.S. Census divisions plus four large states (New York, Flor ida, Texas, and California). For Census divisions that contain one of the large states, DOE removed the data for that state from the calculation of the regional average. The Pacific region average does not include California, for example, and the West Sout h Central does not include Texas.

The calculation of average residential electricity price proceeded in two steps.

1. For each utility, DOE estimated an average residential price by dividing residential revenues by residential sales.

2. DOE calculated a reg ional average price, weighting each utility that serves residences in a region by the number of residential customers served in that region.

Table 8.2.10 shows r esults for the 13 geographic regions.8-16 Table 8.2.10 Average Residential Electricity Prices

Geographic Area Average Price

New England 2010 $/kWh

0.178
Middle Atlantic (excluding New York) 0.139

East North Central 0.113

West North Central 0.094

South Atlantic (excluding Florida) 0.111

East South Central 0.098
West South Central (excluding Texas) 0.087

Mountain 0.104
Pacific (excluding California) 0.102

New York 0.188

Florida 0.151

Texas 0.126

California 0.126

Source: EIA Form 861 for 2009.

Natural Gas Prices

DOE obtained data for calculating regional prices of natural gas from the EIA publication, Natural Gas Navigator

. 5 This publication presents monthly volumes of natural gas deliveries and average prices by state for residential, commercial, and industrial customers. The Department used the complete annual data for 20 10 to calculate an average annual price for each geographic area. The calculation of average prices proceeded in two steps.

1. For each state, DOE calculated the annual residential pric e of natural gas using a simple average of data.

2. DOE then calculated a regional price, weighting each state in a region by its population.

The method used to calculate natural gas prices differs from that used to calculate electricity prices, because the EIA does not provide consumer

- or utility

- level data on gas consumption and prices. The prices in Table 8.2.11 are in dollars per million BTU ($/ MMBtu ).8-17 Table 8.2.11 Average Residential Natural Gas Prices

Geographic Area Average Price

New England 2010 $/ MMBtu

15.68
Middle Atlantic (excluding New York) 14.26

East North Central 12.47

West North Central 12.07
South Atlantic (excluding Florida) 17.14

East South Central 14.00
West South Central (excluding Texas) 13.89

Mountain 11.41
Pacific (excluding California) 13.14

New York 15.69

Florida 10.00

Texas 12.86

California 19.93

Source: EIA Natural Gas Monthly , 20 10

Because DOE conducted the LCC and PBP analysis in 2010, all natural gas prices are in 2010$

.

Residential Oil Prices

DOE collected 200 9 oil prices from EIA’s Petroleum Navigator, 6

Table 8.2.12 which includes monthly oil prices for residential, commercial, industrial, and transportation consumers by Petroleum Administration for Defense Districts (PADD). The first four PADD follow the U.S.

Census d ivisions. However, Arizona is not included in the PADD for the Pacific Region and New Mexico is excluded altogether. In addition, data was not provided for the East South Central region, West South Central region, Florida, Texas, and California, so national averages were used for these regions. DOE weigh ted the average residential oil prices for each PADD by

the amount of oil consumed in each PADD. DOE then transformed the data in units of cents/gallon to $/MMBtu. Finally, the prices were aggregated and averaged by nine geographic areas ( ). The EIA oil price data do not include taxes, so DOE determined the average

tax rate for the four Census r egions (Northeast, South, Midwest, and West) 7 and applied it to the annual average data.8-18 Table 8.2.12 Average Monthly Residential Oil Prices in 200 9

Geographic Area Average Price

New England 2010 $/ MMBtu

18.64
Middle Atlantic (excluding New York) 18.35

East North Central 16.41

West North Central 16.46
South Atlantic (excluding Florida) 17.95

East South Central 16.09
West South Central (excluding Texas) 14.54

Mountain 16.14
Pacific (excluding California) 18.21

New York 19.08

Florida 18.43

Texas 14.65

California 17.51

*National average

* * Pacific Division average

* **South Atlantic Division average

Water Prices

DOE obtained data on water prices for 20 10 from the Water and Wastewater Rate Survey conducted by Raftelis Financial Consultants and the American Water Works Association. 2 The

survey covers approximately 308 water utilities and 2 28 wastewater utilities, analyzing each industry (water and wastewater) separately. The water survey includes, for each utility, the cost to consumers of a given volume of water. The total consumer cost is divided in to fixed and volumetric charges. DOE’s calculation of water prices uses only volumetric charge s , because only th ose charge s would be affected by a change in water consumption. Including the fixed charge in the average would lead to a slightly higher water price.

For wastewater utilities, the data format is similar, except that the price represents the cost to treat a given volume of wastewater. A sample of 308 or 228 utilities is too small to calculate regional prices for all U.S. Census di visions and large states (for comparison, data from
EIA Form 861 cover more than 3,000 utilities ). Therefore, DOE calculated regional cos ts for

wastewater service at the level of Census regions only (Northeast, South, Midwest, and West). The calculation of average prices per unit volume proceeds in three steps.

1. For each water or wastewater utility, DOE calculated the price per unit volume by dividing the total volumetric cost by the volume delivered.

2. DOE calculated a state

- level average price by weighting each utility in a given state by

the number of residential customers it serves.8-19 3. DOE calculated a regional average by combining the state

- level averages, weighting each by the state’s population. This third step helps reduce any bias in the sample that may

result from the relative under

- sampling of large states.

Table 8.2.13 presents the results of the calculation of costs for water and wastewater service. The price units in the table are 2010 dollars per thousand gallons (/tg).

Table 8.2.13 Average Water and Wastewater Pri ces per Unit Volume

Census Region Water Wastewater 2010$ /tg 2010$ /tg

Northeast 4.07 3.53

Midwest 2.21 2.77

South 3.01 4.68

West 4.06 3.96

National Average 3.30 3.87

8.2.2.3 Energy and Water Price Trends

DOE used EIA price forecasts to estimate the trends in natural gas, oil, and electricity prices

. To arrive at prices in future years, it multiplied the average prices described in the preceding section by the forecast of annual average price changes in EIA’s AEO 20 1 1

. 8 To estimate the trend after 2030, DOE followed past guidelines provided to the Federal Energy Management Program (FEMP) by EIA and used the average rate of change during 202 0

– 203 5.

The Department calculated LCC and PBP using three separate projections from AEO

20 1 1 : Reference, Low Economic G rowth, and High Economic Growth

. These three cases reflect the uncertainty of economic growth in the forecast period. The high and low growth cases show the projected effects of alternative growth assumptions on energy markets. Figure 8.2.1 show s the residential electricity price trend based on the three AEO 20 1 1 projections. For the LCC results presented in section 8.4, DOE used only the energy price forecasts f rom the AEO

R eference case.8-20 Figure 8.2.1 Electricity Price Trends

To estimate the future trend for water and wastewater prices, DOE used data on the historic trend in the national water price index (U.S. city average) from 1970 through 2005

, 9

Figure 8.2.2 combined with the all

- products CPI for this same period. It extrapola ted a future trend based on

the linear inflation

- adjusted growth during the 1970

– 2005 period. shows the projected inflation

- adjusted water price trend . DOE used this fit to forecast water and wastewater prices for residential dishwashers. 0.84 0.86 0.88

0.9 0.92 0.94 0.96 0.98 1 1.02 1.04 1.06

2008 2013 2018 2023 2028 2033 2038 2043 

### AEO 2011 Electricity Forecasts

Reference

High

Low8-21 Figure 8.2.2 Inflation

- Adjusted Water Price Trend

8.2.2.4 Repair and Maintenance Costs

Typically, small incremental changes in product efficiency produce no, or only slight

, changes in repair and maintenance costs over baseline products. However, products having significantly higher efficiencies, compared to baseline products

, are more likel y to incur higher repair and maintenance costs because their increased complexity and higher part count typically increases the cumulative probability of failure

. DOE requested that manufacturers and other stakeholders assist in developing appropriate repa ir and maintenance , but it did not receive any input . T hus DOE did not include any changes in repair and maintenance costs for products more efficient than baseline products.

8.2.3 Product Lifetimes

RECS records the presence of vario us appliances in each househ old and places the age of each appliance into bins comprising several years. Data from the U.S. Census’s American Housing Survey (AHS), 10 which surveys all housing including vacant and second homes, enabled DOE to adjust the RECS data to reflect some applia nce use outside of primary residences. By combining the results of both surveys with the known history of appliance shipments (collected

from Appliance magazine or directly from manufacturer trade associations), DOE estimated the percentage of appliances o f a given age still in operation. This survival function, which DOE assumed has the form of a cumulative Weibull distribution, provides an average and a median appliance lifetime. DOE calculated the average lifetime for both product classes at 15.4 years. y = 2.06x

- 3,990.11

R2 = 0.95

0 20 40 60 80 100 120 140 160 180

1980 1985 1990 1995 2000 2005 2010 

### Inflation

- Adjusted Water CPI

Inflation

- Adjusted CPI

Linear (Inflation

- Adjusted CPI)8-22 The Weibull distribution is a probability distribution commonly used to measure failure

rates. a Its form is similar to an exponential distribution, which models a fixed failure rate, except

that a Weibull distribution allows for a failure rate that changes over time in a particular fashion.

The cumulative Weibull distribution takes the form:



# e x



### x P **β**

**α**

**θ ** 

** **  ** **  ****

**−**

**−**



### = ) ( for x > θ and

P(x) = 1 for x ≤ θ

Where:

P(x) = probability that the appliance is still i n use at age x ,

x = appliance age

,

α = scale parameter, which would be the decay length in an exponential distribution

, β = shape parameter, which determines the way in which the failure rate changes through time

, and

θ = delay parameter, which all ows for a delay before any failures occur.

When β = 1, the failure rate is constant over time, giving the distribution the form of a cumulative exponential distribution. In the case of appliances, β commonly is greater than 1, reflecting an increasing failure rate as appliances age. Figure 8.2.3 shows the Weibull retirement

function for dishwashers.

Figure 8.2.3 Weibull Retirement Function for Dishwashers

a For reference on the Weibull distribution, see sections 1.3.6.6.8 and 8.4. 1.3 of the NIST/SEMATECH e

- Handbook

of Statistical Methods

, < www.itl.nist.gov/div898/handbook/ >

. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

0 5 10 15 20 25 30 35 40 45 50 

### Weibull Retirement Function for Dishwashers (mean = 15.43 years)8-23 Appendix 8D presents the Weibull distributions that DOE used in the LCC and PBP analysi s.

8.2.4 Discount Rates

The d iscount rate is the rate at which DOE discounted future consumer expenditures to establish their present value. DOE derived the discount rates for the LCC and PBP analyses from estimates of the finance cost of purchasing the conside red products. Following financial theory, the finance cost of raising funds to purchase appliances can be interpreted as: (1) the financial cost of any debt incurred to purchase products, or (2) the opportunity cost of any equity used to purchase products. DOE considers both of these interpretations.

In the case of individual households, the financing of purchasing products installed in

new homes is different from the financing of appliances bought directly by consumers (i.e. , as a replacement for a faile d unit or as a new purchase for an existing household that does not already own the appliance). Thus, DOE used different discount rates for these residential purchases.

8.2.4.1 Residential Discount Rates for Products Purchased in Existing Households

Households u se a variety of methods to finance the purchase of major appliances. In principle, one could estimate the interest rates on the actual financing methods used to purchase appliances. However, the shares of different financing methods in total appliance purc hases are

unknown.

DOE’s approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, including household assets that might be affected indirectly

. b DOE excluded debt from primary mortgages or assets considered non

- liquid (such as retirement accounts), because those financing methods are unlikely to be used by households in existing housing to purchase appliances . DOE estimated the average percentage shares of the various debt and equity classes in the average U.S. household equity and debt portfolios using data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1989, 1992,
1995, 1998, 2001, 2004, and 2007. 11 Table 8.2.14 shows the average percentages of each

considered type of debt or equity . DOE derived the mean percentage shares of each source of financing for each of the seven surveys as a basis for es timating the weight of the classes in the direct or indirect financing of the considered appliances.

b An indirect effect would arise if a household sold some assets in order to pay off a loan or credit card debt that

might have been used to finance the appliance purchase.8-24 Table 8.2.14 Average Shares of Considered Household Debt and Equity Types : %

Type 1989

SCF 1992

SCF 1995

SCF 1998

SCF 2001

SCF 2004

SCF 2007

SCF Mean

Home equity loans 4.3 4.5 2.7 2.8 2.8 4.4 4.6 3.7

Credit cards 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1

Other installment loans 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.6

Other residential loans 4.4 6.9 5.2 4.3 3.1 5.8 7.1 5.3

Other line s of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.5

Checking accounts 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.4

Savings & money market 19.2 18.8 14.0 12.8 14.2 15.1 13.0 15.3

Certificate s of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 8.6

Savings bond s 2.2 1.7 2.2 1.1 1.2 0.9 0.7 1.4

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 9.5

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 29.0

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 18.6

Total 100 100 100 100 100 100 100 100

DOE estimated interest or return rates associated with each type of equity and debt. The
source for the interest rates for loans, credit cards, and lines of credit was the Federal Reserve

Board’s SCF in 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Table 8.2.15 shows the average nominal rates in each year, and the inflation rates used to calculate real rates. DOE calculated effective interest rates for home equity loans in a similar manner as for mortgage rates, because

interest on both such loans is tax deductible

. Table 8.2.16 shows the average effective real rates

in each year and the mean rate across the years. Because the interest rates for each type of household debt reflect economic conditions throughout numerous years, they are expected to be representative of rates in the year in which amended standards would take eff ect.8-25 Table 8.2.15 Average Nominal Interest Rates for Household Debt

Type of Debt Average Nominal Interest Rate

1989 %

1992 1995 1998 2001 2004 2007 Mean

Home equity loans 11.5 9.6 9.6 9.8 8.7 5.7 7.9 9.0

Credit cards*

- - 14.2 14.5 14.2 11.7 12.6 13.4

Other installment

loans 9.0 7.8 9.3 7.8 8.7 7.4 1 0.4 8.6

Other residential

loans 8.8 7.6 7.7 7.7 7.5 6.0 6.3 7.4

Other line of credit 14.8 12.7 12.4 11.9 14. 9 8.8 12.7 12.6

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.
* No interest rate data available for credit cards in 1989 or 1992.

Table 8.2.16 Average Real Effective Interest Rates for Household Debt

Type of Debt Average Real Interest Rate %

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loans 3.8 4.3 4.4 5.8 3.8 1.9 3.3 3.9

Credit cards*

- - 11.0 12.7 11.1 9.1 9.7 10.7

Other installment

loans 4.9 5.8 7.0 6.6 6.1 5.4 5.8 6.0

Other residential

loans 4.0 4.7 4.8 6.0 4.6 3.3 3.4 4.4

Other line s of credit 9.6 9.4 9.3 10.2 7.3 6.0 9.7 8.8

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

* No interest rate data available for credit cards in 1989 or 1992.

DOE developed a probability distribution of interest rates for each debt class based on the

SCF data. To account for variation among households, DOE sampled a rate for each household from the distributions for the appropriate debt class. Appendix 8 E presen ts the probability distribution of interest rates for each debt class that DOE used in the LCC and PBP analyses.

No similar rate data are available from the SCF for the asset classes, so the Department

derived data for these classes from national historical data. The interest rates associated with certificates of deposit (CDs), 12 savings bonds, 13 and bonds (AAA corporate bonds) 14 are from

Federal Reserve Board time

- series data covering 1977

– 2010. DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts are from Cost of Savings Index data covering 1984

– 2010. 15 The rates for stocks are the annual returns on the Standard and

Poor ’s (S&P) 500 in 1977

– 2010. 16 Rates for mutual fund are a weighted average of the stock8-26 rates (two

- thirds weight) and the bond rates (one

- third weight) in each year from 1977

– 2010. DOE adjusted the nominal rates to real rates using the annual inflation rate for each year

. Average nominal and real interest rates for the classes of assets are listed in Table 8.2.17

. Because the interest and return rates for each type of asset reflect economic conditions throughout numerous years, they are expected to be representative of rat es in the year in which

amended standards would take effect.

Table 8.2.17 Average Nominal and Real Interest Rates for Household Equity

Type of Equity Average No minal

Rate % Average Real

Rate %

Checking accounts

- 0.0
Savings and money market 5.2 2.2

CDs 6.3 2.1
Savings bonds 7.5 3.3

Bonds 8.3 4.1

Stocks 12.1 7.8

Mutual funds 10.6 6.3

Table 8.2.18 summarizes the mean real effective rates of each type of equity or debt as well as the average percentage of the debt and asset for all U.S. households over the 7 years of survey data

. DOE de termined the average percentage of each type of debt and asset using SCF data for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Each year of SCF data provides the

amount of debts and assets held by each U.S. household. DOE averaged the percentages for the 7 years of survey data to arrive at the p ercentages shown in Table 8.2.18

. The average rate across all types of household debt and equity, weighted by the shares o f each class, is 5.1 percent.8-27 Table 8.2.18 Shares and Interest or Return Rates Used for Household Debt and Equity
Average Share of Household Debt plus Equity % * Mean Effective

Real Rate % **

Home equity loans 3.7 3.9

Credit cards 2.1 10.7

Other installment loans 1.6 6.0

Other residential loans 5.3 4.4

Other line of credit 0.5 8.8
Checking accounts 4.4 0.0

Savings and money market accounts 15.3 2.2

Certifi cates of deposit s 8.6 2.1
Savings bonds 1.4 3.3

Bonds 9.5 4.1

Stocks 29.0 7.8

Mutual funds 18.6 6.3

Total/ w eighted

- average discount rate 100 5.1

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, loan interest tax deduction.

DOE developed a normal probability distribution of interest rates for each asset type by using the mean value and standard deviation from the distribution. To account for variation among households, DOE sampled a rate for each household from the distributi ons for the appropriate asset class. Appendix 8 E presents the probability distribution of interest rates for each asset type that DOE used in the LCC and PBP analyses.

8.2.4.2 Residential Discount Rates for Products Installed in New Housing

Appliances installed in new homes (“new

- housing appliances”) are purchased as part of the home, which is almost always financed with a mortgage loan. DOE estimated discount rates

for new

- housing appliances using the effective real (after

- inflation) mortgage rate for homebuyer s. This rate corresponds to the interest rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation (using the Fisher formula). c For example, a

6

- percent nominal mortgage rate has an effective nominal rate of 4.5 pe rcent for a household at

the 25

- percent marginal tax rate. When adjusted for an inflation rate of 2 percent , the effective

real rate becomes 2.45 percent

.

The data sources DOE used for mortgage interest rates were the SCF in 1989, 1992, 1995, 1998, 2001, 200 4 , and 2007. Using the appropriate SCF data for each year, DOE adjusted

c Fisher formula is given b y: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)]

– 1.8-28 the mortgage interest rate for each relevant household in the SCF for mortgage tax deduction and inflation (see Table 8.2.19 ). In cases where the effective interest rate is equal to or below the inflation rate (resulting in a negative real interest rate), DOE set the real effective interest rate to

zero.

The aver age nominal mortgage rate carried by homeowners in these 6 years was 7.9

percent . Since the mortgage rates carried by households in these years were established over a range of time, DOE believes they are representative of rates that may apply when amended

standards take effect. After adjusting for inflation and interest tax deduction, effective real interest rates on mortgages across the six surveys averaged 3.0 percent

.

Table 8.2.19 Data Used to Calculate Real Effective Mortgage Rates

Year Mortgage In terest Rates in Selected Years %

Average

Nominal

Interest Rate Inflation Rate 17 Marginal Tax Rate Applicable to Mortgage Interest 18 Average Real

Effective Interest

Rate

1989 9.7 4.82 24.3 2.4

1992 9.1 3.01 23.4 3.8

1995 8.2 2.83 24.1 3.3

1998 7.9 1.56 23.9 4.4

2001 7.6 2.85 22.9 2.9

2004 6.2 2.66 20.6 2.2

2007 6.3 2.85 21.6 2.1

Average 7.9 3.0

To account for variation among households, DOE sampled a rate for each household in the RECS samples from a distribution of mortgage rates. DOE developed the distribution based

on the SCF data . Appendix 8 E presents the probability distribution that DOE used in the LCC and PBP analyses.

8.2.5 Compliance Date

In the context of EPCA, the compliance date is the future date when parties subject to the requirements of a new or amended standard must comply. EPCA requires DOE, no later than January 1, 2015, to determine whether amended standards for dishwashers are w arranted. The compliance date for any amended standards would be January 1, 2018. (42 U.S.C. 6295(g)(10)(B)) Where appropriate, DOE calculated the LCC and PBP for dishwashers as if consumers would purchase new products in 2018. Trial Standard Level ( TSL ) 2, which corresponds to the Consensus Agreement level for standard dishwashers, has a compliance date of Jan. 1, 2013. Thus, for TSL 2, DOE used 2013 as the compliance year. Further discussion of the TSLs is prov ided in c hapter 10, s ection 10.1.1

.8-29 DOE c alculated the LCC for all consumers as if they each would purchase a new product in the year of compliance with an amended standard takes effect.

8.2.6 Product Assignment for the Base Case

To accurately estimate the percentage of consumers that would be affected by a particular
standard level, DOE took into account the distribution of product efficiencies expected for the compliance year. In other words, rather than analyzing the impacts of a particular standard level assuming that all consumers are curre ntly purchasing products at the baseline level, DOE conducted the analysis by taking into account the full breadth of product efficiencies that consumers purchase under the base case (i.e., the case without new energy efficiency standards).

As noted in se ction 8.1.1, DOE’s approach for conducting the LCC analysis for residential dishwashers relied on developing samples of households that use each product class. DOE used a Monte Carlo simulation technique to perform the LCC calculations for the

households i n the sample. Using the base

- case distribution of product efficiencies, DOE assigned each household in the sample a unique product efficiency. Because it performed the LCC

calculations on a household

- by

- household basis, DOE based the LCC for a particular c andidate standard level (CSL) on the efficiency of the product assigned to each given household. For example, if a household was assigned a product efficiency that is greater than or equal to the efficiency of the CSL under consideration, the LCC calculati on would reveal that this household is not impacted by an increase in product efficiency that is equal to the standard level. The distributions of product efficiencies that DOE used for the LCC analysis for dish washers are

discussed below.

AHAM provided the distribution of standard

- sized and compact dishwashers efficiencies

sold in 2010. 19

Figure 8.4.2 Based on these shipment

- weighted efficiency data, the base

- case distributions for

standard

- s ized and c ompact dishwashers were calculated. DOE used an exponential functi on, displayed in , to model the historical decline in shipment

- weighted annual average energy use shown in the AHAM data and forecast that decline into the future.8-30 Figure 8.2.4 Historic and Projected Base Case Trend in Dishwasher Average Energy Use

DOE then combined this predicted trend with the market share trends for various efficiency levels to predict the market shares for each efficiency level in 2013 and 2018. To predict the market shares by efficiency level in 2013 and 2018, DOE observed the market trends present in the AHAM data and assumed th o se trends would continue in a manner consistent with the decline in total average energy use shown above. The h istoric al and forecast market shares

are shown in Table 8.2.20 and Table 8.2.21 , along with shipment

- weighted annual energy use (SWAEU)

.

Table 8.2.20 Standard Dishwashers: Efficiency Market Share Data and Base

- Case

Forecast : % Efficiency Level 2008 2009 2010 2013 2018

Baseline 56.4 38.7 3.8 3.8 3.8

1 30.0 41.1 51.8 32.3 25.2

2 7.8 8.9 21.5 28.0 32.7

3 5.8 5.2 15.3 16.4 18.5

4 0.0 4.0 5.0 13.8 10.8

5 0.0 2.0 2.5 5.6 9.0

SWAEU 338.4 326.5 309.0 295.1 291.6 275 285 295 305 315 325 335 345 355 365 3752002200320042005200620072008200920102011201220132014201520162017201820192020Shipment-Weight AEU (kWh/yr) Forecast

AHAM Data8-31 Table 8.2.21 Standard

- Sized Dishwashers: Base

- Case Efficiency Market Shares for 2018 Efficiency

Level Annual Energy

Use kWh/year Water Use Market Share

% gal/cycle

Baseline 355 6.50 3.8

1 324 5.80 25.2

2 307 5.00 32.7

3 295 4.25 18.5

4 234 3.80 10.8

5 180 1.60 9.0

For compact dishwashers, AHAM data for efficiency distributions were not available.
Thus, DOE first considered 2010 market data from the NPD Group, Inc. Th o se data show that nearly all shipments for both standard and compact dishwashers are at the baseline efficiency level. For the compact class base

- case distribution, however, there were only two types of

compact dishwashers in the NPD data set: “countertop” and “portable.” DOE is not aware of any portable dishwashers currently on the market in the United States that would be classified as compact size based on the number of place settings. Further, there are no co mpact dishdrawer platforms included in the NPD dataset, which DOE believes represent a sizeable fraction of compact dishwasher shipments. As a result, DOE estimated compact base

- case efficiencies from

its research on the number of models available at each efficiency level. Of the eight compact
dishwashers listed in the FTC database for manufacturer certifications in 2010, four are dishdrawer models with similar performance. Therefore, DOE allocated half of shipments to the dishdrawer platform that meets CSL 2. DOE further estimated, based on the number of countertop models and underlying platforms contained within the CEC and FTC databases, that half of remaining shipments (25 percent of total compact dishwasher shipments) would meet CSL 1, while the remaini ng 25 percent of compact shipments are at the baseline. Table 8.2.22 presents the market shares of the efficiency levels in the base case in 2018 for compact

dishwa shers.

Table 8.2.22 Compac t Dishwashers: Base Case Efficiency Market Shares for 2018
Efficiency

Level Annual Energy Use Water Use kWh/year Market Share

% gal/cycle

Baseline 260 4.50 25.0

1 222 3.50 25.0

2 154 2.10 50.0

8.3 INPUTS TO PAYBACK PERIOD ANALYSIS

The payback period (PBP) is the amount of time i t takes the consumer to recover, through lower operating costs, the assumed higher purchase price of a more energy efficient product. Numerically, the PBP is the ratio of the increase in purchase price (i.e., fro m a less efficient design) to the decrease in annual operating costs. This type of calculation is kno wn as a “simple”8-32 payback period because it ignores changes in operating expense over time or the time value of

money . That is, the calculation is done at a n effective discount rate of zero percent.

The equation for PBP is:

OC IC PBP **∆ ∆** 

**=**

W here:

Δ IC = d ifference in the total installed cost between the standard level unit and the

baseline unit , and

Δ OC = difference in annual operating expenses.

Payback periods are expressed in years. A payback period greater than the life of the product mean s that the increased total installed cost is not recovered in reduced operating costs

.

The data inputs to PBP are the total installed cost of the product to the consumer for each efficiency level and the annual (first year) operating expenditures for each standard level

. The inputs to the total installed cost are the product price and the installation cost. The in puts to the operating costs are the annual costs of energy and water, repair, and maintenance. The PBP uses the same inputs as the LCC analysis

, as described in section 8.2, except that PBP does not require energy and water price trends or discount rates. Considering the PBP is a “simple” payback, the required energy and water price s are only for the year in which a new standard will

take effect

— in this case, 2018 (2013 for TSL 2) . The energy and water price s DOE used in the PBP calculation was the price pr ojected for that year.

8.4 RESULTS OF LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSES

This section presents the LCC and PBP results for residential dishwashers. A s discussed in section 8.1.1, DOE’s approach to conducting the LCC analysis relied on developing sam ples of households that use each product clas s. DOE also used probability distributions to characterize the uncertainty of many of the inputs. DOE applied a Monte Carlo simulation to calculate the

LCC for the households in the sample. For each set of sample households using each product class, DOE calculated the average LCC and LCC savings and the median and average PBP for

each of the standard levels.

DOE calculated LCC savings and PBPs relative to th e base

- case produc t it assigned to the households. As discussed in section 8.2.6, DOE assigned some households a base

- case produc t that is more efficient than some of the standard levels. For that reason, the average LCC impacts are not equal to the differ ence between the LCC of a specific standard level and the LCC

of the baseline product

.8-33 LCC and PBP calculations were performed 10,000 times on the sample of households established for each product class . Each LCC and PBP calculation was performed on a single

household , which was selected from the sample based on its weight (i.e., how representativ e a particular household is of other households in the distribution ). Each LCC and PBP calculation also sampled from the probability distributions that DOE dev eloped to characterize many of the inputs to the analysis.

The results from the Monte Carlo simulations on 10,000 samples provided the basis for

DOE to calculate the share of households with a net LCC benefit, with a net LCC cost, and with no impact for the base case and each successive efficiency level . DOE considered a household to receive no impact at a given efficiency level if DOE assigned it a base

- case produc t having an efficiency equal to or greater than the efficiency level in question

. T he follo wing sections

illustrate the distributions of LCC impacts and PBPs for each product class at base

- case efficiency and each efficiency level analyzed

.

8.4.1 Distributions of Life

- Cycle Cost for Baseline Units

The figures below are presented as frequency charts that show the distribution of LCCs, LCC impacts, and PBPs with their corresponding probability of occurrence. DOE generated the figures for the distributions from a Monte Carlo simulation run based on 10,000 samples.

Figure 8.4.1 and Figure 8.4.2 show the frequency chart s for the base line LCC for

standard

- sized and compact dishwashers , respectively

.

Figure 8.4.1 S tandard

- Sized Dishwashers: Base

- Case LCC Distribution8-34 Figure 8.4.2 Compact Dishwashers: Base

- Case LCC Distribution

8.4.2 Distributions of Life

- Cycle Cost Under New Standard Level s

Figure 8.4.3 and Figure 8.4.4 are example s of f requency chart s showing the distribution

of LCC differences for standard

- sized and compact dishwashers at the efficiency levels corresponding to TSL 2

. Refer back to section 8.2.6 on the distribution of product efficiencies

under the base case. DOE can generate a frequency chart li ke the one shown in Figure 8.4.3 for every standard level.8-35 Figure 8.4.3 Standard

- Sized Dishwashers: Distribution of LCC Impacts for Efficiency Level 2

Figure 8.4.4 Compact Dishwashers: Distribution of LCC Impacts for Effi ciency

Level 18-36 8.4.3 Distribution of Payback Period Under New Standard Level

Figure 8.4.5 and Figure 8.4.6 are example s of frequency chart s showing the distribution of payback periods for dishwashers at the efficiency levels corresponding to standard level 2

. DOE can generate a frequency chart li ke the one shown in Figure 8.4.5 for every standard le vel.

Figure 8.4.5 Standard

- Sized Dishwashers: Distribution of PBPs for Efficiency Level 28-37 Figure 8.4.6 Compact Dishwashers: Distribution of PBPs for Efficiency Level 1

8.4.4 L ife

- C ycle C ost and P ayback P eriod Summary Results

Table 8.4.1 and Table 8.4.2 show the LCC and PBP results for standard

- sized

dishwashers and compact dishwashers , respectively

. The average operating cost is the discounted

sum.

Table 8.4.1 Standard

- Sized Dishwashers: L ife

- C ycle C ost and P ayback P eriod

Results

Level Annual Energy

Use Life

- Cycle Cost

kWh Life

- Cycle Cost Savings Payback

Period

Median years Average

Installed

Price $ Average Operating

Cost $ Average

LCC $ Average Savings %

Net

Cost Households with

No Impact Net

Benefit

Baseline 355 630 489 1,120 NA 0 100 0 NA

1 324 656 445 1,101 $1 2 96 2 5.9

2 307 674 417 1,092 $4 14 71 15 10.9

3 295 726 396 1,122

- $15 51 38 10 33.7

4 234 734 318 1,052 $41 30 20 50 6.6

5 180 745 232 977 $108 23 9 68 4.5

Table 8.4.2 Compact Dishwashers: Life

- Cycle Cost and Payback Period Results

Level Annual Life

- Cycle Cost Life

- Cycle Cost Savings Payback8-38 Energy

Use Average

Installed

Price $ kWh Average Operating

Cost $ Average

LCC $ Average Savings % Period Households with

Median years Net

Cost No Impact Net

Benefit

Baseline 260 621 356 977 NA 0 100 0 NA

1 222 623 301 923 $13 6 76 18 0.3

2 154 638 206 844 $52 5 50 44 2.1

Figure 8.4.7 and Figure 8.4.8 show the range of LCC savings for all efficiency levels

considered for standard

- s ized and compact dishwashers , respectively . For each efficiency level

, the top and the bottom of the box indicate the 75 th and 25 th percentiles, respectively. The bar in

the middle of the box indicates the median , which means that with that efficiency level

, 50 percent of the households have LCC savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th percentiles , respectively . The small box shows the average LCC savings for each efficiency level

.

Figure 8.4.7 Ran ge of LCC Savings for Standard

- Sized Dishwashers - 100 0 100 200 300 400 500 600

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings ($)

Efficiency Level Standard Dishwashers: Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8-39 Figure 8.4.8 Range of LCC Savings for Compact Dishwashers

Figure 8.4.9 and Figure 8.4.10 show the range of PBPs for all efficiency levels for

standard

- sized and compact

- sized dishwashers, respectively. Households that are not affected by the new standard are not included in the figures.

Figure 8.4.9 Range of Payback Periods for Standard

- Sized Dishwashers - 50

0 50 100 150 200 250 300

Level 1 Level 2Average LCC Savings ($)

Efficiency Level Compact Dishwashers: Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 50 100 150 200 250 300 350 400 450 500

Level 1 Level 2 Level 3 Level 4 Level 5Average Payback Period (years)

Efficiency Level Standard Dishwashers: Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8-40 Figure 8.4.10 Range of Payback Periods for Compact Dishwashers

8.5 REBUTTABLE PAYBACK P ERIOD

DOE develop s rebuttable PBPs to support the legally established rebuttable presumption that an energy efficiency standard is economically justified if the additional product costs

attributed to the standard are less than three times the value of the first

- year energy and water cost savings. (42 U.S.C. §6295 (o)(2)(B)(iii))

The basic equation for rebuttable PBP is the same as that shown in section 8.3 on inputs to the payback period analysis . Unlike the analyses described in sections 8.2 and 8.3, however,

the rebuttable PBP is not based on the use of household samples and probability distributions.
Rather, the rebuttable PBP is based on discrete

, single

- point values. For example, DOE uses a probability distribution of regional energy prices in the distributional payback period analysis,

but it uses only the national average energy and water price s from the probability distribution to
determine the rebuttable PBP.

Other than the use of single

- point values, the most notable difference between the

distribution PBP and the rebuttable PBP is the la tter’s reliance on the DOE test procedure to determine a product’s annual energy and water consumption. To determine the rebuttable PBP for dishwashers, DOE based the annual energy and water consumption values on the number of cycles per year specified in the DOE test procedure. 20 0 2 4 6 8 10 12 14

Level 1 Level 2Average Payback Period (years)

Efficiency Level Compact Dishwashers: Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

The number of cycles from the DOE test procedure, 215 cycles per year, is equal to the average number of cycles that DOE used in its

determination of distribution PBPs.8-41 8.5.1 Inputs

As noted in section 8.5.1, the calculation for the r ebuttable PBP differ s from th at of the general PBP in that the inputs are discrete values rather than distributions. For the general PBP, inputs for determining total installed cost were based on single

- point values. However, the variability and/or uncerta inty in the inputs for determining operating costs required using distributions to calculate the general PBP. DOE used the following single

- point values in determining the rebuttable PBP.

• Manufacturing costs, markups, sales taxes, and installation costs were the same as the single

- point values used in the general LCC and PBP analys e s.

• As described in section 8.5.1, annual energy and water consumption were based on the usage in the DOE test procedure.

• Energy and water prices we re based on national average values for the year that new

standards are assumed to take effect (2013 for the consensus agreement levels ; 2015 for

all other efficiency levels )

.

• Neither a n average discount rate nor a lifetime is required in the rebuttable PBP

calculation.

8.5.2 Resul ts

DOE calculated rebuttable PBPs for each efficiency level relative to the distribution of product efficiencies assumed for the base case (refer back to section 8.2.6 for more details on the

base

- case efficiency distributions for e ach product). In other words, DOE did not determine the

rebuttable PBP relative to the baseline efficiency level, but relative to the current distribution of product efficiencies DOE determined for the base case (i.e., the case without new standards).

Table 8.5.1 and Table 8.5.2 present the rebuttable PBPs for standard

- sized and compact

dishwash ers , respectively

.

Table 8.5.1 Standard

- Sized Dishwashers: Rebuttable Payback Periods

Efficiency

Level AEU Water Use
kWh/year Rebuttable PBP gal/cycle

Baseline years

355 6.50

-

1 324 5.80 5.26

2 307 5.00 5.40

3 295 4.25 8.85

4 234 3.80 5.578-42 5 180 1.60 4.00

Table 8.5.2 Compact Dishwashers: Rebuttable Payback Periods

Efficiency

Level AEU Water Use
kWh/year Rebuttable PBP gal/cycle

Baseline years

260 4.50

-

1 222 3.50 0.23

2 154 2.10 1.028-43 REFERENCES

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