## Friday December 2, 1988

Ej 

# Part III



# Department of Enerevu,

Office of Conservation and Renewable Energy

10 CFR Part 430 

## Energy Conservation Program for Consumer Products; Proposed Rule and Notice Friday December 2, 1988



# Part III


# Department of Energy

Office of Conservation and Renewable

. Energy·

10 CFR 

## Part 430 

## Energy Conservation Program for Consumer Products; Proposed Rule and Notice

### 487 98 Federal Register

DEPARTMENT OF ENERGY

Office of Conservation and Renewable Energy

10 CFR Part 430

[Docket No. CE-RM-87-1021


### Energy Conservation Program for Consumer Products; Proposed Rulemaking and Public Hearing Regarding Energy Conservation Standards for 3 Types of Consumer Products

AGENCY: Office of Conservation and Renewable Energy, DOE.
ACTION : Notice of proposed rule and public hearing. 

### Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

SUMMARY : The Energy Policy and Conservation Act (EPCA), as amended by the National Energy Conservation Policy Act (NECPA) and the National Appliance Energy Conservation Act (NAECA), prescribes energy
conservation standards for certain major household appliances, and requires the Department of Energy (DOE) to administer an energy conservation program for these products. NAECA requires DOE to consider amending the energy conservation standards for refrigerators, refrigerator-freezers, and freezers; to establish standards for small gas furnaces; and to consider establishing energy conservation standards for
television sets. 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. The final rule will specify a specific level for refrigerators, refrigerator-freezers and freezers; the level selected could include no change to the standard level prescribed by NAECA. For small gas furnaces, the Department is proposing to determine that standards would result in a significant conservation of energy and be economically justified. Finally, for television sets, the Department is proposing to determine that an energy conservation standard would result in a significant conservation of energy but would not be economically justified.
DATES: Written comments on the proposed rule must be received by the Department by January 31, 1989: Oral views, data, and arguments may be. presented at the public hearing to be held in Washington, DC, on January 12, 1989. Requests to speak at the hearing must be received by the Department no later than 4:00 p.m., January 10, 1989. The hearing will begin at 9:30 a.m., on January 12, 1989, and will be held at the U.S. Department of Energy, Forrestal Building, Room 1E-245,1000 Independence Avenue, SW., Washington, DC.
ADDRESSES : Written comments, oral statements, requests to speak at the hearing and request for speaker lists are to be submitted to U.S. Department of Energy, Office of Conservation and Renewable Energy, Hearings and Dockets, Energy Conservation Program for Consumer Products, Docket No. CAS-RM-87-102, Room 6B-025, Forrestal Building, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9320, Copies of the transcript of the public hearing and written public comments received may be read at the DOE Freedom of Information Reading Room, U.S. Department of Energy, Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-6020, between the hours of 9:00 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 INFORMATION 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., Washington, DC 20585, (202) 586-9507. U.S. Department of Energy, CE-43.1, Docket No, CAS-RM-87-102, Forrestal Building, Room 6B-025, 1000 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 or 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. Refrigerators, Refrigerator-Freezers/ Freezers

1. Classes 2. Design Options 3. Comments on the Advance Notice of Proposed Rulemaking 4, Efficiency Levels Analyzed

b. Small Gas Furnaces
1. Classes 2. Design Options 3. Comments on the Advance Notice of Proposed Rulemaking 4. Efficiency Levels Analyzed

c. Television Sets

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 (SPCA); Pub. L. 94-163, as amended by the National Energy Conservation Policy Act (NECPA), Pub. L. 95-619

, by the National Appliance Energy Conservation Act (NAECA), Pub. L. 100-12 , and by the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), Pub. L. 100-357,1 created

i Part B of Title III of EPCA, as amended by NECPA. NAECA, and NAECA 1988

, is referred to in this notice as the "Act." Part B ofTitle III is codified at 42 U.S.C. 6291 at seq. Part B of Title III of EPCA. as amended by NECPA only, is referred to in this notice as NECPA. 48798 

### Federal Register 

## I VoL 53, No. 232 

## ! Friday, December 2, 1988 

## I Proposed Rules

= !i&SQ LihiU:!

_ d 7'i"PPR**~**

DEPARTMENT OF ENERGY

Office of Conservation and Renewable Energy

10 CFR Part 430

[Docket No. CE-RM-87-102]

Energy Conservation Program for Consumer Products; Proposed Rulemaking and Public Hearing Regarding Energy Conservation Standards for 3 Types of Consumer Products

AGENCY: Office of Conservation and Renewable Energy, DOE.

ACTION: Notice ofproposed rule and public hearing.

SUMMARV: The Energy Policy and Conservation Act (EPCA), as amended by the National Energy Conservation Policy Act (NECPA) and the National Appliance Energy Conservation Act (NAECA), prescribes energy conservation standards for certain major household appliances, and requires the Department ofEnergy (DOE) to administer an energy conservation program for these products. NAECA requires DOE to consider amending the energy conservation standards for refrigerators, refrigerator-freezers, and freezers; to establish standards for small gas furnaces; and to consider establishing
energy conservation standards for television sets.

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. The final rule will specify

a specific level for refrigerators, refrigerator-freezers and freezers; the level selected could include no change
to the standard level prescribed by NAECA.

For small gas furnaces, the Department is proposing to determine that standards would result in a significant conservation ofenergy and be economicallyjustified.

Finally, for television sets, the Department is proposing to determine that an energyconservation standard would result il-l. a significant conservation of energy but would not be economically justified.

OATES: Written comments on the proposed rule must be received by the Department byJanuary 31, 1989;

Oral views. data, and arguments may be,presented at the public hearing to be held in Washington, DC, on January 12, 1989. Requests to speak at the hearing must be received by the Department no later than 4:00 p.m., January 10, 1989.

The hearing will begin at 9:30 a.m., on January 12, 1989, and will be held at the U.S. Department ofEnergy, Forrestal Building, Room lE-245, 1000 Independence Avenue, SW., Washington, DC.

ADDRESSES: Written comments, oral statements, requests to speak at the hearing and request for speaker lists are to be submitted to U.S. Department of Energy, Office ofConservation and Renewable Energy, Hearings and Dockets, Energy Conservation Program for ConsumerProducts, Docket No. ' CAS-RM-87-102, Room 6B-025, Forrestal Building, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586--9320.

Copies ofthe transcript ofthe public hearing and written public comments received may be read at the DOE Freedom ofInformation Reading Room, U.S. Department ofEnergy, Forrestal Building, Room lE-190, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 588-6020, between the hours of9:00 a.m. and 4:00
p,m., Monday through Friday, except Federal holidays.

Formore information concerning public participation in this rulemaking proceeding, see section V, "Public Comment Procedures," of

### this notice.

FOR FURTHER INFORMATION CONTACT: Michael

## J. McCabe, U.S. Department of

Energy, Office ofConservation 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

ofEnergy, Office ofGeneral Counsel, Forrestal Building, Mail Station GC12,1000Independence Avenue, SW., Washington, DC 20585, (202) 586--9507. U.S. Department ofEnergy, CE-43.1,

Docket No. CAS-RM-87-102, Forrestal Building, Room 6B-025. 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586--9320.

SUPPLEMENTARY INFORMATION:
[, Introduction

o. Authority

b. Background

II. General Discussion

o. Test Procedures

b. Technological Feasibility

1. General
2. Maximum Technologically Feasible Levels

c. EnergySm--ings

1. Determination ofSavings 2. Significance of Savings d. Rebuttable Presumption

e. EconomicJustification

1. Economic Impact on Manufacturers and Consumers

2. Life-Cycle Gosts 3. Energy Savings 4. Lessening of Utility or Performance of Products

5. Impact of Lessening of Competition 6. Need ofThe Nation to Conserve Energy
7. Other Factors

III. Product-Spedfic Discussion

a. Refrigerators, Refrigerator-Freezers/ Freezers

1. Classes 2. Design Options 3. Comments on the Advance Notice of Proposed Rulemaking

4. Efficiency Levels Analyzed

b. Small Gas Furnaces

1. Classes
2. Design Options
3. Comments on the Advance Notice of Proposed Rulemaking

.

4. Efficiency Levels Analyzed

c. Television Sets

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. Env-ironmentalRev-jew

b. RegulatoryImpactReview

c. "Takings"AssessmentReFiew

d. Federalism Rev·jew

e. RegulatoryFlexibiliiyReview

V. Public Comment Procedures

a. Participation in Ruiemaking

b. Written Comment Procedures

c. Public Hearing

d. Issues Requested fa!' Commellt

I. Introduction



### a. Authority

Part B ofTitle III ofthe Energy Policy and Conservation Act (EPCA), Pub. L. 94-163, as amended by the National Energy Conservation Policy Act (NECPA), Pub. L. 95-619, by the National Appliance Energy Conservation Act (NAECA), Pub. L. 100-12, and by the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), Pub. L. 100-357,1 created

I Part BofTitle III ofEPCA, as amended by NECPA. NAECA. and NAECA 1988, is referred to in ibis notice as the "Act." Part B ofTitle III is codified
at 42 U.S.C. 629111/seq. Part B ofTitle II[ of EPCA.

as amended by NECPA only, is referred to in this notice as NECPA.

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

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), in 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 each 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 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 costs 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 assist consumers in making purchasing decisions or is not 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 66475

, November 19, 1979, 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) through (h). The Act establishes effective dates for the standards in 19M 1990

, 1992 or 1993, depending on the product

, and -specifies that the standards are to be reviewed by the Department within three to ten
years, also depending on the product. Section 325 (b} through (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 v hich increases the maximum allowable
energy use , or decreases the minimum required energy efficiency

, of a covered product. Section 325(1) (1). The Department's first review of standards is for refrigerators

, refrigerator

-freezers and freezers

. The Act requires DOE to publish a s final rule for these products by July 1, 1989. Section 325(b)(3} (A)(i). The Act also directs DOE to prescribe an energy conservation standard, no later than January 1, 198-0, for small gas furnaces

, i.e., gas furnaces having an input of less than 45

,000 Btu per hour and manufactured on or after January 1, 1992. Section 325(f

)(1)(B). With regard to another covered product, television sets, the Act allows the Department to prescribe an applicable standard; however, such standard may not become effective before January 1, 1992. Section 325(i)(3). These products (refrigerators, refrigerator

-freezers

, and freezers; small gas furnaces; and television sets) are the subject of this rulemaking. 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)(B)(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 

### 437

the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are -likely to result 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, (a) 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 (B) stipulate that in no case may airamended standard apply to products manufactured within three years or five years, depending on the product, after publication o€t he 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(rn)(1) (A) and (B). Section 325(q) provides that manufacturers having annual gross revenues not exceeding $8 million may apply to DOE for an exemption from all or part of the requirements of an energy conservation standard. This exemption may not extend beyond two years from the effective date of any standards requirement. This authority will not be exercised by DOE unless, after written consultation with the Attorney General. the Secretary finds that failure to allow the exemption would likely result in a lessening of competition. Section 326 of the Act requires manufacturers to submit information or reports to assure that each covered 

### Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed Rules 

### 48799

Sii!!£&lWU2ZC a::

__ Oil lfsrJI;;m."pUIT5 grr;:siP we



### 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 conditioningheatpumps; 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 ofEnergy. Section 322. To date, the Secretaryhas-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 ofEnergy (DOE or Department). in consultation with the National Institute ofStandards 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 each ofthe 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)(IJ. One hundred and eighty days after a test procedure for a product is adopted. no manufacturer mayrepresent the energy consumption of, or the cost ofenergy consumed by the product except as reflected in a test conducted according
to the DOE 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 costs for other models ofthat product. Section 324(c)(1). Disclosure ofestimated operating cost is notrequired under section 324 if

### the FTC detel'1Illnes that such disclosure is not likely to assist

consumers in makingpurchasing decisions or is not 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 

### 65475, November 19. 

### 1979, and 52 FR 46888. 

### December 10, 

### 19S7-.

For each of 12 of the covered products, the Act prescribes aninitial Federal energy conservation standard. Section 325 (bJ through (1). 

### 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 ten years, also depending on the product. Section 325 (b} 

### through (h). After the specified three- 

## to ten-year period. DOE
may promulgate new standards for each product; however, the Secretarymay not prescribe any amended standard which increases the maximum allowable
energy use. or decreases t.l:le minimum required energy efficiency. ofa covered product. Section 325(1)(1). The Department's first review of standards is for refrigerators. refrigerator-freezers and freezers. The Actrequires DOE to pubiish a final rule for these products by July 1,1989. Section 3Z5(b)(3}(A)(i).

The Act also directs DOE to prescribe

an energy conservation standard. no later thanJanuary 1, 1989. for small gas furnaces, i.e., gas furnaces having an input ofless than 45,000 Btu perhour and manufactm:ed onor after January 1. 1992. Section 325(fl(1)(B).

With regard to another covered product, television sets. the Act allows the Department to prescribe an applicable standard; however. such standard may not become effective before January 1. 

### 1992. Section 325(i)(3).

These products (refrigerators, refrigerator-freezers. and freezers; small gas furnaces; and television sets) are the subject ofthis rulemaking.

Any new or amended standard is required to be designed so as to achieve the mCLximum improvement in energy efficiency that is technologically feasible and economicailyjustified. Section 325(1)(2)(A).

Section325(1)(2)(B)(i) provides that before DOE determines whether a standardis economicallyjustified. it


### must first solicit comments ona proposed standard. After reviewing
comments on the proposal. DOE must then determine that the benefits ofthe standard exceed its burdens, based. to the greatest extent practicable, on a weighing ofthe following seven factors:

(1) The economic impact of the standard on the manufacturers and on the consumers ofthe products subject to such standard;

(2) The savings in operatingcosts throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of. 

### or in the initial charges for, or maintenance expenses of. the covered products which are likely to result 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 ofthe utility or the performance ofthe coveredproducts likely to result from the imposition ofthe standard;

(5-) The impact of any lessening of competition. determined in writing by the Attorney General. that is likely to resultfrom the imposition of the standard;

(6J The need for 

### national energy conservation; and

(7) Otherractors 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)(I). The Department must grant such a petition 

### if it 

### determines that an amended standard willresult in significant conservation of energy. is technological1y feasible and is cost effective. Section 325[1<)(2).

Sections 32-S(k)(3) CAJ and (B) 

### stipulate that in no case mayan-amended standard apply to products manufactured within three years or five
years. depending on the product. after publication ofthe final ru.le establishing

a standard.

Prior to proposing a newor amended standard, DOE is required to publish an , advance notice ofproposedrulemaking which specifies the type (or class] of coveredproduct to which the rule may apply and which provides a 50-day period during which interested persons may submit written comments. Section 325(m)[1) (A) and (B).



### Section 325(q) provides that manufacturers having annual gross

revenues not exceeding $8 

### million may apply to DOE for an exemption from all

or part of the requirements of an energy conservation standard. This exemption
may not extend beyond two years from the effective dateof any standards requirement. This authority will not be exercised by DOE unless. after written consultation with the Attorney General. the Secretary finds that failure to allow the exemption would likely result

## ma lessening ofcompetition.

Section 326 ofthe Act requires manufacturers to submit information or reports to assure that each covered

### 48800 Federal Register Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

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)); (2) 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). Section 327 of the Act addresses the effect of Federal rules concerning testing, labeling, and standards on State laws or regulations concerning such matters. Generally, all such State laws or regulations are superseded by the Act. Section 327 (a) through (c). Exceptions to this general rule include: (1) State standards prescribed or enacted before January 3, 1987, and applicable to appliances produced before January 3,1988, may remain in effect until the applicable standard begins (section 327(b)(1); (2) State procurement standards which are more stringent than the applicable Federal standard'(section 327(b)(2) and (e)) and certain building code requirements for new construction, if certain criteria are met, are exempt from Federal preemption (section 327(b)(3) and (f)(1) through f(4)); (3) State regulations banning constant burning pilot light's in pool heaters; and (4) State standards for television sets effective on or after January 1, 1992, may remain in effect in the absence of a Federal standard for such product (section 327(b)(6) and 327(c)). Another exception to Federal preemption concerns standards for refrigerators, refrigerator-freezers and freezers. The Act specifies that if DOE does not publish a final rule before January 1, 1990, relating to the revision of Federal standards for this product category, the State .of California's December 14, 1984, standards (effective January 1, 1992) for these products, would become effective in California beginning January 1, 1993, and may not be preempted by any Federal standard prescribed on or after January 1, 1990. Section 325(b)(3)(A)(ii)(I).and section 327(c). In addition, if DOE does not publish a final rule before January 1, 1992, relating to the revision of standards for refrigerators, refrigerator-freezers and freezers, any State regulation which applies to such products manufactured on or after January 1, 1995, is exempt from Federal premption until the effective date of a Federal standard. Section 325(b)(A)(ii)(II). A State whose energy conservation standard is preempted may petition the Department for a rule that it not be preempted on the basis that the State regulation is needed to meet unusual and compelling State or local energy interests. Section 327(d). However, DOE cannot issue the requested rule if it is established that such State regulation will significantly burden marketing, manufacturing, distribution, sale or servicing of the covered products, or is likely to result in the unavailability in the State of any covered product with performance characteristics that are substantially the same as those generally available in the State at the time of DOE's determination. Section 327(d)(4). The Act further provides that, except under certain energy emergency conditions, any State regulation for which exemption is granted shall apply to products manufactured three years after DOE publishes such a rule in the Federal Register, or five years after publication, if DOE finds that additional time is necessary for retooling and redesign. Section 327(d)(5).
b. Background NECPA required DOE to establish mandatory energy efficiency standards for each of 13 covered products.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

0 The consumer products covered byNECPA included: 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. 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 Department published an advance notice of proposed rulemaking 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 advance notice, on June 30, 1980, DOE published 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 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.a The April 1982 proposal also proposed rules governing petitions to DOE both by States to obtain exemption from preemption of State of local energy efficiency standards; as well as by manufacturers to obtain preemption of State or local standards.. On Decmber 22,.1982, DOE published a final rule in which the Department determined that efficiency standards

The April 1982 proposal, did not propose any rule with respect to the product type "home heating equipment, not including furnaces;" or with respectto that class of the product water heaters made upof heat pump water heaters, or with 'respect 'to those classes of the product central air conditioners that are heat pumps. 

### <18800 

### Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 / Proposed Rules

product to which q standard applies meeis the required energy efficiency level. The Act also specifies thafin determining information requirements, DOE consider existing sources of information, including nationally recognized trade association certification programs. Section 326(d).

Enforcement-related provisions ofthe Act provide for: (1) DOE to prescribe rules requiring manufacturers to allow the Department to observe testing and inspect results oftesting conducted by the manufacturer (section 326 (b}(5)); (2) manufacturers to supply to DOE a reasonable number ofproducts for testing purposes (section 326(b)(3]); (3) manufacturers to submit information or reports necessary to ensure compliance (section 326(d)); and (4) injullctive relief against any prohibited act, inCluding distribution ofnoncomplying products (section 334).

Section 327 ofthe Act addresses th'e effect ofFederal rules concerning testing, labeling, and standards on State laws or regulations concerning such
matters. Generally, all such State laws

orregulations are superseded by the Act. Section 327 (a) through (c). Exceptions to this general rule include: (1) 

### State standards prescribed or enacted before January 3, 1987, and applicable to appliances produced before January 3.1988. mayremain in effect until the applicable standard begins (section 327(b](1); (2) State procurement standards which are more stringent than the applicable Federal standard (section 327(b)(2J ami (e)) and certain building code requirements for

new construction. ifcertaLI1 criteria are met, are exempt from Federal preemption (section 327(b)(3) and (f}(1) through f(4)}; (3) State regulations banning constant burning pilot lights in pool heaters; imd (4) State standards for television sets effective on or after January 1. 1992. may remain in effect in the absence of a Federal standard for such product (section 327(b)(6) and 327(c)).

Another exception to Federal preemption concerns sta.ndards for refrigerators, refrigerator-freezers and freezers. The Act specifies that ifDOE does not publish a final rule before January 1,1990, rel,aUng t.o the revision ofFederal staridi'!l'ds for this product ' category, the State.ofCalifornia's December 14, 1984, stand<;trds (effective January 1, 1992) for these products. ' would become effective in California begirming January 1, 1993, and may not be preempted by any Federal standard prescribeg on or after January 1, 1990. Section 325(b)(3)(A)(ii)(I) and section 327(c). ' 92£16 \ee



### In addition. ifDOE does not publish a final rule before January 1, 1992, relating
to the revision of standards for refrigerators. refrigerator-freezers and freezers, any State regulation which applies to such products manufactured

on or after January 1, 1995, is exempt from Federal premption until the effective date of a Federal standard. Section 325(b)(A)(ii)(II).

A State whose energy conservation standard is preempted may petition the Department for a rule that it

### not be preempted on the basis that the State regulatiQn is needed to meet unusual and compelling State or local energy interests. Section 327(d). However. DOE cannot issue the requested rule ifit

### is established that such State regulation will significantly burden marketing, manufacturing, distribution, sale or servicing ofthe covered products, or is likely to result in the unavailabIlity in the State ofany covered product with performance**characteri~tics** 

### that are substantially the same as those generally available in the State at the time ofDOE's determination. Section 327(d}(4).

The Act further provides that, except under certain energy emergency conditions, any State regulation for which exemption is granted shall apply
to products manufactured three years after DOE publishes such a rule in the Federal Register, or five years after publication, ifDOE finds that additional time is necessary for retooling and redesign. Section 327(d)(5).
h. Background

NECPA required DOE to establish mandatory energy efficiency standards for each of 13 covered products. 2 

### These standards were to be designed to achieve the maximum improvement in energy efficiency that was technoiogically feasible and economicallyjustified.

NECPA provided, however, that no standard for a product be establishedif there were no test procedure for the product. or ifDOE determined by rule either that a standardwouldnot result in significant conservation ofenergy, or that

## a standard was not technologically feasible or economicallyjustified. In 

### determining whether a standard was economicallyjustified. the. Department

was directed to determine whether the benefits ofthe standard exceeded its

• The consumer products covered by NECPA included: Refrigerators and refrigerator-freezers: freezers; dishwashers: clothes dIyers: water heaters;

roomair conditioners; home heating equipment not including furnaces: television seta; kitchen ranges and ovens; clothes washers; humidifiers and dehumidifiers; centra'l air'dbnditiomirs; and furnaces. 

### burdens by weighing the seven factors discussed above.

NECPA specified the priorities and procedures tobe followed in adopting efficiency standards. Nine ofthe 13 covered products were given priority. These nine products were: Refrigerators and refrigerator-freezers; freezers; clothes dryers; waterheaters; room air conditioners; home heatmg equipment
not including furnaces; kitchen ranges and ovens; central air conditioners; and furnaces.

The Department published an advance notice ofproposed rulemaking 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 advance notice, onJune 30, 1980, DOE published 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 ofthe standards, procedures for processing petitions by States that sought exemption for regulations subject to the general preemption requirements of NECPA, and small business exemptions.

On April 2. 1982, DOE issued a further notice ofproposed rulemaking with ' respect to the nine priority products. 47 FR 14424. (Hereafter referred to as the April 1982 proposal). With respect to eight ofthe produ9ts, DOE proposed to make a determina-tion that

## a standard would not resultin significant conservation ofenergy and would not be economicallyjustified. 3 

### The April 1982 proposal also proposed rules governing petitions to DOE both by States to obtain exemption from preemption ofState or local energy efficiency standards; as well as by

, manufacturers to obtainpreemption of State 'or local standards.

OnDecmber**~2,J,982,** 

### DOE published

a final rule in which the Department determined that efficiency standards

3 The April 198Zpropo)laldid not propose any rule with respect to the product type ,:.'home healing equipment, not induding furnaces," or with respect to that class of the product-water heaters malle up' ofheat pump water healers. or with respectIo those classes of the product central air conditioners that

are heat pumps.

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

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 coveredzby 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 in significant conservation of energy, but 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 the four products covered by the April 1985 proposal, DOE proposed that an energy efficiency standard would not be 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. NRDC v. Herrington, 768 F.2d 1355 (D.C. Cir. 1985). Consequently, on March 5,1986, DOE published notices in the Federal Register removing the December 1982 and August 1983 final rules 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. More recently, the National Appliance. Energy Conservation Amendments of 1988 (Pub. L. 100-357) established Federal energy conservation standards for a new covered product, fluorescent lamp ballasts. These amendments also created a review schedule for DOE to determine if an amended standard is required. As stated above, the Act requires DOE to publish a final rule for small gas furnaces by January 1, 1989; for refrigerators, refrigerator-freezers, and freezers by July 1,1989; and to consider establishing a standard for television sets. DOE is combining these rulemaking items into one action. The purposes of this rulemaking is three-fold: (1) To review the energy conservationstandards for refrigerators, refrigeratorfreezers, and freezers (hereafter referred
to as refrigerators) that have been established by the Act; (2) to propose energy efficiency standards between 71 percent and 78 percent AFUE (annual fuel utilization efficiency) 4 for small gas furnaces, i.e., those having an input rate less than-45,000 Btu per hour; and (3) to consider the establishment of an energy conservation standard for television
sets. As directed by the Act, DOE published an advance notice of proposed rulemaking, with a 60-day comment period that ended February 5, 1988, as the Department considers prescribing applicable new or amended standards for these three products. 52 FR 46367, December 7, 1987. (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. In addition, on January 28, 1988, a public hearing was held on the advance notice,

4 The Annual Fuel Utilization Efficiency {AFUE) is the ratio annual fuel output energy to annual fuel input energy, expressed as a percent. 

### 48801

H. General Discussion
As stated above, NAECA requires DOE to determine if the legislated standards for refrigerators should be amended, to establish a standard for small gas furnaces, and to consider establishing a standard for television
sets. The Act prohibits DOE from promulgating a standard for a product if (1) there is no test procedure for the product, (2)a standard is not technologically feasible, (3) DOE determines that a standard would not be economically justified, or (4) if a standard would not result in a significant conservation of energy. To

measure possible energy savings,and economic justification, DOE analyzed several possible standard levels for each product type (refrigerators and television sets) or class of product (small gas furnaces). Furthermore, the Act stipulates that any adjustment of a standard may only be toward 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.,, high efficiency .. compressor, ora complete assembly with the design option installed, e.g., a condensing furnace. While a prototype design may be technologically feasible as an individual component or as part of a bread-boards 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. These test procedures also cover the various classes of products identified in today's notice. However, DOE has issued fourtest procedure waivers for refrigeratorfreezers, all concerning variable defrost controls.6 The engineering analysis for refrigerator-freezers for today's proposal is based upon the test procedures included in DOE' s Decision and Orders concerning variable defrost controls. Research in support of the developmentof test procedures for refrigeratorfreezers equipped with variable defrost controls has been completed. DOE issued a proposed rule concerning

5 A breadboard unit is an experimental arrangement of the design made to test its feasibility.

11 RF-001 Whirlpool Corp., 50 FR 34186, August 23, 1985; RF-002 White Consolidated Inc., 51 FR 15679, April 25, 1988: RF463 and RF-004 Whirlpool Corp., 51 FR 36591, October` 14;1986. 

### Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed Rules 

### 48801

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 ofa State or local standard not otherwise preempted.

OnAugust 30, 1983, DOE published a final rule with respect to the remaining six covered products: RefrigeratOl's 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 ofthe six products coveredcby the August 1963 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. WWl respect to central air conditioners, DOE found that an energy. efficiency standard would result in

. significant conservation ofenergy. but
not be economicallyjustified.

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. (Hereafterreferred to as the April 1985 proposal). For each ofthe four products covered by the April 1985 proposal. DOE proposed that an energy efficiency standard wouldnot be economicallyjustified 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 ofAppeals set aside DOE's December 1982 and August 1983 final rules. 

### NRDC v. 

### Herrington. 768 F.2d 1355

.(D.C. Cir. 1985). Consequently. on March 5, 1986. DOE published notices in the Federal Register removing the December 1982 and August 1983 final rules 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 "coveredproducts" (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 

### ifan amended standardis required.

More recently. the National Appliance. Energy Conservation Amendments of 1988 (Pub, L. 100-357) established Federal energy conservation standards for a new coveredproduct, fluorescent lamp ballasts. These amendments also created a review schedule for DOE

## to determine 

### ifan amended standard is required.

As stated above. the Act requires DOE to publish a final rule for small gas furnaces byJanuary 1. 1989; for refrigerators. refrigerator-freezers. and freezers byJuly 1. 1989; and to consider establishing a standardfor television
sets. DOEis combining these rulemaking items into one action. The purposes of this rulemaking is three-fold: (1) To review the energy conservation standards for refrigerators. refrigeratorfreezers. and freezers (hereafter referred
to as refrigerators) thathave been establishedby the Act; (2) to propose energy efficiency standards between 71 percent and 78 percent AFUE (annual fuel utilization efficiency) 4 

### for small gas furnaces, i.e.• those having an input rate less than 45.000 Btu perhour; and (3) to consider the establishment ofan energy conservation standard for television
sets.

As directed by the Act. DOE published an advance notice of proposed rulemaking, with a 60-day
comment period that ended February 5, 1988, as the Department considers prescribing applicable new or amended standards for these three products. 52 FR 46367, December 7. 1987. (Hereafter referred to as the advance notice). The advance notice presented the product classes that DOE planned to anaiyze, and provided a detailed discussion of the analytical methodology and analytical models

## that :the Department expectedto use in performing the analysis to support this rulemaking. The Departmentinvited comments ano. data

on the accuracy and feasibility ofthe planned methodology and encouraged interested persons to recommend improvements or alternatives to DOE's approach. The comments inresponse to the advance notice are.addressed in sections II and ill ofthis notice. In addition. on January 28. 1988. a public hearing was held on the advance notice.

• The Annual Fuel Utilization Efficiency (AFUE) is the ratio annual fuel o·utput energy to annual fuel input energy. expressed as a percent. 

## n. General Discussion

As stated above, NAECA requires DOE to determine ifthe legislated standards for refrigerators should be amended. to establish a standard for small gas furnaces. and to consider establishing a standard for television
sets.

The Act prohibits DOE from promulgating a standard for a product if 

### (1) there is no test procedure for the product. (2) a standardis not technologically feasible. (3) DOE determines that a standard would not be economicallyjustified. or (4) 

### ifa standard wouldnot result in a significant conservation ofenergy. To

measure possible energy savings.and economicjustification. DOE analyzed several possible standard levels for each product type (refrigerators and· television sets) or class ofproduct (small gas furnaces). Furthermore. the Act stipulates that any adjustment of a standard may 

### only be toward stringent levels. With respecUo each appliance. DOE analyzed various specific design options. including·prototypes. A prototype can be eithetanindividual**component.e.g~.** 

### high efficiency compressor. ora complete assembly with the design optioninstalled. e.g.• a condensing furnace. While a prototype design may be techriologically feasible

as an individual component or as part of

a bread-board I 

### assembly. it 

### does not necessarilyfollow that techniques have been developedfor ma.ss production of the prototype design.

.

o. 

### Test Procedures

For each product discussed in today's proposed rulernaking there is an

. applicable DOE test procedureto evaluate its energy efficiency. These test procedures also cover the various classes ofproducts identified intoday's notice. However, nOE has issued four
test procedure**waiv~rs** 

### for refrigerator-

. freezers. 

### all concerning variable d.efrost controls. 6 

### The engineering anp.lysis for refrigerator-freezers for today's proposal is based upon the test procedures i.ncluded inbOE's Decision and Orders concerningvariablEi defrost controls. Research in supportdfthe development oftest procedures for refrigeratorfreezers equipped 

### \vlth variable defrost controls has been completed. DOE issued a proposed rule concerning

• A bread'board unitis·an ex:perimental arrangement of the**d~sig;'** made to test Us feasibility.

• RF-OOl Whirlpool Corp., 50 FR 34186, Augusl23, 1905; RF-002 White Consolidated Inc

.. Sl.FR 15679. April 25. 1986; 

### W-®3 a.nj:i RF-004 Whirlpool Corp., 51 FR 36591, O'ctobel'14:·1986.

### 4S#iv2. Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed. Rules

variable defrost controls on September. 26, 1988. (53 FR 37416).
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.- Several comments addressed the subject of technological: feasibility. The California Energy Commission (CEO)' recommended that DOE put no limits on design options for technological feasibility,,tha:t DOE include prototypes; foreign market designs and designs with, long paybacks.. (CEC; No. 35,- at 4.) , The Association of Home Appliance Manufacturers (AFiAM) identified! the need for DOE: to' establish maximumtechnologically feasible levelsseparatelyfrom any economic inputs. (ARAM, No. 22, at 4.) The Natural Resources. Defense Council' (NRDC) recommended' that DOE'increase standard levels to the maximum technologically feasible designs, such as evacuated panel insulation for refrigerators. (NRDC. No. 19, at 9.)
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. A complete discussion of each maximum technologically feasible level and design options included in each is found in the Engineering Analysis, See Technical Support Document, Chapter 3, specifically sections 3.2.3 through 3.2.5.,

Comments on the advance notice have been assigned docket nbere and have been-numbered consecutively. Statements that were presented at the January 28, 1938, public hearing are identified as Testimony. 3.3, and 3.4.1 through 3.4.3. These are presented in Table 2=1

, below.

TABLE 2-I.-MAXIMUM

TECHNOLOGICALLY FEASIBLE LEVELS

Products and product classes

Refrigerators and RefrigeratorFreezers: Manual Defrost (1 6.8- cu. ft.) ..... Partial Automatic Defrost (18.1 cu. ft.). Automatic Defrost Top Mount (20.8 cu. ft.). Automatic Defrost Side-by- . Side (24

.1 cu. ft.).Automatic Defrost Side-bySide with Through-the-Door Service Features (31.9 cu. ft.). Automatic Defrost Top Mount. with Through-the-Door Service Features (20.8 cu. ft). Automatic Defrost Bottom Mount (20.4 Cu. ft). Freezers: Chest, Manual. Defrost (22.5 cu. ft). Upright, Manual Defrost (26:1 cu_ ft:). Upright, Automatic Defrost (29.9 cu. ft.). Small Gas Furnaces: Non-Weatherized (indoor' ..... Weatherized: (Outdoor).... Television. Sets. Monochrome (i3') .............. ..... Color (19"-20") ........................... Unit energy consumption

380 kWh/yr. 435 kWh/yr.

515 kWh/yr.

599 kWh/yr.

776 kWh/yr.

525 kWh/yr.

535 kWh/yr.

315 kWh/yr.-

343- kWh/yr.

505 kWh/yr.

197% AFUE. 1,97% AFUE.

46 kWh/yr. 171 kWh/yr.

1 78-:percent AFUE is the

, maximum standard level that is allowed by the Act for small gas furnaces.

The Department believes that these are the maximum technologically feasible energy conservation levels from an engineering standpoint. some or all of these levels will be evaluated in accordance with the economic-. justification factors specif ied in the Act. to determine if the levels are _ economically justified. Specifically excluded from further. analysis are the maximum technologically feasible levels for small gas furnaces, since these levels are beyond the range in which the Department must establish standards. The New York State Energy Office (NYSEO) called for DOE to explain why it does not adopt any design option. that conserves more energy than the maximum technologically feasible design. The NYSEO also stated that for those design options selected, DOE must ensure that development and - commercial availability correspond to the dates standards become effective. (NYSEO, No. 32, at 4--W. Admiral Home Appliances (Admiral) stated' that "innovation, cannot be legislated, therefore, maximum technologically feasible design options are those that are fully developed and commercially available today. Admiral also stressed NAECA's requirement that DOE delete design options that would lessen utility to the consumer and affect performance, life, and reliability of the covered appliance.-(Admiral, No. 31, at 3). 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. DOE believes that. design options; including prototypes; and foreign designs.. must be capable. of implementation by the effective. date. of a, standard. Each maximum technologically feasible lever was- evaluated to, determine if'it would-be commercially. viable, that is, economically justified, atthe time of the effective date of-thestandard: Design options that have unacceptable impacts on consumers or manufacturers or result in the changingof the utility of the product wererejected. DOE.prov

.id'ed lists of design options for engineering analysis in the advance notice. DOE received' a number of comments on these design options, which 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 include the method of analysis for each of the products.
c. E1 ergy Savings 1. Determination of Savings
The Department forecast energy consumption through the use of the Lawrence Berkeley Laboratory 48802. 

### Federal Register / Vol. 53, No. 232 / Friday. December 2, 1988 

## I Proposed Rules ..,'.

variable defrost controls on September. 25. 1988. (53 FR 37416).


### b. TechnologicalFeasibility'

1. General

For those products and classes of pro'ducts discussed in today's'notice, DOE believes that the efficiency levels analyzed. while not necessarily in production, are technologically possibie. The technological feasibility ofthe design options is addressed in the product specific discussion. DOE's criteria for evaluating designoptions 

### for technological feasibility are that the design options 

### ale already in use by

### the respective industry or thatresearch·has progressed;to the likely de:velopment of

a prototype

...

Several COIIL.'Il.ents addressed the subject oftechnolagicalfeasibiIits'. The California Energy Commission (CEe)' recommendedthat DOE putno 

### limits on design options for technological

. feasibility.,thatDOE include prototypes;

foreign market designs,and designs"with long paybaeks

..**~CEC;** 

## ruo. 35, at4.) • The AssociationefHome Appliance Manufacturers 

### (AHAMJ identified'the need for DOE to,establish maximum, technologically feasible'levels separately from any economic inputs. (AHAM, No. 22; at 4.) The Natural ResoutcesDefense Council (NRDC) recommendedthatDOE'increa:se standard levels to the maximum technological1yfeasiblB' designs. such as evacuatedpanel insulationfor refrigerators. (NRDC, No.19.at9,)

2. Maximum Technologically Feasible Levels

The Actrequires thatin considering.
any new or amended s.tandarrls, the' Departmentmust considerthose 

### that "shall be designed to achiev:e the maximum improv.ementin energy efficiency which the Secretary determines 

### is technologically feasible and economicallyjustified." (Section 325(1)(2)(A}.) Accordingly, for each class ofproduct under consideration in this rulemaking, 

### a maximum technologically feasible design option was identified. This is the most efficient model: 

### ofa class for which at leasta prototype exists. A complete discussion ofeach maximum technologically feasible level and design**option~** included iheacn

### is found in the Engineering Analysis. See Technical Support Document, Chapter 3, specifically sectians 3.2.3 thrsugh 3.2.5.,

7 Comments on the advance notice have been assigned docket number. and have been'uumbered consecutively. Statements thaI 'Were presented at the January 28, 1988. public hearing are identified as Testimony. 3.3, and 3.4.1 through 3.4.3. These are presented in Table**2~1.** below.

TABLE 2-1.-MAXIMUM
TECHNOLOGICALLY FEASIBLE LEVELS

Products and product classes

Refrigerators and Refrigerator·

Freezers: Unit energy consumption

Manual Defrost (16.8' cu. ft.)

..... 380 kWh/yr. Partial Aut(lmatic Defrast 435 kWh/yr.

(18.1 cu. ft.). Automatic Defrost Top Mount 515 kWh/yr.

(20.8 cu. ft.). Automatic Defrost Side-by· 599 kWh/yr.

Side (24.1 cu. ft.). Automatic Defrost Side·by·'776 kWh/yr.

Side with l'hrougn-the,Door Sef'llice Features (3:1.9 cu. tt).

, Automatic Defrost Top Mount·. 525 kWh/yr

..

with ThrougMtlErDoor Service Features (20.8 cu. ttl. Automatic Defrost Iilotlom .535 kWh/Yr.

Mount (20.4 Ctl. ttl

.. Freezers: Chest. Manual. Defrost (22.5 315 kWJ1tyr •. cu, It). Upright, Manual' Defrost (26:1 343 kWh/yr.

cu

..ft;). Upright, Automatic Defrost;505 kWh!yr.

(29.9 cu. ft.). Small Gas Furnaces: : Non-Weatherized (Indoor)

........., 1 97% AFUE. Wealherized:(Outdoor)

......_ ... "97% AFUE. Television; Sets: Monochrome**(~3")** ..................... :46 kWh/yr. Color (19"-20")

........................... 171 kWh/yr.

1 78· percent AFUE. is the',maximum standard level that is allowed by the Act for small gas furnaces.

The Departmentbelieves 

### that these

are the maximum te.chnologicaHy feasible energy consenvationlevels from

an engineering standpoint; some or all of these lev:els will be evaluatedin accordance 

### with the economic justification factors specified 1.'1:the Act
to determine ifthe levels are.

. economicallyjustified. Specifically excluded from further analysis aI'S the maximum technologically feasible levels for small gas furnaces. since these levels

are beyondthe range inwhich the Departmentmust establish standards.

The New York State Energy Office (NYSEO) calledfOl: DOE to explain why it does not adopt any design optionthat

conserves more euergy than t.l}.e

. maximUm technologically feasible design. The NYSEO also stated that 

### for those design options selected, DOE must

ensure that development and'

. commercial availability correspond to the dates standards become effective. (NYSEO. No. 32, at4-6). Admiral Home Appliances (Admiral)**stat~d** that" "innovation,cannot be legIslated,

. therefore, maximum technologically feasible design options are those that

arefuBy developed and GOITh'11ercially available today. Admiral also stressed 

# ...

NAECA's requirement that DOE delete design options that would lessen utility
to the consumer and affectperformance, life. and reliability ofthe covered appliance

.. (Admiral. No. 31. at 3).

DOE proposes that the maximum technologicallyfeasible.level 

### is one**L~at** can be carried:out by.the. addition 

### of design options, both commercially feasible and prototypes, to the baseline units without affecting the product's utilitv. DOE believes thatthere ate no prodi:Ictsavailable 

### with, the

### sa~.e 

### utilit'y and capacity that aremor.e,efflclefit.than the'maximum technological level. DOE believes tha

### t. design options; indudL'1g prototypes:and foreigndesigns,.IDust

### be capable.ofimplementationby the effectiv.e·date ofa,**standar.d~**

Each maximum technologically feasible levelwas·evalua,ted to determine 

### ifitwould be cOIllIllerciaHy, viable, thatis, economicallyjustified; 

### at the time ofth.e effective date ofthe' standard. Design options iliat have unacceptable'impacts onconsumers or manufacturers orresultinthe changing

or the utility oftheproduct were rejected.

DOEprovided lists ofdesign aption:> for engineering analysis in the advance notice. D0Ereceived'a number of
comments on these design options, which resulted in more detaileddesign options for DOE**te~ew.** DOEhas

. consideredthese**sugges~ions** and 

### has addressed them in the product specllm discussions in 

### tWs notice

..

The analysis process,is d.escribed fully in the TechnicalSupport Document. Computermodels and manufacturers: datawere 

### used.to predict improvements in**produ~t** efficiencies and.the costs. assoClated! with these impI'Ovements.

The Engineering Analysis addresses
two statutory r.equirements. The first requiremenUs the.Department's evaluation ofthe'maximum improvements 

### inenergy efficiency 

### that

are technologically feasible. The second! requirement relates to the lessening of utility to t.ne. consumer ofany of the covered pl'oducts due 

### to the imposition of standards. The Engineering Analysis also ptovides information on efficiencies and manufacturing costs to other sections of the overall analysis. The product specific sections ofthis notice

. include the method ofanalysis for each

ofthe producfs.

.



### c. EnergySavings

1. Determination ofSavings

The Department forecast 

### enm:gy consumption through the use of the Lawrence Berkeley Laboratory

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules 48803

Residential Energy Model (LBL-REM). The LBL-REM forecasts energy consumption over the period of analysis for candidate standards and the base case." The Department quantified the energy savings that would be attributable to a standard as the difference in energy consumption between the standards case and the base case. The LBL-REM, which is an improvement of the Oak Ridge National Laboratory Residential Energy End Use Model (ORNL Model) that was used by DOE in previous standards rulemakings is fully explained in the Technical Support Document. Appendix B to that document addresses the LBL-REM in detail. The LBL-REM contains algorithms to project average efficiencies, usage behavior, and market shares for each product. The model's assumptions and methods are described in the Technical Support Document. The market share algorithm used for the refrigerator analysis is the same as the one used in previous analyses. Since such products have no significant competition from technologies that use fuels other than electricity, the principal market share decisions are: purchase this product or not; and select among the available classes. The fraction of potential purchasers who actually purchase the product is determined each year by applying market share elasticities to:the percent change in equipment price, operating expense (which includes changes in electricity price and in unit energy, consumption), and income. The market share elasticities are constant over the projection period. The market share obtained by each class in any future year is assumed to be a constant fraction of total refrigerator sales. (See Technical Support Document, Table B.3). For refrigerators, the market sharesrange from a low of 0.7 percent for a topmount refrgerator-freezer with throughthe-door ice, to a high of 72.9 percent for a top-mount refrigerator-freezer without through-the-door ice service. If this assumption were changed, the results of the LBL-REM would be affected, e.g., for refrigerators, if the market share of less expensive and less energy consumptive products were to increase, the energy savings would be increased and the net present value would also likely be increased. If this scenario were to occur, consumers would sacrifice utility by purchasing refrigerators with fewer

9 For refrigerators the base case represents the NAECA 1990 standards; for small gas furnaces andtelevision sets, the base case represents nostandards. 

### amenities. DOE requests comments on this issue. On the other hand, a new market share algorithm for small gas furnaces had to be developed, since such products had not previously been analyzed separately. Market shares for small gas furnaces are determined using modifications to the algorithms developed for all heating and cooling end uses. See Technical Support Document section 4.2.3i Elasticities for heating equipment in new mobile. . homes, new : large; multifamily housing (five or more units), and all types of, existing housing are calculated using methods and models developed by Lin, Hirst, and Cohn, Fuel Choices in the Household sector, Oak Ridge, TN: Oak Ridge National Laboratory; ORNL/ CON-3,1976. Those authors reported a cross-sectional analysis of residential fuel choices (equipment ownership market shares) for five major end uses, including space heating, air conditioning, water heating, food freezing, and cooking, using 1970 data from states. For new single-family and new small (two to four units) multifamily housing, effective market share elasticities are derived from an econometric model originally developed by Electric Power Research Institute (EPRI), Household Appliance Choice: Revision of REEPS Behavioral Models, Palo Alto, CA: Electric Power Research Institute, EPRT EA-3409, Research Project 1918

-1, 1984, and modified at Lawrence Berkeley Laboratory (LBL). The model was established from a national data base disaggregated to the household level, using exogenous variables of equipment prices, operating
expenses (which are proportional to fuel prices), household income, and other variables. The most significant difference between the EPRI model and the LBL model is the LBL model's characterization of a household discount rate for the choice of heating and cooling equipment as varying with maximum winter heat

.load and a measure of the oppressiveness of

summer climate. Essentially

, the data strongly support the hypothesis that households that are likely to use a particular piece of equipment frequently (because of a cold winter climate or a hot, humid summer climate) are likely to pay greater attention to future operating
expenses

. Such households are estimated as having lower discount rates, i.e., accepting longer payback periods for additional equipment expenses for heating or cooling appliances than those living in relatively mild conditions

. Conversely, those households in milder climates give relatively greater weight to equipment price than to operating expense. See Technical Support Document, Appendix B. section 8.5. TheLBL-REM is used to project residential energy use over the relevant time periods for: (1) Television sets with and without standards; (2) small furnaces at 71, 74, and 78 percent AFUE; and (3) refrigerators at differentstandard levels, including the NAECAimposed 1990 standards, and several candidate amendment levels. By comparing the energy consumption projection at:alternative standard levels or no standard' (for television sets), at standards of-71.pereent and 78 percent AFUE (for small furnaces), and at alternative standard levels or NAECA 1990 standards. (for refrigerators), the Department estimated the amount of energy projected to be saved during the period 1992-2015.9 The energy saved is expressed in Quads, i.e.,. quadrillion Btu. 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 at consumer product at point of use. This is generally called " site" energy, as opposed to "source" energy. There are great differences between these types of
energy. In 1986, 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. 10 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,

s 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 rulemakings 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. 10 Energy Information Administration, Electric Power Annual 1986, Tables 7 and 41, DOE/EIA0348i86), 1987. 

### Federal Register / Vol. 53. No. 232 

# I Friday. December 2. 1988 / Proposed Rules 48803

Residential Energy Model (LBL-REM). The LBL-REM forecasts energy consumption over the period ofanalysis for candidate standards and the base

case. s The Department quantified the energy savings that would be attributable to a standard as the difference in energy consumption between the standards case and the base case.

The LBL-REM, which is an improvement ofthe Oak Ridge National Laboratory Residential Energy End Use Model (ORNL Model) that was used by DOE in previous standards rulemakings is fully explained in the Technical Support Document. Appendix Bto that document addressesthe LBL-REM in detail. The LBL-REM contains algoritlmls to project average e.ffidencies, usage behavior. and market shares for eachproduct. The model's assumptions andmethods are described

. in the Technical Support Document. The

market share algorithm used for the refrigerator analysis is the same as the

one used inprevious analyses. Since such products.have no significant competition from technologies that use fuels other than electricity. the principal market share decisions are: purchase this product ornot; and select among the available classes. The fraction of potential purchasers who actually purcha,se the product is determined each yearby applying market share elasticities to the percent change in equipment price. operating expense (which Includes changes in electricity price and inunit energy.coilsumption). and income. The market share elasticities are constant over the projectionperiod. The market share obtainedby each class in any future year is assumed to be a constant fraction oftotal refrigerator sales. 

### (See Technical SupportDocument. Table B.3). For refrigerators. the market shares
range**fr~m** 

### a low of0.7**perc~rit** 

### for a topmount refrgerator-freezer with through**the~door** 

### ice. to Ii 

### highof72.9 percent for

a top-mount refrigerator-freezer without through-the-door ice service. If

### this assumption were changed. the results of the LBL-REM would be affected. e.g.• for refrigerators, ifthe market share ofI.ess expensive and less energy consumptive products were to increase. the energy savings would be increased and the net present value would also likely be increased. 1£ 

### this scenario were to occur,

consumers would sacrifice utility by purchasing refrigerators with fewer

• For refrigerators the base case represents tbe NAECA 1990 standards; for smail gss furnaces and television sets. the base case represents nostandards. 

### amenities. DOE requests comments on this issue.

On the otherhand. a new market share algorithm for small gas furnaces had to be developed, since such products had notpreviously been analyzed separately. Market shares for small gas furnaces are determined using modifications to·the algorithms developed for all heating and cooling end uses.**Se~** 

### Technical Support Document section4.2.3. Elasticities for heating equipmenfin new mobile.

. hbmes. new largemultifaqlily housing (five ormore units). and all types of existinghousing are calculated using methods and models developed by Lin. Hirst. and Cohn. 

### Fuel Choices in the. Householdsector. OakRidge. TN: Oak Ridge National Laboratory; ORNL! CON-3, 1976. Those authors reported a cross-sectional analysis ofresidential fuel choices (equipment ownership market shares) for five major end uses, including space heating. air

. conditioning. water heating. food freezing, and cooking, using 1970 data from states.

.

For new single-family and new small (two to·four units) multifamHy housing, effective market share elasticities are derived from an econometric model originally developed by Electric Power ResearchInstitute 

### (EPRI}.Household Appliance Choice: Revision of REEPS BehavioralModels, Palo Alto, CA: Electric PowerResearchInstitute. EPRT EA-3409. Research Project 1918-1, 1984,

. and modified at Lawrence Berkeley Laboratory (!..BL).

The model was established from a national dat(i base disaggregated**~o** 

### the household level. using exogenous variables ofequipment prices. operating
expenses (which are proportional to fuel prices), household income. and other variables. The most significant

. difference between the EPRI model and the LEI, model is the LBL model's characterization ofa household discount rate for the choice ofheatirtg and·

. cooling equipment as varying with inaximum Winter heatload and a m.eas,ure !>ftheoppressiveness of summer-climate.. Essentially, the data strongly support the hypothesisthat households that are likely to use a particular piece ofequipment frequently (because ofa cold winter climate or a hot. humid summer climate) are likelyto pay greater attention to future operating expenses. Such households are estimated as having lower discount

rateSt i.e.• accepting longer payback periods for additional equipment
expenses for heating or cooling appliances than those living in relatively mild conditions. Conversely. those households in milder climates give relatively greater weight to equipment price than to operatirig expense. 

### See Technical Support Document. Appendix B. section B.S.

ThetBL-REM is used to project residential energy use over the relevant time periods for: (1) 

### Television sets with andwithout standards; (2) small furnaces at71. 74. and 78 percent AFUE; and (3) refrigerators at different standard levels. including the NAECAimposed 1990 standards, and several candidate amendment levels. By compa:ring the energy consumption projection at.alternative standard levels

or no standard'(for television sets). at standards of71percent and 78 percent AFUE (for small furnaces). and at alternative slandard levels or NAECA

. 1990 standards. (fonefrigerators). the· Department estimated the amount·of energy projected to be saved during the' period 1992-2015. 9 

### The energy-saved is expressed in Quads.i.e.•. quadrillion·Btu. With respect to electricity. the savings

are quads.of source orprimary energy. which is the energy necessary to generate and transmit electricity. The Act defines "energy use" as tM quantity ofenergy directly'consumedby a:

consumer produGt a:t point ofuse. This is generally called**"sih~"** 

### erlergy. as

. .. opposed to "source" energy. There are greatdifferences between these types of energy. In 1986. the amount ofelectrical energy consumed at the site was less than one-third ofthe amount ofsource energy thatwas reqUired to generate' and transmit the site**~lectriGal** 

### energy.lO Therefore•.it

### is.important

## to**id~!1tify** 

### whether the electrldtyinvolved is site

or source energy.

The LBL-REM projections are dependentonmanyassumptions. Among the most important are responsiveness ofhousehold appliance purchasesto:changes in I'mergy prices and consum,er**~ncorrie,** 

### future energy prices, future lev.els gfhousing construction. and options that exist for improving the energy efficiency of appliances. As is the case with any complicated computer modelsimulation.

. • LBL-RElv!**wa~** programmed to analyze a single standard level or alternative levels. over the entire period. Thatis. the fact tha·t B.standard might be revised during subse·qiieni rulemakings wnsnot considered by the .lIiodel. The Department beHeves 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,**e~ch** standarp level that was**analyze~** was projected to have been in place from the time ofimplementation to the year 2015.

10Energy Information Administration. Electric PowerAnnual 19i36, Tables 7 and 41. DOE/EIA034B{86}. 1987.

### 43804 Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

the validity of the outputs is critically dependent on the inputs. Several of the assumptions that were described in the advance notice were questioned in comments on the advance notice. These included the following: Rebound Effect. NYSEO critiqued the existence of a"rebound effect" with more efficient refrigerators or television
sets (NYSEO, No. 32, at 14-15). The Department believes: that households respond to changes in operating expenses in three different ways. In the short run, they change the way they - operate existing equipment, e:g_ lower winter thermostat setting. In the long run, they also change equipment by switching from one fuel to another, and by improving the efficiency of their equipment, e.g.,. purchasing a more efficient water heater, or both. Thus, the elasticity of demand can be thought ofas being separated into three elementsa usage, elasticity„ a technical efficiency elasticity,, and an equipment/fuel choice (market share) elasticity. Household changes. in equipment. use in response. to changes in fuel price and household income determine the usage elasticities. These elasticities are based on engineering, possibilities and judgment in the original formulation of"the ORNL model., i See Technical Support Document, Appendix B. DOE requests comments on the methodology and elasticities used and the appropriate values for the various elasticities, including usage elasticity (rebound effect). In the analysis, the Department assumed that a more efficient refrigerator or television set would not be used more intensively because it is more energy efficient. Therefore;. in estimating energy savings from different standard levels for refrigerators and television sets, the Department did not

use a rebound effect. The Department' does not'hav-e any data that consumers will use refrigerators and television sets any differently with, in either energy prices or efficiency. However, the Department did- include a"rebound effect" of 30percent for small gas furnaces. See Technical Support Document, sections B.1 and B.G. The. Department requests comments on the "rebound effect" for each product subject to today's proposal and for all space heating and cooling. products, including the furnace. categories not covered by this notice. Discount Rate. NRD.C and the CEC contended. that the. Department's use of

" Eric Hirst and Janet Caney 1978 "The Oak Ridge Engineering

-Economic Model of Residential Energy Use;" 'Oak Ridge National Laboratory, .
ORNL/CON-24. five, seven and 10 percent discount rates was artificially high and would result in many capital-intensive candidate standard levels being excluded from consideration (NRDC, No. 19, at 21; and CEC,, No. 35, at 7). Since a dollar in the future is worth less than a dollar today,, that future dollar must be discounted to determine 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 October 1988, the prime rate was 10

.0 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 5.0 percent. This results because the expected annual rate of price increases in that time period is approximately five percent. Most businesses

, however

, are riot eligible for loans at the prime rate of interest, so the estimated real rate of interest for these firms would probably be somewhat - 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 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," Econometrico, 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 the Technical Support Document, sections 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 and CEC critiqued the use of old data in LBL-REM in developing the baseline units for analysis. They contended that use of such old data could underestimate the impact that increased efficiency standards could have on saving energy. (NYSEO, No. 32, at 12; and, CEC, No. 35, at 3). While some old data was used for the analysis

. of refrigerators

, small gas furnaces

, and television sets, these data, points were merely the point of departure of the analysis

. All of the data bases were updated to reflect current levels of efficiency in. the marketplace, and, in. the. case of refrigerators, the baseline units were those with, levels of efficiency that will be in the marketplace after the NAECA-imposed standards, are in effect, he., after January 1, 1.990: These data.were then used. to calculate, annual energy consumption for the. LBL-REM: and, life-cycle cost (LCC), analyses, based on the DOE test procedures. For example, in the, LCC. analysis,. DOE used. the test. procedure annual average hours of use to calculate the annual cost of operation. 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 use of out

-of-date. usage values may affect the•resultssof 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-REIN would use 4880-t 

### Fe.daral Register 

# I Vol. 53, No. 232 

# I Friday. December 2, 1988 

# I Proposed Rules

liJlD' 

# = ............a:] 1Sl:J!il!lWij)£ 

### =

the validity ofthe outputs is critically dependent on the inputs.

Several ofthe assumptions thatwere described in the advance notice were questioned in comments on the advance notice. These included the following:



### ReboundEffect. NYSEO critiqued the existence of a"rebound effect" with

more efficient refrigerators or television
sets (NYSEO, No. 32, 

### at 14-15). The Department believesthat households respond to changes in operating expenses in three differentways. 

### In

### the short run, they change the way they operate existing equipment, e,g.,.Iower winter thermostat.setting.In the long
run, they also change equipment

### by switching from one fuel to another. and by improving the efficiency oftheir equipment, e.g., purchasing 

### a more efficient water heater, or both. Thus, the elasticitv of demand can be thought of

as**being~separated** 

### into three elementsa usage elasticity. a technical efficiency elasticity" and an equipment/fuel choice (market sharelelastidty. Household changes in e.quipmerituse in response to changes infuel price and household income determine the usage elasticities. These elasticities are based on engineering,pol'lsibilities andjudgment in the originalformulation of

### the 

### OM'!. model. l I See 

### Technical Support Document, Appendix B. DOE requests comments on the methodology and elasticities

# used and the appropriate values for the various elasticities, including usage elasticity (rebound effect).

In the anaJysis, the Department assumed thata more efficient refrigerator or television setwould not be used more intensively because it

### is

more energy efficiimt. Therefore,: in estimating energy savings from different standardl-evels f-or refrigerators and television sets, the Department did not

use a rebound effect. The Department does nothav:e any data that consumers will use refrigeratorsi:md·television sets any differently withchanges in either
energy prices or efficiency. However, the Department didinclude a "rebound effect" of30cpercentfor small gas· furnaces. See 

### Technical Support Document, sections B.1 and B.B. 

### The. Departmentreques.ts comments on the "rebound effect" for·eachproduct subject to today's proposal and for all space heatingand cooling products. including the furnace. categories not covered by this naUce.



### DiscountRate. NRDC andthe CEe contendedthat the. Department's use of

11 Eric Hirs! and Janet Carney**~97S'** "The Oal< Ridge Engineering-Economic Model'**o~**Residential· Energy tlse;'··Oak Ridge National**Labo~atory,** . ORNL!CON-24. 

### five, seven and 10 percent discount rates

was artificially high and would result in
many capital-intensive candidate standardlevels being excluded from consideration (NRDC, No. 19, at 21; 

### and CEC, No. 35, at 7).



### Since 

### a dollar in the future is worth less than a dollar today, that future dollar must be discounted to determine its value today. 

### Ifthe 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**th~** 

### business.perspective, a reasonable discount rate wouldbe one that represented the private opportunity cost of capital used to meet any appliance conservation standard. A gauge ofthe private opportunity cost ofcapitalis the
most profitable alternative use ofthat capital. One measure ofthat cost could be the prime rate, that is, the interest
rate that is offered bylending. institutions to theirmost credit-worthy
customers. In 

### early October 1988, the prime rate was 10.0 percent. If

### such a business secured a loan at one of those
rates ofinterest, andrepaidit in the 1990-1995 timeperiod, the real rate of interest wouldbe 5.0 percent. This results because thB expected annual rate ofprice increases in thattime periodis approximatelyfive percent. Most businesses. however, are not eligible for loans at the prime rate ofiriterest, so the estimatedreal rate ofinterest for these firms would probably be somewhat : higher.

Similarly, from the consumer perspective, one· approach to selecting

an appropriate.discount rate is to· look at the interestpayable on a consumer loan· and depreciate thatinterestby the inflation rate. Ifa- 

### consumer secures a lo·an at 12 percentinterest.. andrepays it 

### in the 199(}-1995 time period, the real
rate ofinterest

### will' be sevenpercent. Thus, DOE believes thatfrom both the business and consumerperspectives, a

sevenpercent discountrate is reasonable.

On the otherhand, itmay·notbe

reasonable to·require consumers to make an investmentwhere·there are inherentrisks.**Forexaniplt~.** 

### if

consumers perceive a risKbecause of the uncertainty ofenergy prices and reliability and'longevityofthe

- equipment, theywould require a greater return ontheidnv.estment, Le., a higher discount rate. 

### It has been argued·that the discount rate should:be as· highas 15 percent. Dubinand MeFadden. "An Econometric Analysis ofResidential 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 ofvarying certain assumptions

on the results of the analysis. By such sensitivity analyses, it 

### is possible to 

### det.ermine those inputs where changes, includingpossible errors, are meaningful
to the model's output, andthose inputs for which changes are not meaningful. See 

### the Technical SupportDocument, sections 4.3 and 5.4.

The savings attributable to the different standard levels are identified for eachproductin sec.tion III 

### ofthis notice.



### Modeling. Several comments offered suggestions onthe LBL-REM modeling efforts. NYSEO and CEC critiqued nle

use of olddatainLBL-REMin developing the baseline units for analysis. They contended that use of such old data could underestimate the impact that increased efficiency standards could have onsaving· energy. (NYSE0, No. 32. at 12; 

### and. CEC, No. 35, 

### at 3).

While some old data was usedfor the analysis ofrefrigerators, small gas furnaces. and: television sets, these data· points were merely the point of departure oHhe analysis. All ofthe data bases were updated to reflect current levels ofefficiency in the marketplace, and, in.the. case ofrefrigerators, the baseline units were thesewithlevels of efficiency thatwill bein the marketplace after the NAECA-impDsed standards.are ineffect, te., after January 1,1.990. These data.were then us_edto calc:ulateannllal energy consumption for the I'.BL-REM and.li£e-cycle·cost (Lee) 

### analyses. based onthe ElOE 

### test procedures. Forexample. in the LCG analysis,.DOE

### used. the testprocedure aIh'1.ual average hours ofuse to calculate the'annualcos! ofoperation. This. calculationdoes;noti accountfor variabilityin consumerusage pattems,

nor does,itr.eflect any changes·in- 

### typical

consumerusage behavior since·the. test procedures'were. developed. While·the

use of out-of-date.usage values may affect the·result:s:ofthe LB&REt'vi. and 

## Lce analysis, DOE is not certain to what extent the. results would be affectedsince, for example, the. energy savings and netpresent value calculation of the LBL-REM would use

### Federal Register / Vol. 53, No.. 232 / Friday', D-cemhe

the dated usage values in both the base case and standards case. Several comments expressed confusion as to 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.'2 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 without standards for small gas furnaces and television sets, and for refrigerators, only those standards mandated by the Act. 

### 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.
Two comments discussed the issue of significant energy savings. NRDC Noted that the use of engineering estimates to screen those design options that yield measurable energy savings is desirable and encouraged the Department not to establish (as it had in the past) a threshold of significance for energy savings. The Department has not established a -significance threshold for energy savings. In addition, AHAM contended that, with regard to revision of refrigerator standards, if DOE found that incremental savings by the 1990 standards are "minor," the Department can "legally conclude that no revision is justified." (AFIAM, No. 22, p. 7). DOE proposes that each candidate refrigerator standard saves a significant amount of energy. -

12 The baseline units for snail gas furnaces and television sets are those with estimated average shipment-weighted ena gv rectors (SWEF"e) in 198^, white the baseline refrigerator units are ones with an estimated average SWEF in 1990. 

### 22, 1988 / Proposed Rules

d. 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 standard is economically justified. DOE believes that this provision means that if the added price of an appliance, caused by a conservation standard, would repay itself to the consumer in value of energy savings in less than three years, then it can be presumed that such standard is economically justified. 13 This presumption of economic justification can be rebutted by the seven factors of economic justification. 

### 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.
1. Economic Impact on Manufacturers and Consumers The engineering analysis identified improvements in efficiency along with the associated costs to 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, and to determine the effects of standards on different-sized firms, 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 (LBI..-Mile);

fa For this calculation, the Department calculated cost-of-operation based on the DOE test procedures. Therefore, the consumer is assumed to be' 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 more than the test procedure assumes will have a shorter payback. Is fully explained in the Technical Support Document. The LBL-MIM was formerly named the Lawrence BerkeleyLaboratory Typical Year Model (LBLTYlef), which is the name that appeared in DOE's advance notice of this proposed rulemaking. LBL-MIM provides a broader array of outputs than the specified in the advance notice. The outputs are shipments, price, revenue, net income, and return on equity (ROE). An "Output Table" lists values for these 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 effected 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
One measure of the effect of proposed standards on consumers is the change in life-cycle costs 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. As noted in the advance notice, energy price forecasts are inputs that are taken from the 1986 Annual Energy Outlook of the Energy Information Administration. Appliance usage forecasts are taken from the results of the LBL-REM. 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 refrigerators and small gas furnaces are presented in Tables 6.1 through 6.3 of the Technical Support Document. These LCC's are calculated at a seven percent discount 

### Federal Register / VoL 53, No. 232 

## I Friday, December 2, 

### 1988 

### I Proposed Rules

im'li***?i'~!!![~_'**
the dated usage values in both the base

case and standards case.

Several comments eXDressed confusion as to 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 ofunits that are expected to be offered for sale in the beginning year of the analysis. 12

Baseline refers only to the engineering analysis and is the first point identified in each cost-efficiency curve. Itis 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 without standards for small gas furnaces and television sets, and for refrigerators. only those standards mandated by the Act.



### 2. Significance 

### of Savings

Under section 325(lJ(3)(B} ofthe Act, the Departmentis prohibited from adopting a standardfor 

### a product 

### ifthat standard would not result in "significant" energy savings. While t.."-e
term "significant" has never been defined precisely in the Act, 

### the Department believes that 

### a standard level option need not meet a threshold level ofenergy savings to be considered

a "significant" saver ofenergy. The U.S. Court ofAppeals, 

### NRDC v. 

### Herrington,
supra, concluded that Congressional intent in using the word "significant"

was to mean "non-trivial." 

### ld. 

### at 30. Thus, DOE believes that each candidate standard considered results in significant energy savings.

Two comments discussed the issue of significant energy savings. NRDC Noted that**L~e** use ofengineering estimates to

screen those design options L.1.at yield measurable energy savings is desirable and encouraged the Department

### not to establish (as ithad in the past) a threshold of significance for energy savings. The Department has not established a -significance threshold for
energy savings. In addition, AHAM contended that, withregard to revision ofrefrigerator standards, 

### ifDOE found that incremental savings by the 1990 standards are "minor," the Department

can "legally conclude that no revision is justified." (AHAM, No. 22, p. 7}. DOE
proposes that each candidate refrigerator standard saves 

### a significant
amount ofenergy.

_

12**!~e** baseline units for small gas furnaces and teleViSIOn sets are thosn 'with estimated average shiI-:ment.weighted energy factors**(SVJE.~·g)** in 1987, while the baseline refrigerator unita are ones \\dth

an estimated average SWF.F in 1990. 

### d. RebuttablePresumption
NAECA established new criteria 

### for determining whether a standard level is economicallyjustified. Section 325[lJ(2}(BJ(iii) states:

If the Secretary finds that the additional
cost to the consumer ofpurchasing a product complyoing with an energy conservation standard level will be less than three times the value ofthe energy savings during the first year that the consumer will receive as 11 result ofthe standard, as calculated under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economicallyjustified. A determination by the Secretary that such criterion is not mel shall not be taken into consideration in the Secretary's determination ofwhether a standard is economicallyjustified.

DOE believes 

### that this provision

means that 

### ifthe added price of

### an appliance, causedby a conservation standard, wouldrepay itselfto the

consumer in value of energy savings 

### in less than three years, then it can

### be presumed that such standard is economicallyjustified. 13 This presumption of economicjustification

canbe rebutted by the seven factors 

### of economicjustification.



### e. EconomicJustification

As noted earlier, section 325(1}(2)(B)(i) ofthe Act, provides seven factors to 

### be evaluated in determining whether a conservation standardis economically justified.



### 1. EconomicImpact on N!anufacturers aIld

### COllsumers

The engineering analysis identified improvements in efficiency along 

### with the associated costs to manufacturers for each class ofproduct. For each design option, these costs constitute the increased per unit cost

### to manufacturers
to**~~hieve** the indicated energy effiCiency levels. Manufacturer, wholesaler, and retailer markups 

### wiH result in a consumer purchase price higher than the manufacturer cost.

To assess the likely impacts 

### of standards on manufacturers. and

### to determine the effects ofstandards on different-sized firms, the Department used a computermodel that simulated hypothetical firms 

### in the three industries under consideration. This model, the Lawrence Berkeley Laboratory Ivlanufacturer ImpactModel 

### (LBL-MIM),

13For this calculation, the Depar!ment catcn!ateti cost-oE-operationbased on the DOR lestprocedures. Therefore. the consumer is assumed 10 be "average"

consumer as defined by the DOEtest procedures. Consumers that use the products less than the test procedure assumes wii! experience n longer payback while those that use more thanthe lest procedure assumes will have a shorter payback. is**fu!l~;** explained in the Technical

.SupportDocument. The LBL-MIM 

### was formerly named the Lawrence Berke!ev Laboratory Typical YearModel (LEL-" TYM), which is the name that appeared! in DOE's advance notice ofthis proposed rulemaking. LBL-MIM provides a broader array ofoutputs 

### than**t~e** specified in the advance notice. The outputs are shipments, price, revenue, net income, and return on equity (ROE). An "Output Table" 

### lists values 

### for these in the base case and in each ofthe standards cases under consideration. It also gives a range for each ofthese estimates. A "Sensitivity Chart" shows how ROE would be effected by a**Ghang~** in anyone ofth_8 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 increasedfirst price, any increased maintenance-expenses. and the reduced! fuel expenses resulting from the product's greater efficiency. Under section 325 ofthe Act, life-cycle cost analysis is a separate factor to be considered in determining economic justification

2. 

### Life-Cycle Costs

One measure ofthe effect ofproposed standards on consumers is the change 

### in life-cycle costs 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 LeC 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 offive"
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. As noted in the advance notice, energy price forecasts

are inputs that are taken 

### from the 1986 

### Annual

### Energy Outlook ofthe Energy Information Administration. Appliance
usage forecasts are taken from the results of the LBL-REM. The Department seeks comments on theinput to the LCe analysis including the discount rate and
energy priceforecasts.

The differences in life-cycle costs between the base case and various levels ofstandards for refrigerators 

### and small gas furnaces are presented in Tables 6.1 through B.3 ofthe Technical Support Document. These LCC's are calculated at a seven percent discount

### 48806 Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

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.,1; percent, and energy prices were lower than average, the minimum life-cycle cost point could be less. efficient than the baseline unit. 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. All this indicates is 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, it 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 a benefit from the investment. . The Department conducted a net present value (NPV)'analysis to assess the differential economic impacts on 

### consumers that would occur from the adoption of standards (for small gas . furnaces and television sets) and amended standards (for.refrigerators) compared to a base case with nostandards (for gas furnaces and television sets) and NAECA 1990 standards (for refrigerators). See Technical Support Document, Chapter 5. The LBL :REM calculates the total expenditure for each product (discounted total value of energy consumption from 1992 through the last year of use for those products purchased through the year 2015, plus the total discounted expenses for equipment purchased from 1992 through 2015) with and without standards (for televisions and small furnaces), and with more stringent standards and with NAECA 1990 standards (for refrigerators). The NPV analysis is similar to the LCG - analysis, in that the greatest NPV should occur at the standard level that corresponds to the LCC minimum for the product. 14 The NPV for each product at the different standard levels is identified in section III of this notice, The NPV calculation, like the LCC analysis, is based on national average efficiency and usage values. This analysis does not take into account variations in energy prices and local usage rates. If for any product the covariances are zero, the results of the analysis will not be affected. If, however, the covariances are not zero, the results of the analysis will be affected. DOE does not have the data to determine if or to what extent the NPV calculation is affected by using average usage rates and energy prices. DOE requests comments or_ this issue.
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 new orrevised standards. DOE used the LBLREM 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 cannot be quantified. 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

e4 The net present value (NPV) of a standard, per 'appliance, is calculated for all affected appliances that are tnrchased in the projection period, while the-life-cycle cost (LCC) is calculated only for the lifetime of an appliance the, ispurchased in the first tear of the relevant standard. Therefore, NF'' and LCC estimates, per appliance, may not correlate exactly. 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. However, other factors, in conjunction with standards, could affect the utility or-performance of products subject to standards. For example, the EPA limitations on CFC production could cause iefrigeratormanufacturers to adopt alternatives to the regulated CFCs which would affect the refrigerator's 'utility or performance. In this way, DOE is not able to assure that utility and performance could not be affected by standards. Also, as discussed in section Iliof this notice, DOE was not able to establish separate classes`for television features that provided a utility and which affected energy efficiency. DOE requests comments on the impacts that both legislated and revised standards could have on product utility and, performance.
5, Impact of Lessening of Competition
It is important to note that this factor has two parts; or the ,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 of that effect, should it occur. 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. To afford the Attorney General the information that he may need to carry out his responsibility, we have forwarded 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 last year in a DOE report (Energy Security: A Report to The President of The United States, Washington, DC.: U.S. Department of Energy, March 1987.) In that report, U.S. energy security was essentially considered to be a function of free oil markets. The three products being considered here (namely, refrigerators, small gas furnaces, and television sets) 

### 48806 .in;- 

### Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 19BB 

## I Proposed Rules

rate; 

### a higher rate, e.g. 10 percent, gives



### a smaller difference, while 

### a lower rate. e,g.Jive 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 15percentin the LCC analysis; however, as can be seen in the various LCC curves, the use ofa higher discount rate would result in a flatter curve with the minimum life-cycle
cost dropping, 

### Le., approaching the baseline unit. 

### Ifa higher discount rate

were used, e.g., 15 percent, arid energy prices were -lower than average,the minimum life-cycle cost point could be less. efficient than the baseline unit.

When the Lce numbers are plotted graphically (on the Y axis) against unit
energy consumption (on the 

### X axis), the data generaliy 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, wili reach a minimum (which may

or may not

### be discrete), and then rise. All this indicates is that the first efficiency improvements 

### wiii produce
energy savings. the value ofwhich will

more than pay for the design change. As efiiciency improvements are made, it becomes increasingly costly to save

more energy, and, eventually, the valt.\e of the energy saYings 

### willno! cover the expenditures for the design improvements. 

### See TechnicRJ Support

.Document, section 3.5. The minimum 

### ofthe Lec curve was of particular interest in the analysis. The minimum of the curve representslhat ievel of efficiency improvements that maximizes the difference between the value ofenergy saved and the additional

consumer expendituresJorihe 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 LeC minima. the incremental first cost of the product exceeds the value of

### the
energy savings such thattheaverage

consumer does not realize a benefit from the investment.

The Department conducted a ·net· present value (NPV)analysis to assess the differential economic impacts on

consumers that would occur from the adoption of standards (for sma:llgas furnaces aJ:ld television set!!) and amended standards (forrefrigeratol's) compared to a base case with no- ' standards (for gas furnaces end television sets) and NAECA 1990 standards (for refrigerators). See· Tech.rlical Support Document, Chapter 5. The LBL-REM calculates the total expenditure for each product (discounted total value of energy cor.sumption from 1992 through the last
year ofuse for those products purchased through the year 2015, plus the total discounted expenses for equipment purchased from 1992 through 2015) with and without standards (for televisions and small furnaces), and with more stringent standards and with NAECA 1990 standards (for refrigerators). The NPV anaJysis is similarto theLCG analysis. inthet the greatest NPV should

occur at the· standard level that corresponds to the 

### Lce minimum for the p:WdUCt. 14 The NPV for eachproduct at the different standard levels is identified in section HI 

## ofthis notice, The NPV caleulaHon, like the LeC analysis. is based on national average efficiency and usage values. This analysis does

### not take into aCCOll.'lt variations in energy priCes and loca!usage rates. 

### Iffor any product the cova:r!ances are zero, the results ofthe analysis will not be affected. 

### If, however, the covariances

are not zero, the results ofthe analysis \'\.111·be affected. DOE does not**hav~** the data to determine 

### ifor to what extent the NPV calculation is affected by using
average usage rates and energy prices. DOE 

### requests comments on this issue.

S. Energy Savings

While the signifIcant conservatiopof energy

# is a separate statutory

. requirement for imposing an energy conservation standard, the Actrequhes DOE, ind!;!termining the economic justification ofa standard to consider the total projected savings that are eXllected to result directly from new or revised.standards. DOE used the 

### LBL

### REM results, discussed earlier, in its consideration 

### of totalprojected savings. The savings for the three products are provided in section III ofthis notice.

4. Lessening ofUtility or Performance of Products

This factor cannotbe quantified. In establishing classes ofproducts and deSIgn options, the Department tried to eliminate any degradation ofutility or performance in the three products under consideration in this rulemaking. That ls, 

## to the exHmt that corrimentsorDOE's m'\1ll researchirtdicated thEita product

.. included 

### Ii. utility or performance-related

,. The netpresent value· (NPV) ofa standard, per

.QPpliance. is calculaledJor all affected appliances

.thai 

### are purchased in the projection period. whlIe**the:life·cycl~** cos! [LeG) is calculated only for the

. ljfetime of an appliance that is purchased in the firs! year

## or the relevant standard. Therefore. NPV'and 

### Lee**~stimates.** per appliance. may not correlate -exacty. s:

feature that affected energy efficiency, a separate class with 

### a differElnt efficiency standard was created for that product. 

### In this way the Department attempted to minimize the impact 

### ofthisfactor as 

### a result of

### the standards that were analyzed. However, other factors, in conjunction with standards, couldaffecl 

### the lltility 

### or performance 

### ofproducts subje.ct to standards. For example, the EPA limitations on CFCproduction could cause·refrigsrator manufacturers
to adopt ·altermitives to the regulated CFC!s which would affect the refrigerator'sutility 

### orperformance. In this way, DOE is not able to assure that utility and performance could not be affected 

## by**st!irid~rds~** ..

Also, as discussed in section IlIofthis notice, DOE Was riot able to establish separate classesfor television features that provided a utility and which affected energy efficiency. DOE requests comments on the impacts that both legislated and revised standards could have on product utility and. performance.
5, Impact ofLesseDjng ofCompetition



### Iiis**inipor~ant** to note.·thatthis factor has two parts; on**theon~** hqnd, it

assumes that there could be some lessening ofcompetition as a result of standards{and. 

## on: the otherhand; it directs the Attorney Generalto gauge the impact ofthat effect, should it occur.

In order to assist the Attorney' General in"making such a deterrrJnation, 

### 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.

To afford the Attorney General tile information that he 

### may need to 

### Garry
out 

### his responsibility, we have forwarded copies of this notice and the Technical SupportDocument for his review.

6. Need ofthe Nation to Conserve Energy

.

One measure ofthe 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 last year in: 

## aDOE report· 

### (Energy Security:A Report to The Presideid ofThe UnitedStates, Washington, DC.: U.S. Department of Energy, March 1987.) In that report, U.S

. energy security was essentially considered to be a function offree oil markets. The three products being considered here (namely, refrigerators. small gas furnaces, and television sets)

### Federal Register / Vol. 53,

are all fueled by energy forms other than oil, specifically electricity for refrigerators and television sets, and natural gas for the small furnaces. While some oil is used to generate the electricity on which refrigerators and television sets operate, that is a'very small part of our national energy picture. Specifically, only 5.5 percent of net electricity was generated by petroleum in 1986. Therefore, conservation of energy by these products will have little bearing on our national energy security.

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. The only such factor that has been identified is the EPA regulation to restrict the production of certain chlorofluorocarbons (CFCs).

III. Product

-Specific Discussion
a. Refrigerators/Refrigerator-Freezers/ Freezers

1. Classes In the advance notice, the Department discussed its methodology for reviewing the energy conservation standards established by the Act for refrigerators to determine if the standards should be amended. NAECA currently prescribes maximum annual energy consumption level for refrigerators based on the adjusted volume of the model. The equations are different for each of the seven classes of refrigerators and refrigerator

-freezers

, and three classes of freezers. These standards are to become effective January 1, 1960. The following are the classes that are being reviewed for amended standards: Refrigerators and Refrigerator-Freezers with manual defrost,Refrigerators and Refrigerator-Freezerspartial automatic defrost. Refrigerators and Refrigerator

-Freezersautomatic defrost with: Top-mounted freezer without through-thedoor ice service.Side-mounted freezer without through-thedoor ice service.Bottom-mounted freezer without throughthe-door ice service.Top-mounted freezer without through-thedoor ice service.Side-mounted freezer without through-thedoor ice service. Upright Freezers with: Manual defrost. Automatic defrost. Chest Freezers and all other f reezers. 2. Design Options The following is a list of a design options that were examined: (i) Ref aerators and refri,erator-freezers. S . 232 / Friday, December 2, 1983 / Proposed Rules

(A) Foam insulation substitution in doors. (B) Increased door insulation thickness. (C) High-efficiency compressor .substitution, (D) Anti-sweat heater switch. (E) increased cabinet insulation thickness. (F) Increased evaporator surface area, (G) Adaptive defrost control. (H) Fan and fan motor improvement. (I) Improved foam insulation. (1) Evacuated insulation panels. (ii) Freezers, (A) Foam insulation substitution in cabinet. (B) Foam insulation substitution in door. (C) Increased cabinet insulation thickness. (D) Increased door insulation thickness. (E) High-efficiency compressor
substitution. (F) Double door gasket. (G) Adaptive defrost control. (H) Fan and fan motor improvement. (I} Improved foam insulation. (J) Evacuated insulation panels.

3. Continents on the Advance Notice of Proposed Rulemaking During the comment period on the advance notice, the Environmental Protection Agency (EPA) published a proposed rulemaking on December 14, 1987, concerning CFC production restrictions. 52 FR 47486. Recent findings regarding depletion of the earth's ozone layer have pointed to certain CFC's as the probable cause of that depletion. As part of an international agreement to halt that deterioration, the EPA proposed production restrictions on the most harmful of those CFC's. These rules were finalized on August 12, 1988. 53 FR 30566. Persons commenting-on the advance notice with regard to refrigerators voiced concern about EPA's proceeding, since many of the design options that were under , consideration by DOE involved CFC's. The following is a summary of comments concerning refrigerators. The manufacturers and the trade association expressed concern for the ozone layer and recommended that DOE policy set the reduction of CFCs as a priority over energy conservation; to do otherwise would create potential conflict between two governmentagency rulemakings. (WhiteConsolidated Inc. (WCI), No. 17, at 2; Whirlpool, No. 10, at 1; Admiral, No. 31, at 2; and AHAM, No. 22, at 16). Each recommended that DOE reject all design options that would require increased use of CFCs. (Whirlpool, No. 10, at 7; WCI, No. 17, at 1; Admiral, No. 31, at 2; and AHAM, No. 22, at 18). Whirlpool stated further that substitutes for CFC 11 and 12 would not be available for - approximately five to seven years. (Whirlpool, No. 10, at 2.) NRDC stated that DOE should establish more stringent standards in an effort to replace CFC technology with 4 i 7

new forms of technology such as vacuum panel insulation or improved refrigeration cycles and that this would reduce industry need for CFC 11 or 12. (N'R.DC, No. 19, at 9.) The Solar Energy Association of Oregon (SEAO) supported this opinion, (SEAO, No. 30, at 1.) NRDC believes that DOE has the authority under section 325(b) of the Act to respond to industry demands for leadtime by establishing a two-tier level or extension to provide maximum technologically feasible standards. (NRDC, No. 19, at 12.) NAECA established the review cycles to provide industry with sufficient time to respond to regulated standard levels set by DOE. Intermediate standard levels could require manufacturers to retool more than once in a five-year period. Therefore, the Department does not consider the imposition of intermediate standard levels between reviews to be practicable. The EPA testified that, if promulgated, its proposed rule would not eliminate CFC 11 or 12 from production, but would impose reductions in CFC production over 11 years (EPA, Testimony). EPA stated that its proposed rule would allow for market-based CFC. distribution and use, providing for a flexible regulation suitable to the needs of business and consumers. (EPA, Testimony). SEAO recommended that DOE analyze and follow one of two courses of action concerning CFC issues. First, DOE could follow EPA's proposed rule and apply limited availability to the cost analysis. Alternatively, DOE could anticipate the further or more rapid reduction of CFC's production due to developments in research on the ozone layer. (SEAO, No. 30, at 2.) In commenting on the advance notice, E. I. DuPont de Nemours and Company (DuPont) described its work on alternatives to CFC 11 and CFC 12. While the company has some promising alternatives, it does not expect to have them available in commercial quantities until late 1992, at the earliest; and, eventhen, the alternatives (HFC-134, HCFC123 and HCFC-141b) will be less energy efficient as well as much more expensive. (DuPont, No. 48, at 1-2.) At the public hearing on the advance notice, the NRDC urged that the Department not establish standards that would require use of more of the harmful CFC's, and also advocated that such CFC's be banned. (NRDC, Testimony.) In mid-March 1988, the National Aeronautics and Space Administration (NASA) announced the results of a 19- year international study that concluded that the depletion of the earth's ozone are all fueled by energy forms other than oil, specifically electricity forrefrigerators and television sets, and 

### natural gas 

### for the 

### small furnaces. While

some oil is used to generate the electricity on whiCh refrigerators and television sets operate, that is**ave~i** sma!l.part ofour national energy picture. Specifically, only 5.5 percent ofnet electricity was generatedby petroleum in 1986. Therefore, conservation of
energy by tb,ese products will have little bearing on ourI}ational energo} security.

7. Other Factors

This provision allows the Secretary.

### of Energy, in determining whether a standard is economicallyjustified. to consider any other factors that he deems
to be relevant. The only such factor that has been identified is the EPA regulation
to restrict the production ofcertain chlorofluorocarbons (CFCs

## J.

m. Product-Specific Discussion



### a. Refrigerators/Refrigerator-Freezers/ Freezers

1. Classes

In the advance notice, the Department discussed its**meL~odology** for reviewing the energy conservation standards' established.by the Act for refrigerators
to determine ifthe standards should be amended. NAECA currently prescribes maximum annual energy consumption level for refrigerators based on the adjusted volume of the model. The equations are different for each ofthe

seven classes ofrefrigerators and refrigerator-freezers, and three classes 

### offreezers. These standards are to become effective January 1, 1990.

The following are the classes that are being reviewed for amended standards: Refrigerators and Refrigerator-Freezers with manual defrost Refrigerators and Refrigerator-Fl'eezerspartial automatic defrost. Refrigerators andRefrigerator-Freezersautomatic defrost with: Top-mounted freezer without through-thedoorice service. Side-mounted freezer without through-thedoor ice service. Bottom-mounted freezer without throughthe-door ice service. Top-mounted freezer without through-thedoor ice sel'vic8_ Side-mounted freezer v.ithout through-thedoor ice service. Upright Freezers with:

Manual defrost. Automatic defrost. Chest Freezers and all ollier freezers.

2. Design Options

The following is a list ofa design options that were examined:

(il Refrigerators andrefrigerator-freezers. (AJ Foam bsulation substitution ill doors. (B) Increased door insulation thickness. (Cl High-efficiency compressor .substitution.

[D) Anti-sweat heater switch. {El increased cabinet insulation thickness. {Fi Increased evaporator surface area. (G) Adaptive defrost contra!. (HJ Fan and fan motorimprovement. (Il Improved foam .insulation. 

# m

Evacuated insulation panels. (ii) Freezers.

. (A) Foam insulation substitution in cabinet. (El Foam insulation substitution in door. (C) Increased cabinet insulation thickness. (DJ Increased door insulation thickness. (El High-efficiency compressor substitution.

IF) Double door gasket. (Gl Adaptive defrost control. IH) Fan andIan motor improvement. (IJ Improved foam insulalion. 

# m

Evacuated insulation panels.

3. Comments on the Advance Notice 

### of Proposed Rulemaking

During the comment period on the advance notice, the Environmental Protection Agency (EPA) published a proposed rulemaking on December 14, 1987, concerning CFC production restrictions. 52 FR 47486. Recent findings regarding depletion ofthe earth's ozone layer havepointed to certainCFe's as. the probable Gause ofthat depletion. As part ofan international agreement to halt that deterioration, the EPA proposed production restrictions on the
most harmful of those CFC's. These rules were finalized on August 12, 1988. 53 FR 30566. Persons commenting on the advance notice with regard to refrigerators voiced concern about EPA's proceeding, since many ofthe design options that were under. consideration by DOE involved eFG's. The following is a summary of
comments concerning refrigerators.

The manufactUrers and the trade association expressed concern for the

ozone layer and recommended that DOE policy set the reduction of CFC's as a priority over energy conservation; to do otherwise would create potential conflict between two government agency rulemakings. (White' Consolidated Inc. (WCI), No. 17, 

### at 2; Whirlpool, No. 10, at 1; Admirai, No. 31,
at

## z; and AHAM. No. 22, at 16). Each recommended that DOE reject all design options that would require increased use of CFC's. (Whirlpool, Ncr. 10, at 7; WeI. No. 17, at 1; Admiral. No. 31, at 2; and AHAM, No. 22, 

### at 1S). Whirlpool stated further that substitutes for CFt 11 and 12 would not be available for approximately five to seven 

### years. (Whirlpool. No. 10, at 2.)

NRDC stated that DOE should establish more stringent standards in an effort to replace CFC technology with new forms of technology such as

vacuum panel insulation or impro\-ed refrigp-ration cycles and that this wDuB reduce industry need for CFC 11 or 12. (N"RDC, No. 19, at g.) 

### The SolarEnergy Association ofOregon (SEA-O) supported this opinion. (SRI\O, No. 30,

.at 1.) NRDC believes that DOE has the authority under section 325(b) 

### ofthe 

### Act
to respond to industry demands for leadtime 

### by establishing a two-tier 

### level

or extension to provide maximum technologicallyfeasible standards. (NRDC, No. 19, 

### at 12.)

NAECA established the review cycles
to provide industry with suffiCient time
to respond to regulated standard levels
set by DOE. Intermediate standard levels could require manufacturers to retool more than once in a five-year period. Therefore, the Department does
not consider the imposition of intermediate standard levels between reviews to be practicable.

The EPA testified that, ifpromulgated, its proposed rule would not eliminate CFC 11 or 12 from production, but would! impose reductions in CFC production

over 11 years (EPA, Testimony). EPA stated that its proposed rule would allow for market-based CPCdistribution and use, providing for a fle:>dble regulation suitable to the needs 

### of business and consumers. (EPA, Testimony).

SEAO recommended thatDOE analyze and follow one oftwo courses ofactipn concerning CFC issues. First, DOE could follow EPA's proposed rule and apply limited availability to the cost analysis. Alternatively, DOE could anticipate the further ormore rapid reduction of CFC's production due to developments in research on the ozone layer. (SEAO. No. 30. at 2.)

In commenting on the advancenotice, E. I. DuPont de Nemours and Company (DuPont) described its work on alternatives to CFC 11 and CFC 12. While the company has some promising alternatives, it does not expect to have them available in commercial quantities until late 1992, at the earliest; and, even then,the alternatives (HFC-134, HCFC123 and HCFC-141b) will be less energy efficient as well as much more expensive. (DuPont, No. 48. at 1-2.J

At the public hearing on the advance notice, the NRDC urged that the Department not establish standards that would require use ofmore ofthe harmful CFC's, and also advocated that such CFC's be banned. (NRDC, Testimony.}

In mid-March 1988, the National Aeronautics and Space Administration (NASA) announced the results ofa 19- year international study that concluded that the depletion ofthe earth's ozoneIf,88sr^' 

### Federal 

### Reg

### ister / V

### ol. 53 , N

### o, 232



### . / Fr

### id

### ay, 1988 ) Proposed Rules 

### ^ ^

layer was more extensive than had pre iously been indicated. Specifically, the study found that stratospheric ozone has decreased by as much as three percent over densely populated areas of North America and Europe since 1969, as well as wintertime drops of more than six percent in Alaska and the Scandinavian countries, and that this crone depletion had been caused by certain CFC and other chemicals, In late March 1988, DuPont .urged a total phaseout of the destructive CFC and indicated its intent to cease production of those CFC's at some unspecified date. In announcing the decision, the company cited the significant ozone depletion that was documented in the NASA report. In September 1988, EPA reported that nothing short of a halt in the use of CC's can save the stratospheric ozone layer from further dangerous depletion. EPA projects a more extensive and faster-moving threat than previously realized. DOE's analysis does not consider the possibility that CFC's could be banned altogether. Furthermore, the possibility of a ban in CFC use is an example of the reason why DOE needs to exercise care in prescribing standards. For example, DOE is prohibited by NAECA from reducing the stringency of standards. Because of limitations imposed on CFC's, whether by reduction in production levels or by production bans, refrigerator manufacturers may be required to utilize alternatives to the restricted CFC's to achieve energy efficiency requirements. DOE cannot be certain, however, that the new product would have the same utility or performance or be able to achieve the same level of energy efficiency. If .standards are set at a level that, as a result of these or other factors, cannot be attained, the standards could have an adverse effect or manufacturers and consumers, since DOE is prohibited by NAECA from reducing the stringency of standards. The Department-believes that under present EPA regulations, there will be substitutes for CFC-11 and CFC-12, but with a cost and energy efficiency penalty. In addition, questions exist regarding the ability of appliance manufacturers to accommodate new refrigerants in their production processes. For example, if the new refrigerants are not as energy efficient as the CFC's being replaced, it would mean that more of them would be needed to achieve the same level of savings: and, this could result in a need to alter the refrigerator design in order to accommodate the substitute materials. Under these circumstances. any change in the need for CFC's could result in altering the expected results of the analysis by, for example, adversely affecting the estimates of manufacturing costs, consumer prices, and so on. The Department is examining all design options, including those using CFC's. CFC's, while being reduced in quantity, are not banned from production. Supplementary information provided through DOE research shows that the residential refrigerator industry consumption of CFC-11 And CFC-12 currently represents approximately two percent of all consumption of the regulated CFCs. 15 The engineering baseline unit for refrigerators was identified in the advance notice as the same unit used in the April 1982 proposal. The CEC and AHAM expressed concern that the data were too old for current use and that DOE should use a representative model. - (CEC, No. 35, at 3; and AHAM, No. 22. at 27.) DOE agrees

, and has used as the baseline for each class

, a refrigerator with a SWEF near that which is expected to prevail after the 1990 NAECA standards are in effect. AHAM stated that data provided to LBL on 1987 refrigerator models had no single set of design options used by manufacturers to accomplish energy goals, making it difficult to identify a baseline unit. (AHAM, No. 22, at 27.) Furthermore, AHA I suggested removing from consideration, in this rulemaking, those design options that would be used to accomplish the 1990 standards . (AHAM, No. 22, at 28.) The Department did not include such design options

-in this analysis.' NRDC submitted data on the LaBrecque Cycle, as a possible means to shift from CFC-12 to 'CFC-22. (NRDC, No. 19, at 19.) While DOE agrees that this technology is a theoretical possibility

, the Department has no knowledge of any prototype or laboratory assembly that demonstrates its potential

. Furthermore

, DOE does not have data to conclude that this technology could be adopted as a prototype by the time of the amended standard's. 2993 effective date. Therefore

, DOE did not include this technology in the engineering analysis. NYSEO recommended that DOE investigate different configurations, changes in unit dimensions

, number and location of doors, rotary compressors as

16 "The Useof Chlorofluorocarbons in Refrigeration

, Insulation and Mobile Air Conditioningin the United States ," Terry G. Stall. DOE, paper prepared for EPA Conference on Substitutes and Alternatives to CFC's and Halons. Washington, DC, January 13-15.1988. well as conducting research into Japanese methods of refrigerator manufacturing. (NYSEO, No. 32, at 7.) DOE believes that the number and location of doors and dimensions. of a refrigerator may have utility implications to the consumer, but it is uncertain whether there is any impact on energy efficiency. Many refrigerators are used as replacements and must therefore fit into the space used by previous models, which can make dimensions very restrictive, The concept of using rotary compressors as one of the design options is a good one. However, DOE believes that considering design options by compressor efficiencies, e.g., 5.0 or 5.3 energy efficiency ratio, rather than by design e.g., rotary compressor, allows manufacturers to select the appropriate compressor design, The CEC was concerned that some design options will be incorporated to reach the 1990 standard levels, and should not be used again to evaluate 1993 levels. Also, the CEC requested that DOE identify the method of combining design options. (CEC, No. 35, at S.) The Department combined design options by beginning with those designs that were most cost-effective for consumers, and then adding progressively less cost-effective ones. DOE has determined that certain design options will be part of the 1990 standard level design, and are in some current models, `therefore, they are being treated as part of the base case for 1990. These options are: Foam insulation substitution in freezer section doors; and antisv:>eatheater switch. One design option, evacuated insulation panels, was mentioned throughout the comments as an -energy saver that could'also eliminate the need for CFC-11 in refrigerators. NRDC commented that evacuated panels have been researched in many forms, all showing high potential for saving energy. (NRDC, No. 19, at 17). AHANI provided information from its investigation of Japanese use of evacuated panels in refrigerators. AHAM , stated that the models were discontinued, and speculated that it was due to concerns about a combination of cost, reliability and incompatibility with the manufacturing process. (ARAM, No. 22, at 31). - DOE has funded research at the Solar Energy Research Institute (SERI) and Oak Ridge National Laboratory (ORNL) to develop U.S. technology in evacuated panels. Completion of this research is expected to take approximately five years; however, independent research or 4BfH:la**F~derq.l** 

### Register / Vol. 53, 

### No, 232 / 

### Friday, 

### DeC8tT'ber 2, 1988 

## I Proposed Rules**\~~~~~~"~JL2lt,::at",-_.~~_~,~~~;em;,.pZ4.:c::u;;::;&J;i._,;;;::m:::;;::;;;:;;a:.:t#:iliWiSf1':;:s_.~;J;tIt!** layer "vas more extensive than had preYiously been indicated. Specifically, 

### the studVfound that stratosoheric ozone 

### has decreased 

### by 

### as much 

### as three percent over densely pqpulate9, areas of 

### r";orth America and Europ,e since 1969,

as weU as wintertime drops ofmore than six percent in Alaska and the Scandinavian countries, and that this

ozone depletion had been caused by certain CFC and other chemicals.

In late March 19813, DuPonturged a tot21 phaseout 

### of the destructive CFC 

### and indicated 

### its intent to**cea~e** production ofthose CFC's at some unspecified date. 

### In announcing the decision, the company citedthe significant ozone depletion that was documented in the NASA report.

In September 1988. EPA reported that nothing short ofa halt in the use of CFC's Can save the stratospheric OZOrte layer from further dangerous depletion. EPA projects a more extensive and faster-moving threat than previously realized. DOE's analysis does not consider the possibility that CFC's could be banned altogether. Furthermore, the possibility ofa ban in CFC useisan example ofthe reason

.. \Thy DOE needs
to exercise care inprescribing standards. For example. DOE is prohibited by NAECA from reducing the stringency of standards.

Because oflimitations imposed on CFC's, whetherby reduction in productionlevels orby'production bans, refrigerator manufacturers may be required to utilize alternatives to the restricteq CFC's to achieve energy efficiencyrequirements. DOE call..,,\ot be certain, however. that the newproduct would have the same utility or performance or be able to achieve the

same level ofenergy .efficiency. 

### If ,standards are set at a level that, asa result ofthese or otherfactors, cannot be attained, the standards could have an adverse effect on manufacturers and
consumers, since DOE is prohibited by NAECA from reducing the stringency of standards.

The Department"believesthatunder present EPA regulations. there will be substitutes for CFC-ll and CFC-12, but with a cost and energy efficiency penalty. In addition. questions exist regarding the ability ofappliance manufacturers to accommodate new refrigerants in their production
processes. For example, if the new refrigerants are not as energy efficient

as the CFC's being replaced, it would

mean that more ofthem would be needed to achieve the same level of savings; a!,)d, this could result in a need
to alter the refrigerator design in order
to accOInmodate the substitute materials. Under these circumstances, -**-~.,** any change in the need for CFC's could result 

### in altering the expected results of the analysis 

### by. for example, adversely affecting the estimates ofmanufacturing
costs. consumerprices, and so on,

The Department is examining all design options, including those using CFC's. CFC's, while being reduced in quantity. are not banned from production. Supplementary information provided through DOE research shows that the residential refrigerator industry consumption ofCFC-ll and CFC-12 currently represents approximately 1\;"0 percent ofall consumption of the regulated CFC's.! 5



### The engineering baseline unit for refrigerators was identified in the advance notice as the same unit used in the April 1982 proposal. The CEC and AHAM expressed concern that the data

were too old for current use and that DOE should use a representative modeL, (CEC, No, 35, at 3; aI}d AHAM, No. 22, at 27.)

.

DOE agrees. andhas used as the baseline for each class, a refrigerator with a SWEF near that which is expected to prevail after the 1990 NAECA standards are in effect.

. AHAM stated that data provided to LBL 

### (iIi 1987 refrigerator models had no single set ofdesign options used by manufa9turers to accomplish energy goals. making it**d~fficult** to identify a baseline unit. 

### (Al-l'A-M:, No. 22, at 27.) Furthermore. AHANI suggested rem()ving from consideration, in this rulemaking, those design options that wouldbe used to accompFsnthe 1990 standards. (AHAM, No. 22, at 28.) The Departmentdid not include such design options-in this analysis.

NRDC submitted data on the LaBrecque Cycle, a's a possible means to shiftfrbm CFC-12 toCFC-22. (NRDC, No. 19, 

# at 19.jWhile DOE agrees that this technology is a theoretical possibility. the Department has no knowledge of any prototype or laboratorY assembly that demonstrates its potentia:!. Furthermore, DOE does not have'data to conclude that this tecP.Jlology could be adopted as a prototype bythe time ofth,e amended standard'/l1993 effective**dat~:** Therefore. DOE did not**.~ql.ude** $i/l technology in the engineering analysis.

NYSEO recommended that DOE investigate different configurations, changes in unit dimensions. number and location of doors, rotary**~ompressors** as

,. "The Use ofChlorofluorocarhons in Refrigeration, lnsulation and Mohile Air Conditioning,iI! !he United States." Terry G. Stat!. DOE. paper pr,epared for EPA COlifere!lce on Substitutes anI:! Altematives to CFC's and Hahms. Washington, DC, January 13-15. 1988, 'well as conducting research into Japanese methods 

### ofrefrigerator manufacturing. (NYSEO, No. 32, at 7.) DOE believes that the number and location ofdoors and dimensions of a refrigerator may have utility implications to the consumer. but it is uncertain whether there is any impact

on energy efficiency. Many refrigerators

are used as replacements and must therefore fit into the space used by previous models, which can make dimensions very restrictive, The concept 

### ofusing rotary compressors as one of the design options is a good one. However. DOE believes that considering design options 

### by compressor efficiencies. e.g., 5.0 or 5.3 energy efficiency l'aiio, rather than by design
e.g., rotary compressor, allows manufacturers to select the appropriate
compressor design,

The CEe was concerned L'wt some design options 

### v..111 be incorporated to reach the 1990 standard levels. and should not,be used**ag~in** to evaluate 1893 levels. Also, the CEC requested that DOE identify the inethod of combining design options. (CEC. No. 35, 

### at 6.)

.,

The DepattIDent combined design options by beginning with those designs that were most cost-effective for

consumers. and then adding progressively**le~s cost~effective**  ones.

.DOE has d,etermined that certain design options willbe part ofthe 1990 standardleveldesign, and are in some current'models,therefore. they are being treated

# as part

### ofthe base case for 1990. These'opti()ns are: Foam insulation substitution in freezer section doors; and antis¥Jeat heater switch.

One q,esign option. evacuated insulation panels, was mentioned throughout the COlll..rnents as an energy

saver Lhat could'also eliminate the need for CFC-'11 in refrigerators. NRDC commented that evacuatedpanels have beenresearchedin many forms, all sho;.vinghighpotentia] for saving
energy. (NRDC. No. 19, at 17).AHAM provided.information from its investigation ofJapanese use of evacuated panels in refrigerators. AHAM stated that the models were rliscontiimed, and speculated that it was due to concerns about a combination of cost, reli!;lbility and in'compatibility with the manufacturing process. (AHAM, No. 22, at 31).

...

DOE nas funded research at the Solar Energy Researchhistitute (SERI) and Oak RidgeNational Laboratory (ORNL)
to develop U.S. technology in evacuated panels. Completion of this research is expected to take approximately five
years; however, independent research or

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

a major breakthrough may bring this refrigerator with automatic defrost be technology into place prior to 1993

. equivalent to a refrigerator

-freezer, top Nevertheless

, DOE believes that to mount
, with automatic defrost and that specify standards that would require the standard level for a built-in be evacuated panel insulation in 1993 approximately 10 to 15 percent above would be beyond the ability of the the non built

-in class. (Whirlpool, No. manufacturers to carry out commercially 10, at S-6 ). AHAM supported the acceptable redesign and retooling adoption of the all

-refrigerator with successfully. Therefore

, DOE is retaining automatic defrost class. (AHAM, No. 22 evacuated insulation panels as a design at DOE proposes to include the alltechnologically option i Peas that for is not refrigerator with the class of top-mount implementation feasible



### of 1993 standard levels. automatic defrost refrigerator

-freezer.
DOE believes that the scheduled However, DOE does not have any
reductions in CFC production will inspire industry to research non-CFC technology such as evacuated panels and provide prototypes and limited production models for the next review process of refrigerators. Whirlpool requested that DOE evaluate the possible development of information to conclude that built-ins, which provide utility to the consumer, affect energy consumption. Thus, DOE isnot proposing a separate class for builtin refrigerators. DOE invites comments and data concerning the adoption of these classes,
4. Efficiency Levels Analyzed two new classes for refrigerators. The DOE examined a range of standard first is an all-refrigerator with automatic levels, including the 1990 NAECA defrost and the second is for'built-in standards. As discussed above, the refrigerators. Whirlpool recommended impacts of any revised standards were that the standard level for an all- compared to the 1990 NAECA 

### 48x09

standards; 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 top-mount, automatic defrost refrigerator-freezer without through-the-door ice service. Level 5 corresponds to the highest efficiency level considered in the engineering analysis. it was felt that manufacturers eventually can produce appliances at this efficiency. Level 4 generally corresponds to the minimum life-cycle cost point. Levels I through 3 correspond to efficiencies lower than that of level 4. Each level was analyzed discretely in the engineering analysis. Standard levels for each of the other classes of refrigerators was based on the combination of design options for the top mount, automatic defrost refrigerator-freezer without through-thedoor ice service.

TABLE 3-1.-ALTERNATIVE EFFICIENCY LEVELS FOR 1993 FOR REFRIGERATORS AND REFRIGERATOR-FREEZERS AND FREEZERS [ENERGY CONSUMPTION KWH/YR.]

P d cl Level analyzed

ro uct ass 1 2 3 4 5

Refrigerators and Refrigerator-Freezers with manual defrost .............:............ 14.4 AV+ 287 12.3 AV+272 11.9 AV+258 10.6 AV+245 8.0 AV+245 Refrigerator-Freezers-partial automatic defrost...... ............... .................. 16.7 AV+333 15.2 AV+317 14.1 AV+305 12.5 AV+290 8.9 AV+273 Refrigerator

-Freezers

- automatic defrost with: Top-mounted freezer without through-the-door ice service' ................... 19.3 AV+384 17.8 AV+372 16.8 AV+363 14.4 AV+334 10.0 AV+306 Side-mounted freezer without through-the-door Ice service ..................... 14.8 AV+572 13.5 AV+547 13.1 AV+540 10.9 AV+497 6.9 AV+426 Bottom-mounted freezer without through-the-door ice service ................. 21.1 AV+410 19.1 AV+499 17.9 AV+386 15.2 AV+353 10.5 AV+321 Top-mounted freezer with through-the-door ice service ............................ 20.5 AV+409 18.9 AV+395 17.6 AV+380 14.8 AV+343 10.2 AV+313 Side-mounted freezer with through

-the-door ice service

.............. 17.2 AV+ 662 15.7 AV+635 15

.2 AV+625 12.8 AV+582 8.1 AV+517 Upright Freezers with:-Manual defrost ......................................................... 14.7 AV+213 13.2 AV+191 12.3 AV+181 10.4 AV+177 7.0 AV+157 Automatic defrost.............. .............................................................................. 20.7 AV+ 300 19.2 AV+277 18.0 AV+264 14.8 AV+252 9.7 AV+216 Chest Freezers and all other freeze's ....................... ................................. . 12.8 AV+186 12.0 AV+173 11.2 AV+163 9.4 AV+159 7.0 AV+157
Including all refrigerators with automatic defrost.

Payback Period. Table 3-2 presents the payback period for the-efficiency levels analyzed for the most prevalent class of product (20.8 cubic foot adjustedvolume, automatic defrost refrigeratorfreezer): Standard level 1 involves efficiencies achievable with foam door insulation and a 5.0 compressor, level 2 involves additional efficiencies achievable with K=0.11' foam insulation, level 3 substitutes a 5.3 compressor, level 4 substitutes K=0.10 foam. insulation and adds more efficient fans as well as 2 inches of door insulation, and level 5 adds adaptive defrost and evacuated panel which the additional expense of purchasing a product at this efficiency level will be less than three times the value of the energy.savings that the consumer will receive during the first year. The payback period for refrigerators that meet standard level 1 efficiency ranges from a low of 0.6 years for a side-by-side refrigerator-freezer with through-the-door services'to a high of 2.0 years for a manual defrost chest freezer; the payback period for refrigerators that meet standard level 2 efficiency ranges from a low of 0.9 years efficiencies. For most classes, standard level 3 corresponds to the most stringent energy conservation standard level at for a side-by=side refrigerator-freezer without through-the-door services to a high of 1 .9 years for a manual defrost chest freezer; the payback period for refrigerators that meet standard level 3 efficiency ranges from a low of 1:3 years for an upright, automatic defrost freezer to a high of 2.9 years for a manual defrost, chest freezer; and, the payback period for units that meet level 4 efficiency ranges from 2.7 years for an automatic defrost refrigerator-freezer with side freezer and through-the-door services to 4.1 years for a chest freezer. See Technical Support Document Table 3.31 through Table 3.40. 

### Federal Register 

## I Vol. 53. No. 232 / Friday. December 2, 1988 / Proposed Rules 

### 48GG9

a major breakthrough may bring this technology into place prior to 1993. 

### Nevertheless. DOE believes that to specify standards that wouid require evacuated panel insulation in 1993 

### would be beyond the ability of the manufacturers to carry out commercially acceptable redesign and retooling successfully. Therefore. DOE is retaining evacuated insulation panels as a design option but proposes that it 

### is not technologically feasible for implementation

## of1993 

### staj1dard levels. DOE believes that the scheduled reductions in CFC production will inspire industry to research non-CFC technology such as evacuated panels and provide prototypes and limited production models for the next review
process ofrefrigerators.

Whirlpool requested that DOE evaluate the possible development of
two new classes for refrigerators. The first is an all-refrigerator with automatic defrost and the second is for'built-in refrigerators. Whirlpool recommended that the standard level for an allrefrigerator with automatic defrost be equivalent to a refrigerator-freezer, top mount, with automatic defrost and that the standard level for a built-in be approximately 10 

### to 15 

### percent above the non built-in class. (Whirlpool, No. 10. 

### at 8-6). AHAM supported the adoption ofthe ail-refrigerator with automatic defrost class. (AHAM, No. 22 

### at 26).



### DOE proposes to include the a11- refrigerator with the class oftop-mount, automatic defrost refrigerator-freezer: However. DOE does not have any information to conclude that built-ins, which provide utiiity tothe consumer, affect energy consumption. Thus. DOE is
not proposing a separate class for builtin refrigerators. DOE invites comments and data concerning the adoption of these classes.

4. Efficiency Levels Analyzed

DOE examined a range of standard levels. including the 1990

### NAECA standards. As discussed above. the impacts of any revised standards were compared to the 1990 

### NAECA standards; 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 top-mount, automatic defrost refrigerator-freezer without through-the-door ice service. Level 5 corresponds to the highest efficiency level considered in the engineering analysis. It

### was felt that manufacturers eventually canproduce appliances at this efficiency. Level 4 generally corresponds to the minimum life-cycle cost point. Levels 1 through 3 correspond to efficiencies lower than that oflevel 4. 

### Each level was analyzed discretely in the engineering analysis. Standard levels for each ofthe other classes ofrefrigerators was based on the combination of design options for the top mount. automatic defrost refrigeratol'-freezer without through-thedoor ice service.

TABLE 3-1.-ALTERNATIVE EFFICIENCY LEVELS FOR 1993 FOR REFRIGERATORS AND REFRIGERATOR-FREEZERS AND FREEZERS [ENERGY CONSUMPTION KWH/YR.]

Product class level analyzed 1 2

Refrigerators and Refrigerator·Freezers with manual defrost

.............;

............ 14.4 AV+287 12.3 AV+272 Refrigera!or-Freezers-partial automatic defrost

...,........................................... 16.7 AV+333 15.2 AV+317 Refrlgerator-Freezers-automatic defrost with: Top-mounted freezer without through-the·doof ice service 1

................... 19.3 AV+384 17.8 AV+372 Side-mounted freezer Without through·the·door Ice service

..................... Bottom-mounted freezer without through-the-door ice service

.......;

......... 14.8 AV+572 13.5 AV+547 21.1 AV+410 19.1 AV+499 Top·mounted freezer with through-the·door ice service

............................ 20.5 AV+409 18.9 AV+395 Side·mounted freezer wiih through-the.door ice service

........................... Upright Freezers with:. Manual defrost

......................................................... 17.2 AV+662 15.7 AV+635 14,7 AV+213 13.2 AV+191 Automatic oefrosl.

..................;

.....................................:

.................................. 20.7 AV+300 19.2 AV+277 Chest Freezers and all other freezers

......................................................... 12.8 AV+186 12.0 AV+173

1 Including all refrigerators with automatic defrost.



### PaybackPeriod. Table**3~2** 

### presents the paybackperiod for the'e(ficiency levels analyzed for the most pre'valent class ofproduct (20.8 

### cubic foot adjusted volume. automatic defrost**refrigerator~** 

### freezer), Standard level 1involves efficiencies achievable withfoarn door irisulation and a 5:Q 

### compressor, levei 2 involves additionalefficienCies ' achievable with K=O.l1'

### foam insulation, level 3 substitutes a 5.3
compressor, level4substitutes K=0.10 ' 

### f6aminsulation and adds more efficient fans as well as 

## 2indies ofdoor insulation. and levelS'adds adaptive defrost and evacua'ted panel which the additional expense

# of purchasing a product at this efficiency level will be less than three times the value ofthe energy.savings that the

consumer willreceive during the first
year. The paybackperiod for refrigerators that me'et standard level 1 effidency ranges from a low of0.6 years for a side-by-side**refrigerator~freezer** 

### with through-the-d()or services to a high of2.0 years for a manual defrost chest freezer; the paybackperiod for ' refrigerators that meet standard level 2 

### efficien.cy ranges from a low of0.9 years efficiencies. Formost classes. standard level 3 corresponds to the most stringent energy conservation standard level at 4 5 3

11.9 AV+258' 10.6 AV+245 B.O AV+245 14.,1 AV +305 12.5 AV+290 B.9 AV+273

16.B AV+363 14.4 AV+334 10.0 AV+306 13.1 AV+540 10.9 AV+497 6.9 AV+426 17.9 AV+386 15.2 AV+353 10.5 AV+321 17.6 AV+S80 14.8 AV+343 10.2 AV+313 15.2 AV+625 12.8 AV+582 8.1 AV+517 12.3 AV+181 10.4 AV+177 7.0 AV+1S7 16.0 AV+264

, 14.8 AV+2S2 9.7 AV+216 11.2 AV+163 9.4 AV+159 7.0 AV+157



### for a**side-by~side**

### -refrigerator-freezer withoutthrougii-the-door services to a high of 1.9 

### years for 

### Ii manual defrost chest freezer; the payback period for refrigerators**tha~** 

### meetstandard level 3 efficiency ranges from a low of 1.3 

### years for an upright. automatic defrost freezer
to a high of2.9 years for a manual defrost, chest freezer; and, the'payback period for units that meet level 4 efficiency ranges from 2.7 years for an automatic defrost refrigera,tor-freezer with side freezer and through-the-door services to 4.1 years for a chest freezer. 

### See Technical Support Document Table 3.31 through Table 3.40.

### 48810 Federal' Register Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

TABLE 3-2.-PAYBACK PERIODS (YEARS)

TOP MOUNT AUTO DEFROST REFRIGERATOR-FREEZER, WITHOUT THROUGHTHE-DOOR FEATURES
(Adjusted Volume=20,8 Cu. Ft.)

Standard level

2 ................ ......................... ....... _..

................ 3 ...................................................................... 4 .............................................. _. _.................. 5 ........................................... ...................... 0.9 1.1 1.7 3.3 5.4

Significance of Energy Savings. By the year 2015, the weighted average energy consumption of new refrigerators sold in absence of revised standards is not projected to change compared to 1990 when the legislated standards become effective. This is because residential electricity rates are projected to decline from 1984 to 1995, then increase, reaching 1983 levels by 8015 tin real terms). Without upward pressure on operating expenses, the LBL-REM projects that there will be no major energy consumption improvements. When revised energy conservation standards are imposed, the LBL-REM projects that over the period 1992-2015, the following savings would be attributable to the increased standards: Level 1-3.8 Quads Level 2-5,1 Quads Level 3-5.9 Quads Level 4-8.1 Quads Level 5-11.6 Quads
(See Technical Support Document, Table 5.8.) On the basis of the above, DOE believes that the increased standard levels considered for refrigerators 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 refrigerators compared to 1990 is unlikely. Over the last two decades the average efficiency of refrigerators has increased over 50 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 refrigerators will not continue to increase. Changes in SWEF can be brought about by a number of factors including heightened consumer awareness.16 DOE requests comments

's On,June13, 1388, FTC published proposed rules to amend the appliance labeling program. (53 FR 22106). In particular, FTC requested comments on amendments to refrigerator labeling. Changes to the refrigerator label could increase consumer awareness of energy consumption. Payback period on this issue, particularly the LBLREM's forecast of refrigerator efficiency. Economic Justification-A.. Economic Impact on Manufacturers and Consumers. The per unit increased cost to manufacturers to meet the level 3 efficiency ranges from $12.80 for a 22.5 cubic foot (adjusted volume tAV)) chest freezer to $15.90 for a 31.9 cubic foot AV automatic defrost refrigerator-freezer with side freezer and through-the-door services. The cost for the most prevalent class of product (automatic-defrost refrigerator-freezer with top-mounted freezer) would increase $13.20. For level 4 efficiency, the per unit increased cost to manufacturers to meet that efficiency ranges from $22.40 for a 26 cubic foot chest freezer to $36.80 for a 31.9 cubicfoot automatic defrost refrigeratorfreezer with side freezer and through- -the-door services. The cost for the mostprevalent class of product (automaticdefrost refrigerator-freezer with topmounted freezer) would increase $33.20. The per unit increased cost to manufacturers to meet the level 1 efficiency ranges from $4.60 to $6.90, while level 2 cost increases range from $7.70 to $10.30. For level 5, the cost increases from $47.30 to $79.60. See Technical Support Document, Tables 3.14 through 3.23. The LBL-MIM, in the base case, projects manufacturers long-run return on equity (ROE) to be 9.54 percent for refrigerators and refrigera tor-freezersand 8.25 for freezers. At level 3, the LBLMIM predicts that a prototypical refrigerator and refrigerator-freezer manufacturer would have a gain in its ROE to 10.59 percent, a gain of 11.0 percent. At level 4, the manufacturer's ROE is expected to increase to 10.56 percent, a 10.7 percent gain. The corresponding gains for freezer manufacturers are 15.5 percent at level 3, and 6.9 percent at level 4. At levels 1and 2, the refrigerator and refrigeratorfreezer manufacturers' ROE are expected to improve respectively, to 10.08 percent (an improvement of 15.6 percent) and to 10.32 percent (an improvement of 8.2 percent). For freezer manufacturers, the ROE is expected to improve to 8.99 (an improvement of 12.8 percent) for levels 1 and 2, respectively. See Technical Support Document, Tables 7.9 and 7.10. These industries have displayed periods of increasing consolidations that have been especially pronounced during periods of low earnings. By increasing - profitability, .as DOE projects, 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 increase in profitability is directly related to the I BL-REMMM projection of shipments. Shipr= er_-'_s under standards are projected to increase slightly. See Technical Support Document, Table 5.34. If shipments were to decrease, however, the LBI-' SiM's projection of ROE would likely decrease, resulting in reduced profitability and possibly increase industry concentration. The Department's characterization of the prototypical manufacturer in the base case assumes that manufacturers' typical refrigerator, refrigerator-freezer and freezer 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 refrigerators that minimally comply with the 1990 NAECA 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 publically available, e.g., Securities and Exchange Commission 10K reports and company annual reports. Finally, DOE assumed that manufacturers would have sufficient quantities of the regulated CFC's. Because of the significant impact 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 the refrigerator, refrigeratorfreezer and freezer 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 refrigerator, refrigerator-freezer and freezer manufacturers by nearly 1.5 percent and nearly 2.0 percent for freezers. See Technical Support Document, Tables 7.17 and 7.18. t' 'hile these scenarios are theoretically possible, the Department expects that the original analysis will be the likely

outcome. For consumers, standard level 3 would cause price increases that would range from a low of $22.62 for an automatic defrost, upright freezer, to a high of$39.36 for an automatic defrost, side-byside refrigerator-freezer. The corresponding range of price increases at standard level 4 would be a low of $48.13 for a manual defrost, chest

### Fede~al Register 

# j Vol. 53, No. 232 

## I Friday, Dec-ember 2, 1988 

## I Proposed Rules

TABLE 3-2.-PAYBACK PERIODS (YEARS)

Top MOUNT AUTO DEFROST REFRIGERATOR-FREEZER, WITHOUT THROUGHTHE-DoOR FEATURES

[Adjusted Volume=20.B Cu. Ft.]

Standard level

1

............................................._ ............_ ....... 2

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

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

...................................................................... 5

.........................................:

........................... Payback period

0.9 1.1 1.7 3.3 5.4



### Significance of Energy Savings. By the
year 2015. the weighted average energy consumption ofnewrefrigerators soldin absence ofrevised standards is not projected to change compared to 1990 when the legislated standards become effective. This is because residential

. electricity rates are projected to decline from 1984 to 1995. then increase. reaching 1983 levels by,2015 

### (in real terms). Without upwardpressure on operating expenses. theLBL-REM projects that there will be no major
energy consumption improvements. Whenre"ised energy conservation standards are imposed, the LBL-REM projects that over the period 1992-2015. 

### the following savings would be attributable to the increased standards:

Level 1-3.8 Quads Level 2-5.1 Quads LeveI3-5.9 Quads Level 4-8.1 Quads Level 5-11.6 Quads 

### (See Technical Support Document. Table 5.8.)

,

On

# the basis ofthe above, DOE believes that the increased standard levels considered for refrigerators would resultin a significant conservation of
energy. However, DOE believes that the LBL-REM base case projections ofno improvement in the efficiency or refrigerators compared to 1990 is unlikely. Over the last two decades the
average efficiency ofrefrigerators has increased over 50 percent.During this time, the nation experienced both declining andincreasing realenergy prices, DOE believes there is no reason to conclude that the average efficiency ofrefrigerators will not continue to increase. Changes in SWEFcan be brought about by a number offactors including heightened consumer

awareness. I6

### DOErequests comments

16On,June 13. 1988. FTC plibiished proposedrules
to amend the appliance labelingprogram. (53,FR 22106). In particular. FTC requested comments on amendments to refrigerator labeling. Changes to the refrigerator lahel could iricrease consumer

awareness ofe'Il2rgy consumption. 

# =

on this issue. particularly the LBLREM's forecast ofrefrigerator efficiency.



### EconomicJustification-A. Economic Impact on Manufacturers and Consumers. The perun.it increased cost to manufacturers to meet the level 3 

### efficiency ranges from $12.60 for a 22.5 

### cubicfoot (adjusted volume lAY)) 

### chest freezer to $15.90 for a 31.9 

### cubic foot A V 

### automatic defrostrefrigerator-freezer with side freezer and through-the-door services. The cost for the most prevalent class ofproduct (automatic-defrost refrigerator-freezer with top

..mounted freezer) would increase $13.20. Forlevel 4 

### efficiency, the perunit increased cost to manufacturers to meet that efficiency
ranges from $22.40 for a 26 

### cubic foot chest freezer to $36.80 for a 31.9 cubic foot automatic defrost refrigeratorfreezer with side freezer and through- ·the-door services. The cost for the most prevalent class ofproduct (automaticdefrostrefrigerator-freezer with topmounted freezer) would increase $33.20. The perunit increased cost to manufacturers to meet the level 1 

### efficiency ranges from $4.60 to $6.90. while level 2 cost increases range from $7.70 to $10.30. Forlevel 5. tbe cost increases from $47.30 t() 

### $79.£0. 

### See Technical Support Document, Tables 3.14 through 3.23.

The LBL-MIM, in the base case, projects manufacturers long-run return

on equity (ROE) to be 9.54 percentfor refrigerators and refrigerator-freezers and 8.25 for freezers. At level 3, the LBLMIM predicts that aprototypical refrigerator and refrigerator-freezer manufacturer would have a gain in its ROE to 10.59 percent, again of 11.0 percent. At level4, the manufacturer's ROE is expected to increaseto 10.56



### .percent, a 10.7 percent gain. The corresponding gains for freezer manufacturers are 15.5 percent at level 3, 

### .and 6.9 

### percent at level 4. At levels 1 and 2, the refrigerator and refrigeratorfreezer manufacturers' ROE are expected to improve respectively, to 10.08 percent (an improvement of 15.6 percent) and to 10.32percent (an improvement of8.2 percent). For freezer manufacturers, the ROE is expected to improve to 8.99 {a'll improvement of 12.8 

### percent) for levels 1 and 2, respectively. 

### See Technical SupportDocument, Tables 7.9 and7.10.

These industrfes have displayed periods ofincreasing consolidativns that have beenespeciallypronounc{ld during periods oflow earnings. By increasing profitability. 

# as DOEprojects, standards could lead to.a reduction inthe rate of such consolidations, thereby possibly contributing to more robust competitiveness than is likely in the base case. The LTlcrease in profitability is directlyrelated to the tEL-REM 

### projection of shipments. ShipmeLls under standards are projected to increase slightly. 

### See Technical Support Document, Table 5.34. If

### shipments were to decrease, however, the LBL-MH..:fs projection ofROE would likely 

### decrease, resulting in reduced profitability andpossibly increase industry concentration.

The Department's characterization of the prototypicalmanufacturer 

### in the base case aSSll.1Jles thatmanufacturers' typical refrigerator, refrigerator-freezer andfreezer designs are based on the combinationDfoptions presented in the Engineering Analysisfor the baseline unit. If

### manufacturers use a different ' combination ofdesign optivns to produce refrigerators that minimally comply with the 1990 NAECA standard, the Department may have inappropriately characterized the financial position oftheprototypical manufacturer in 

### 1,.1.e LBL-MIM. Furthermore, since financial data ofthe type needed to characterize the prototypical manufacturer are generally
not available, DOKhad to make a number ofassumptions based on the limited data publically available. e.g

.. Securities and Exchange Commission 10K reports and company annual ' reports. Finally, DOE assumed that manufacturers would-have sufficient quantities ofthe regulated CFC's. Because ofthe significantimpact these assumptions could have on the results of the analysis. DOE requests comments on these issues, particularly from small manufacturers.

'fhe sensitivity analysis, however. indicates the refrigerator, refrigeratorfreezer andfreez'er industry is sensitive
to price and operating expense elasticities. For example, the high priqe andlow operating cost scenario ; indicates that the effects of standards would be to decrease return-on-equity for refrigerator, refrigerator-freezer and freezer manufacturers by nearly 1.5 

### percent and nearly 2.D 

### percent for freezers. 

### SeeTechnical Support Document. Tables 7.17 and7.18. 1'Vhile these scenarios are theoretically possible, theDepartmentexpects that the original analysis will be the likely
outcome.

For consumers, standardlevel 3 would

cause price increases thatwouldrange from a low Df

### $22.62 for an automatic defrost. upright freezer, to a high of $39.36 for an automatic defrost. side-byside refrigerator-freezer. The correspondirig range ofprice increases
at standard level 4 would be a low of $48.13 for a manual defrost, chest

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1938 / Proposed Rules 4881-11

freezer and a high of $96.70 for an automatic defrost, side-by-side refrigerator-freezer. See Technical Support Document, Tables 3.31-3.40, 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 4 generally corresponds to the minimum for each of the life-cycle

cost curves. See Technical Support Document, Figures 3.13-3.22. This indicates that the standard level would not cause any economic burden on the average consumer. DOE examined the effect of different discount rates, 5, 7 and 10 percent, on the LCC curves and generally found little impact; however, the Department did not consider higher discount rates. Similarly, DOE did not consider different energy prices, including regional prices, or different usage rates in the LCC analysis, 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 costs and/or expect to use their refrigerators more intensively, are on average, more likely to buy higher efficiency refrigerators, 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. The Department requests comments on the effects of energy prices and expected usage rates on consumer's choice of efficiency level as well as the potential biases that may be introduced by using national average energy prices and usage rates. The net present value (NPV) analysis indicates that if a standard were adopted at level 3, there would be a net present value of $12.2 billion from energy savings over the period 1992- 2015. At level 1, the corresponding NPV would be $8.5 billion, at level 2, $11.0 billion and at level 4, the corresponding NPV would be $13.9 billion. See Technical Support Document, Table 5.14. if, as discussed above, the NPV were calculated based on a 15 percent discount rate, the NPV at level 3 would be $2.5 billion; significantly less than calculated at seven percent. 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 1990, the market would produce refrigerators of an efficiency that increases more than the standards would otherwise require. The base case projects that there will be no increases in the SWEF of refrigerators after 1990, i.e., that the private sector will not continue to improve the efficiency of these appliances beyond=the mandated levels. The sensitivity case assumes that after the 1990 standards are in place, the base case efficiency growth, instead of being flat or zero, will occur at some positive rate. The Department believes that the maximum improvement in marketinduced refrigerator energy efficiency after 1990 would be that amount that would be characterized by the historical improvement in such efficiency. It would not be reasonable to assume that energy efficiency would improve at a greater than historical rate. Therefore, the Department believes that the range of market-induced efficiencies that would occur after 1990.. in the absence of additional Federal standards would be from a low or no improvement to a high of an historical average growth rate. It is important to note that the energy savings results for refrigerator standards may overstate the results that would otherwise obtain. For example, as indicated above, the maximum savings attributable to standards on refrigerators would be 11.6 Quads of electricity. This level would require the use of evacuated panels in place of foam insulation. If, however, base case efficiency growth were to occur at its historical average rate, the LBL-REM projects that savings from standards would be reduced by as much as 4.09 Quads, i.e., 11.6 Quads minus 7.51 Quads over the 1992-2015 period. See Table 3.3. Similarly, the energy savings could be affected if a regional analysis, including regional energy prices and varying usage rates, were used. DOE did not perform this analysis because the Department does not have data to indicate that regional values would have an effect on energy savings due to standards.

TABLE 3-3.-SENSITIVITY ANALYSIS: CUMULATIVE ENERGY CONSUMPTION OF REFRIGERATORS, REFRIGERATOR-FREEZERS, AND FREEZERS IN THE PERIOD 1992-2015 (QUADRILLION BTU, PRIMARY)
[High efficiency sensitivity case]

Base case

41.64 ............................................................................................................................... Level 3 . Standard

Level 4

39.41 37.52 Level 5

34.13 Level 3

2.23 Difference

Level 4

4.12 Level 5

7.51

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 refrigerators

. However, there is no assurance that future utility or performance of refrigerators would not be lessened as a result of disincentives caused by standards to investments in energy

-using new features or as a result of redesign brought about by EPA's regulations affecting CFC production. E. Impact of Lessening Competition. Since standards generally would result in greater industry profitability; and since historically in this industry mergers have resulted during per of low profitability, one result of standards could be to reduce the rate of industry consolidation, therby leading to more competition than is likely under the less profitable base case . DOE concludes from the results of the LBL-MIM that standards could lead to a reduction in the rate of consolidation; therefore, standards would not lessen competition. However, this conclusion is based on DOE's forecast of increased ROE. DOE requests comments on the impact of standards, both legislated and possibly amended, on competition. F. Need to Save Energy. Refrigerators use electricity as their energy source. Nearly seven percent of the nation's total electricity(which required source energy of 27.6 Quads in 1987) powers refrigerators, and nearly 13 percent of that seven percent would be saved by standards for this product at level 3, while almost 18 percent of that seven Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed Rules 

### 4B81J[

.... m p "l!l'7

.. iii 77Z rns

freezer and a high of$96.70 for an automatic defrost, side-by-side refrigerator-freezer. 

### See Technical Support Document. Tables 3.31-3.40.



### B. Life Cycle Cost andNetPreseni 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 4 generally corresponds
to the minimum for each ofthe life-cycle
cost curves. 

### See Technical Support Document, Figures 3.13-3.22. This indicates that the standard level wouldl
not cause any economic burden on the
average consumer. DOE examined the effect of different discount rates, 5, 7 and 10percent, on the Lce curves and generally found little impact; however, the Department did not consider higher discount rates. Similarly, DOE did

### not consider different energy prices, including regional prices, or different
usage rates in the 

## Lec analysis"

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 e[ficiency levels and the relationship between consumers' expected usage and choice ofenergy efficiency leveL Ifthose

consumers who face higher energy costs and!or expect to use their refrigerators

more intensively, are on average, more likely to buy higher efficiency refrigerators, 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. The Department requests comments on the effects of energy prices and expected usage rates on consumer's choice 

### of efficiency level as well as the potentialbiases that may be introduced by using national average energy prices andusage rates.

The net present value (NPV) analysis indicates that 

### if a standard were adopted at level 3, there would be a net present value of$12.2 billion from
energy savings over the period 1992- 2015. Ai levell, the corresponding NPV would be $8.5 billion, at level 2, $11.0 billion and at level 4, the corresponding NPV would be $13.9 billion. 

### See Technical Support Document, Table 5.14. 

### If, as discussed above, the NPV

were calculatedbased on 

### a 15 percent discount rate, the NPV at level 3 would be $2.5 billion; significantly less than calculated at seven percent.



### C. 

### EnergySOl'ings. As discussed above, DOE proposes that standards, at each candidate standard level, would result in a significant saving of energy. The Departmentconducted several sensitivity cases, one ofwhich was to

assume that after 1990, the market would produce refrigerators of an efficiency that increases more than 

### the standards would otherwise require.

The base case projects that there will be no increases in the SWEF 

### of refrigerators after 1990, i.e., that the private sector will not continue to improve the efficiency 

### ofthese appliances beyond,the mandated levels. The sensitivity case assumes that after the 1990 standards are in place, the base

case efficiency growth, instead ofbeing flat or zero, 

### wiil occur at some positive
rate. The Department believes that the maximum improvement in marketinduced refrigerator energy efficiency after 1990wouldbe that amount that would be characterized by the historical improvement in such efficiency. It wouId
not bereasonable to assume that energy efficiency would improve at a greater than historicall'ate.

Therefore. the Departmentbelieves that the range ofmarket-induced efficiencies thatwould occur after 1990' 

### in the absence ofadditional Federal standards would be from a low or no improvement to a high of an historical
average growth rate.

Iiis important to note that the energy savings results for refrigerator standards
may overstate the results that would otherwise obtain. For example, as indicated above, the maximum savings attributable to standards on refrigerators would be 11.6 Quads or electricity. This level would require the

use of evacuatedpanels in place offoam insulation. 

### If, however, base case efficiency growth were to occur 

### at its historical average rate, the LBL-REM projects that savings from standards wouldbe reduced by as much as 4.09 Quads, i.e., 11.6 Quads minus 7.51 Quads over the 1992-2015 period. See Table 3.3. Similarly, the energy savings could be affected if

### a regional analysis, including regional energy prices and varying usage rates, were used. DOE did
not perform this analysis because the Department does not have data to indicate that regional values would have

an effect on energy savings due to standards.

TABLE 3-3.-SENSITIVITY ANALYSIS: CUMULATIVE ENERGY CONSUMPTION OF REFRIGERATORS, REFRIGERATOR-FREEZERS, AND
FREEZERS IN THE PERIOD 1992-2015 (QUADRILLION BTU, PRIMARY)
[High efficiency sensitivity easel

Standard Base case Level 3 Level 4

41.64............................................................................................................................... 39.41 37.52

D. 

### Lessening ofUtiiity orPerformance of

Products. As indicated above. DOE established classes ofproducts in order
to assure that the standards analyzed would not lessen the existing utility or performance ofrefrigerators. However, there is no assurance thatfuture utility

or perfcirrrtanceofrefrigerators would
not be lessened as a result of disincentives caused 

## by standards to investments in energy-using new features or as a result ofredesign brought about by EPA's regulations affecting CFC production. 

### E.lmpact of Lessening 

### Competition. Sfnce standards generally would result in greaterindustry profitability, and since historically in this industry
mergers have resulted during periods of low profitability, one result of standards cO\lld be to reduce the**ra~e** ofindustry consolidation, therby leading to more competition than is likely under the less profitable base case. DOE concludes from the results of the LBL-MIM that standards could lead to a reduction in the rate ofconsolidation; therefore, standards would not lessen competition. Difference

level 5 level 3 level 4 LevelS

34.13 2.23 4.12 7.51

However, this conclusion is based on DOE's forecast ofincreased ROE. DOE requests comments on the impact of standards, both legislated and possibly amended, on competition.

F. 

### Need

### to SaveEnergy. Refrigerators

use electricity as their energy source. Nearly sevenpercent of the nation's total electricity (which required source energy of27.6 Quads in 1987} powers refrigerators, andnearly 13 percent of that seven percent would be saved 

### by standards for this product at level 3. while almost 18 percent ofthat seven

### 48812 Federal Register / Vol. 53, No . 232 / Friday, December 2,

percent would be saved at level 4. Levels 1 and 2 would save 8 and 11 percent respectively. The sensitivity analysis on the LBL-REM indicates that even if market improvements and consumer awareness of appliance efficiency continues

, the projected savings at level 3 would be nearly 5.5 percent of that seven percent, while the savings at level 4 would be nearly ten percent of that seven percent. G. Other Factors. In the Design Option discussion above, it was explained that many design options considered by DOE require the use of additional amounts of CFC, either CFC-11 or CFC 12. Both of these refrigerants are subject to an EPA rulemaking that would place restrictions on the manufacture of certain CFCs. As noted above

, the use of CFC's in the manufacture of refrigerators currently accounts for approximately two percent of the restricted CFC's. The 50 percent reduction in CFC manufacture prescribed by EPA, will likely result in the use of CFC's in refrigerators to exceed five percent of U.S. consumption

. This increase in the percentage of CFC consumption accounted for refrigerators would be a result of the CFC production restriction along with increased CFC use to meet the legislated 1990 standards, and increased sale of these products. Presently

, DOE is unaware of anycurrently available alternatives to CFC11 or CFC-12 that have been demonstrated as acceptable replacements to the affected CFC's, However, likely alternatives have been identified

, but have not been subjected to complete evaluation

, including toxicology tests. Based upon the comments on the advance notice, DOE assumed that suitable alternatives will be developed; however, the schedule by which these alternatives will become available in sufficient quantities is unknown at this time. DOE believes that most of the increase in CFC usage will be made in order to meet the 1990 NAECA standards . Of the design options considered to meet standard levels 1 through 3, only the addition of foam doors for refrigerators and refrigerator

-freezers (level 1) wotild require significant amounts of the affected CFCs. However, in order to meet the 1990 NAECA standards, manufacturers could consider the adoption of design options not Included in DOE's baseline unit; including thicker walls. If manufacturers were to adopt this approach, substantiallymore CFC's would be required than' he Department assumes. Furthermore

, under this scenario, the supply of CFC' s may not meet the demand at any standard level including the 1990 NAECA level. The impacts of the EPA rulemaking on CFCsare not specifically reflected in the LBLMIM. DOE solicits comments on this issue

, especially concerning the baseline unit and manufacturers ' ability to meet the 1990 NAECA standards. DOE is particularly interested in receiving comments from small manufacturers of refrigerators. Conclusion. After careful consideration of the analysis, the Department is proposing a revision of the refrigerator standards from a range of standards that includes continuing the 1990 NAECA standards to standard level 3. The Department proposes that each candidate standard level for refrigerators saves a significant amount of energy

, and is economically justified. However, because of the analytical and policy questions 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 refrigerators ; the level selected could include no change to the 1990 NAECA standards. As discussed above, DOE's analysis indicates that there would be substantial energy savings at each candidate standard level of efficiency. During the period 1992

-2015, these savings would be nearly six Quads of primary electricity per year compared to the base case for level 3, five Quads for level 2 and nearly four Quads for level 1. Although these standards would cause some increase in the initial price to the consumer

, each standard is calculated to reduce substantially the typical consumer's life-cycle costs. in addition

, of the standard levels analyzed

, level 3 was the most stringent level that satisfied the rebuttable presumption test, i.e., that had 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 each standard, level 1-3, will likely be available by 1993. These include compressors of near 5.3 EER. For manufacturers

, level 3standards are expected to produce longrun increases in their net income and return on equity of 18.2 percent and 11.0 percent, respectively

. Levels 1 and 2 will result in similar increases. Each standard lever may involve the use of additional :amounts of ozonedepleting CFC's; however

, DOE believes this additional amount will come at the expense of other products that presently 

### 988 / Proposed Rules

use the needed CFC's. If, however, EPA were to halt the production of CFC's, manufacturers would have to find alternatives to both CFC-11 and CFG12. It has not been conclusively demonstrated to what extent, if any, alternatives would penalize the energy efficiency performance of refrigerators. Furthermore, if the standards were to be revised and it were to be shown that the CFC alternatives did have an efficiency penalty, DOE would not be able to adjust the standard dowmvvard.
In the base case (1990 NAEGA standards), DOE believes the analysis likely underestimates the impacts of the 1990 NAECA standards. As discussed above, the Department believes that the LBL-REM overestimates energy consumption by forecasting no increases in refrigerator SWEF. Also, the characterization of the prototypical manufacturer in the LBL-MIM does not account for the possible impacts of the EPA's regulations concerning CFC manufacture

, since the Department assumed that sufficient quantities will exist after the regulations go into effect.
In addition

, not amending the 1990 NAECA standards would allow manufacturers time to adjust to the standards; would not increase refrigerator CFC use; and would allow time for research on alternative

, lower CFC-using technologies. For standard level 3, the Department proposes that there will be a 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. However, standards at this level would require the use of more CFC's and would increase prices to consumers. Furthermore

, as discussed above, the LBL-REM forecast of energy savings is likely to be overestimated. The standards analysis may also underestimate the impact on manufacturers

, since many are already involved in retooling to meet the 1990 NAECA standards and the EPA's CFC restrictions. For standard level 2, the Department proposes that there will be a significant conservation of energy and that the standards will cause little increase in price to consumers

. In addition, the analysis projects little economic impact on manufacturers and a substantial reduction in consumer life cycle costs. However, standards at this level will require the use of more CFC's. Also, the analysis may underestimate the economic impacts on manufacturers as 

### 48812 Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 

### 2, 1988 

## I Proposed Rules



# --

percent would be saved at level 4. Levels 1 and 2 would save 6 and 11 percentrespectively. The sensitivity analysis on the LEL-REM indicates that

even ifmarket improvements and

consumer awareness ofappliance efficiency continues, the projected savings at level 3 would be nearly 5.5 percent ofthat seven percent, while the savings at 18ve14 would be nearly ten percent ofthat seven percent.

G. 

### OtherFactors. In the Design Option discussion above, it 

### was explained that
many design options consideredbyDOE require the use ofadditional amounts of CFC, either CFC-ll or CFC-12. Both of these refrigerants ar.e subject to all EPA rulemaking that would place restrictions

on the manufacture ofcertain CFCs.

As noted above, the use ofCFC's in 

### the manufacture ofrefrigerators currently accounts for approximately"
two percent ofthe restrictedCFC's. The 50 percentreduction in CFC manufacture prescribed byEPA. 

### will likely result in the use ofCFC'g in refrigerators to exceed five percent of U.S. consumption. This increase in the percentage ofCFC consumption accou11ted for refrigerators would be a result ofthe CFC productionresu'iction along with increased CFC use to meet the legislated 1990 standards, and increased sale of these products. Presently, DOE is unaware ofany currently available alternatives to CFG11 or CFC-12 thathavebeen demonstrated as acceptable replacements to the affected CFC's. However, likely alternatives have been identified, but have notbeen subjected
to complete evaluation, including toxicology tests. Basedupon the
comments on the advancenotice, DOE assumed that suitable alternatives 

### will be developed; however, the schedule by which these alternatives 

### will become available in sufficient quantities is unknown at this time. DOE believes that
most ofthe increase in CFC usage 

### will be made in order to meet the 1990 NAECA standards. 

## orthe design options considered to meet standard levels 1 through 3, only the addition of foam doors for refrigerators and refrigerator-freezers (level 1) 

### would require significant amountscfthe affected CFC's. However. in order to meet the 1990 NAECA standards, manufacturers could consider the adoption ofdesign options not included in DOE's baseline 

### unit. including thicker 'Nalls. 

### Ifmanufacturers were to adopt this approach,.substantially.more CFC's would be required thantheDepartment

assumes. Furthermore, underthis scenario. the supply ofCFC's may not meet the demand at any standardlevel including the 1990 NAECA level. The impacts ofthe EPA rulemaking on CFCs

are not specifically reflected in the LBtMIM. DOE solicits comments on this issue, especially concerning the baseline un.it and manufacturers' ability to meet the 1990 NAECA standards. DOE is particularly interestedin receiving
comments from small manufacturers of refrigerators.



### Conclusion. After careful consideration ofthe analysis, the Departmentisproposing a revision of the refrigerator standards from 

### .a range ofstandards that includes continuing the 1990 NAECA standards to standard level 3. The Departmentproposes that each candidate standardlevel for refrigerators saves a significant amount ofenergy, andis economicallyjustified. However, because ofthe analytical and policy questions discussed above, the Department is notproposing specific standardlevels withinthe above range. Rather, DOE is presentingthe results of the a..'1aIysis and is soliciting additional
comment andinformation tn be considered inpromulgatingthe final rule. The final rule will specify a specific level forrefrigerators; thelevel selected could include no change to the 1990 NP,ECA standards.

As discussed above, DOE's analysis indicates thatthere would be substantial energy savings at each candidate standardlevel ofefficiency. During the period 1992-2015, these

. savings wouldbenearly six Quads of primary electricityper year compared to the base case for level 3, five Quads for level 2 and nearly four Quads for level 1.

Although these standards would

cause some increase in the initial price
to the consumer, each standard is calculated to reduce substantially the typical consumer's life-cycle costs. in 

### addition, ofthe standardlevels analyzed, level 3 was the most stringent level that satisfied the rebuttable presumption test, i.e., that had a value of
energy savings that repaid the initial purchase price increase to the average

consumer in less than three years.

The technologies thatmay be necessarytomeet each standard, level 1-3, will likely be available

### by 1993. These include compressors ofnear 5.3 EER. Formanufacturers, level S 

### standards are expected to produce longrun increases in

### their netincome and
return on equity of16.2 percent and 11.0 percent, respectively. Levels 1 and 2will resultin similar increases.

Each standardlevelmayinvolve the

use ofadditiona1.amounts ofozonedepletingCFC's; however, DOE believes this additional amount will come at the
expense ofotherproducts that presently use the needed CFC's. If, however. EPA

were to halt the production of CFC's, manufacturers would have to find alternatives to both CFC-ll and CFC12. It

### has not been conclusively demonstrated to what extent, 

### if any, alternatives would penalize the energy efficiency performance ofrefrigerators. Furthermore, 

### ifthe standards were to be revised and it 

### were to be sho·wn that the CFe alternatives did have an efficiency penalty, DOE would not be able to adjust the standard dovv-:nward.



### Inthe base case (1990 NAECA standards),DOE believes the analysis likely underestinlates the impacts ofthe 1990 NAECA standards. As discussed above, the Departmentbelieves that the LEt-REM overestimates energy consumption byforecasting no increases in refrigerator SWEF. Also, the characterization ofthe prototypical manufacturerin the LBL-MIM does not account for the possible impacts ofthe EPA's regulations concerning CFC manufacture, since**L~e** 

### Department assumed that sufficient quantities will exist after the regulations go into effect.

In addition,not amending the 1990 NAECA standards would allow manufacturers time to adjust to the standards; wouldnot increase refrigerator CFC use; and would aHow time for research on alternative, lOl'lTer CFC-using technologies.

For standardlevel 3, the Department proposes that there willbe a significant conservation ofenergy and that tile standards are projected to have little economic impact on manufacturers. Standards at this level would likely be
met with existing technology and would reduce consumerlife cycle costs. However. standards at this level would require the use ofmore CFC's and would increase prices to consumers. Furthermore, as discussed above. the LBL-REM foreeast of energy savings is likely tobe overestimated, The standards analysis may also underestimate the impact on manufacturers, since many are already involved in retooling to meet the 1990 NAECA standards and theEPA's CF·C restrictions.

For standardlevel 2, the Department proposes that**t.~ere** 

### willbe a significant conservation of energy and that the standards will cause little increase in price to consumers. In addition, the analysis projects little economicimpact

on manufacturers and a substantial reduction in consumer life cycle costs. However. standards at this level will require the use ofmore CFC·s. Also, ihe analysis may underestimate the economic impaots on manufacturers asr1



### 1 --9 e / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

discussed above and it likely overestimates energy savings. For level 1, the Department proposer that there will be a significant conservation of energy and that the standards would likely have little economic impact on manufacturers and consumers. In addition, the standards would substantially decrease consumer life cycle costs compared to the 1990 unit. However, significant improvements in efficiency are technologically feasible. Also, standards at this level would result in some increase in CFC use in refrigerators, and the impacts on manufacturers and energy savings estimates may be incorrect as described above. The results of the analysis, including those for levels 1, 2, and 3 discussed above, could change if a different discount rate were used, energy prices drop, or if the use of, national average energy prices and appliance usage rates introduces a bias. Furthermore, if amendments to the appliance labeling program are finalized by FTC, it could improve the effectiveness of the program, thereby reducing any benefits of standards. 53 FR 22106, June 13, 1988. DOE believes that programs such as the labeling program are preferable to standards since they result in the least amount of intervention in the marketplace and do not preclude products that may be the optimum for certain consumers. More stringent standard levels were examined and rejected for the following

reasons: First, the level 5 standard, the maximum technologically feasible option, involved the use of evacuated panels. While evacuated panels have existed for some time, and were previously even used in some Japanese refrigerators, the technology has not yet proven to be a reliable and durable one, and one suitable for mass production. Furthermore, even though one domestic manufacturer has patented an evacuated-panel technology, there are no reasonable assurances that a reliable and durable evacuated panel design will be available when this standard is to be effective. Therefore, the Department has rejected this standard level. Moreover, in most cases this point is beyond the minimum life-cycle cost point which would prevent some consumers frombeing able to purchase the most costeffective units for them. Level 4 standards would involve a substantial increase in the initial

consumer price of refrigerators; in fact, the improvements necessary to reach that level of efficiency are estimated to be so costly that the rebuttable presumption consideration is not satisfied for the most prevalent class. In addition, results of the engineering analysis and the life-cycle cost analysis indicate that while there is a substantial increase in the price of refrigerators between level 3 and 4, the corresponding decrease in operating costs results in a negligible life-cycle cost difference between these levels, Furthermore, this standard levelassumes the use of more ozonedepleting CFC than the level 3 standard.



### b. Small Gas Furnaces

1. Classes Two classes of small gas furnaces, 17 weatherized (outdoor) and nonweatherized (indoor), were specified in the advance notice. These classes are distinguished by their ability, or inability, to be installed outdoors, a performance

-related feature that affects utility and efficiency. The weatherized (outdoor) furnace provides the owner with the utility of saving indoor space. The weatherized furnace typically is less energy efficient than a comparable nonweatherized (or, indoor) furnace because the "jacket" energy losses of a weatherized furnace will usually exceed the infiltration energy losses of an indoor furnace. The test procedures for furnaces recognize these differences and prescribe different efficiency calculation methods for these two types of furnaces.


### 2. Design Options

The Engineering Analysis-identifies individual or combinations of design options with a potential for improving energy efficiency. Design options that

are on the market, or that will be on the market by the time standards are effective, were considered. The following is a list of design options that were examined: (A) Increased heat exchanger surface

area. '(B) Intermittent ignition device (LID). (C) Power burner or power vent. (D) Increased insulation.(E) Additional improvement of steadystate efficiency. (F) Two-stage and modulating burners.


### 3. Comments on the Advance Notice of Proposed Rulemaking

Comments from the Edison Electric

17 The Act requires the Department to establish minimum energy conservation standards for gas furnaces (other than furnaces designed solely for installation in mobile homes) having an input of less than 45,000 Btu per hour. The Department interprets this provision to be applicable only to gas, forced air furnaces. 

### 4t3€f13

Institute (EE!) suggested that in evaluating the small furnace standard (between 71 and 78 percent AFUE), the Department consider the base case not to be the no regulation case, but rather the 78 percent case. In addition, EEL suggested that the Department examine 71 percent AFUE, 78 percent AFUE (as the base case), and two levels higher than 78 percent. (EEI, No. 20, at 3-4). The Department rejects the idea of a base case at 78 percent AFUE since that would preclude the ability to show any energy savings at 71 percent AFUE and, therefore, it would a priori exclude the 71 percent AFUE case from consideration. As-to EEI's other suggestion, DOE believes it would serve
no purpose in this proceeding to examine two standards cases of efficiencies greater than 78 percent AFUE since the Act precludes DOE from setting a standard greater than 78 percent AFUE. The American Gas Association (AGA) and Alabama Gas Association (AIG) maintained that the use of life-cycle cost (LCC) analysis is inappropriate in the small gas furnace market since much of the decision-making on new purchases is made by builders and contractors whose purchase decisions are influenced principally by initial price considerations. (AGA, No. 24, at 1; and, AIG, No. 8, at 3 and 6). Conversely, CEC suggested that the Department develop LCC curves for each product. (CEC, No. 35, at 6). Indeed, while much of the small furnace market demand comes frombuilders and contractors, consumer lifecycle cost analysis is still appropriate since section 325(1)(2)(B)(i)(II) of the Act requires DOE, in determining whether a

new or amended standard is economically justified, to "determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering 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, or in the initial charges for, or maintenance
expenses of, the covered products which are likely to result from the imposition of the standard."

The AGA stated that the LBL-REM model disregards regional variations in housing unit growth rates (AGA, No. 24, at 15). The AGA is incorrect, since the inputs to LBL-REM include forecasts of regional housing starts. Specifically, LBI -BEM's updated housing submodel includes several features: (1) The model uses population projections, which are more stable than 

### Federal 

### Register! Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed Rules 

### 48813

iii z:a:c:a rrrrr



### discussed above and it likely overestimates energy savings.

For level 1. 

### the Department proposet that there will be a significant conservation ofenergy and that the standards wOilld likelv have little economic impact on manufacturers and

consumers. In addition. the standards would substantially decrease consumer life cycle costs compared to the 1990 

### unit. However, significant improvements in efficiency are technologically feasible. Also. standards at this level would resuiOn some increase in CFC

use in refrigerators. and the impacts on manufacturers and energy savings estimates may beincorrect as described above.

The results of the analysis, including those for levels 1, 2, 

### .and 3 

### discussed above. could change ifa 

### different discount rate were used. energy prices drop, or ifthe use ornational average energy prices and appliance usage rates introduces a bias. Furthermore. if amendments to the appliance labeling program are finalized byFTC. it

### could improve the effectiveness ofthe program; thereby reducing any benefits of standards. 53 FR 22106. 

### June 13. 1988. 

### DOE believes that programs such as the labeling program are preferable to standards since they result in the least
amount ofintervention in the marketplace and do not preclude products that may be the optimum for certain consumers.

More stringent standard levels were examined and rejected for the following

reasons: First, the level 5 

### standard, the maximum technologically feasible option. involved the use ofevacuated panels. While evacuated panels have existed for some time. and were previously even used in some Japanese ·refrigerators. t..l:te technology has not yet proven to be a reliable and durable one, and one suitable for mass production. Furthermore. even though one domestic manufacturer has patented an evacuated-panel technology, there 

### are

no reasonable assurances that a reliable and durabie evacuated panel design will be available when this standard is to be effective. Therefore. the Department has rejected this standardlevel. Moreover, in most cases this point is 

### beyond the minimum life-cycle cost point which would prev.ent some consumers from being able to purchase the most costeffective units for L'1em.

Level 4 standards would involve a substantial increase in the initial

consumerprice ofrefrigerators; in fact, the improvements necessary to reach that level ofefficiency are estimated to be so costly that the rebuttable presumption consideration is not satisfied for the most prevalent class. In addition, results ofthe engineering analysis and the life-cycle cost analysis indicate that while there is a substantial increase in the price ofrefrigerators between level 3 

### and4. 

### the corresponding decrease in operating
costs resuits in a negligible life-cycle
cost difference between these levels,**FurL~ermore.** 

### this standard level

assumes the use ofmore ozonedepleting CFC than the level 3 

### standard.

b. SnwIl GasFurnaces

1. 

### Classes

Two classes of small gas furnaces. 17 

### weatherized (outdoor) and nonweatherized (indoor). were specified in the advance notice.

These classes are distinguished by their ability, or inability, to be installed outdoors. a performance-related feature that affects utility and efficiency. The weatherized (outdoor) furnace provides the owner with the utility of saving indoor space. The weatherized furnace typically is less energy efficient than 

### a comparable nonweatherized (or. indoor) furnace because the "jacket" energy losses ofa weatherized furnace will usually exceed the infiltration energy losses ofanindoor furnace. The test procedures for furnaces recognize these differences and prescribe different efficiency calculationmethods for these
two types offurnaces.

2. 

### Design Options

The Engineering l\nalysis·identifies individuator combinations of design options**wit..~** 

### a potentialforimproving energy efficiency. Design options that

are on themarket. or thatwill be on the marketby the time standards are effective. were considered. The following is a list ofdesign options that

were examined:

CA) Increasedheat exchanger surface

area.

,(B} 

### Intermittent ignition device (lID). (C) 

### Power burner orpower vent. (D) Increased insulation. (E) Additional improvement of steadystate efficiency.

(F) 

### Two-stage and modulating burners.

3. Comments on the Advance Notice of Proposed Rulemaking

Comments from the Edison Electric

17 The Act requires the Depar'.ment to establish minimum energy conservation standards for gas furnaces (other than furnaces designed solely for installation in mobile homes) having an input ofless than 45.000 Btu per hour. The Department interprets this**pro\~sion** to be applicable only to gas. forcedair furnaces. PWLW k



### Institute (EEl] suggested that in evaluating the small furnace standard (between 71 

### and 78 

### percent AFUE). the Department consider the base case not to 

### be the no regulation case, butrather the 78 

### percent case. In addition, EEl 

### suggested that the Department examine 71 

### percent AFUE. 78 

### percent AFUE (as 

### the base case). and two levels higher than 78 

### percent. (EEl. No. 20, 

### at 3-4).



### The Departmentrejects the idea ofa 

### base case 

### at 78 

### percent AFUE 

### since that would preclude the ability to show any energy savings at 71 

### percent AFUE 

### and, therefore. it would apriori exclude the 71 

### percent AFUE 

### case from consideration. As-to EEl's 

### other suggestion, DOE believes it

### would serve

no purpose 

### in this proceeding to examine two standards cases of efficiencies greater than 78

### percent AFUE since the Act precludes DOE from setting 

### a standardgreater than 78 

### percent AFUE.



### The American Gas Association (AGA) 

### and Alabama Gas Association (AlG) 

### maintained that the use oflife-cycle cost (LCG) analysis is inappropriate in the small gas furnace market since much of the decision-making onnew purchases is made bybuilders and contractors whose purchase decisions are influencedprincipally byinitial price considerations. (AGA. No. 24. 

### at 1; 

### and, A1G. No.8. at 3 

### and 6). 

### Conversely. CEC suggested thatthe Department develop LCC curves for eachproduct. (CEe, 

### No. 35. 

### at 6).



### Indeed, while much ofthe small furnace market demand comes from builders and contractors. consumer lifecycle cost analysis is still appropriate since section 325(1)[2)(B)(i}(lI) 

### ofthe Ad requires DOE, in determining whether a

new or amended standard is economicallyjustified. to "determine whether the benefits ofthe standard exceed its burdens by. to the greatest extentpracticable. considering the savings in operating costs throughout the estimated average life ofthe covered product in the type (or classj 

### compared
to anyincrease in the price of. or in 

### the initial charges for. ormaintenance expenses of. the covered products which

are likely to result from the imposition ofthe standard."

The AGA stated that the 

### LBL-RR'vi model disregards regional variations in housing unit growth rates (AGA, No. 2'1, 

### at 15). The AGA is incorrect. since the inputs to 

### LBI.-REM include forecasts of regional housing starts. Specifically, 

### LBI.-REM·s updated housing submodel includes several features:

(1) The model uses population projections. which are more stabie than

### 48814 Federal Register Vol. 53, No. 232 / Friday; December 2, 1988 / Proposed Rules

projections of housing completions because of the comparatively larger influence of economics, e.g., the stage of the business cycle, interest rates, and so on, on housing completions. In the long run, the number of housing units available is expected to agree with the need for housing units, which is determined by the size and composition of the population. (2) The updated method utilizes population projections for states by house type. This feature, combined with climate data, permits estimation of the fraction of households with heat loads that could be met by small gas furnaces. 

### (3) Projections of the numbers of people in each age group in future years are used to project changes in the distribution of house types. Lastly, with regard to the utility impact analysis; Lone Star Gas Company (LSG) and EEI suggested that the utility analysis examine the impact on gas, as well as electric, utilities. (LSG, No. 11, at 6; EEL No. 20, at 6).
No direct analysis of gas utilities was performed, but impacts on residential gas sales were estimated. The Department believes that this is adequate to assess the gas utility impacts from standards or, small gas furnaces thatare intended for residential use, since the bulk of these impacts should be on future gas utility residential sales. Nevertheless, the Department welcomes detailed information, and data from persons or organizations who believe that DOE has underestimated the likely impacts on gas utilities. Also, two utilities suggested that results obtained for a region may differ greatly from results obtained for each separate utility system within a region. (Allegheny Power System (APS), No. 13, at 2; and, LSG, No. 11. at 6). - For the small gas furnace analysis, it was the Department's intention to capture as much of the regional variations as possible. LBL-REM used regional disaggregation in modeling space conditioning choice in new homes. While resource limitations prevented any further disaggregation of the marektplace, DOE is interested in . . receiving information and data on any specific regional problems that were overlooked. Several gas distribution companies and gas suppliers, and the Southern Gas Association (SGA) and AGA endorsed the 71 percent AFUE furnace standard over the 78 percent AFUE. They cited various reasons for their preference for the lower efficiency, the predominant one being the impact on gas utilities of reduced load that would result from a,78 percent standard.18 Comments in favor of the 78 percent. AFt_TE were received from the Gas Appliance Manufacturers Association and the Edison Electric Institute. (GAMA, No. 23, at 1); (EEI, No. 20, at 2). Three comments encouraging a thorough analysis of all factors before a decision is made were submitted by the Natural Resources Defense Council, the New York State Energy Office, and theAmerican Council for an EnergyEfficient Economy (ACEEE). (NRDC, No. 19, at 6-8; NYSEO, No. 32, at 7-8; =!CEEE. Testimony).

Several comments favored D OE's approach of considering two standards

cases, 71 percent and 78 percent, since efficiencies between 71 and 78 percent are not well-defined in terms of inherent design options. (PING,, No. 3, at 3; Peo.G., No. 6, at 1; FNGA, No. 14, at 1; ENTEX, No. 15, at 2; AGA, No. 24, at 7; and SCA, No. 26, at 2). Comments requesting consideration of a range of efficiencies between 71 and 78 percent were received from Southern Company Services Inc. (SCS). (SCS, No. 7, at 1). While the Department still believes that 71 percent and 78 percent AFUE are the meaningful candidate levels, an analysis at 74 percent AFUE was also conducted. The Edison Electric Institute suggested that the 78 percent AFUE level should be the base case or "default level" unless DOE justifies reducing it to 71 percent. (EEI, No. 20, at 3). The New York State Energy Office stated that DOE is required to investigate maximum technical feasibility efficiency levels for small furnaces and that while pulse combustion and heat exchangers are not on the list of design options to be

Name Assigned

abbreviation Comment

No.

Oklahoma Natural Gas Cc ......._' OKNG ................. Piedmont Natural Gas Co

., Inc.. PING

................... Public Service Co. of N.C. Inc... Pub.S .................. Peoples Gas System Inc............ Peo.G.................. Southern Companies Services SCS ..::................. Inc. Alabama Gas Cor ................ AIG

........... East Tennessee Natural Gas ETNG ............ Co. Lone Star Gas Cc..... ......... LSG ................. ANR Pipeline Co....::: ANR ...::.........

Florida Natural Gas Assoc a- FNGA ......... .....' Lori Energy Committee Entex ..:::. .:.... .... EN, EX

.........._.... Virginia Natural Gasanc ..... VANG ................. Gas Appliance Manutaciurers GAMA ................. Association. The American Gas Association

. AGA.................... Southern Gas Association

.......... SGA _ .................. Arkansas Louisiana Gas Co....... ALG ..................... United Cities Gas Cc .::................ UCG .............. South Carolina Electric & Gas SCE and G........ Co. Sierra Power Co ................. SP Co.................

, Northern Illinois Gas._ ................. NIGas

................. Nashville Gas Co ......................... NG Co................ 2.
3.
5.

7.



### e. 9.

11. 12 and
34. 14

.
15. 16. 23.

24. 25. 26. 27. 28.

33. 36. 37.

is The gas utility companies and associations responding included: examined, they should be. (NYSEO, No. 32, at 7-8). The "max-tech" level of efficiency for small furnaces is 96 percent AFUE; therefore, it cannot be a candidate standard level for this rulemaking, because it falls outside of the range for consideration set by section 325(f)(1)(B)(ii) of the Act. Only one comment addressed test procedure issues. York International (York) pointed out that "the measure of efficiency for furnaces under the FTC appliance labeling requirements is the annual fuel utilization efficiency (AFUE) and not the Energy Factor." (York, No. 1, at 1). The Act is explicit under the definition of "efficiency descriptor" stating "for furnaces and direct heating equipment, (it is) annual fuel utilization efficiency." Section 321 (a)(22)(A). The confusion in this matter has reference to section III of DOE's advance notice, in which outputs of the engineering analysis are listed as Energy Efficiency (expressed as the DOE energy factor) with a footnote stating "the energy factor is a measure of energy efficiency derived from the DOE test procedure for that product" The problem is that the DOE test procedure for furnaces includes an additional efficiency descriptor called Energy Factor which includes the electric energy in the calculation. This potential misinterpretation, that energy efficiency refers to the "Energy factor," is being clarified by stating that energy efficiency refers to AFUE Maintenance Expense. Several gas companies referenced the need to consider higher maintenance expense for the 78 percent AFUE furnace standard. (A.1G, No. B, at 6; LSG, No. 11, at 4&8; FNGA, No. 14, at 4; YANG, No. 16, at 7; ALG, No. 26, at 2; and NG.Co., No. 37, at 2). Since this efficiency level would require the use of a fan motor and its associated controls for induced .draft, the maintenance expense was included in the Engineering Analysis. Higher First Costs/Installation Costs. Several of the gas companies and associatiorm cited increased installation expenses due to special venting requirements as being necessary to consider in the engineering and economic analyses for the 78 percent AFUE standard for induced draft type furnaces.(OKNG, No. 2, at 2; ETNG, No. 9, at 4 and 5; LSG; No. 11, at 8; ANR, No. 12, at 2; FNGA, No. 14, at 2; YANG, No. 16, at 5; AGA, No. 24, at 12; SGA, No. 25, at 4; UCG, No, 27, at 3; SCE&G, No. 28, at 3; and'NG Co., No. 37, at 2). Generally, these comments addressed problems that would arise when a furnace and a water heater are installed with a common vent system. 

### 48814 Federal Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed Rules**~y** ............ """;";ri FE**!Oi'2!"Bi:lf'JnfOief!"Zfl!!i:EM!&i~,** &&

.. A 

# -
pl'Ojections of

### housing completions because ofthe comparatively larger influence of economics, e.g., the stage 

### 01' the business cycle, interest rates, and so on, on housing completions. In 

### the long



### run. the number 

### ofhousing units available is expected to agree 

### with the need for housing units, which is determined 

### by the size and.composition 

### ofthe population.

(2) 

### The updated method utilizes populationprojections for stales by house type. This fe!J.ture, combined ,,,,<jth climate data. permitsestimation ofthe fraction ofhouseholds with heat loads that could be met by small gas furnaces.

(3) Projections of the numbers of people in each age group in future years

are used to project changes in the distribution of house types.

Lastly, with regard to 

### th!? utility impact analysis. Lone Star Gas Company (LSG) and EEl suggested that the utility analysis examine the impact



### on gas, as wellas electric, utilities. (LSG, No. 11, 

### at 6; 

### EEl, No. 20. at 6).



### No direct analysis 

### ofgas utilities was performed, butimp;;lcts on residential gas sales were estimated. The Depa.\'tment believes that this is adequate 

### to asSess the gas utility impacts from standards on small gas

. furriaces that are intended for residential use, since the bulk ofthese impacts should be on future gasutility residential sales. Nevertheless,the Department welcomes detailed information. and data from persons or organizations who believe tbat DOE has underestimated the likely impacts on gas utilities.

Also, two utilities suggested that results obtained for a 

### region may differ greatly from results obtained for each separate utility system within a region. (Ailegheny Power Sysfem (APS). No. 13, at 2; 

### and. LSG, No. 11; 

### at 6).

.

For the small gas furnace analysis, it



### was the Department's intention to capture as much ofthe regional variations as possible. LBlr-REM used regiomtl disaggregation in modeling space conditioning choice in new homes. While resource limitations prevented any further disaggregation pfthe marektplace. DOE is intereSted in

. receiving information and data on any specific regional problems that were overlooked.

. . Seveflll gas clistrlbution companies and gas suppliers. alid the Southern Gas Association (SGA) and AGA endorsed the 71 percent AFUE furnace standard

. over the 78 percent AFUE. They cited various reasons for their preference for the lower efficiency. the predominant

onebeing the impact on gas utilities of reduced load**th~t ~ould**  

### result from a78 percent standardo!S Comments in favor of

### the 78 

### percent. AFUE werereceived from the Gas Appliance Manufacturers Association and the Edison Electric Institute. (G.i\MA, No. 23, 

### at 1); 

### (EEl, No. 20, 

### at 2). Three comments encouraging a thorough analysis 

### ofall factors before a decision is made were submitted by the Natural Resources Defense Council, the New York StateEnergy Office, and the American Council for an EnergyEfficient Economy (ACEEE). 

### (NRDC. No. 19. 

### at 6-8; 

### NYSEO. No. 32. 

### at 7-8; 

### ACEEE, Testimony).

Several comments favored 

## DOE's approach ofconsidering

## tv.ro standards case's. 71 

### pertent and 78 percent, since efficiencies between 71 

### and 78 percent

are not well-defined in terms ofinherent design options. (PING,No. 

### 3, at 3; 

### Peo.G., No, 6. 

### at 1; 

### FNGA, No. 14, 

### at 1; 

### ENTEX, No. 15, at 2; 

### AGA. No. 24. 

### at 7; and SGA, No. 26, at 2).



### Comments requesting consideration of

a range ofefficiencies between 71 and 78 percent were received from Southern Company Services Inc. (SeS). 

### (SCS, No. 7, 

### at 1).



### While the Department still believes that 71 

### percent and 78 

### percent AFUE are the meaningful candidate levels. an analysis at 74 

### percent AFUE was also conducted,

The EdisonElectric Institute suggested that the 78 percent AFUE level should be the base case or "default level" unless DOEjustifies reducing it

## to 71 

### percent. (EEl, 

### No. 20, at 3). 

### The New York State Energy 

### Office stated that DOE is 

### required to investigate maximum technical feasibility efficiency levels for small furnaces and that while pulse combustion and heat exchangers are not


### on the list ofdesign options to be

Name Assigned Comment abbreviation No.

Oklahoma Natural Gas Co

,.......: OKNG ,."".".•""" 2. Piedmont Natura: Gas Co•• Inc

.. PING "'"'''''''''''''' 3. Public SelVice Co. of N.C. Inc

... Pub.5

.................. 5. Peoples Gas System Inc •..•.•••...• Peo.G••...•........•... 6. Southern C.ompanies Services 

### ses

..., .........., ..".. 7. Inc. Ala.bama Gas Corp

...................... AIG

...,,,.......:........ B. East Tennessee Natural Gas ETNG.................. 9.

Co. Lone Star G.8S Co

........................ LSG

.."

................. 1\. ANR Pipeline Co

....:,::

.................. ANR

.......:

............ 12 and Fioria. Natural Gas

### A~socia. FNGA

..................

### 14~4.

.. liori Er.ergy Comintttee.**Ente~**..........,......................c

......:;'" ENTEK............... 15. Virginia Natural. Gas.lnc

....."

....... VANG

................. 16. Gas Appliance Manufacture"s GAMA

................. 23

..

Assoclalion. ·The American Gas Associalion. AGA

.................... 24. Southem Gas Association

.......... SGA

.................... 25. Arkansas Louisiana Gas Co

....... ALG,

.................... 26.

### ~~~d**g~~~n~a~,~ri~·i·G~~**

# ..**~g~ ;;-~d·G·::::::::** **~~:**

Co, Sierra Power Co

........................... Sf' Co.

................ 33.

.Northern Illinois Gas

.................... NIGas

................. 36. Nashville Gas Co

......................... NG Co

................ 37.

i.The gas utility companies and associations responding included: 

### examined, they should be. (r-.TYSEO. No. 32, 

### at 7-8).

.



### The "max-tech" level 

### of efficiency for small furn'aces is 96 percent 

### AFUE; therefore. it 

### cannot be a candidate standard level for this rulemaking, because it 

### falls outside 

### of the range for consideration setby section 32S{f)(1)(B)[ii)of

## the Act.

Only one comment addressed test procedure issues. York International (York) pointed out that "the measure of efficiency for furnaces under the FTC appliance labeling requirements is 

### the annual fuel utilization efficiency (AFUE) and not th!? Energy Factor." (York, No.1,
at 1). 

### The Actis explicitunder the definition of "efficiency descriptor"

.stating "forfurnaces and direct heating equipment. (it 

### is) annual fuel utilizatimi efficiency." Section 321 

### (a)(22)(A). The confusion in this matterhas reference to section

## In ofDOE's advance notice. in

. which outputs of the engineering analysis are listed as Energy Efficiency (expressed as the DOE energy factor) with a footnote stating "the energy factor is a measure 

### ofenergy efficiency derived from the DOE test procedure for that product." The problemis that the DOE testprocedure for furnaces includes an additional efficiency descriptor called Energy FactorwhIch includes the eleQtric energy in the calcuiation. This potential misinterpretation, that energy efficiency refers to the "Energy Factor," is 

### being clarified by stating that energy efficiency refers to 

### AFuE.

.

MaintenaIlceExpense. Several gas companies referenped the need to considerhigher maintenance expense for the 78 

### percent AFUE furnace standard. (A1G, No. S, 

### at 6; LSG. No. 11.


### at 4&8; 

### FNGA. No. 14.

# at 4; 

### VANG; Noo 16, 

### at 7: 

### ALG. No. 26, at 2; 

### and NGCo., No. 37, 

### at 2). 

### Since this efficiency level would require the use ofa fan motor and its associated controls for induced draft. the maintenance expense was inchlded in the Engineering Analysis.



### HigherFjrst Costs/Installation Costs. Several ofthe gas companies and. associations.cited increased installation
expenses due to specialventing requirements as being riecessary to considerin the engineering and' economic analyses for the 78 percent. AFUE standardfor induced draft type furnaces. (OKNG, No.2, at 2; ETNG, No. 9, at 4 and

### 5; LSG; No. 

### it, at 8; ANR. No. 12, at 2; FNGA, 

## No. 14. at 2; VANG, No. 16, at

## 5; AGA, No. 24, at 12; SGA, No. 25,
at4; UCG. No. 27. at3; SCE&G. No. 28,
at 3; 

### andNG Co., No. 37. 

### at 2): Generally, these comments addressed problems that would arise when a furnace and a water heater are installed with a common vent system.Federal Register / Vol. 53, No. 232 / Friday, December 2. 1988 . / Proposed Rules 49PT5

These additional expenditures were cited as needed since a separate vent may be required to vent an induced draft type furnace. Also, the existing vent used for the waterheater would then be oversized and possibly require a revised water heater vent or insulation of the vent to prevent condensation, Particular problems were cited for multifamily structures and accessibility to the existing venting for retrofit. GAMA disagreed

, stating that venting of induced draft gas furnaces in multifamily housing would cost less, not more, than the atmospheric type of vent systems. (GAMA, No. 23, at 4). GAMA also encouraged DOE to examine further this comparative cost issue

. This issue had not been addressed explicitly by LBL and additional analysis is planned before DOE will issue a final rule. Regional Analysis. Several gas companies and their associations submitted comments suggesting that a regional analysis be included that accounts for the reduced heat load and energy savings that would prevail for the higher efficiency

, i.e., 78 percent AFUE, in milder climates. (PING, No. 3, at 2; Peo.G

., No. 6, at 2; AIG, No. 8, at 3&7; FNGA, No. 14, at 4; AGA, No. 24, at 14; SGA, No. 26, at 2; and SCE&G, No. 28, at 2). A national estimate was made using LBL-REM. DOE recognizes that thereare regional differences in climate. LBLREM includes a heat load calculation for new houses in each state that is used-for projecting market shares of small gas furnaces

. The average unit energy consumption of small gas furnaces reflects the average climate where small gas furnaces are located

, not a national population

-based climate. In addition

, DOE performed a sensitivity analysis on the LCC analysis using regional energy prices and usage rates. See Technical Support Document, section 6

.2. Because of the impact that usage and prices can have on the results, DOE requests comments on this issue. Vent Installation-Ability to Use Common Venting. Many of the gas companies and their associations contended that a major issue to be considered in the 78 percent AFTJE furnace (an induced draft type system) are code requirements which would prohibit the installation of this type furnace in a common vent with an atmospheric type burner system. This would be particularly important in the replacement market, (PING, No. 3, at 3; OKNG, No. 2, at 2; Peo.G, No. 6, at 2; A1G. No. 8, at 4; FNGA, No. 14, at.3; YANG. No. 16, at 7; SGA, No. 25, at 3; ALG, No. 26, at 2; NIGAS, No. 36, at 2). The National Fuel Gas Code (ANSI payback and economic analysis for mild Standard Z223.1), which is the major climates, such as those with less than installation code for gas-fueled furnaces, 2500 degree days (SCE&G, No. 28, at 2). addresses mechanical draft systems as Utility Impact Analysis-Fuel follows: "Vent connection serving Switching Impact. Several gas utility equipment vented by natural-draft shall companies commented that the utility not be connected into any portion of analysis should include costs of all mechanical draft systems operating utilities, not only electric utilities. under positive pressure." This would (OKNG, No. 2, at 3; Peo.G, No. 6, at 2; prohibit an installation of a gas water SCS, No. 7, at 1; A1G, No. 8, at 3 and 7; heater and a gas furnace in a common ETNG, No. 9, at 6; ANR, No. 12, at 3; chimney venting arrangement. The FNGA, No. 14, at 3 and 4; ENTEX, No. operative words in the code are 15, at 2; YANG, No. 16, at 6; ALG, No, "systems operating under positive 18, at 2; AGA, No. 24, at 4-7 and 12; pressure." SGA, No: 25, at 3; UCG, No. 27, at 4; 

### GAMA stated that "over 90 percent of SCE&G, No. 28, at 3; NIGAS, No. 36, at 2; the non-condensing induced draft and NGCo., No. 37, at 2). furnaces and boilers certified by the These companies believe that American Gas Association can be safely probable shifts of gas utility load to common vented with conventional electricity generation should be included atmospheric type gas appliances." in the analysis when considering the (GAMA, No. 23, at 3). GAMA cited a higher 78 percent AFUE levels for small September1985 "White Paper' prepared gas furnaces

. For example

, gas utilities by the American Gas Association could suffer a decreased market share Laboratories

, entitled "Common Vent resulting in"an increased cost of gas per Study of Power and Non Power Vented unit sold, (LSG, No. 11, at 6). Several of Appliances," to substantiate its these companies also pointed out that statement and which LAMA

. believes when load is lost to electric resistance directly contradicts the testimony of heat-particularly baseboard radiant AGA and SGA. GAMA also submitted.a heat-that future conversion to gas list of engineering reports published by would be cost prohibitive

. Gas utilities the AGA Laboratories in the July 1987 also contended that a switch to electric issue of the AGA Laboratories Directory resistance heat with its attendant higher of Certified Appliances. GAMA stated cost of operation will hurt the elderly that the purpose of these reports is to and lower income customers. AGA identify specific induced draft non- stated that the proposed methodology .condensing furnaces that can be should not consider load loss to heat common vented with conventional pumps in assessing the potential load combustion system equipment. GAIti4A loss from-gas utilities when evaluating further stated that AGA's White Paper the shift of gas heating to electric concluded that before allowing common resistance heat, as required by the Act. venting offan orblown assisted (AGA, No. 24, at 4). combustion system appliances with In considering candidate standard draft hood equipped appliances

, code levels, the Department will calculate the authorities are requiring engineering potential load loss of gas utilities to data to show satisfactory performance . - electric resistance heat, and to other Based on this information, DOE heating choices, e

.g., heat pumps. believes that draft induced appliances The South Carolina Electric Company can be

.used safely in a common vent (SCE&G), which supplies both gas and system with atmospheric type (draft electricity to its customers

, favors the hood equipped) water heaters. However, lower 71 percent AFUE standard for there remains a question of the degree of small furnaces

. SCE&G stated that fuel acceptability by local code officials of switching will produce a greater demand draft-induced furnaces using a common for electricity on the company 's electric vent with an atmospheric type water system

, but this will not cause a heater. DOE will examine these issues corresponding increase in KWh sales before issuing a final rule for the small because of the utility 's climate area. furnace standard

. DOE invites (SCE&G, No

. 28, at 3). comments on these issues , especially . Alabama Gas Corp. (A1G, No. 8, at 4) with respect to the acceptance within stated what many other gas utility each State or local- jurisdiction regarding companies also implied-that when a the special testing requirements and gas furnace is not selected

, a gas water AGA engineering reports that are being heater often will not be selected. used. Specific comments that cited statistics Several Comments also suggested that or estimates included the following: a variety of housing types and climates "Seventy-eight percent AFUE would be investigated. SCE&G cited the need lose 20-25 percent of the market to for specialized cases to examine electric resistance"-(OKNG, No. 2, at Federal 

### Register 

## I Vol. 53, No. 232 

## I Friday, December 2, 1983. 

## I Proposed**Rv.~es** 

### 481315

These additional expenditures were cited as needed since H separate vent may be required to vent an induced draft type furnace. Also, the existing
vent used for the waterheater would then be oversized andpossibly require a revised water heater vent or insulation 

### ofthe vent 

### to prevent condensation. Particular problems Were cited for multifamily structures and accessibility
to the existing venting for retrofit. GAMA disagreed, stating that venting 

### of induced draft gas furnaces in multifamily housing would costless. not
more, than the atmospheric type ofvent systems. (GAMA, No. 23, at 4). GAM..I\ also encouragedDOE to examine further this comparativecost issue. This issue had not been addressed explicitly by LBL and additional analysis is planned before DOE will issue a final rule.



### RegionalAnalysis. Several gas· companies and their associations submitted comments suggesting that a regional analysis be included 

### that
accounts for the reduced heat load and
energy savingsthat would prevail for the higher efficiency, i.e., 78 percent AFUE, in milder climates. (pING. No.3,
at 2; Peo.G., No.6, at 2; A1G, No.8, at 3&7; FNGA, No. 14, at 4; AGA, No; 24, at 14; SGA, No. 26. at 2; and SCE&G. No. 28, at 2).

A national estimate was made using LBL-REM. DOErecognizes that there

are regional differences in climate. LBLREM includes a heat load calculation for

new houses in each state that is used-for projecting market shares of small gas furnaces. The average unit energy consumption of small gas furnaces reflects the average climate where small
gas furnaces arelocated, not a national population-based climate.

In addition, DOEperformed a sensitivity analysis on the 

### Lce analysis using regional energy prices and usage rates. 

### See Technical SupportDocument, section 6.2. Because ofthe impact that
usage and prices can have on the results, DOE requests comments on this issue.



### Vent Installation-AbiHtyto Use Common Venting. Many ofthe gas companies and their associations contended that a major issue

### to qe considered in the 78 percent AFUE furnace (an induced draft type system)

are code requirements which would prohibii the installation ofthis type furnace in a common vent with an atmospheric type buruersystem. This would be particularly important in 

### the replacement market. (PING, No.3, at 3; OKNG, No.2, at 2; Pea.G. No.6, at 2; A1G. No.8, at 4; FNGA, No.H, at3; VANG, No. 16, at 7; SGA, No. 25, at 3; ALG, No. 26, at 2; NIGAS, No. 36, at 2). I'i' JIM**1il~'"'!'X** ,. ;z:;:::;:ac

The National Fuel Gas Code 

### (Al"JSI StandardZ223.1). which is the major installation code for gas-fueled furnaces, addresses mechanical draft systems as follows: "Vent connection serving equipment vented bynaturardraft shaH
not be connect€dinto anyportion 

### of mechanical draft systems operating under positive pressure." This 

### would prohibit an installation ofa gas lI'later heater and a gas furnace in a common chimney venting arrangement. The operative words in the code 

### are "systems operating under positive pressure."

GAMA stated that "over 90 percent 

### of the non-condensing induced draft furnaces and boilers certified by the American Gas Association can be safely

common vented with conventional atmospheric type gas appliances." (GAMA, No, 23. at 3). GAMA cited 

### a September1985 "White Paper" prepared by the American Gas Associ!l.tion Laboratories, entitled "Corrunon Vent Study ofPower and NonPower Vented Appliances," to substantiate its
statement and which GAMA believes directly contradicts the testimony of AGA and SGA.GAMA also submitted a list of engineeringreports publishedby the AGA Laboratories in the July 1987 issue ofthe AGA Laboratories Directory ofCertified Appliances. GAMA stated that the purpose ofthese reports is to identify specific induced draft noncondensing furnaces that canbe

common ventedwith conventional combustion system equipment. GAMA further stated that AGA's White Paper concluded thatbefore allowing common venting ofran orblown assillted combustion system appliances with draft hood equipped appliances, code authorities are requiring engineering data to show satisfactoryperformance

..

Based on this information, DOE believes that draft induced appliances

canbe.used safely in a common vent system with atmospheric type (draft hood equipped) waterheaters. However, there remains a question of the degree of acceptability by local code officials of draft-inducedfurnaces using a common vent with an atmospheric type water heater. DOE will examine these issues before issuing a final rule forthe Elmall furnace standard. DOE invites
comments on these issues, especially with respect to the acceptance within each State or localjurisdiction regarding the special testing requirements and AGA engineering reports that arebeing used.

.

Several Comments also suggested that

a variety ofhousing types and climates be investigated. SCE&G cited the need for specialized cases to examine payback and economic analysis for mild climates, such as those with less than 2500 degree days (SCE&G, No. 28, at 2).



### Utility ImpactAnalysis-Fuel Switching Impact. Several gas utility companies commented that the utility analysis should include costs ofall utilities, not only electric utilities. (OKNG, No.2, at 3; Peo.G, No.6, at Z; 8eS, No.7. at 1; A1G, No.8, at 3 

### and 7; ETNG, NO.9. at 

### 13; ANR, 

### No. 12, 

### at 3; FNGA. No. 14, at 3 and 4; ENTEX, No. 15, at 2; VANG, No. 16, at 6; ALG, No. lB, 

### at 2; AGA, No. 24. at 4--7 and 12; SGA, No: 25, at 3; UCG, No. 27. at 4; SCE&G, No. 28, at 3; NiGAS, No. 36, at 2; and NGCo., No. 37, at 2).

These companies believe that probable shifts ofgas 

### utility load to electricity generation should be included in the analysis when considering the higher 78 percent AFUE levels for small
gas fu.rnaces. For example. gas utilities

. could suffer a decreased market share resulting in'an increased cost ofgas per unit sold. [LSG, No. 11. at 6). Several 

### of these companies also pointed out that when load is lost to electric resistance heat-particularlybaseboard radiant heat-thatfuture conversion to gas would be cost prohibitive. Gas utilities also contended that a switch to eJectric resistance heat with its attendant higher'
cost of operation will hurt the elderly and lowerincome customers. AGA stated that the proposed methodology should not consider load loss to heat
pumps in assessing the potential load loss from-gas utilities when evaluating the shift ofgas heating to electric resistance heat, as required by the Act. (AGA, No. 24, at 4).

In considering candidate standard levels. the Department will calculate the potential load loss ofgas utilities to electric resistance heat, and to other heating choices, e.g., heat pumps.

The South Carolina Electric Company (SCE&G). which supplies both gas and eiectricity to its customers, favors the lower 71 percent AFUE standardfor small furnaces. SCE&G stated that fuel switching 

### .will produce a greater demand for electricity on the company's electric system, but this will not cause a corresponding increase in KWh sales because ofthe utility's climate area< (SCE&G, No. 28, at 3).

Alabama Gas Corp. (A1G, No.8, at 4) stated what many other gas utility companies also implied-that when a gas furmice is not seJected, a gas water heater often will notbe selected. Specific comments that cited statistics

or estimates included the following: "Seventy-eight percent AFUE would lose 20-25 percent of the market to electric resistance"-(OKNG, No.2, at

### 48016 Federal Register J. Vol. 53, No.

3); "forty percent of new homes in Florida install electric resistance heat," (FNGA, No. 14, at 3); "although less than 10 percent of dwelling units'priced above $120,000 use electric resistance heat, roughly one-third of the units priced less than $60,000 use electric resistance heat. AGA projections of load loss to gas utilities between the years 1993 and 2000 could be as high as 600 BCF if the 78 percent AFUE level is prescribed." (NG Co., No. 37, at 3). Conversely, EEl stated that DOE's analysis should consider only those households that are both candidates to purchase gas furnaces and candidates to purchase gas supply, since the decision of a builder to choose electric space conditioning may be based on the availability, cost or convenience of electricity and gas, EEi also commented that DOE should modify the utility analysis to include the benefits that will occur from improved gas energy efficiency causing an extension of future gas reserves. (EEI, No. 20, at 5). While improvement in energy efficiency in small gas furnaces would seem to extend future gas reserves, the Department believes that the private individuals' values for those reserves, as expressed in the marketplace, captures fully the benefits to society of any extension of the-reserves' lifetimes: Therefore, no additional benefits to society will be calculated for this potential effect. Sierra Pacific Power (SPC) stated that the analysis should also include gas utilities which would be impacted by. Reduction in fossil fuel usage; input to environmental assessment; change in investment; change in revenue requirements; change in facilities, and change in residential load factors. (SPC, No. 33, at 1). 

### NRDC contended that the furnace standard analysis should consider the likelihood of the Department's implementation of ASHRAE Special Project 53, which would require greater thermal integrity in homes that are heated by electric resistance heat than for those that are heated by gas. The contention was that since this would raise the first-cost of electric resistance heating relative to gas heating, it would "reduce or eliminate fuel switching to electric resistance resulting from furnace standards by reducing the differential costs-both first cost and operating cost-of gas and electric resistance houses." (NRDC, No. 19, at 8-9). The Department accepts this point; however, DOE has no authority to implement a mandatory program, incorporating provisions of ASHRAE Special Project 53, that would apply to non-Federal construction. . 

### Friday, December 2, 1988 1 Proposed Rules

NPDC also suggested that consideration of the small gas furnace standard be done in the context of manufacturers having retooled to meet a 78 percent AFUE standard for gas furnaces greater than 45,000 Btu. Therefore, to produce a 71 percent AFUE unit would require setting up a separate production line which., because of the relatively small numbers of small furnaces produced, could result in higher unit cost than would a 78 percent . standard for small furnaces. (NRDC, No. 19, at 6). The Department's analysis evaluated the, impacts of standards on small gas furnaces in the context of a 78 percent standard in effect on all furnaces greater than 45,00 Btu/ hour input. The NRDC contended, in advocating a 78 percent AFUE small gas furnace standard, that those consumers who are already willing and institutionally able to trade off higher first costs in return for lower operating costs will buy a small gas furnace, even at 71 percent efficiency. NRDC maintained,

It would seem anomalous if a family that was willing to accept, say, a five-year payback on going from resistance heat to gas would not be willing to accept a similar or shorter payback with respect to increasing the efficiency of the gas furnace. We believe the model should reflect this syllogism. (NRDC, No. 19, at 7). This-comment contains implicit assumptions that are not necessarily valid. The payback on the higher efficiency furnace would be similar or shorter only if it had. a less than proportional price increase to reach the higher efficiency. If the price increase for the higher efficiency unit were proportionately more expensive than the value of additional energy saved, then the payback :period would, in fact, be longer.The American Council for an EnergyEfficient Economy testified that claims about shifts in markets should be avoided unless supported by empirical evidence. (ACEEE, Testimony). Future Market. Several gas utilities and associations commented that the future market for gas furnaces of less than 45,000 Btu/h input is considerably, greater than may be projected by the LBL,-REM. (A1.G; No. 8, at-,3-5; VANG, No. 16, at 6; AGA, No. 24, at 9, 11, and 15; SGA, No. 25, at 3; and ANR, No. 34, at 2). The major reasons given to support this assertion were: Thermal integrity of buildings is improving due to either retrofit or to recent changes in model building codes; historical oversizing of gas furnaces has now been recognized and oversizing practices are being - moderated (in some cases as a result of building codes); and, there are increased numbers of multifamily housing units with their smaller sizes and lower heating require: rents. AGA provided data from its Space Heating Efficiency Improvement Program (SHEIP) showing that furnaces are typically 21/2 times oversized, and all new and existing multifamily units could be served by less than 45,000 Btu/h furnaces. (AGA, No. 24, at 10). AGA also commented that the assumption in the proposed methodology that the market for a small gas furnace is the single family house which is undefined by size, heat loss, geographic region, or socioeconomic group is questionable for existing construction, and is an incorrect assumption for new housing built from 1992 and beyond. (AGA, No. 24, at 9). "AGA statistics indicate that average gas consumption for house heating customers declined 27.4 percent from 1973 baseline consumption levels, while the number of house heating customers increased 17 percent." AGA also comments that master meter prohibitions and rehabilitation of existing buildings are greatly expanding the market for the small gas furnace. (AGA, No. 24, at 10). -, Impact of Builder and Developer Decisions; Several of the gas utility companies and their associations stated that DOE's methodology should evaluate builder decision-making regarding type' of heating fuel selected. (PING, Not 3, at 3; OKNG, No.-5, at 2; A1G, No. 8, at 4 and 6; FNGA, No; 14, at, 2; ENTEX, No. 15, at 2; YANG, No: 2, at 4 and 5; AGA,' No. 24; at 11 and 12; SGA, No. 25, at 6; UCG, No. 27, at 3; and ANR, Nos. 12 and 34, at 3). ANR cited an opinion survey that concluded that builders are the decision=makers in selecting 'a heating system for single family residences. The objective of these comments was to show that builders' decisions were based on first cost, and that builders will switch to electric resistance because of the increased cost for the 78 percent AFUE furnace. (ANR, No. 34; at 3). NRDC contends, that no further switch to electric is likely as a, result of the small, gas furnace standard going from 71 to 78 percent AFUE since. first cost is already significant for gas at 71 percent versus electric. EEI stated that if a builder decides not to purchase gas it may be for reasons other than whether the furnace is 71 percent or 78 -percent AFLIE, namely, reasons such as individual metering requirements, interruptible rate requirements, etc. (EEI, No. 20, at 5). Florida Natural Gas has stated that 40 percent of new homes in Florida are presently installed with 

### 4.8616**F~derid** 

### Register 

# I. VoL 53, No. 232 

## I Friday, December 

### 2, 1988 / Proposed Rules**~L!1:Z2!!.~~e '$~~_2**  ..**~~ ~**  w:zz:**T!m::~**
3); "forty percent ofnew homes in Florida 

### install electric resistance heat," (FNGA. No. 14, at 3); "although less than 10 percent ofdwelling units priced above $120.000 use electric resistance heat, roughly one-third

# of the units priced less than $60,000 use electric resistance heat. AGA projections 

### ofload loss to gas utilities between the years 1993 and 2000 could be as high as 600 lBCF 

### if the 78 percent AFUE level is prescribed." (NG Co., No. 37, at 3).

Conversely, EEl statecl thatDOE's analysis should consider onlythose households that are both candidates to purchase gas furnaces and candidates to purchase gas supply, since the decision of a builder to choose electric'space conditioning may be based on the sxailability, cost or**C(lnven~t:1nce** of electricity and gas. EElalso commented 

### that DOE should modify the utility analysis to include the benefits thet 

### will

occur from improved gas energy efficiency causing an extension offuture gas reserves. (EEl, No. 20, at 5). While improvement in**ene~gy** efficiency 

### in small gas furnaces would seem to extend future gas reserves, the

. Department believes tliat the private individuals' values for those reserves, as expressed in the marketplace, captures fully the benefits to society ofany extension ofthe.reserves' lifetimes: Therefore, no additional benefits to society will be calculated forthis ]potential effect.

Sierra Pacific Power (SPC) stated that the analysis should also include gas utilities which would be impactedby: Reduction in fossilfuel usage; input to environmental assessment; change in investment; change inrevenue

. requirements; change in facilities, and change in residential load factors. (SPC, No. 33, at 1).

..

NRDC contended that the furnace standard analysis should consider the likelihood ofthe Department's' implementation ofASHRAE·Special Project 53, which would require greater thermal integrity inhomes that are ' heated by Ellectric resistance heat than for those that are heated by gas. The contention was that since this would raise t.1.e first-cost ofelectric resistance heating relative to gas heating, it would "reduce or eliminate fuel sv.·itching to electric resistance resulting from furnace standards byreducing the difierential costs-both first cost and operating oost-ofgas and electriC resistance houses." (NRDC, No. 19, at 8-9).

.

The Department ar;cepts this point; however, DOE has no authority to implement a mandatory program, incorporating provisions ofASHRAE Special Project 53, that would apply to non-Federal construction. NRDC 

### also suggested that consideration of the small gas furnace standard be done in the context of manufacturers having retooled to meet 

### a 78 percent AFUE standard for gas furnaces greater

### than 45,000 Btu. Therefore. to produce 

### a 71 percent AFUE unit .would require setting 

### up a separate production line 

### which, because 

### of the relatively small numbers of small furnaces produced, could result in higher unit cost than 'would 

### a 78 percen,t standard for small furnaces. (NRDC, No. 19, at 6).

The Department's analysis evaluated the impacts of standards"on small gas furnaces 

### in the context of

### a 78 oercent standard

## in effect 

### on all

### furnac~s greater than 45,00 Btu/hour input.

The NRDC contended, in advocating a 78 percent f\FUE sm1J,ll gas furnace standard, that those consumers who are already willing and institutionally able
to trade 

## Offhigher first costs in return for lower operating costs will buy a small gas furnace, even at 71 percent efficiency. NRDC maintained,

Itwould seem anomalous if a family that

was 1I\rilling to aC,cept, say. a fivecyear payback on going from res.istance heat to gas would not be willing to accept a similar or shorterpayback with respect to increasing the efficiel1cy ofthe gas furnace. We believe the model should reflect this syllogism. (NRDC, No. 19, at 7).

Thiscomm£lnt contains implicit**assumption~** that are not necessarily valid. 

### The payback on the higher efficiency furnace ,";ould be similar or shorter only ifit had.

# aless than proportional price increase to reach the higher efficjency. 

### Ifthe price increase for the higher efficiency unit were proportionately more expensive than the value of additional energy saved, then the payback·period would, in fact, be longer.

The Amencan Council for 

### an**Energy~** EfficientEconomy testified that claims about shifts inmarkets shouldbe avoided unless supported by empirical evidence. (ACEEE, Testimony).



### Future Market. Several gas utilities and associations commented that the future market for gas furnaces ofless than 45,000 Btuthinputis considerably greater than may be projectedby the·· LBI.-REM. (A1G; No. 8,**at.~;** VANG, No. 16, at6; AGA. No; 24, at 9, 11, and 15; SGA, No; 25, at 3; and ANR, No. 34, 

### at 2).

The majorreasons given to support this assertion were: Thermal integrity of buildings is improving due

# to either retrofit or to recent changes in model building codes; historical oversizing of
gas furnaces has now been recognized and oversizing practices are being moderated (in some cases as a result of building codes); and, there are increased numbers of multifamily housing units with their smaller sizes and lower heating requirements. AGA provided data from its Space Heating Efficiency Improvement Program (SHEIP) showing that furnaces .are typically 2

### V2 times oYersized, and all new and existing multifamily units could be served by less 

### than 45,000Btu/h furnaces. (AGA. No. 24, at 10).

AGA also commented that the aesumpticn in the proposed mefhodology that the market for a small
gas furnace is the single family house which is undefined by size, heat loss,**geograph~c** region, or socioeconomic
group 

### is questionable for existing construction. and is an incorrect assumption for new housing built from 1992 and beyond, (AGA, No. 24, at 9).

"AGA statistics indicate that average gas consumption for house heating custom?rs declined 27.4 percent from 1973 baseline consumption levels, while the number 

### ofhouse heating customers increased 17 percent." AGA also
cornments that mastermeter prohibitions an.d rehabilitation of existing buildings are greatly expanding the market for the small gas furnace. (AGA, No. 24, at 10).

,.



### Impact of BuilderandDeveloper Decisions. Several ofthe gas utility companies and their associations stated thatDOE'smethodology should evaluate :builder decision-making regarding typ.e.ofheating fuel selecl.ed. (PING, NOla, 

### .at 3; OKNG, No.-5, at 2; A1G, No.8, at 4 and 6;FNGA, No, 14, at 

### 2; ENTEX, No. 

### 15, at 2; VANG, No.2, at 4 and 5; AGA,. No. 24; at 11 and 12; SGA. No. 25, at 6; UCG, No. 27, at 3; and ANR, Nos. 12 and 34, at 3). ANR cited an opinion survey that concluded that builders are the decisioncmakers in selecHnga heating systemfor single family residences. The objective of these commEHlts was to show thatbuilders' decisions were based on first cost, and that builders will switch to electric resistance because ofthe increased cost for the 78 percent

### AFUE furnace. (ANR, No. 

### 3::1. at 3). 

### NRDC contends.L1.at no

.further switch to electric

# is likely 

### as a ' result ofthe smallgas furnace stcmdard going from 71 

### to 78 percentAFUE; since. first costi.s alre'ady signifiqant for gas at 71 percentversus eli3ctric. EEI stated that 

### ifa builder decides not to purchase
gas it may be for reasons other than whether 

### t.he furnace is 71 percent or 78 ·perceritAFUE. namely, reasons such as individual meterIng requirements, interruptible rate requirements, etc. (EEl, No. 20. at 5). Florida Natural Gas has stated ihat 40 percent ofnew homes in Florida are**p~·esent1y** installed with·

### Federal Register / Vol. 53, No. 232 / Frid^y, December 2. 1983 / Proposed Rules

electric resistance heat. (FN-GA, No. 14, at 3). Comments on future market share have an overlapping consequence to this analysis if the future market share for small gas furnaces is as great as some have predicted. As a result of more thermally efficient homes, and, with less oversizing of furnaces, the principal market share that otherwise would have been 78 percent AFUE (the NAECA standard for furnaces greater than 45,000 Btu/h) would become 71 percent AFUE if the smaller furnace is predominant. One basis of setting standards for furnaces was predicated on the fact that builders determine the type of equipment to be installed and do so on first cost. If the 71 percent AFUE furnace is available, and attains a large share of the future market for small gas furnaces, the less efficient furnace may be used in structures where a greater than 45,000 Btu/h furnace (of 78 percent AFUE) would otherwise have been used. In other words, the purpose of an energy efficiency standard as specified by the Act for the typical gas furnace at 78 percent AFUE would be circumvented by the availability to the builder market of a 71 percent AFUE furnace at lower cost. The more thermally efficient home, coupled with less oversizing, could lead to more small gas furnaces. The builder model that would otherwise have been a somewhat larger than 45,000 Btu/h, 78 percent AFUE furnace could become the less expensive 45,000 Btu/h, 71 percent furnace, in a structure that, because of improved construction (with lower heat loss), could then use the .smaller furnace.
4. Efficiency Levels Analyzed Table 3.4 presents the efficiency levels selected for analysis for 1992. Alternate levels were selected to generate a range of impacts for analysis. The initial level selected, level 3, corresponds to the highest efficiency level provided for in the Act. Standards above 78 percent AFUE were excluded from consideration because the Act specifies that such a standard may not be greater than 78 percent AFUE. Levels 1 and 2 correspond: to efficiencies lower than level 3, with level's being the lowest. level provided for-in the Act. Levels 1 and 2 were analyzed discretely in the Engineering Analysis. Level 3, 78 percent AFUE, was based on engineering level 3, having an intermittent ignition device and induced draft. In addition, the engineering. analysis considered design options, that would result in furnace efficiencies as great as 92 percent AFUE: These more efficient designs, as mentioned above, were not considered for potential standards

, but rather were used as input to the LBL

-REM in order that the energy forecasting analysis would have a complete set of data upon which to make projections.

TABLE 3-4. STANDARD LEVELS ANALYZED

FOR SMALL GAS FURNACES

Standard level AFUE (percent)

i_ .............................. .................................... 2 ..................................................................... 3 ..................................................................... 71
74
78

Payback Period. Table 3.5 presents the payback period for the efficiency levels analyzed

. For both classes

, level I is the only energy conservation standard level in which the additional cost of purchasing a product at this efficiency level will be less than three times the value of the energy savings the consumer will receive during the first year. The payback period for units that meet level 1 efficiency ranges from 2.3 years for a warm air indoor gas furnace to. 2.5 years for a warm air outdoor gas furnace. See Technical Support Document Tables 3.41 and 3.42.

TABLE 3-5. PAYBACK PERIODS OF DESIGN

OPTIONS YEARS FOR GAS FURNACES (LESS THAN 45,000 BTU/HR.)

Standard level

1 ........................................ 2 ........................................ 3 ........................................ Payback

Warm air indoor

2.3 14.4 5.1 2.5

15.6 

### 6.4

Significance of Energy Savings. By the year 2015, the weighted average energy efficiency of new small gas furnaces sold in the absence of standards is projected to be 80.3 percent AFUE. Standards, at standard levels 1 and 3, are expected to increase the average shipment weighted efficiency of-small gas furnaces to between 81.6 and 84.3. percent AFUE, respectively. See Technical Support Document, Table 5.16. However, the aggregate annual energy consumption of small,gas furnaces is projected to increase slightly. This increase in gas consumption for small gas furnaces comes at the expense of larger gas furnaces, heat pumps, and central electrical furnaces. See Technical Support Document, Table 5.18. While standards increase the efficiency and cost of small gas furnaces, the market for small furnaces is projected to increase at the same time. When energy conservation standards are imposed, the periods

Warm air outdoor 

### 4It81 x

LBL-REM projects that over the period 1992-2015, the following increase in energy consumption of small gas furnaces would occur:

Level 1-0.01 Quads Level 2-0.03 Quads Level 3-0.05 Quads
Economic justification-A. Economic Impact on Manufacturers and Consumers. The per unit increased cost to manufacturers to meet the level 3 efficiency ranges from $64 for an indoor gas furnace to $88 for an outdoor gas furnace. See Technical Support Document, Tables 3.24 and 3.25. At that level of efficien :y, the price to the consumer increases $215.10 for indoor gas furnaces and $257.60 for outdoor gas furnaces at level 3. See Technical Support Document, Tables 3.41 and 3.42.
The LBL-REM results indicate that standards at level 3 will result in nearly a five percent improvement in average shipment weighted efficiency when compared to standard level 1. This would result in a negligible drop in life cycle costs. See Technical Support Document, Table 5.16 and Figures 3.11 and 3.12. In the LBhMIM results for small gas furnaces, it was found that standards would cause manufacturers to lose evctn more -money on these furnaces than theyare projected to lose in the base or nostandards case. Iii the base case, manufacturers` returns on equity (ROE) are expected to be -2.02 percent for small furnaces, compared to a base case ROE of a =2.13 percent-under standard level-3. Small gas furnaces tend to have ver low profit margins and thus they contribute little or nothing to a gas furnace tnalufactucer s profitability. DOE believes this is because of marketing considerations, in that manufacturers find it important for, marketing purposes to carry :a complete line of furnace capacities. Thus, manufacturers tend to carry small gas furnaces in their product lines, although many of these firms carry only one or two models. LBL-MIM projects that a standard of either 71, 74, or 78`percent AFUE for small gas furnaces would.result in. slightly fewer shipments, higher product prices, and lower net income and ROE than would occur in the absence of standards. The LBL-MIM predicts at level 3.that a prototypical furnace manufacturer would experience a .001 percent decrease in ROE. See Technical Support Document, Table. 7.23. The sensitivity analysis, however, indicates the gas 

### Federal Regist.er / 

### VoL 53, 

# no. 232 

## I PridDY, December 

### 2. 1983 

## I Proposed 

### Rules 4B317

................,.. -=-s**_~IZ!IZIF ~:JQUUUS** **,,_'''Dl!!'~.'~'''''''''''''''''''''''''** 

### __

''''''''_

electric resistance heat. (FNGA, No. 14,
at 3).

Comments on future market share have an overlapping consequence to this analysis if the future market share for small gas furnaces is as great as some have predicted. As a result ofmore ther:r:rially efficient homes, and, with less oversizing offurnaces, the principal market share that otherwise would have been 78 percent AFUE (the NAECA standard for furnaces greater than 45,000 Btu/h) '\-"(Quld become 71 percent AFUE ifthe smaller furnace is predominant. One basis of setting standards for furnaces was predicated

on the fact that builders determine the type of equipment to be installed and do

so on first cost. 

### Ifthe 71 percent AFUE furnace is available, and attains a large share of the future market for small gas furnaces, the less efficient furnace may be used in structures where a greater than 45.000 8tu/hfurnace (of 78 percent AFUE) would other"\iVisehave been used.

In other words. the purpose ofan energy efficiency standard as specified by the Act for the typical gas furnace at 78 percent AFUE would be

. circumvented by the availability to the builder market ofa 71 percent AFUE furnace at lower cost. The more thermally efficienthome, coupled with less oversizing. could lead to more small
gas furnaces. The builder model that would otherwise have been a somewhat larger than 45.000 Btu/h. 78 percent AFUE furnace could become the less expensive 45,000 Btu/h, 71 percent furnace. iJ) a structure that. because of improved construction (with lowerheat loss). could then use the smallerfurnace.

4. Efficiency Levels Analyzed

Table 3.4 presents the efficiency levels selected for analysis for 1992. Alternate levels were selected to generate a range ofimpacts for**analysi!!~** The initial level selected. level 3. corresponds to the

. highest efficiency level provided for in the Act. Standards above 78 percent i\FUE were excluded from .consideration because the ACt specifies that slich a standard may not be greater than 78 percent AFUE.Levels 1 and 2 . correspond,tei efficiencies lower than

. 'lev!'!.13. wit4levell being,tlJe lowest**levelprovid~d** fodii the Act. Levels 1

and 2 were analyzed c!iscretely 

### iri the Engineering Analysis.

## Level 3. 78

. . percent AFUE, Was based on engineeririg level 3. having an interi:nittent ignition device anll induced draft. In addition. the engineering analysis considered dE:isign options.that would result in furnace efficiencies as great as 92 PercentAFUE. These·more

. efficient designs. as.mentioned above,

were not considered for potential standards. but rather were used as input
to the LBL-REM in order that the energy forecasting analysis would have 

### a complete set ofdata upon which to make projections.

TABLE 3-4. STANDARD LEVELS ANALYZED
FOR SMALL GAS FURNACES

Standard level

i

................................,..,.................................. 2

..........................,........................................... 3

..·
..·
..,..···
......··
..··
..··
..··
........·
..·····
..·
....··
..···
..·
..·1 AFUE (percent)

71 74 78



### Payback Period. Table 3.5 presents the paybackperiod for the efficiency levels analyzed. Forboth class.es. level 1 is the only energy conservation standard level in which the additional cost of purchasing a product at this efficiency level will be less than three times the value ofthe energy savings the

consumer willreceive during the first
year. The payback period for units that
meet level 1 efficiency ranges from 2.3 years for 

### a warm airindoor gas furnace
to 2.5 years for a warm air outdoor gas furnace. 

### See Technical Support Document Tables 3.41 and 3.42.

TABLE 

### 3-5. PAYBACK PERIODS OF DESIGN

OPTIONS YEARS FOR GAS FURNACES (LESS THAN 45,000**~Tu/HR.)**

Payback periods
Standard**feve~** Warm air Warm air indoor outdoor

1

...............................,........ 2,3 2.5 2

......................,..,.............. 14.4 15.6 3

..;..................................... 5.1 6.4



### Significance of EnergySavings. By the
year 2015. the weighted average energy efficiency ofnew small gas furnaces sold in the absence ofstandards is projected to be 80.3 percent AFUE. Standards. at standard levels 1 and 3.

are expected to increase the average shipment weighted efficiency of·small
gas furnaces to between.81.6 and 84.3

. percent AFUE, respectively. 

### See

.. Technical Support Docuillent. Table 5.16. However. the aggregate annual eriergy consumption of small gas furnaces is projected to increase Slightly. This increase in ga:s consumption for small gas furnaces

comes at the expense oflargergas fUrnaGes, heat pumps, and central electrical furnaces. 

### See Technical SUppOI:t Document,-Tabl{,! 5.18. While standards increase the effiCi"ency. and
cost of small gas furnaces, the market for smallfurnaces is projected to increase at the same time. When energy conservation standards are imposed, the LBL-REM projects that over the period 1992-2015, the following increase in
energy consumption of small gas furnaces would occur:
Level 1-0.01 Quads Level 2-0.03 Quads Level 3-0.05 Quads



### Econ.omicJustIfication-A. Economic Impadon lYlanufacturers and Consumers. The per unit increased cost to manufacturers to meet the level 3 efficiency ranges from $64 for an indoor
gas furnace to $88 for an outdoor gas furnace. 

### See Technical Support Document, Tables 3.24 and 3.25.

Atthat level ofefficie"tli!:y. th.e price to the consumerincreases $215.10 for indoor gas furnaces and $257.50 for outdoorgas furnaces at level 3. 

### See Technical SupportDocument, Tables 3.41 and 3.42.

The LBL-REM results indicate that standards at level 3 will result in nearly 

### Ii five percent improvement in average shipment weighted efficiency when compared to standard level 1. This would result in a negligible drop in life cycle costs. 

### See Technical Support Document.'Table 5.16 and Figures 3.11 and 3.12.

.

In the LBlr:MIM results for small gas furnaces, itwas found that standards would cause manufacturers to lose**ev~n** more'money on these furnaces 'than they

are projected to lose in the base 

### or nostandards case. 

### Iri. the base case, manufacturers' returns on equity (ROE)

are-expected 

### tp be -2.02 percent for sI).1all furnaces, compared to 

### a base case ROE ofa -'2.13 perceiitlinder standard level·3. .'

,

Snialt"gas furnaces tend to have vext low profit margins and thus they

. contribute little or nothing to a gas furnace rrianufacturer's profitability. DOE believes this is because of marketing considerations. in that manufacturers find itimportant for marketing purposes to carry'a complete line offurnace capacities. Thus, manufiuihirers tend to carry small gas furnaces in their product lines. although mimy of these firms carry only one or twomodels.

.



### tEL-Mllvf projects that a

### s~andard of either 71, ;;4, or 78'percentAFUE for small gas furnaGes would result in slightly fewer shipments. higher product prices. and lowernet income and ROE than would occurin the absence of standards.

Tpe'LBL-MIM predicts at level 3.that Ii. prototypicaJ furnace manufacturer

.would experience a .001 percent decrease in ROE. 

### See Technical Support Document. Table?23. The sensitivity an1l1ysis. however. indicates the gas

### 48618 Federal Register / Vol. 53, No. 232 /Friday, December 2, 1988 / Proposed Rules

furnace industry results are sensitive to consumer price elasticities and unit variable cost increases. For example, the sensitivity analysis indicates that the effects of standards could be to decrease return-on-equity for small gas furnace manufacturers by nearly 1.2 percent or to raise it by nearly the same amount. However, there is only a one percent chance of either of these sensitivity results occurring. See Technical Support Document, Table 7.25. B. Life Cycle Cost andNet 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 3.41 and 3.42. Also, of the three 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. The NPV analysis indicates that if a standard were adopted at level 3, there would be a net present value of a negative $17 million to consumers. This negative value is due principally to the increase in furnace shipments and a corresponding increase in total gas consumption in the standards cases. See Technical Support Document, Table 5.37. C. Energy Savings. As indicated above, standards will result in an increase of gas consumption for small gas furnaces

. If, however, the marketplace continues to demand changes in efficiency at the same rate as historically, the LBL-REM projects that there would be no savings from standards over the 1992-2015 period. This result occurs because in the base case, the efficiency or SWEF of all new small gas furnaces is projected to exceed the 78 percent AFUE standard by the time it would come into effect. See Technical Support Document, Table 5.30, Reference 10. 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 theexisting utility for performance of small gas furnaces. E. Impact of Lessening Competition. The determination of this factor must be made. by the Attorney General. F. Need to Save Energy. Small gas furnaces use natural gas as their energy source. Nearly seven percent ofthe nation's natural gas consumption is used to operate small gas furnaces, and nearly five percent of that

. seven percent would be saved by standards.for this product at level 3. However, the 

### sensitivity analysis on the LBL-REM indicates that if consumer awareness of and concern with appliance efficiency continues the projected savings would be the same as with level 3 standards. Conclusion. The Department is proposing a 78 percent AFUE standard on small gas furnaces

. A 78 percent AFUE standard for small gas furnaces would result in a significant conservation, of energy, and although the payback is greater than three years, the standard level was found to be economically justified. 

### In addition to producing the maximum unit energy savings of the candidate standards, this standard is beneficial to consumers and manufacturers alike. For consumers , the-78 percent AFUE standard produces the lowest consumer life-cycle cost of the candidate levels. In addition, the initial purchase price increase may be lower than that which has been estimated. This result is possible because the 78 percent AFUE standard on small gas furnaces is the same level of efficiency that the Act imposes on larger gas furnaces, which presently comprise more than 95 percent of furnance sales. Therefore, to the extent that manufacturers can produce these small units on the same production lines, with the same design options that will be used for the larger furnaces

, there may be economics of scale in the production of these units. Small gas furnace manufacturers have strongly supported the 78 percent AFUE standard on-their products. The analysis indicates that such a standard should have relatively little economic impact on them. The uniformity of a 78 percent AFUE standard on small furnaces and on larger units may make the production process simpler for the manufacturers. This occurs because as mentioned above, a uniform standard for all gas furnaces could result in fewer production lines. In comments on the advance notice, several gas utilities contended that a 78 percent AFUE standard on small gas furnaces would cause them to lose market share to electric utilities. This analysis, however

, indicates that such a loss of market share is not a likely result from a 78 percent AFUE standard. The LBL-REM projects that market share. for small gas furnaces is likely to increase as a result of the level 3 standard. 

### One small drawback to the 78 percent AFUE standard on small gas furnaces is that it would eliminate units that may be, in some circumstances

, the most cost-effective for some consumers. This is a result that could possibly occur in some Southern

-tier States

, where the most cost-effective small gas furnace could be one that is less efficient and whose first cost is less than the minimum LCC unit. This less efficient unit could cost the consumer less to operate, on a LCC basis, if the usage
rate is extremely low. With low usage it is possible that any increase in purchase price may not be matched by reductions in annual operating costs. Nevertheless, while this is a possible outcome for some purchasers in some areas, the Department believes that such effects, should they occur at all, would be limited.


### c. Television Sets

1. Classes

In accordance with the Act, the Department is considering the establishment of an energy conservation standard for television sets, to become effective no earlier than January 1, 1.P92. The advance notice proposed two classes of television sets, color and monochrome (black and white) to be evaluated for separate levels of efficiency. DOE identified eight design options and requested data on power demand characteristics. The two classes are distinguishes;, by the ability of one to reproduce images in color, a performance-related feature that affects utility and efficiency. Color television sets usually consume more energy than comparable monochrome television sets, because of the use of multiple electron guns. For this reason

, energy efficiency levels achieved by monochrome television sets are not achievable in color television sets. Since color television sets and monochrome television sets offer distinct differences in utility to the

consumer, DOE is specifying separate classes for color and monochrome television sets. Certain features on television sets, such as remote control and stereo components
, provide utility to the consumer and may affect -energy consumption. Although such characteristics typically would require the establishment of separate classes for television sets with such features, the Department was unable to analyze these features separately and, hence, is not establishing separate classes for them 

### 2. Design Options
The following is a list of design options that were examined for both color and black and white television
sets: (A) Remote control. (B) Electronic tuning. [C) Automatic color control. (D) Vertical interval reference. (E) Brightness sensor. 

### 48818 Federal 

### Register 

## I Vol. 53, No. 2.32 !Friday, December 2, 1988 

## I Proposed Rules

::::: Sll!<Ji:az::Gi(4tU**!!i!i;eq~~**


### furnace industry results are sensitive to

consumerprice elasticities and unit variable cost increases. For example, the sensitivity analysis indicates that the effects of standards could be to decrease return-an-equity for small gas furnace manufacturers bynearly 1.2 

### percent or to raise it 

### by nearly the same amount. However, there is only a one percent chance ofeitherofthese sensitivity results occurring. 

### See Technical Support Document, Table 7.25.



### B. 

### Life Cycle Cost andNetPresent Value. The Lee 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 3.41 

### and 3.42. 

### Also, ofthe three 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 ofthe decreasing life cycle costs.

The NPV analysis indicates that ifa standard were adopted at level 3, there would be a net present value ofa negative $17 

### million to consumers. This negative value is due principally to the increase in furnace shipments and a corresponding increase in total gas consumption in the standards cases. 

### See Technical Support Document, Table 5.37.



### C. 

### EnergySavhlgs. As indicated above, standards 

### 'will result in an increase ofgas consumption for small gas furnaces. 

### If,however, the marketplace continues to demand changes in efficiency at the same rate as historically, the LBL-REM projects that there would be no savings from standards over the 1992-2015

### period. This result occurs because in the base
case, the efficiency or SWEF ofall new small gas furnaces is projected to exceed the 78 percent AFUE standard by the time it would come into effect. 

### See Technical SupportDocument, Table 5.30, Reference 10.

D. 

### Lessening ofUtility orPerformance of

Products. As indicated above, DOE established classes ofproducts in order
to assure that the standards analyzed would notlessen the eXisting utility for performance ofsmall gas furnaces.

E. 

### Impact of Lessening Competition. The determination ofthis factor must be made. by the Attorney General.

F. 

### Need to SaveEnergy. Small gas fUl;,naces use natural gas as their energy

source. Nearly sevenpercent ofthe nation's natural gasconsumptionis used
to operate small gas furnaces, and

. nearly five percent ofthatseven percent would be savedby standardsfor this product at level 3. However, the sensitivity analysis on the LBL-REM indicates that ifconsumer awareness of and concern with appliance effIciency continues the projected savings would be the same as with level 3 standards.



### Conclusion. The DeDartment is proposing a 78 percent AFUE standard

on small gas furnaces. 

### A78 percent AFUE standard for small gas furnaces would result in a significant conservation ofenergy, and although t.1e payback is greater than three years, the standard level waS found to be economically justified.

In addition to producing the maximum unit energy savings of the candidate standards, this standard is beneficial to

consumers and manufacturers alike.

For consumers, the-78 percent AFUE standard produces the lowest consumer life-cycle cost ofthe candidate levels. In addition, the initial purchase price increase may be lower than that which has been estimated. This result is possible because the 78 percent AFUE standard on small gas furnaces is the

same level ofefficiency that the Act imposes on larger gas furnaces, which presently comprise more than 95 percent offurnance sales. Therefore, to the
extent that manufacturers can produce these small units on the same production lines, with the same design options that will be used for the larger furnaces, there may be economics of scale in the production ofthese units.

Small gas furnace manufacturers have strongly supported the 78 percentAFUE standard on·theirproducts. The analysis indicates that such a standard should have relatively litHe economic impact on them. The uniformity ofa 78 percent AFUE standard on small furnaces and

on larger units may make the production process simplerfor the manufacturers. This occurs because as mentioned above, a uniform standardfor all gas furnaces couldresult in fewer productionlines.

In 

### comments on the advance notice, severalgas utilities contended that a 78 percentAFUE standard on small gas furnaces would cause them to lose market share to electricutilities. This analysis, however, indicates that such a loss ofmarket share is not a likelyresult from a 78 percentAFUE standard. The LBL--REM projects that market share for small gas furnaces is likely

# to increase

as a result ofthe levelS standard.

One smalldrawback to the 76 percent AFUE standard on small gas furnaces is that it would eliminate units that may be, in some circumstances, the most cost,effective for some consumers. This is a result that could possibly occur in

some Southern-tillr States, where the
most cost-effective small gas furnace could be onethat is less efficient and whose first cost is less than the minimum Lee unit. This less efficient unit could cost the consumer less to operate, on a Lee basis, 

### ifthe usage rate is extremely low. With low usage it 

### is possible that any increase in purchase price may not be matched by 

### reductions in annual operating costs. Nevertheless. while this is a possible outcome for

some purchasers in 

### some areas, the Depaitment believes that such effects, should they occur at all. would be limited.



### c. Television Sets

1. Classes

In accordance with the Act, the Departmentis considering the establishment of an energy conservHtion standard for television sets, to become effective no earlier than January 1,1992. The advance notice proposed two \ classes of television sets, color and monochrome (black and white) to be evaluatedfor separate levels of efficiency. DOE identified eight design options and requested data on power demand characteristics.

The two classes are distinguishe4 by the ability ofone to reproduce images in

. color, a performance-relatedfeature that affects utility and efficiency.

Color television sets usually consume

more energy than comparable monochrome television sets, because of the use ofmultiple electron guns. For this reason, energy efficiency levels achievedby monochrome television sets

are not achievable in color television
sets. Since color television sets and monochrome television sets offer distinct differences inutility to the
consumer, DOE is specifying separate classes for color and monochrome television sets.

Certainfeatures on television sets, such as remote control and stereo components, provide utility to nle

consumer andmay affect·energy consumption. Although such characteristics typIcally would require the establishment of separate classes for television sets with such features, the Department was unable to analyze these features separately and, hence, is not establishing separate classes for them.

2. Design Options

The follo\\ing is a list ofdesign options thatwere examinedfor both color andblack and white television
sets:

(A) Remote control. (B) Electronic tuning. (C) Automatic color control. £DJ Vertical interval reference. [E) Brightness sensor.

### Federal Register f Vol. 53. No. 222 / Fr dl;v De ,.er: ber 2. :988 / Proposed Rules ii;d. 9

(F) Voltage regulating power source, (G) Display device. (H) One-gun tube.

3. Comments on the Advance Notice of Proposed Rulemaking

Three comments addressed specifically the issue of standards for television sets; these were offered by one manufacturer, one manufacturers' association

, and one conservation group. Thompson Consumer Electronics,Inc. (Thompson), manufacturermarketing company for Radio Corporation of America (RCA) and General Electric (GE) brand television
sets, opposed the establishment of energy standards for television sets. Thompson claimed that the technological advancement of solid state electronics in replacing tubes had extensively increased the energy efficiency of television sets. (Thompson, No. 4. at 2). The company stated further that its research revealed an incremental improvement of only 5-48 kilowatt hours (Kwh) per year based on the standard operating time of 2200 hours per year. (Thompson

, No. 4, at 3). These claims were supported by the Consumer Electronics Group of the Electronic Industries Association (EIA), an industry trade association representing television manufacturers, (EIA, No. 21, at 2).
Additional comments contended that manufacturers prefer to decrease energy use because of the adverse effects on reliability and performance that can be caused by the excess heat generated by inefficient electronics . (Thompson, No. 4, at 3 ; and ETA, No. 21, at 3). NRDC supported the establishment of standards for television sets and maintained that a significant conservation potential exists for this product. (NRDC, No. 19, at 3). NRDC suggested that the list of design optionsbe left open to allow for new and costeffective energy efficient technologies. One of those recommended was based on the observed, variation in power requirement between a 40-inch color set of 190 watts and a four inch monochrome portable of 3.6 watts, It was, suggested that even allowing for color versus black and white difference, the

. 10

-fold decrease in size inferred soe technology of portability which could be employed in larger sets. (NRDC, No. 19, at 4). DOE has reviewed this comment and does

. not find a basis for the improvement potential suggested by NRDC

. Therefore, the Department rejects NRDC's inference of improvement potential. NRDC expressed the expectation that the Department would issue a standard for television sets as long as at least one of the design options analyzed has a favorable life cycle cost and meets the other impact criteria under which DOE is operating. (NRDC, No. 19, at 5). ETA submitted that television sets no longer use significant amounts of energy and are "covered products" because of historical data obtained when tubes were used primarily in the circuits. (EIA,No. 21, at 2). EIA also commented thattelevision sets are not similar to any other covered product. In addition, EIA claimed that standards could retard development of new television set designs. Specifically, EIA stated that standards would cause manufacturers to reallocate funds presently being used to support research on high-definition television (HDTV), research that is being coordinated by the Federal Communications Commission. (EIA, No. 21, at 3). ELA. and Thompson discussed the eight proposed design options. 1. Remote control is seen as a consumer utility using five watts or less. Statistics were provided showing that 68 percent of color sets sold in 1987 included remote control (EIA, No. 21, at 4). It was also noted that not all remote controls have the same features, thereby affecting power requirements (Thompson, No. 4, at 6). Furthermore, EIA indicated that while manufacturers are moving toward use of more energy consumptive remote control devices, such devices will result in a more efficient television set in the playing mode. EIA did not provide a specific example of how this condition could occur. (EIA, No. 21, at 4). 2. Electronic tuning is considered to have negligible power requirements. (EIA, No. 4, at 6). 3. Automatic color control is described as a feature which does not use energy and is a component of the picture stabilization system. (Thompson, No. 4, at 6; and EIA, No. 21, at 5). 4. Vertical Internal Reference (VIR) is no longer in production according to these comments . (Thompson, No. 4, at 6; and EIA, No. 21, at 5). 5. Brightness sensor is seen as an energy saver by EI-A

, while Thompson points out that this device performs the same function available to the consumer using the picture controls. Both comments agree that this device uses no
power. (EIA, No. 21

, at 5; and Thompson, No. 4, at 6). 6. Voltage regulating power source contributes measurably to the energy consumption of television sets depending on the type of power supply. (Thompson

, No. 4, at 7). It was noted by EIA that transformers have become obsolete with the advent of solid-state :`. voltage regulators. The ability to increase the efficiency of the solid-state components shows little potential (EIA, No. 21, at 5). 7. The cathode ray tube is seen by Thompson and EIA as the only efficient and reliable display device known for use in direct view sets . (Thompson, No

. 4 at 7; and EIA

, No. 21

, at 5). The concept of Liquid Crystal Display (LCD) is functional in small sets but very restrictive and unreliable in larger sets (EIA, No. 21, at 5). 8. One-gun tube color television sets have been demonstrated as a prototype; however, its enormous cost and poor quality picture have placed serious limitations on its commercial feasibility, according to EIA. (EIA; No. 21, at 6).
4. Efficiency Levels Analyzed Table 3.6 presents the efficiency levels selected for analysis for 1992. Alternate levels were selected to generate a range of impacts for analysis

. The initial level selected, level 3, corresponds to thehighest efficiency level, i.e., the "maxtech" level, identified in the engineering analysis. It was felt that manufacturers could produce products at this efficiency, and that these products would not have any reliability problems.Level 2 corresponds to the minimum lifecycle cost point. Level 1 corresponds to efficiency lower than that of level 2. These levels were analyzed discretely in the Engineering Analysis.

TABLE 3-6.-Standard Levels Analyzed for Television Sets (KWH /YR.)

Standard level Monochrome Standard

Color

4' ................... NA.................. ...I Standby power no greater than 2 W/h 

### 2 ................... 47...................... 

### 7.3 5 + 3

### e 3 ................... 45...................... 6.9 S + 42

S is screen size (diagonal) in inches.

Note that standard level 1 is not a performance standard. DOE's measures of energy consumption by television sets are receiver energy efficiency factor and annual energy consumption, both annual energy use' measures.. Standby power deals with energy consumption of the .unit for that period when the unit is not in operation

. Section 321 (a)(6)(A) of the Act prescribes. that a performance standard 'prescribes a minimum level of energy efficiency

, or a maximum quantity of energy use." DOE's analysis assumed that for level 1, the baseline unit was unchanged except for the standby power. However, a limitation on standby power does not necessarily have an effect on the energy efficiency or energy 

### Federal Register 

## I Vol. 53, No. 222 / Friday, De':sJ:;ber 2. 1988 

## I Proposed 

### p:ules**~19 ~~"mZ(W44**  s::;:;**e::u.;;.a:;:,~).~ 5J:z:r~g#bcas:;;;:e;a;**  _ ......**~{..1l!P':='~~'~~"'<~"~-~~9';W'.,Jdtl'1s:wa:t:it",·-..aa.i»J~~** (F) 

### Voltage regulating power source. (GJ 

### Display device. (H) 

### One-gun tube.

3. 

### Comments on the Advance Notice of Proposed Rulemaking

Three comments addressed specifically the issue ofstandards 

### for television sets; these were offered by



### one manufacturer, one manufacturers' association. and one conservation group. Thompson Consumer Electronics, Inc. (Thompson), manufacturermarketing company for Radio Corporation ofAmerica (RCA) and Genera! Electric (GEJ brand television sets, opposed the establishment of energy standards for television sets. Thompson claimed that the technological advancement ofsolid
state electronics in'reple,cing tubes had extensively increased the energy' efficiency oftelevision sets. (Thompson. No.4, at 2). The company stated furtIler that its research revealed an incrementa! improvement ofonly 5-48 

### kilowatt hours (Kwh) per yearbased on the standard operating time of2200 hours peryear. (Thompson, No.4. at 3). 

### These claims were supported by the Consumer Electronics Group 

### ofthe Electronic Industries Association (ElA),

an industry trade association representing television manufacturers. (ElA. No. 21. 

### at 2).



### Additional comments contended that manufacturers prefer to decrease energy

use because ofthe adverse effects on reliability and performance that can be caused by the excess heat generated by inefficient electronics. (Thompson, No. 4. 

### at 3; 

### and EIA, No. 21, at 3).



### NRDC supported the establishment of standards for television sets and maintained that a significant conservation potential exists for this product. (NRDC, No. 19. at 3). 

### NRDC suggested that the list of.design options be left open to allow for: new**~md** 

### costeffective energy effiQient technologies. One ofthose recommended was based

on the observedvariation in power requirement betweena**~O~inch** 

### Golor set of 190 watts and 

### a four inch monochrome'portable.of 3.6 

### watts. It



### was. suggested

### t11at eVi'!nallQwing for color versus black and white difference. .the 10-fold decre.as·e in size inferred**~ome** 

### teclmology

# otportability which coulq be employed in larger sets. (NRDC, No. 19. 

# at 4). 

### DOE has revie,Ned this comment and (loes not find a basis for the improvement**potentia~** 

### suggested by NRDC. Therefore, the Department**reject~** 

### NRDC's inference 

### of improvement potential.

NRDC expressed the expectation that the Department would issue a standard for television sets as long as at least one ofthe design. options anaI:;'zed has a favorable life cycle cost and meets the other impact criteria under whichDOE is operating. (NRDC, No. 19, 

### at 5).



### ErA submitted that television sets no longer use significant amounts of energy and are "covered products" because of historical data obtained when tubes

were used primarily in the circuits. (ElA. No. 21, 

### at 2). EIA 

### also commented that. television sets are not similar to any other covered product. In addition, ElA 

### claimed that standards could retard development 

### ofnew television set designs. Specifically, EIAstated that standards would cause manufacturers to reallocate funds presently being used to support research on high-definition television [HDTV). research t.'at is being coordinatedby the Federal Communications Commission. (ElA, No. 21, at 3).

EIA 

### and Thompson discussed the eight proposed design options.



### 1. Remote controlis seen as a

consumer utility using five watts or less. Statistics were provided showing that 63 

### percent ofcolor sets sold in 1987 included remote control (EIA. No. 21, at 4). It 

### was also noted that not all remote controls have the same features. thereby affecting power requirements (Thompson, No.4, at 6). 

### Furthermore, EIA indicated that while manufacturers'

are moving towarduse ofmore energy consumptive remote control devices, such devices will result in a more efficient television set in the playing mode. EIA did not provide a 

### specific example ofhow this condition could

occur. (EIA. No. 21. at 4).



### 2. Electmllic tuning is considered to have negligible power requirements. (EIA, 

### No.4, at 6).



### 3. Automaticcolorcontrolis described as a feature which does not

use energy and is a 

### component ofthe picture stabilization system. (Thompson,**No.~.** 

### at 6; and EIA. No. 21, at 5).



### 4. VerticalInternalReference (VIR) is

no longer in production**~ccording** 

### to these comments. (Thompson. No.4. at 6; and EIA, No. 21. 

### at 5).

.5. 

### Brightness sensoris seen as an energy saverby EIA, while Thompson points out that this device performs the

same function available to the consumer using the picture controls. Both COmments agree that this device uses no power. (EIA. No. 21, at 5; 

### and Thompson, No

.. 4. 

### at 6).

. .



### 6. Voltage regulatingpowersource contributes measurably 

## to the energy consumption oftelevisionsetll '

.. 

### dependingon the type ofpower supply.**(T~ompson.** 

### No.4, at 7). It

### was noted by EIA that trarisformers havebl:lconie obsolete with the advent of solid-state voltage regulators. The ability 

### tei increase the efficiencv of 

### tha solid-state components shows little potential [ElA, 

### No. 21, at 5).



### 7. The cathode ray tube is seen by 

### Thompson and EIA as the only efficient andreliable display device known for

use in 

### direct view sets. (Thompson, No. 4 

### at 7; 

### and EIA, 

### No. 21, at 5). 

### The concept ofLiquid Crystal Display (LCD} 

### is functional in small sets butvery restrictive and unreliable in larger sets (EIA, No. 21, at 5).



### 8. One-gun tube color television sets have been demonstrated as a prototype; however, its enormous cost and poor quality picture have placed serious limitations on its commercial feasibility, according to EIA. (EIA, No. 21, at 6).

4. 

### Efficiency Levels Analyzed

Table 3.6 presents the efficiency levels selected for analysis for 1992. Alternate levels were selected to generate a range ofimpacts for analysis. The initial level. selected. level 3, corresponds to the highest efficiency level, i.e., the "maxtech" level, identified in the engineering analysis. It

### was felt that manufacturers could produce products at this efficiency, and that these products would not have any reliability problems. Level 

## zcorresponds to the minimum lifecycle cost point. Levell corresponds to 

### efficiency lower than that oflevelZ. These levels were analyzed discretely in 

### the Engineering Analysis.

TABLE 

### 3-6.-Standard Levels 

### Anat)lzedl
for Television Sets (KWH/YR.)

Standard

level Standard

Monochrome Color

1

................... NA

..................... Standby power no greater than 2 Vl'/h 2

................... 47

...................... 7,3 S 

### + 38 3

................... 45

...................... 6.9 S 

### + 42

S is screen size (diagonal) in inches.



### Note that standardlevel 1 is not a performance standard. DOE's measures ofenergy consumption by television sets

are receiver energy efficiency factor and annual energy consumption. both annual energy use measures

..Standby power deals with energy consumption ofthe unit for that period when the unit is not in openitio!1. Section 321(a)(6)(A) ofthe Act prescribes.that a 

### performance .standard "prescribes a minimum level of energy efficiency.or a maximum qua:ntity of energy**use.~'** 

### DOE's analysis assumed that for levell, the baseline !mit 

### w.as urtchanged except for the standby power.

.

However, a limitation on standby power does notnecessarily have an

.

.effect

# on the energy efficiency or energy

### 48820 Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

consumption as defined by DOE at § 430.22 . While standby power may be limited, changes to the design of the television set can result in more energy being consumed when the unit is on, thereby resulting in more total energy being used. Payback Period Table 3-7 presents the payback period for the efficiency levels analyzed

. For the color class, level 1 is the only energy conservation standard level in which the additional price of purchasing a product at this efficency level will be less than three times the value of the energy savings the consumer will receive during the first year. No standard level for monochrome televisions pays back in less than 3 years. The payback period for units that meet level I efficiency is approximately three years for the color class.

TABLE 3-7.-PAYBACK PERIODS (INYEARS) FOR Two CLASSES OF TELEVISION SETS

Standard level Payback periods

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

2. ............................ ..........
3 ........................................ 19" to 20" Colo;

2.9 3.4 3.7 13" to 14"

monochrome

NA 4.7
11.6

By the year 2015 the weighted average energy consumption of new television sets sold in absence of standards is projected to decline nearly 20 percent, compared to new sets sold in 1987. Significance of Energy Savings, with energy conservation standards imposed, the LBL-REM projects that over the period 1992-2015

, the following savings would be attributable to standards: Level 1-.66 Quads Level 2-.89 Quads Level 3-.73 Quads

See Technical Support Document, Table 5.26

. On the basis of the above, DOE believes that the standards considered for television sets would result in a significant conservation of
energy. Economic Justification-A. Economic Impact on Manufacturers and Consumers

. The per unit increased cost to manufacturers to meet the level 1 efficiency ranges from $0.33 for a 13-inch monochrome set to $2.15 for a 19-20 inch color set. See Technical Support Document

, Tables 3.29 and 3.30. The purchase price to the consumer increases $4.30 for the 19/20-inch color television set. See Technical Support Document, Table 3.43. 

### LBL-MIM projects that television standards would result in ROE essentially unchanged, compared to the base case of no-standards. See Technical Support Document, Table 7.27. 

### The sensitivity analysis also indicates that the television set industry 's ROE is relatively insensitive to standards. DOE believes this results from the proportion of manufacturing costs due to standards that can be passed on to consumers in the form of a higher price and a low consumer demand elasticity with respect to price and operating cost. B. Life Cycle Cost and Net Present Value. The LCC analysis indicates that for each possible standard level, except level 3

, the increase in purchase price would be offset by savings in operating
expenses

. However, the LCC analysis indicates that for color television sets, the savings over the products ' lifetimes would be slight and that for each standard level the savings are less than $5.00. See Technical Support Document, Figure 3.23

. For 13 inch to 14 inch black and white televisions

, the LCC savings over the expected lifetimes of the products are even slighter, as each candidate standard level would save less than $1.00. See Technical Support Document

, Figure 3.24. This indicates that the standard level would not cause any economic burden on the average

consumer. The NPV analysis indicates that if a standard were adopted at level 1, 2, or 3, there would be a net present value of $1 billion from energy savings over the period 1992

-2015. See Technical Support Document

, Table 5.29. C. Energy Savings, As indicated above, the maximum savings attributable to standards would be .73 Quads of electricity. This level would require the reduction of standby power and reduction of screen power, including a more efficient screen display. D. Lessening of Utility or Performance of Products. As indicated above, DOE is required to establish classes of products in order to assure that the standards analyzed would not lessen the existing utility or performance of the regulated appliance

. However, for television sets, the Department was not able to establish classes to assure the utility of the product

. Almost every feature present on a television set that provides utility to the consumer, also affects the product's energy consumption. For example, remote control and stereo sound both provide utility to the consumer and affect energy - consumption

. Therefore

, separate classes would have to be established for each feature

, as well as for those products that have both features and those without either feature, a total of four classes , in order not to lessen the 

### product's utility, However, because of the existence of a number of different features that provide utility but for which DOE has limited data on their energy consumption

, the Department was not able to set separate classes for each. In addition, because the electronics industry is changing so rapidly, DOE believes that it is likely that future utility or performance would be lessened as a result of disincentives caused by standards to investments in energy-using new features. E. Impact of Lessening Competition. The determination of this factor must be made by the Attorney General. F. Need to Save Energy. Television sets use electricityas their energy

source

. Nearly one percent of the nation's electricity powers television sets, nearly 10 percent of that one percent would be saved by standards for this product at level 3. However, the sensitivity analysis on the MI-REM indicates that if consumer awareness of. and concern with, appliance efficiency continues

, the projected savings would be less than three percent of that one percent. G. OtherFactors. Television sets are presently not covered by the Federal Trade Commission (FTC) labeling program. Testing and certification could be an unusual' burden on manufacturers of this product since testing and certification could result in delays in the rapid introduction of new technologies that characterize this industry. For example

, a standard for television sets, involving the diversion of research. and development monies to complying with the standard, could have an impact on the development of high resolution televisions

, which is an effort that is presently being supported by the Federal Communications Commission (FCC). Conclusion. After reviewing the effects that energy conservation standards on television sets would have,the Department is proposing a "nostandard" standard

. The Department proposes that while energy conservation standards for television sets would save a significant amount of energy

, they are not economically justified. DOE believes standards for television sets would have insignificant impacts on consumer life-cycle costs

, .and could harm manufacturers, especially in their ability to introduce new products, i.e., by diverting research and development funds to complying with energy conservation standards

. Any increase in cost to manufacturers due to efficiency testing and certification reporting will reduce the already small LCC savings. Furthermore, the Department is 

### 48820 

### Federal Register 

## i Vol. 53, No. 232 

## I Friday, December 

### Z, 1988 

## I Proposed Rules

iSUtM ::m;:;;z;;;::,**~** mmm 

### * ca"!'"**"'~'f** consumption as defined 

### by DOE at § 430.22. While standbypowermay be limited. changes to the design 

### ofthe television setcanresult

### inmore energy being consumed when the unit is on. thereby resulting in more total energy being used.



### PaybackPeriod. Table 3-7presents the paybackperiod for the efficiency levels analyzed. For

### the colorclass, level 1 

### is the only energy conservation standardlevel in which**t~e** additional price ofpurchasing a product at nils efficency level 

### will be less than three times the value of the energy savings the

consumerwill receive during the first
year. No standardlevel formonochrome televisions pays backin less than 3 years. The paybackperiod for units that
meet level 1 efficiency is approxi.lllately 

### three years for the color

### class.

TABLE 3-7.-PAYSACK PERIODS (IN

YEARS) FOR 

### Two CLASSES OF TELEVISION SETS

Payback periods

Standard level 19" to 20" c-olor 13" to 14"
monochrome

1

........................................ 2

............................;

........... 2

........................................ 2.9 3

..4 3.7 filA 4.7 11.6

By the year 2015 the weighted average

,energy consumption ofnew television
sets sold in absence ofstandards is projected to decline nearly 20 percent, compared to new sets sold in 1937.



### Significance of Energy Savings. With
energy conservation standards imposed, 

### the LBL-REM projects that over the period 1992-2015, the following savings wouldbe attributable to standards:

Level 1-.66 Quads Level 2-.69 Quads 1evel3-.73 Quads



### See Technical Support Document. Table 5.26. On the basis ofthe above, DOE believes that the standards considered for television sets would resultin a significant conservation of energy.



### EconomicJustification-A. Economic Impact on Manufacturers and Consumers. The per unit increased cost to manufacturers to meet the level 1 efficiencyranges from $0.33 for a 13-inch monochrome set to $2.15 for a 19-20 inch color set.

## See Technical Support Document. Tables 3.29 and 3.30.

ThepUrchase price to the conSll..l1ler increases $4.30 for the i9/20-Inch color television set. 

### See Technical Support Document. Table 3.43.

LBL-MIM projects that television standards would result in ROE essentially unchanged, compared to th,e base case 

### ofno-standards. 

### See Technical Support Document, Table 7.27.

The sensitivity analysis also indicates that the television set industry's ROE 

### is relatively insensitive to standards. DOE believes this results from the proportion ofmanufacturing costs due to standards that can be passed on to consumers in the forID of 

### a higher price and a low'

consumer demand elasticity with respect to price and operating cost.



### B.**L~fe** 

### Cycle Cost andNetPresent Value. The LCC analysis indicates thal for each possible standard level, except level 3, the increase in purchase price would be offset by savings in operath'lg
expenses. However, the LCC analysis indicates that for color television sets. the savings over the products' lifetimes would be slight and that for each standardlevel the savings are less than $5.00. See Technical Support Document, Figure 3.23. For 13 inch to 14inch black and white televisions, the LCC savings

over

### the expected lifetimes ofthe products are even slighter. as each candidate standard levelwould save less than $1.00. SeeTechnical Support Document, Figure 3.24. This indicates that tlte standard level would not cause any economic burden on the average

consumer.

The NPV analysis indicates that if a standard were adopted at level 1. 2, 

### or 3, there would be a netpresent value 

### of

### $1 billionfrom energy savings over the period 1992-2015. See Techrlical Support Document. Table 5.29.

C. 

### Energy Savings. As indicated above. the maximmn savings attributable to standards would be .73 Quads ofelectricity. This level would require the reduction ofstandbypower and reduction ofscreenpower. including

a more efficient screen display.



### D. Lessenblg ofUtility orPerformance of

Products. As inilicated above, DOE is required to establish classes ofproducts in order to assure that the standards analyzed would not lessen the existing utility or performance ofthe regulated appliance. However. for television sets, the Department was not able to establish classes to assure the utility 

### of the product. Almost,every feature present on a television set thatprovides utility to the consumer. also affects the product's energy consumption. For example, remote control and stereo sound bothprovide,utility to the

consumer and affect energy consumption. Therefore, separate classes wouid haveto be established for each feature, as well as for those products thathave bothfeatures and those without either feature, a total of four classes, in order not to lessen the product's utility. However, because of the existence 

### ofa number of different features that provide utility 

### but for which DOE has limited data on their
energy consumption. the Department



### was not able to set separate classes for each. In addition. because the electronics industry is changing so rapidly, DOE believes that it is likely that future utility or performance would be lessened as a result ofdisincentives causedby standards to investments in energy-using new features.



### E.lmpactof Lessening Competition. The determination ofthis factor must 

### be made 

### by the Attorney General.



### F. Needto SaveEnergy. Television
sets use electricity'as their energy

source. Nearly one percent of the nation's electricity powers television sets, nearly 10percent ofthat one percent would be savedby standards for this product at level 3. However, the sensitivity analysis on the 

### LBL-REM indicates that 

### ifconsumer awareness of. and concern with, appliance efficiency continues, the projected savings would be less than three percent ofthat one percent.

G. 

### OtherFactors. Television sets are presentlynot covered by the Federal Trade Commission (FTC) labeling
program. Testing and certification couid be an unusual'burden on manufacturers of this product since testing and certification could result in delays in thn rapid in,troduction ofnew technologies that characterize 

### this industry. For example. a standardfor televi.sion sets., involving the diversion ofresearchand developmentmonies to complying l'."1th the standard, could have an impact on the development ofhigh resolution televisions, which is a..!J. effort that is presently being supported by the Federal Communications Commission (FCC).



### Conclusion. Afterreviewing the effects that energy conservation standards on television sets would have, the Departmentis proposing a "nostandard" standard. The**Departme~t** proposes that while energy conservation standards for television sets would save

a significant amount ofenergy. they are not economicallyjustified.

DOE believes standards for television
sets would have insignificant impacts on conSll..l11er life-cycle costs, ,and could harm manufacturers, especially in their ability to introduce new products, i.e., by diverting research and development funds to complying with energy conservation standards. Any increase in.
cost to manufacturers due to efficiency testing and certification reporting

### will reduce the already smallLCC savings.

, Furthermore, the Department is

### Federal Register / Vol. 53, No. 232 / Friday, December 2, 1933 / Proposed Rules 481121

concerned that standards could adversely impact the efforts to develop high resolution televisions, adversely affecting the future utility of the products. For these costs, at standard level 3, the energy savings that the Nation would experience is approximately three-fourths of a Quad over 24 years, i.e., 1992-2015, which would result in minimal LCC savings, i.e., less than $5,00. The individual consumer would save only about one percent of his expected life-cycle costs. Because of the relatively small impacts on energy consumption for television set consumer life=cycle costs, DOE believes that the manufacturer impacts described above are the most noteworthy. Furthermore, because of limited, available data on television sets, the standards analysis was unable to account for the wide variety of television features , Because of that, the Department believes that the establishment of energy conservation standards on television sets would restrict the utility and performance of new products. Finally, as noted earlier, level 1 standard (standby power no greater than 2 watts per hour) was rejected from consideration because it does not meet either of the Department's two measures of television set energy consumption. namely, receiver energy efficiency factor and annual energy consumption. Standby power could be viewed as either a design standard or efficiency standard for a- component. DOE views section 321(a)(6) of the Act as prohibiting standby power requirements for television sets. Weighing the anticipated benefits against the potential costs, the Department is proposing that energy conservation standards for television sets, at each standard level considered, are not economically justified.

IV. Environmental

, Regulatory Impact, -Takings Assessment

, Federalism 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 onEnvironntental Quality regulations implementing the procedural provisions of NEPA (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; and • 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. • The Regulatory Flexibility Act (5 U.S.C. 601 at 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 at 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: refrigerators, refrigerator-freezers, and freezers; small gas furnaces; and television sets. 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,' 9 an agency

10 "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 local government agencies , or geographic regions; or (8) Siguificeni advorse effects on competition. employment. 

### 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 reader is referred to the complete draft "Regulatory Impact Analysis," which will be available for public comment 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 for refrigerators
and small gas furnaces that were ' examined 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 identi'ied 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

investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or expert markets. 

### Federal Regi.ster 

## I Vol. 53, No. 232 

## I Friday, December 2, 1988 

## I Proposed 

### Rules 

### 4sn21

concerned that standards could adversely impact the efforts to develop high resolution tele\-isions. adversely affecting the future utility ofthe products.

For these costs, at standard level 3. the energy savings that the Nation would experience is approximately three-fourths of a Quad over 24 years. i.e., 1992-2015. which would result in minimal LCC savings, i.e., less than $5.00. The individual consumer would

save only about one percent 

### ofhis expected life-cycle costs.

Because ofthe relatively small impacts on energy consumption for television set consumer**life~cycle** costs, DOE believes that the manufacturer impacts described above are 

### the most noteworthy.

Furthermore, because oflimited available data on television sets, the standards analysis 

### ''las unable 

### to accountfor the wide variety of television features. Because of that, the Department believes that the establishment of energy conservation standards on television sets would restrict the utility and performance 

### of

new products.

Finally, as noted earlier, level 1 standard (standbypower no greater than 2 watts perhour) was rejected 

### from consideration because it does 

### I]ot meet either ofthe Department's two measures of television set energy consumption. namely, receiver energy efficiency factor and annual·energy consumption. Standbypower could be viewed as either a design standard or efficiency standard for a'component. DOE views section 321(a)(6) of the Act

### as prohibiting standbypowerrequirements for television sets.

Weighing the anticipated benefits against the potential costs, the Department is proposing that energy conservation standards for television sets, at each standard level considered.

are not economically justified,

IV. Environmental, Regulatory Impact, -Takings Assessment, Federalism 

### and Regulatory Flexibility Reviews

The Department has reviewed today's proposed action inaccol'dance with the Department's oblig!1tions u!lder:

• The National Environmental Policy Act 

### of 1969 (NEPA) (42 U.S.C. 4321 et seq.). the Council onEnvironmental Quality regulations implementing the procedural provisions 

### ofNEPA (40 CFR Part 1500 

### etseq.), and

### the Department's

own NEPA regulations {10 CPR Part 1021):

.. Executive Order 12291 (46 FR 13193, February 19, 1981) which pertains to agency_review ofthe impact ofFederal regulations: and

- ,. Oleo

• Executive Order 12630 (53 

### FR 8859, March 18, 1988) which pertains to agency consideration 

### ofFederal actions that interfere with constitutionally protected property rights.

• Executive Order 12612 (52 FR 41685. October 30, 1987) which pertains to agency consideration ofFederal 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 ofgovernment.

• The Regulatory Flexibility Act (5 U.S.C. 601 

### etseq.) which requires, in part, that an agencyprepare an initial regulatory flexibility analysis for any proposed rule unless itdetermines 

### that the rule 

### will not have a "significant economic impact 011 a substantial number of small entities." Inthe event that such an analysis is notrequired for

a particularrule. the agency must publish a certification and explanation 

### ofthat determLtlation in 

### the Federal Register.



### a. EnvironmentalReview

DOE prepared an Environmental Assessment (EA) 

### on the proposed standards pursuant to the National Environmental Policy Act of 1959, as amended. Pub. L. 91-190, 40 U.S.C_ 4221


### etseq., and the implementing regulations ofthe Council on Environmental Quality (40 CFR Parts 1500 through 1808). The EA addresses the possible incremental emironmental effects attributable to the application of the proposed standards to the design of three types ofcovered products: reD.'igerators, refrigeratm;-freezers. and freezers; small gas furnaces; and television sets.

A Finding ofNo Significant Impact (FONS!) is published in today's Federal Register. TheFONS! concludes L'J.at the proposed standards would result in no significant environmental impacts and that an environmentalimpact statement is not required.

TheRA is part ofthe Technical Support Document and is available at the DOEFreedom ofInformation Reading Roomat the address provided
at 

### the beginning ofthis notice.


### b. R.egulatoryimpact

### Relliew

Executive Order 12291 (46 FR 13193. February 19, 1981) directs that, in proposing a major rule,19 an agency

,0 "Major rule" means any regulation thaI ;s likely to result in: (1) An annual effect on the oconomy-of$100 million or more: (2) A major increase in costs orprices for consumers. individual industries. Federal. State. or local government asencies.or geographicregions; or(3] Significant advorsc effects on competition. employment. perform a regulatory analysis. Such an analysis presents major alternatives 

### to the regulation that could substantially acr-Jeve the same regulatory goal 

### at lower cost. as well as a description 

### of the costs and benefits (including potential netbenefits) of the proposed rule.

DOE has determined that this proposed rule 

### is a "majorrule." Accordingly, a Draft Regulatory Impact Review has been prepared,

The Regulatory**Anal~,sis** is summarized below. This summary focuses on the major alternatives considered in arriving at the proptised approach to improving the energy efficiency ofconsumer products. The readeris referred to the complete draft "RegulatoryImpactAnalysis," which will be available for public comment 

### as indicated at the beginning of this notice. It consists of: (1) A statement ofthe pl'Oblem 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 ofthe impacts ofthe alternatives: and (4) the economic impact 

### ofthe proposed standard.

It should be noted 

### at the outset that

none ofthe alternatives 

### for refrigerators and small gas furnaces that were I eXCJ.lJ1jned saved as much energy 

### as the proposed rule. Also, most 

### ofthe alternatives wouldrequire that enabling legislationbe enacted, since authority to

carrv out those alternatives does not pres"ently exist.

Alternatives for Achieving Consumer Product Energy Conservation

Six major alternatives wereidenUjied by DOE as representingfeasible pohcy alternatives for achieving consumer product ellergy efficiency. These alternatives include:

.. No NewRegulatory 

### Action.

• Informational Action:

-Productlabeling. -Consumer education.

• Prescriptive Standards.

• Financial Incentives:

-Tax credits. -'-Rebates.

• Voluntary Energy Efficiency Targets.

• The Proposed Approach (Performance Standards).

Ea.ch alternative has been evaluated in terms ofits ability to achieve significant energy savings atreasonable

investment. productivity, innovation. or on tho ability ofUnited States-based enterprises to compete witb foreign-based enterprises in domestic

or export markets.

### 48822 Federal Register / Vol, 53, No, 232 / Friday,. December 2. 1988 / Proposed Rules

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 refrigerators, small gas furnaces, or television sets. This is essentially the "base case" for each appliance, in this case, between the years 1992 and 2015 there would be expected energy use of 46.94 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 refrigerators and by two percent for purchasers of ' small gas furnaces. This resulted in no energy savings, with expected consumption equal to that of the base

case. Another method of setting standards would entail requiring that certain design options be used on each product, i.e., prescriptive standards. For refrigerators, this involved assuming a 1.5'inch foam door and 5.0 EER
compressor, and, for small gas furnaces, a power burner. This resulted in energy consumption

, between 1992 and 2015, of 43.14 Quads

, and savings of 3.8 Quads. The net present value, in 1987 dollars, was $8.52 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 almost no change from the base case, i.e., this alternative would save less.than,.01 Quad with a net present value of $20 million

. Consumer rebates however, would save.04 Quad-with a" net present value of$210 million. The consumer rebate program and the tax credit program would return to the participating consumer exactly the same amount of money. However, it is expected'that there will be more participants in the rebate program. Therefore, the rebate program would result in substantially more energy savings than the tax credit program would. The most important difference to the consumer between rebate and tax credit programs is that a rebate can be obtained quickly, whereas a tax credit is delayed until income taxes are filed or a tax refund is provided by the Internal Revenue Service. This means that middle and low income purchasers, who generally have little ready cash to purchase more expensive products, are not so likely to take advantage of the
program as are upper income purchasers. To simulate this impact, DOE has assumed that only 60 percent of consumers would purchase more energy efficient products as a result of the tax credit program. Another financial incentive that was considered was tax credits to manufacturers for the production of energy-efficient refrigerators and small gas furnaces . 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 46.93 Quads with savings equal to .01 Quad, and a net present value equal
to zero. 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 refrigerator and small gas furnaces 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 43.01 Quads, energy savings of 3.93 Quads, and a net present value' o&$8.41 billion; the 10 year delay would result in 

### 44.75 Quads of energy being consumed, 2.19 Quads being saved, and a net. present value of $5.47 billion.. These scenarios assume that there would be universal voluntary adoption of the energy conservation standards by the refrigerator and small gas furnace, . 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 refrigerators

, small gas furnaces, and television sets to total an estimated 41.01 Quads of primary energy over the 1992-2015 time period. Savings would be 5.93 Quads, and the net present value would be an expected $12.23 billion. As noted at the beginning of this section, none of the alternatives that were considered for refrigerators and small gas furnaces would save as much energy as the proposed rule.
c. "Takings"Assassmeiii 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 could conceivably 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 economic impacts does not constitute a

"taking" of private property. Similarly, the Departments 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 E.O

.12630 pertain. 

### costs, and has been compared to the effectiveness ofthe proposed regulation.

If

### no new regulatory action were taken, then no new standards would be implemented for refrigerators, small gas furnaces, or television sets. This is essentially the "base case" for each appliance. In this case, between the years 1992 and 2015 there would be expected energy use of46.94 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

consumerproduct labeling and DOE's public education and information program. Both ofthese alternaiives 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 assllmed that market discount rates would be lowered by five percent for refrigerators and by 

### two percent for purchasers of small gas furnaces. This resulted in no energy savings, with expected consumption equal to that ofthe base

case.

Another method ofseWng standards would entail requiring that certain design options be used on each product, i.e., prescriptive standards. For refrigerators. this involved assuming a 1.5jnch foam door and 5.0 EER compressor, and, for small gas furnaces,

a powerburner. This resulted in energy consumption, between 1992 and 2015. of 43.14 Quads, and savings of3.8 Quads. The netpresent value, in 1987 dollars.

was $8.52 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 consuniers were assumed to be 15 percent ofthe increased cost ofhigher energy efficiency feature!) ofthese appliances, while the rebates were asstl..'Ued to be 15 percent oBhe increase in equipment prices. The tax credits to consumers showed almost no change from the base
case, i.e., this alternative would save lessthan

..01 Quad with 

## a. hetpresent value of$20 million. Consumer rebates however, would save .04 Quad with a pet present value Qf$210.million.

The consumer rebate program and the tax credit pr:ogram would return td 

### the participa.ting consumerexactly the same amount ofmoney. However, it

### is expected that there will be more partiCipants in the rebate program. Therefore, the rebate program would result in substantially more energy savings than the tax creditprogram would. The most important difference to the

consumer between rebate and tax credit programs is that a rebate can be obtained quickly. whereas a tax credit is delayed until income taxes are filed or a tax refund is provided by 

### the Internal Revenue Service. This means that middle and low income purchasers, who generally have little ready cash to purchase more expensive products, are
norso likely to take advantage ofihe program as are upper income purchasers.To simulate this impact, DOE has assumed that only 60 percent ofconsumers would purchase more energy efficient products as a result of the tax credit program.

Another financial incentive that was considered was tax credits to manufacturers for the production of energy-efficient refrigerators and small gas furnaces. In this scenario, an investment tax credit (ITe) of20 percent

was assumed. The tax credits to manufacturers had almost no effect, since the energy consumption estimates

are 46.93 Quads with savings equal to .01 Quad, and a net present value equal to zero.

The impact ofthis scenario is so small because the ITC was applicable only to the tooling and machinery costs ofthe firms, i.e., the firms' fixed costs, and
most ofthe design improvements that would likely be adopted to manufacture

more efficient refrigerator and small gas furnaces would involve purchasedparts. Expenses for purchased parts would not be eligible foranlTC.

Two scenarios ofvoluntary 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 infive years, and, in the second scenario, the· proposed standards were assumed to be adoptedjn 10 years. In 

### these scenarios, the five year delay would-result in

. energy consumption by these appliimces of43.01 Quads, energy savings of3.93 Quads, and a netpresent value of$8.41

. billion; the 10 year delay wouldresultiIi 

### 44.75 Quads ofenergy being consumed, 2.19 Quads being saved, and a net.

. present value of$5.47 billion

..

. These scenarios assume that there would be llIrlversal voluntary adoption ofthe energy conservation standards by the refrigerator and small gas furnace· manufacturers, an assumption for which there is no reasonable assurance.

Lastly, all ofthese alternatives must be gauged against the performance standards that are bein,g.proposed in this notice. Sitch performance**~tandards** 

### would result in 

### energy conslpnption of refrigerators, small gas furll.aces, and,. television sets to total an estimated 41,01 

### Quads ofprimary energy over the 

### 1992-2015 time period. Savings would be 5.93 Quads, and the net 

### present value would be an expected $12.23 

### billion.

As noted at the beginning ofthis section, none ofthe alternatives that

were considered for refrigerators and small gas furnaces would save as much
energy as the proposed rule,

c. ''Takings''Assessment ReIdel'>'



### 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.

Forpurposes ofthe Order:

"Policies that have takings implications" refers to Federal regulations. proposed ·Federal regulations, proposedFederal legislation. comments on proposed Federal legislation, or otherFederal policy statements that, ifimplemented 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 could conceivably be viewed as having "takings implications." These are testing and certification requirements,·the impacts ofstandard levels, and possible DOE testing ofproducts for validation.

With regard to 

### the first part, namely, testing and certification. the Department believes that sucha requirement, implementing a long-established statutory mandate in a manner calculated to minimize adverse

.ecollO'mic impacts does not constitute a "hiking" ofprivate property.

Slniilariy, the Department's possible**validation~testing** 

### does not constitute a "taking," within the limitations**desc~i))~d** 

### above.

.

.**t~s~y;,the** 

### impact ofstandards could bl:J·y}ewed by some as a "taking." Nevertheless; the Department believes that the factthat while an energy

. conservation.standard may limit**~ome manuf,~cturers**  

### in the range ofappliance efficiencies that they canproduce. such narrow.i.ng ofthe eI}ergy efficiimcy range does notconstitute a "taking" in the

sense described above.

In short, in none ofthe three parts of the. appliance stqndards program does the**O~partmentbelieve** 

### that the provisions ofE.O.12630 pertaIn.

### Federal Register / Vol. 53, No. 232 ,i Friday, December 2, 1988 / Proposed Rules -- 4823

d. Federalism Reriew
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 implemeuting a regulation or a rule. DOE has identified a substantial direct effect that today's regulation, when finalized, would have on State governments. It would initially preempt inconsistent State regiilatiors. However, DOE has concluded that the initially. preemptive effect is not sufficient to warrant preparation of a federalism
assessment for two reasons. First, DOE does not have discretion under the Act to avoid promulgating a preemptive regulation because of a policy preference for State regulation as a general matter. Second, the Act provides for subsequent State petitions for exemption which necessarily means that the determination as to whether a State law prevails must be made on a caseby-case basis using criteria set forth in the Act. When DOE receives such a petition, it will be appropriate to consider preparing a federalism assessment consistent with the criteria in the Act.
e. Regulatory Flexibility Review 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 rulemakirg, three different products and, hence, industries, are being addressed. Regulatory flexibility for the television set industry, however, does not need to be considered since this notice is proposing no energy conservation standards on those manufacturers. Regulatory flexibility issues will he addressed for the two industries for which standards are being proposed. First, the energy conservation standard of r8 percent AFUE on those small gas furnace manufacturers, who could be considered small businesses,. will be discussed. There is no indication that the impact of standards will be directly related to firm size. Although different size 'firms- have different cost structures, industry sources indicate 

### that, overall, neither large nor small The analysis of combined-unit firms have a cost advantage and that manufacturers is straightforward . Threeneither large nor small firms tend to in-one units are not covered by the have a higher proportion of fixed cost. A present standards , so these corollary to this observation is that manufacturers will not be affected. profits are also not correlated to firm The custom refrigerator manufacturers size. Some large firms are quite seem to be fairly well protected for two profitable

, others earn normal profits

, reasons; they are not exposed to either while others are marginally profitable, direct foreign competition or direct and the same is true for smaller firms

. competition from major domestic firms, The Engineering Mialysis indicates and because they produce custom units that the measures necessary to meet the they have a greater ability to make standards levels under consideration design changes compared to a large involve using additional purchased manufacturer

. These two facts indicate parts. While larger firms may have some that standards will probably not hurt the slight cost advantage from buying in custom manufacturer's control of its larger quantities

, the fact that the design market ; however, its market may shrink options predominantly itwolve due to price increases

. This cannot be purchased parts tends to ne an estimated without engineering data and equalizing factor among different

-sized an estimate of the elasticity of demand firms. in this market

. One thing must be Therefore , the fact that this energy remembered when analyzing this conservation standard on small gas problem: standards will increase the furnaces is not likely to "have a price of standard refrigerators and this significant economic impact on a will offset (partly or more than substantial number of small entities " completely) the impact of the price suggests that the provisions of section increase of custom refrigerators. 605(b) of the Regulatory Flexibility Act r' pertain. These provisions state that The three small manufacturers 

### y neither an initial nor a final regulatory compact refrigerators wi pr a flexibility analysis need be performed the greatest risk, both without standards

fora proposed or itnal rule if the head and from standards . They fade stiff 

### ad foreign competition from large foreign t th al t f th f h e t e e agency cer i ies a o t not, if promulgated, have a significant manufacturers. Some anecdotal economic impact on a substantial evidence turers e indicates that part of their titi" current competitive strategy is to use ll b f sma en um er o es. dl h d cheaper, less efficient compressors than S t econ y, a propose energy their foreign competition. Depending on 

### conservation standards on refrigerator the the level of standards, this op could manufactures needs to be addressed

. It be foreclosed

, forcing them to buy is not at all being proposed

twill the standard "h stand

ave a ard compressors at a higher price than that le etitors who er com i l th i b p

r arg e d y significant economic impact on a pa ome case r in lum i ith b substantial number of small firms." The LBL-MIM indicates through its predictions of an increase in typical ROE that 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 hurtsome smaller firms the most, 

### s s n vo e o er uy e manufacture their own. Still, it would seem that these small manufacturers must have some advantages from the niche they occupy or they would have " already succumbed to their competition. These advantages would need to be accounted for before a firm conclusion could be drawn.Now consider the truly small firmsthose that cater to very specialized niche markets. There are only about a dozen of these and they tend to be very 

### since smaller firms tend to have less small compared with the major firms. sophisticated research and development Because of this, they have little time to capabilities. This should not be a cooperate with data collection efforts serious consideration for regulatory flexibility;since the proposed standard levels on refrigerators will not be technologically difficult to meet. 

### Of the eight small refrigerator firms reviewed for this analysis, three make and consequently relatively little is 

### know about them. "Specifically, engineering cost data is not separately available for smallfirms nor are demand elasticities available. Small firms are generally not members of custom refrigerators, three make AHAM. Consequently, most were not compact units (largely for mobile homes included in information provided by and recreational vehicles), and two P.HAM concerning the Department's make 3 in -1 units with range tops and analysis and, of the ones that were, only sinks. one was included. Because of this no 

### Federal Register! Vol. 53, No. Z32 / Friday. December 2, 1988 / Proposed Rules**4~23**

.-**"P'RS?'Jvzwm~:lI'ftaii5i1J.::::u: "'<iJ!ii?<iIW2¥&iii&~~**  "R**;~** 

### d, Federalism Reriew

Executive Order 12612 (52 FR 4:1685. October.30, 1987) requi.res 

### that regulations or rules be reviewed for any substantial direct effects onStates, on 

### ihe relationship between 

### the National Govermnent and 

### the States. 

### m' on the distribution ofpower and

. responsibilities among variolls levels of government. 

### Ifthere are sufficient 

### substantial direct effects, then ExecuUve Order 12612 requires preparation ofa federalism assessment to be llsed in all· decision;; invGlved inprorrm}gating and implementing a regulation or· a rule.

DOE has identified 

### a substantial direct effect that today's regulation. \vhen finalized, would have on State govermnertts. It wouldinitially preempt inconsistent State reg!ilatioIls. However, DOE has concluded that 

### the initially preemptive effect is not sufficientto warrant preparation ofa federalism
assessment 

### for tv.'o reasons. First, DOE 

### does nothave discretion under the Act
to avoidpromulgating 

### a preemptive regulation because ofa policy preference for Stateregulation as a general matter.Second, the Actprovides for subsequent State petitionsfor exemption whichnecessarily means that the determination as to whether a State law prevails must be made on a caseby-casebasis using criteria setforth in the Act. WhenDOErecei.ves such a petition, it will be appropriate to considerpreparing a federalism
assessment consistentwith the criteria in the Act.



### e. RegulatoryFlexibilityReview

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires an assessment ofthe impact ofproposedregulations on small businesses. Small businesses are defined as those firms within an industry that are privately owned and Jess dominantin the market.

In this rulemaking, three different products and, hence, industries, are being addressed. Regulatory flexibility for the television set industry. however. does not need to be considered since this notice is proposing no energy conservation standards on those manufacturers. Regulatory flexibility issues will be addressed for the two industries for which standards are being proposed.

First, the energy conservation standard of78'percent AFUE onthose small gas furnace manufacturers, who could be considered small businesses, will be discussed. There is no indication that theimpact of standards will be directly related to firm size. Although different size firms havedifferent cost structures. industry sources indicate thaI, overall, neither large nor small firms have a cost advantage anrl that neither large nor small firms tend to have a higher pl'Oportion offixed cost A
coronaryto 

### tIllS observation is that profits 5re also not correlated to firm size. Some large firms are quile profitable, others earnnorInal profits, while others are marginaliy profitable. and the same is true for smallerfirms.

The 

### Engi11eerillg

### j\..n.a1ysis indicates that the**meas~es n~cess!ll'Y.** **~o m~et**  the standards levelS unner coIlslUeration involve using additional purchased parts. \-\ThUe larger firms may have some slight cos! advantage from buying in larger quantities, the fact that the design options predominantly irl'lolve purchased parts tends to he an equalizing factor among.different-sized firms.

Therefore, the fact that this energy conservation standard 

### on small gas furnaces is not likely to "have a significant economic impact on 

### a substantial number ofsmall entities" suggests that the provisions ofsection 605(b) ofthe RegulatoryFlexibility Act pertain. These provisions 

### state that neither aninitial nor a 

### final regulatory**flexi~ility** analysis need be performed for a proposed or final rule "ifthe head ofthe agency certifies 

### that the nile will not, 

### ifpromulgated, have 

### a significant economic impact 

### on a substantial number of small entities."

Secondly, the proposed energy conservation sta.ndards enrefrigerator manufacturers needs 

### to be addressed. It is not atall clear that the s1andard levels being proposed 

### will "havea significant economic impact on a substantial nUHJ.ber of small firms." The LBL-MIM indicates through its

. predictions 

### of an increase in typical ROE that standards are likely to slow down theconsolidationprocess temporarily. Thi.s wouldlead to a temporary slowing down ofthe continuing decrease in this industry's competitiveness. Howeverthis prediction would be tempered by the observation thatif standards were technologiCally difficult to meet they could hurt some smallerfirms the most, since smallerfirms tendto haveless sophisticatedresearch and development capaBilities. This shouldnot be a serious consideration for regulatory flexibility.since the proposed standard levels on refrigerators ""ill not be technologically difficult to.meet.

Ofthe eigHt .small refrigerator firms reviewed for this analysis, three make
custom refrigerators, three make compact uriits (largely for mobile homes and reoreational vehicles), and two make 3-in-l units with range tops and sinks. The analysis ofcombined-unit manufacturers is straightforward. Threein-one units are not covered 

### hv the present standards, so these • manufacturers will not be affected.

The custom refrigerator manufacturers

seem to be fairly well protected for two
reasons; they are not exposed to 

### either direct foreign competition or direct competition from major domestic firms, and because they produce custom units they have a greater ability to make design changes compared to a large manufacturer. These two facts indicate that standards will probably not hurt the
custom manufacturer's control of its market; however. its market may shrink due to price increases. This cannot be estimated without engineering data and

an estimate ofthe elasticity of demand in this market. One thing must be remembered when analyzing this problem: standards will increase the price of standardrefrigerators and this 

### will offset (partly or more than completely) the impact of the price increase ofcustom refrigerators.

'The three small manufacturers of compactrefrigerators are probably at the greatestrisk, both without standards and from standards. They face stiff foreign competition from1arge foreign manufacturers. Some anecdotal evidence indicates thatpart oftheir
current competitive strate!fy is to use cheaper, less efficient compressors.than their foreign competition. Depending on the level of standards, this option could be foreclosed. forcing them to buy
compressors at a higherprice thanthat paidby theirlarger competitors who either buy involume or in some cases manufacture their own. Still, itwould

seem thatthese small manufacturers
must have some advantages fromthe niche theyoccupy or they would have already succumbed to their competition. These advantages would need to be accountedfor before a' firm -conclusion could be drawn.

Now consider the truly small firmsthose that cater to very specialized niche markets. There are only about a dozenofthese and they tend to be very small comparedwith the major firms.

- Because ofthis, theyhave little

# time to cooperate with data colIectiml efforts and consequentlyrelatively little is' know aboutthem.Specifically, engineering costdata is not separately available for smallfirms nor are demimd elasticities availa:ble.Small firms are generally-notmembers of AHAM. Consequently, most were not included in information providedby· AHAM concerning theDepartment's analysis and, of the ones that were, only

one "vas included. Because ofthis no

### 48324 Federal Register / Vol. 53, No. 232 / Friday, December 2, 1988 / Proposed Rules

financial data specific to small firms are available. The foregoing discussion suggests that only three of the eight small manufacturers on whom the effects of standards were evaluated, would possibly suffer from the proposed standards on refrigerators. The Department believes that in this industry, too, the provisions of section 605(b) are applicable, since there is no certainty that the proposed rule will "have a significant economic impact on a substantial number of small entities."

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.

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. CAS-RM-87-102)." 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 within the industry; (3) whether the information is generally known or available from other sources; (4) whether the information has previously been made 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 on class of persons having an interest, to make a written request for an opportunity to make an oral presentation atthe public hearing. Such requests should be labeled both-on the letter and the envelope, "Three Products Rulemaking (Docket No. CAS-RM-87

- 102)," and should be sent to the address, and must be received by the time specified

, at the beginning of this notice. Requests maybe hand

-delivered or . phoned 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 event 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 have made oral presentations ; as well as employees of the United States Government who have made w-ritten-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 Iater . than shortly after the completion of any rebuttal statements and be prepared to state specific justification

, includingwhy the issue is one of disputed fact and how the proposed questions would expedite their resolution. 

### 43324 Federa] Register 

## I Vol. 53. 

### No. 232 / Friday, 

### DecembGr 2. 

### 1988 / Proposed Rules

Frill' 4£!4!SiiUd!iiII**~** z:

...... _'""

.....**fi;C~ 'm:amxaaas::~:::war;i\:::::ssa;;s:~"**  ......... z:»::<t!lAt£lSdh

...:a:-;aa:

.. $lit!

financial data specific to'small firms are available.

.

The foregoing discussion suggesls that only three of the eight small manufacturers on whom the effects of standards were evaluated. would possibly suffer from the proposed standards onrefrigerators. The Departmentbelieves that in this industry. too, the provisions of section 605(b) are applicable. since there is no certainty that the proposed rule will "have a significant economic impact on

a substantial number of small entities."

V. Public Comment Procedures

Q. 

### Participation in Ruiemalcing

. DOE encourages the maximum level ofpublic pal'ticipation possible in this l'ulemaking. Individual consumers. representatives ofconsumer 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 

### ill the public hearing to be held in Washington. DC. at the time and place indicated at the beginning ofthis notice.

The DOE has established a comment period of 60 days following publication ofthis notice for persons to comment on this proposal.



### b: Written Comment

### Procedures

, Interested persons are invited to participate in this pI:oceeding by s1)bmitting written data. views or argument!3 with respect to the subjects
set forth in this notice. Instructions for submitting written comments are set forth at the beginnmg ofthis notice and below.

.

Comments shoUld be**l~beled** both on the envelope artd on the documents, "Three Products Rulemaking (Docket No. CAS-RM-87':"102)," and must be received by tlie date specified at the beginning ofthisnotice. Ten copies are requested to be submitted. All

- coinments recEdved

## by the date specified

, at the beginningp£ this notice arid other

relevant information will be considered byDOE before final action is taken

# QIl

- the proposep regulation.

. '. .' All written cOmIntmts received on the propbsed rule 

### \VHfbeavaiiable for public inspectionat the Freedo:Jn of Information Reading Room. as provided at the beginning ofthis notif;e.

.

Pursuant to the provisions of 10CFR 1004.11. any persoll submitting information or data that is believed to be confidential and exempt bylaw from public disclosure should submit one complete copy ofthe document and 10 copies, ifpossible. from which the ipjormation believed to be confidential has been deleted. DOE will make its

own determination with regard to the confidential status ofthe information or data and treat it according to its determination.

Factors ofinterest to DOE. when evaluating requests to treat information

as confidential include: (1) A description ofthe item; (2) an mooc<ltion 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 within the industry; (3) whether the information is generally known or available from other sources; (4) whether the information has previously been made available to others V'lithout obligation concerning its confidentiality; (5) an explanation ofthe competitive injury to the submittingperson 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 ofthe information would be in the public interest.



### c. PublicHearing

1. Procedure for Submitting Requests to Speak

The time and place of the public hearing are indicatedat the beginning of this**notice~** DOE invites anyperson who' has an interest in these proceedings, or who is a representative ofa group or, .' class ofpersons having aninterest. to make a written request for an opportunity to make an oral

. . presentation atthE! public hearing. Such requests shouldbe labelerj both·OIl the letter and the envel{)pe. "ThreeProducts Rulemaking (Docket No. CAS-RM-87- 102)," and should be senl to the address. and must be received by the time specified, at the beginning ofthis notice. Requests maybe hand-delivered or, phoned in to such address between the**hourso~** 8:30 a.m. and4:30 p.m.• Monday through Friday, exceptFederalhplidays.

Th,e persoil makingthe request should briefly describe the interestconcerried. and. 

### ifappropriate,**~tate** whyhe or she is 

## aproperrepresentative

## of the group

or Class ofpersons thathas suchan interest. and give a telephone number where he or she may be contacted. Each person selected to'be heardwill 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 ofthe hearing. In the event any persons wishing to testify cannot meet this requirement. that person may make alternative arrangements with the Office ofHearings and Dockets in advance by

so indicating in the letterrequesting to make an oral presentation.

2. Conduct ofHearing

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 ofeach presentation is limited to 20 minutes.

A DOE official will be designated to preside at the hearing:The hearing will
notbe a judicial or an evidentiary-type hearing. butwill be conducted in accordance with 5 U.S.C. 533 and section 336 ofthe.Act. At the conclusion ofall initial oral statements at each day ofthe hearing. each person who has madean 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 questipns from those attending. as time permits. Any interested person may submit to the presiding official written questions to be asked ofany person making a statement at the hearing. The presiding official will determine whether the questionis 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 ofmaterial fact. other interested persons who have made oral presentations. as well as employees of the United States Government who have made..V'lTitten or oral presentations.

, relating to the proposedrule. This opportunity,willbeafforded after any rebuttal statements. to the'extent that the presiding official determines that sl.l.ch questioning is likely to result in a

more timely and effective resolution of disputed issues ofmaterial fact. 

### Ifthe time provided i15 insufficient or inconvenient. DOE

# wm consider 'ciffordingan additional opportunity for questioning at a mutually convenient time: Persons interested in making use of this opportunity must l!ubmit"their request to the preSiding official no later. than shortly after the completion ofany rebuttal statements and be prepared to state specificjustification. including why the issue is one of disputed fact and how the proposed questions would expedite their resolution.

### Vol. 53, No. :32 / Friday, December 2, 1988

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 Comment
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 refrigerator baseline units and the base case; • Refrigerator market share elasticities; • Rebound effect for refrigerators, television sets,.small gas furnaces and all other space heating and cooling products; • Refrigerator usage elasticities; • Appropriate discount rates, including those for consumer analyses (LCC and LBL-REM) and the use of a social discount rate (LBI.-REM): • Energy price forecasts; 

### • The characterization of prototypical firms for the manufacturer impact analysis (LEI.-MIM); • Impacts of the EPA restriction on CFC manufacture; and 

### • Refrigerator efficiency forecasts. 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, November 22, 1988. John R. Berg, Assistant Secrretary, Conservation and Renewable Energy, List of Subjects in 10 CFR Part 430 Administrative practice and procedure, Energy conservation, Household appliances.


### PART 430-ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS 1. 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

Product class Energy Conservation Policy Act, Title IV, Part 2, National Appliance Energy Conservation Act of 3987, and National Appliance Energy Conservation Amendments of 1988 (42 U.S.C. 6201--6309). 2. Subpart C of Part 430 is revised to read as follows:
Subpart C-Energy Conservation Standards

Sec. 430.31 Purpose and scope. 430.32 Energy Conservation Standards.

Subpart C--Energy Conservation Standards
§ 430.31 Purpose and scope. This subpart contains any energy conservation standards for classes of covered products that are required to be administered by the Department of Energy pursuant to the energy conservation program for consumer products other than automobiles under the Energy Policy and Conservation Act, as amended (42 U.S.C. 6291 et seq.).
§ 430.32 Energy conservation standards. The energy conservation standards for the'covered product classes are: (a) Refrigerators refrigerator-freezers/
freezers.

1. Refrigerators and refrigerator

-freezers with manual defrost .................. .................................................................... ............... .........:.... 2. Refrigerator

-freezers-partial automatic

.defrost :....:,. ..:. ............................................................................ 3. Refrigerator

-freezers-automatic defrost with top-mounted freezer without ice ;a ........:........:: ................................................... 4. Refrigerator

-freezers-automatic defrost with side-mounted freezer without ice ................................................... 5. Refrigerator

-freezers-automatic defrost with bottom

-mounted without ice ....... .......................................................

............. ,:..: 6. Refrigerator

-freezers:automatic defrost withtop-mounted freezer with through the door ice service .:............. - ....... 7. Refrigerator

-freezers-automatic defrost with side-mounted freezer with through the door ice .................................... ......... 8. Upright freezers with manual defrost ......,.... .............. ...............:....:.........:......................:...:.............:................... 9. Upright freezers with automatic defrost ..

.................................................................................................................................................... 10. Chest freezers and all other freezers

............ .......... ................ ....................... ...............................................................

............. ............. Including all refrigerators with automatic defrost: The Energy 'Standards Equations selected will be from these ranges. AV -Total adjusted volume, expressed in Ft

(b)-(d) [Reserved] (e) Furnaces.

Product Gass Energy standards equations January 1, 19932

(16.3AV + 316) to (11.9AV + 258). (21.SA V + 429) to (14.1 AV + 305). (23.5AV + 471) to (16.8AV + 363). (27.7AV + 488) to (13.1 AV + 540). (27.7AV + 488) to (17.9AV + 386). (26.4AV + 535) to (17.6AV + 380). (30.9AV.+ 547) to (15.2AV + 625). (10.9AV + 422) to (12.3AV + 181). (16.0AV + 623) too-(18.OAV + 264). (14.BAV +,.223) to.(11.2AV + 163).

Annual fuel utilization efficiency (percent)

...... 1.-2. [Reserved]

.................... .......................................................... ...................................... ................................. ....................................... 3. Small furnaces (input rate less than 45

,000 Btu hours: (A) Weatherized (outdoor) ........... ::...:: :.:;.::.,... ............................................................ .. :....: ............ ........ (B) Non-weatherized (indoor).;.... ................: .......... .................................. ................:

(f)-(k) [Reserved] Effective date

January 1, 1992, January 1, 1992.



### (1) Television Sets. No standard:

[FR Doc. 88-27595 Filed 12-1=88; 8:45 am

SILLING CODE 6450-01-m 

### Federal Register 

# I Vol. 53, No. 232 

# I Friday, December 2, 1988 

# I Proposed**Eul~s** 

### 48825

2ZC2G!:&i! .m::ua**~:::{!!~,,~_~::!~~: ~~~:::**  

### ..**~,~_::::::~~~** S! T ACt.

Any further procedural rules regarding
proper conduct ofthe hearing 

### wiH be announced by the presiding official.

A transcript of the hearing 

### will be made, and the entire record ofthis rulemaking, including the transcript, 

### will be retained by DOE and made available for inspection at the DOEFreedom of Information Reading Room as provided
at the beginning ofthis notice. Any
person may purchase a copy of the transcript from the transcribing reporter. 

### d. Issues**Reque~ted**

### for COIl/meat

As discussed above in today's notice, DOE has identified a number ofissues where comments are requested. These issues include, but are notlimited to the following:

.. The refrigerator baseline units and 

### the base case;

• Refrigerator market share elasticities;

• Rebound effect for refrigerators, television sets,.small gas furnaces and 

### aU other space heating and cooling products;

.

.. Refrigerator usage elasticities;

• Appropriate discount rates, including those for consumer analyses [LeC and 

### LBL-REM) and the use of a social discount rate 

### (LBL-REM):

.. Energy price forecasts;

.. The characterization ofprototypical firms for the manufacturer impact 

### analysis (LBL-MIM);

• Impacts ofthe EPA restriction on CFC manufacture; and

• Refrigerator efficiency forecasts. 

### In consideration

### ofthe foregoing, 

### it

### is proposed to amend Part430 ofChapter 

## n ofTitle 10, Code ofFederal Regulations, 

### as set forth below.

Issued in Washington, DC, November 22, 198B.
John R. Berg. AssistantSecretary, Gansen'ation and**Renewable'Energy~** . lLis! of Subjects in 10 CFR Part 430

Administrative practice and procedure. E...'lergy-conservation, Household appliances;

PART 430-ENERGY**COt~SERVATION** PROGRAM 

### FOR CONSUMER

. PRODUCTS

1. The authority citationfor Part430 continues to**r~ad** as follows:

Authority: Energy Policy and Conserv;'ltion Act. Title m. Part B. 8S amended byNational Energy Conservation Policy Act, Title IV, Part 2, National ApplianceEnergy Conservation Act of 1987. and National Appliance Energy Conservation Amendments of1988 (42 U.S.C

. 6291-6309).

2. Subpart C ofPart 430 is revised to read as follows:
Subpart C-Energy Conservation Standards

Sec. 430.31 Purpose and scope. 430.32 Energy Conservathm Standards.
Subpa,t 

### C-Energy Conservation Standards

§ 430.31 Purpose and scope.

This subpart contains any energy conservation standards for classes of covered products that are required to be administeredby the Department 

### of Energy pursuant to the energy conservationprogram for consumer products oth\!r than automobiles under the Energy Policy and Cpnservation Act,

as amended (4:2 U.S.C. 6291 

### etseq.).

§ 430.32 Energy conservation standards.

The energy' consertation standards for the'cpvered product classes are:

(a) Refrigerators

## I refrigerator-freezers! freezers.'

.

Product class Energy standards equations Janua!)'



### __ -"

___ --'....:...

_______**~---------'-----------.-----'--:--.:.+-'** '1,.1993 2

1. Refrigerators and refriger!itor-freezers with manual delros!...

...,.......................................................................................................; •.... (16.3AV 

### + 316) to (11.9AV 

### + 258). 2. Refrigerator,freezers-partial eulomatic,deirost

............................;

....,..............,..:.:

.................................................................................... (2l.SAV 

### + 429) to (14.1AV 

### + 3C5). 

### a. Refrigerator.freezers-automatic defiost with top:mounteil freezer without ice'

........;

......................................................................... (23.5AV 

### + 47.1) 

### to (16.SAV 

### + 363)

.

.4. Refrigeretor·lreezers-automatic defrost lhith side'il1ounted freezer without ice

.........................................................................,.......... (27.7AV 

### + 488) to (13.1AV 

### + 540). 5. Refrigeralor-Ireezers-aulomatic defrost'with bottom·mounted without ice

...........;

............................................................................;.•. (27.7AV 

### + 488) to (17.9AV + 386). 6. Relrigeratqr·freezers-automatic defrost with top·mounted freezer with through the door ice service

............................................... (26.4AV 

### + 535) to ('I7.6AV + 3S0). 7. Relrigerator·freezers·automatic defrost With side-rnounted ireezer with through the door ice

........................................................... ·(30.9AV 

### + 547) to (i5.2AV .j. 625). 8. Upright**fl:ee~ers** with manual defiost.

....................;

................................:

..:

.......................................:

......................................................... (i0.9AV'+ 422) to (12.3AV 

### + 181). 9. Upright Ireezers with automatic defrost...

..........:

.......................................................................................................................:

................ (16.QAV.+ ·623) {,,'(iB.OAV 

### + 264). 10. Chest freezers and all other Iree,er5

....................................................................................................................................................... (14.8AV 

### +

..223) \0.(11

..2AV 

### + 163).

! Including all refrigerators with automatiC defrost.

. . • The Energy 'Standards Equations selected wUl be Irom lhese ranges. AV=Total adjusted volume. expressed in Ft s.

. (b)..:.(d) [Reserved] 

### (e) Furnaces.

Producl class

1.-2. [Reserved]

................................................................................................................................................................................................... 3. Small furnaces (inpui rate less than 45,000 Blu/hours:'

. . .. .. . '(AI WeatheriZed (outdoor)

................................:

...........:

..............:•....**;.:.:~**.........:

.........................:

........:

........:

....:.;.:

.....;

..................................

. (8) Non-weatherized (indoor) .;

.................:

...............................................................:

......................:

............ ·
...'.5:

.................................:

....;.:

[£)..:.(k) [Reserved] (1' Television 

### Sets.

No standard.; [FR Doc:**B~27595** Filed 12-:i:..a8; B:45 am]

1611..1.11lG**COD~** 645M.1-M Annual fuel. utilization efficiency {percent) Eflective dale

18' January 1. 1992. 78 January 1.1992

..