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

CE-RM-87-102 COMMENT 02

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 of Title 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.

CE-RM-87-102 COMMENT 02

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 of proposed 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 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 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 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 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 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 lE-190, 1000 

Independence Avenue, SW., 

Washington, DC 20585, (202) 588-6020, 

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: 

[, Introduction 

o. Authority 

b. Background 

II. General Discussion 

o. Test Procedures 

b. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

c. Energy Sm--ings 

1. Determination of Savings 

2. Significance of Savings 

d. Rebuttable Presumption 

e. Economic Justification 

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 of The 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-ironmental Rev-jew 

b. Regulatory Impact Review 

c. "Takings" Assessment ReFiew 

d. Federalism Rev·jew 

e. Regulatory Flexibiliiy Review 

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 of Title III of the 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 B of Title III of EPCA, as amended by 

NECPA. NAECA. and NAECA 1988, is referred to in 

ibis notice as the "Act." Part B of Title III is codified 

at 42 U.S.C. 629111/ seq. Part B of Title 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 as 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

CE-RM-87-102 COMMENT 02

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: 

Refrigera tors, refrigera tor-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)(IJ. 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 detel'1Illnes 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 

refrigera tor-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 an initial 

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 Secretary may not 

prescribe any amended standard which 

increases the maximum allowable 

energy use. or decreases t.l:le 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 

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 than January 1, 1989. for small gas 

furnaces, i.e., gas furnaces having an 

input of less than 45,000 Btu per hour 

and manufactm:ed on or 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 of this 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 economicaily 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 

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; 

(5-) The impact of any lessening of 

competition. determined in writing by 

the Attorney General. that is likely to 

result from the imposition of the 

standard; 

(6J The need for national energy 

conservation; and 

(7) Other ractors 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 rule making 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 will result 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 of the final ru.le 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 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 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 m a 

lessening of competition. 

Section 326 of the 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 respect

to 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.

CE-RM-87-102 COMMENT 02

<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 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) injullctive relief 

against any prohibited act, inCluding 

distribution of noncomplying products 

(section 334). 

Section 327 of the Act addresses th'e 

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)(2J ami (e)) and 

certain building code requirements for 

new construction. if certaLI1 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 if DOE 

does not publish a final rule before 

January 1,1990, rel,aUng t.o the revision 

of Federal staridi'!l'ds for this product ' 

category, the State.of California'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. 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 

regulatiQn 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 characteri~tics 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). 

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 

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 

• The consumer products covered by NECPA 

included: Refrigerators and refrigerator-freezers: 

freezers; dishwashers: clothes dIyers: water heaters; 

room air 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 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 heatmg 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 rule making with ' 

respect to the nine priority products. 47 

FR 14424. (Hereafter referred to as the 

April 1982 proposal). With respect to 

eight of the produ9ts, DOE proposed to 

make a determina-tion that a standard 

would not result in significant 

conservation of energy and would not 

be economically jus tified. 3 The April 

1982 proposal also proposed rules 

governing petitions to DOE both by 

States to obtain exemption from 

preemption of State or local energy 

efficiency standards; as well as by , 

manufacturers to obtain preemption of 

State 'or local standards. 

OnDecmber ~2,J,982, DOE published 

a final rule in which the Department 

determined that efficiency standards 

3 The April 198Z propo)lal did 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' 

of heat pump water healers. or with respect Io 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 conservation

standards 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 four

test 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 development

of 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.

CE-RM-87-102 COMMENT 02

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 

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: 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 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. (Hereafterreferred 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. refrigera tors, refrigera torfreezers. 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 conservation 

standards 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 anaiyze, 

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 ano. 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 ill of this 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 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 respecUo each appliance. 

DOE analyzed various specific design 

options. including·prototypes. A 

prototype can be eithetan 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 techriologically feasible 

as an individual component or as part of 

a bread-board I assembly. it does not 

necessarily follow that techniques have 

been developed for 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 procedure to 

evaluate its energy efficiency. These test 

procedures also cover the various 

classes of products 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 in bOE's Decision and Orders 

concerning variablEi defrost controls. 

Research in supportdfthe development 

of test procedures for refrigeratorfreezers equipped \vlth variable defrost 

controls has been completed. DOE 

issued a proposed rule concerning 

• A bread'board unit is· 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 maximum

technologically 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 specified 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, at

the time of the effective date of-thestandard: Design options that have

unacceptable impacts on consumers or

manufacturers or result in the changing

of 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

CE-RM-87-102 COMMENT 02

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. Technological Feasibility' 

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 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 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 of technolagical feasibiIits'. The 

California Energy Commission (CEe)' 

recommended that DOE put no limits on 

design options for technological 

. feasibility. ,that DOE include prototypes; 

foreign market designs, and designs" with 

long paybaeks .. ~CEC; ruo. 35, at 4.) • The 

Association efHome 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) 

recommended that DOE'increa:se 

standard levels to the maximum 

technological1y feasiblB' designs. such as 

evacuated panel insulation for 

refrigerators. (NRDC, No.19.at9,) 

2. Maximum Technologically Feasible 

Levels 

The Act requires that in considering. 

any new or amended s.tandarrls, the' 

Department must consider those that 

"shall be designed to achiev:e the 

maximum improv.ement 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 a t least a prototype 

exists. A complete discussion of each 

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 Department believes that these 

are the maximum te.chnologicaHy 

feasible energy consenvation levels from 

an engineering standpoint; some or all of 

these lev:els will be evaluated in 

accordance with the economic 

justification factors specified 1.'1: the Act 

to determine if the levels are. . 

economically justified. Specifically 

excluded from further analysis aI'S 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 fOl: DOE to explain why 

it does not adopt any design option that 

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, at 4-6). Admiral Home 

Appliances (Admiral) stat~d that" 

"innovation ,cannot be legIslated, . 

therefore, maximum technologically 

feasible design options are those that 

are fuBy 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 affect performance, 

life. and reliability of the covered 

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

DOE proposes that the maximum 

technologically feasible. 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 that there 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. of implementation by the 

effectiv.e· date of a, standar.d~ 

Each maximum technologically 

feasible level was· evalua,ted to 

determine if it would be cOIllIllerciaHy, 

viable, that is, economically justified; at 

the time of th.e effective date ofthe' 

standard. Design options iliat have 

unacceptable' impacts on consumers or 

manufacturers orresultin the changing 

or the utility of the product were 

rejected. 

DOEprovided lists of design aption:> 

for engineering analysis in the advance 

notice. D0Ereceived' a number of 

comments on these design options, 

which resulted in more detailed design 

options for DOE te~ew. DOE has . 

considered these sugges~ions and has 

addressed them in the product specllm 

discussions in tWs notice .. 

The analysis process,is d.escribed 

fully in the Technical Support 

Document. Computer models and 

manufacturers: data were 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 of the'maximum 

improvements in energy efficiency that 

are technologically feasible. The second! 

requirement relates to the lessening of 

utility to t.ne. consumer of any 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 of this notice 

. include the method of analysis for each 

of the producfs. . 

c. Energy Savings 

1. Determination of Savings 

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 shares

range 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 and

television 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 different

standard 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.

CE-RM-87-102 COMMENT 02

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 of analysis 

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 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 

algoritlmls to project average 

e.ffidencies, 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 

purcha,se 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.coilsumption). 

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 shares 

range fr~m a low of 0.7 perc~rit for a topmount refrgerator-freezer with throughthe~door ice. to Ii 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 I.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 represen ts 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. Se~ Technical Support 

Document section 4.2.3. Elasticities for 

heating equipmenf in new mobile. . 

hbmes. new large multifaqlily 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) multifamHy 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 (!..BL). 

The model was established from a 

national dat(i base disaggregated ~o 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 LEI, model is the LBL model's 

characterization of a household discount 

rate for the choice ofheatirtg and· . 

cooling equipment as varying with 

inaximum Winter heat load and a 

m.eas,ure !>ftheoppressiveness 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 

ra teSt 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. 

The tBL-REM is used to project 

residential energy use over the relevant 

time periods for: (1) Television sets with 

and without 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 or primary energy. 

which is the energy necessary to 

generate and transmit electricity. The 

Act defines "energy use" as tM quantity 

of energy directly 'consumed by a: 

consumer produGt a:t point of use. This is 

generally called "sih~" erlergy. 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 ~lectriGal energy.lO 

Therefore •. it is. important to id~!1tify 

whether the electrldtyinvolved 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 I'mergy prices 

and consum,er ~ncorrie, future energy 

prices, future lev.els gf housing 

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. That is. 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 rule making, e~ch 

standarp level that was analyze~ was projected to 

have been in place from the time of implementation 

to the year 2015. 

10 Energy Information Administration. Electric 

Power Annual 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 of

as 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

CE-RM-87-102 COMMENT 02

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 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.,.Iower 

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 

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.quipmerit use in response to 

changes in fuel price and household 

income determine the usage elasticities. 

These elasticities are based on 

engineering,pol'lsibilities and judgment 

in the original formulation 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 that a more efficient 

refrigerator or television set would not 

be used more intensively because it is 

more energy efficiimt. Therefore,: in 

estimating energy savings from different 

standard l-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 with changes in either 

energy prices or efficiency. However, 

the Department did include a "rebound 

effect" of 30cpercent for small gas· 

furnaces. See Technical Support 

Document, sections B.1 and B.B. The. 

Department reques.ts 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 naUce. 

Discount Rate. NRDC and the CEe 

contended that 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 

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 th~ 

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 thB expected annual rate 

of price increases in that time period is 

approximately five percent. Most 

businesses. however, are not eligible for 

loans at the prime rate ofiriterest, 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 

lo·an at 12 percent interest.. and repays it 

in the 199(}-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 

reasona ble to· require cons umers to 

make an investment where· there are 

inherent risks. Forexaniplt~. 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 theidnv.estment, Le., a higher 

discount rate. It has been argued ·that 

the discount rate should:be as· high as 15 

percent. Dubin and MeFadden. "An 

Econometric Analysis of Residential 

Electric Appliance Holdings and 

Consumption," Econometrica, March 

1984, pp. 345-361. DOE requests 

comments on the approach taken to 

select an appropriate discount rate. 

alternative approaches. and the 

consumer and business risks to be 

considered. 

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

equipment prices, were tested in 

sensitivity analyses to determine the 

effects of varying certain assumptions 

on the results of the analysis. By such 

sensitivity analyses, it is possible to 

det.ermine 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 sec.tion III of this 

notice. 

Modeling. Several comments offered 

suggestions on the LBL-REM modeling 

efforts. NYSEO and CEC critiqued nle 

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. 

(NYSE0, 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 oHhe 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 these with levels of 

efficiency that will be in the 

marketplace after the NAECA-impDsed 

standards. are in effect, 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 on the ElOE test 

procedures. For example. in the LCG 

analysis,. DOE used. the test procedure 

aIh'1.ual average hours of use to calculate 

the' annual cos! of operation. This. 

calculation does; noti account for 

variability in consumer usage pattems, 

nor does, it r.eflect 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· result:s: of the LB&REt'vi. and 

Lce analysis, DOE is not certain to 

what extent the. results would be 

affected since, for example, the. energy 

savings and net present value 

calculation of the LBL-REM would use 
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 Berkeley

Laboratory 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

CE-RM-87-102 COMMENT 02

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 of units 

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. 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(lJ(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 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 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." 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 of engineering estimates to 

screen those design options L.1.at 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 refrigera tor standards, if DOE 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 of energy. _ 

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. Rebuttable Presumption 

NAECA established new criteria for 

determining whether a standard level is 

economically justified. Section 

325[lJ(2}(BJ(iii) states: 

If the Secretary finds that the additional 

cost to the consumer of purchasing a product 

complyoing 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 11 

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 

criteri on is not mel 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 N!anufacturers 

aIld COllsumers 

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 ~~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 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 

Ivlanufacturer Impact Model (LBL-MIM), 

13 For this calculation, the Depar!ment catcn!ateti 

cost-oE-operation based on the DOR lest procedures. 

Therefore. the consumer is assumed 10 be "average" 

consumer as defined by the DOE test procedures. 

Consumers that use the products less than the test 

procedure assumes wii! experience n longer 

payback while those that use more than the lest 

procedure assumes will have a shorter payback. 

is fu!l~; explained in the Technical 

. Support Document. The LBL-MIM was 

formerly named the Lawrence Berke!ev 

Laboratory Typical Year Model (LEL-" 

TYM), which is the name that appeared! 

in DOE's advance notice of this 

proposed rulemaking. LBL-MIM 

provides a broader array of outputs 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 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 Ghang~ 

in anyone of th_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 

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 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 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 LCe 

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 B.3 of the 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 or

revised 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)

CE-RM-87-102 COMMENT 02

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 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, Le., approaching the 

baseline unit. If a 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 of which 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 will no! cover the 

expenditures for the design 

improvements. See TechnicRJ Support 

. Document, section 3.5. 

The minimum of the Lec curve was of 

particular interest in the analysis. The 

minimum of the curve represents lhat 

ievel of efficiency improvements that 

maximizes the difference between the 

value of energy saved and the additional 

consumer expenditures Jorihe 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 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 anaJysis is similar to the LCG 

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 each product at 

the different standard levels is identified 

in section HI of this notice, The NPV 

caleula Hon, 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. If for any 

product the cova:r!ances are zero, the 

results of the analysis will not be 

affected. If, however, the covariances 

are not zero, the results of the analysis 

\'\.111·be affected. DOE does not hav~ 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 on this issue. 

S. Energy Savings 

While the signifIcant conservatiopof 

energy is a separate statutory . 

requirement for imposing an energy 

conservation standard, the Act requhes 

DOE, ind!;!termining the economic 

justification of a standard to consider 

the total projected savings that are 

eXllected to result directly from new or 

revised. 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 

ls, to the exHmt that corrimentsor DOE's 

m'\1ll researchirtdicated thEita product 

.. included Ii. utility or performance-related 

,. The net present value· (NPV) of a 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 of this factor as a 

result of the standards that were 

analyzed. However, other factors, in 

conjunction with standards, couldaffecl 

the lltility or performance of products 

subje.ct to standards. For example, the 

EPA limitations on CFC production 

could cause·refrigsrator manufacturers 

to adopt ·altermitives to the regulated 

CFC!s 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 st!irid~rds~ .. 

Also, as discussed in section IlIof this 

notice, DOE Was riot 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 ofLesseDjng of Competition 

Ii is inipor~ant to note.·that this factor 

has two parts; on theon~ hqnd, 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 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 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 

Presideid 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) 
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 freezers.

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 government

agency 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, 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.)

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

CE-RM-87-102 COMMENT 02

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 of our national energy picture. 

Specifically, only 5.5 percent of net 

electricity was generatedby petroleum 

in 1986. Therefore, conservation of 

energy by tb,ese products will have little 

bearing on our I}ational energo} 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 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 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, 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. 

Refrigera tors 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 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 of a design 

options that were examined: 

(il Refrigerators and refrigerator-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 motor improvement. 

(Il Improved foam .insula tion. 

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 

substi tution. 

IF) Double door gasket. 

(Gl Adaptive defrost control. 

IH) Fan and Ian motor improvement. 

(IJ Improved foam insula lion. 

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 of the earth's ozone 

layer have pointed to certain CFe's as. 

the probable Gause 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 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 Solar Energy 

Association of Oregon (SEA-O) 

supported this opinion. (SRI\O, 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 CPCdistribution 

and use, providing for a fle:>dble 

regulation suitable to the needs of 

business and consumers. (EPA, 

Testimony). 

SEAO recommended that DOE 

analyze and follow one of two courses 

of actipn 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, 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 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 
If,88sr^' Federal Register / Vol. 53 , No, 232 . /

Friday, 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

CE-RM-87-102 COMMENT 02

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 stud V found 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 of more 

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, DuPont urged a 

tot21 phaseout of the destructive CFC 

and indicated its intent to cea~e 

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 

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 of a ban in CFC use is an 

example of the reason .. \Thy 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 

restricteq CFC's to achieve energy 

efficiency requirements. DOE call..,,\ot 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, asa 

result of these or other factors, 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"believesthat under 

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 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; 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 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-ll and CFC-12 

currently represents approximately 1\;"0 

percent of all 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. 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 (iIi 1987 refrigerator models had no 

single set of design 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 

would be used to accompFsnthe 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, 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 by the time of th,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 of Chlorofluorocarhons 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 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 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 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'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 evacuated panels have 

been researched in many forms, all 

sho;.vinghigh potentia] for saving 

energy. (NRDC. No. 19, at 17). AHAM 

provided.information from its 

investigation of Japanese 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 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 
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 th

at 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 is

not 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 adjusted

volume, 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.

CE-RM-87-102 COMMENT 02

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 of 1993 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 of refrigerators. 

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 of the ail-refrigerator with 

automatic defrost class. (AHAM, No. 22 

at 26). 

DOE proposes to include the a11-

refrigerator with the class of top-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 can produce 

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 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 

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. 

Payback Period. Table 3~2 presents 

the payback period for the 'e(ficiency 

levels analyzed for the most pre'valent 

class of product (20.8 cubic foot adjusted 

volume. automatic defrost refrigerator~ 

freezer), Standard level 1 involves 

efficiencies achievable withfoarn door 

irisulation and a 5:Q compressor, levei 2 

involves additional efficienCies ' 

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 2 indies of door 

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 of the energy.savings that the 

consumer will receive during the first 

year. The payback period for 

refrigerators that me'et standard level 1 

effidency ranges from a low of 0.6 years 

for a side-by-side refrigerator~freezer 

with through-the-d()or services to a high 

of 2.0 years for a manual defrost chest 

freezer; the payback period for ' 

refrigerators that meet standard level 2 

efficien.cy 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 

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~ 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 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 cubic

foot automatic defrost refrigeratorfreezer with side freezer and through-

-the-door services. The cost for the most

prevalent 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-freezers

and 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 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 10.32 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

CE-RM-87-102 COMMENT 02

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 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 ,2015 (in real 

terms). Without upward pressure on 

operating expenses. the LBL-REM 

projects that there will be no major 

energy consumption improvements. 

When re"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 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 or 

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. I6 DOE requests comments 

16 On,June 13. 1988. FTC plibiished 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 lahel could iricrease consumer 

awareness of e'Il2rgy consumption. 

= 

on this issue. particularly the LBLREM's forecast of refrigerator efficiency. 

Economic Justification-A. Economic 

Impact on Manufacturers and 

Consumers. The per un.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 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 cubic 

foot automatic defrost refrigeratorfreezer with side freezer and through-

·the-door services. The cost for the most 

prevalent 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. 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 percent for 

refrigerators and refrigerator-freezers 

and 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, again 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 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 10.32 percent (an 

improvement of 8.2 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 Support Document, 

Tables 7.9 and 7.10. 

These industrfes have displayed 

periods of increasing consolidativns that 

have been especially pronounc{ld 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 LTlcrease in profitability 

is directly related 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 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 aSSll.1Jles that manufacturers' 

typical refrigerator, refrigerator-freezer 

and freezer designs are based on the 

combination Df options presented in the 

Engineering Analysis for the baseline 

unit. If manufacturers use a different ' 

combination of design optivns 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 1,.1.e LBL-MIM. 

Furthermore, since financial data of the 

type needed to characterize the 

prototypical manufacturer are generally 

not available, DOKhad 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. 

'fhe sensitivity analysis, however. 

indicates the refrigerator, refrigeratorfreezer and freez'er industry is sensitive 

to price and operating expense 

elasticities. For example, the high priqe 

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.D percent for 

freezers. See Technical Support 

Document. Tables 7.17 and 7.18. 1'Vhile 

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 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 of price 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

CE-RM-87-102 COMMENT 02

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 and Net Preseni 

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 wouldl 

not cause any economic burden on the 

average consumer. DOE examined the 

effect of different discount rates, 5, 7 

and 10 percent, 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 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. 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 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 SOl'ings. 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, wiil 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 wouId 

not be reasonable to assume that energy 

efficiency would improve at a greater 

than historicall'ate. 

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. 

Ii 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 or 

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 easel 

Standard 

Base case 

Level 3 Level 4 

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

D. Lessening of Utiiity 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 perfcirrrtanceof 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.lmpact of Lessening Competition. 

Sfnce standards generally would result 

in greater industry 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 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. 

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 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 
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 any

currently 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 CFCs

are 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 3

standards 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

CE-RM-87-102 COMMENT 02

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 

percent respectively. The sensitivity 

analysis on the LEL-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 18ve14 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-ll or CFC-12. Both of 

these refrigerants ar.e subject to all 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'g in 

refrigerators to exceed five percent of 

U.S. consumption. This increase in the 

percentage of CFC consumption 

accou11ted for refrigerators would be a 

result of the CFC production resu'iction 

along with increased CFC use to meet 

the legislated 1990 standards, and 

increased sale of these products. 

Presently, DOE is unaware of any 

currently available alternatives to CFG11 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. or the 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 amountscf the 

affected CFC's. 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 

'Nalls. If manufacturers were to adopt 

this approach, .substantially.more CFC's 

would be required than the 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 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 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 a..'1aIysis and is soliciting additional 

comment and information tn 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 

NP,ECA 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 S 

standards are expected to produce longrun increases in their net income and 

return on equity of 16.2 percent and 11.0 

percent, respectively. Levels 1 and 2 will 

result in similar increases. 

Each standard level may involve the use of additiona1.amounts of ozonedepleting CFC's; however, DOE believes 

this additional amount will come at the 

expense of other products 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 of refrigerators. 

Furthermore, if the 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. 

In the base case (1990 NAECA 

standards), DOE believes the analysis 

likely underestinlates the impacts of the 

1990 NAECA standards. As discussed 

above, the Department believes that the 

LEt-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 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; would not increase 

refrigerator CFC use; and would aHow 

time for research on alternative, lOl'lTer 

CFC-using technologies. 

For standard level 3, the Department 

proposes that there will be a significant 

conservation of energy 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 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 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 the EPA's CF·C 

restrictions. 

For standard level 2, the Department 

proposes that t.~ere 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, ihe 

analysis may underestimate the 

economic impaots on manufacturers as 
1 --9 r1

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 from

being 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 level

assumes 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 from

builders 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

CE-RM-87-102 COMMENT 02

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 of energy 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 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 or 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. 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 standard level. 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 

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 resuits in a negligible life-cycle 

cost difference between these levels, 

FurL~ermore. this standard level 

assumes the use of more ozonedepleting CFC than the level 3 standard. 

b. SnwIl 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 l\nalysis·identifies 

individuator combinations of design 

options wit..~ 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: 

CA) 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 Depar'.ment 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 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, 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. (EEl. 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 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 standard greater than 78 

percent AFUE. 

The American Gas Association (AGA) 

and Alabama Gas Association (AlG) 

maintained that the use of life-cycle cost 

(LCG) 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, 

A1G. No.8. at 3 and 6). Conversely. CEC 

suggested that the Department develop 

LCC curves for each product. (CEe, No. 

35. at 6). 

Indeed, while much of the small 

furnace market demand comes from 

builders and contractors. consumer lifecycle cost analysis is still appropriate 

since section 325(1)[2)(B)(i}(lI) of the Ad 

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 (or class j 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-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 the

American 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 South .::................ UCG ..............

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.

CE-RM-87-102 COMMENT 02

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 of the 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 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 stales by 

house type. This fe!J.ture, combined ,,,,<jth 

climate data. permitsestima tion 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 th!? utility 

impact analysis. Lone Star Gas 

Company (LSG) and EEl 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, 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 gas utility 

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 of the regional 

variations as possible. LBlr-REM used 

regiomtl disaggregation in modeling 

space conditioning choice in new homes. 

While resource limitations prevented 

any further disaggregation pf the 

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 

one being the impact on gas utilities of 

reduced load th~t ~ould result from a 78 

percent standardo!S Comments in favor 

of the 78 percent. AFUE were received 

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 of all factors before a 

decision is made were submitted by the 

Natural Resources Defense Council, the 

New York State Energy 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 of considering tv.ro standards 

case's. 71 pertent 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 SGA, No. 26, at 2). 

Comments requesting consideration of 

a range of efficiencies 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 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. (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 of design 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 associa tions 

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 candida te 

standard level for this rulemaking, 

because it falls outside of the range for 

consideration set by 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 Act is explicit under the 

definition of "efficiency descriptor" 

. stating "for furnaces and direct heating 

equipment. (it is) annual fuel utilizatimi 

efficiency." Section 321 (a)(22)(A). The 

confusion in this matter has reference to 

section In 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 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. . 

MaintenaIlce Expense. Several gas 

companies referenped the need to 

consider higher 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 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 inchlded 

in the Engineering Analysis. 

Higher Fjrst Costs/Installation Costs. 

Several of the gas companies and. 

associations. cited increased installation 

expenses due to special venting 

requirements as being riecessary 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. 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, 

at 4; UCG. No. 27. at 3; 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 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 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 of fan 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. Specificcomments 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

CE-RM-87-102 COMMENT 02

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 water heater 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). GAM..I\ 

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; 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. DOE recognizes 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 are located, not a national 

population-based climate. 

In addition, DOE performed a 

sensitivity analysis on the Lce 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-AbiHtyto Use 

Common Venting. Many of the 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 of this type 

furnace in a common vent with an 

atmospheric type buruer system. 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 

Standard Z223.1). which is the major 

installation code for gas-fueled furnaces, 

addresses mechanical draft systems as 

follows: "Vent connection serving 

equipment vented by naturardraft shaH 

not be connect€d into any portion of 

mechanical draft systems operating 

under positive pressure." This would 

prohibit an installation of a 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 of Power and Non Power Vented 

Appliances," to substantiate its 

statement and which GAMA believes 

directly contradicts the testimony of 

AGA and SGA. GAMA also submitted a 

list of engineering reports published by 

the AGA Laboratories in the July 1987 

issue of the AGA Laboratories Directory 

of Certified Appliances. GAMA stated 

that the purpose of these reports is to 

identify specific induced draft noncondensing furnaces that can be 

common vented with conventional 

combustion system equipment. GAMA 

further stated that AGA's White Paper 

concluded that before allowing common 

venting of ran or blown assillted 

combustion system appliances with 

draft hood equipped appliances, code 

authorities are requiring engineering 

data to show satisfactory performance .. 

Based on this information, DOE 

believes that draft induced appliances 

can be. used safely in a common vent 

system with atmospheric type (draft 

hood equipped) water heaters. However, 

there remains a question of the degree of 

acceptability by local code officials of 

draft-induced furnaces using a common 

vent with an atmospheric type water 

heater. DOE will examine these issues 

before issuing a final rule for the Elmall 

furnace standard. DOE invites 

comments on these issues, especially 

with respect to the acceptance within 

each State or local jurisdiction regarding 

the special testing requirements and 

AGA engineering reports that are being 

used. . 

Several Comments also suggested that 

a variety of housing 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 Impact Analysis-Fuel 

Switching Impact. Several gas utility 

companies commented that the utility 

analysis should include costs of all 

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 of gas 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 of gas per 

unit sold. [LSG, No. 11. at 6). Several of 

these companies also pointed out that 

when load is lost to electric resistance 

heat-particularly baseboard radiant 

heat-that future 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 lower income 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 of gas 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 of gas 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 standard for 

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 of the 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 not be 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

CE-RM-87-102 COMMENT 02

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 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 

lBCF if the 78 percent AFUE level is 

prescribed." (NG Co., No. 37, at 3). 

Conversely, EEl statecl 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 

sxailability, cost or C(lnven~t:1nce of 

electricity and gas. EEl also commented 

that DOE should modify the utility 

analysis to include the benefits the t will occur from improved gas energy 

efficiency causing an extension of future 

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 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 Ellectric resistance heat than 

for those that are heated by gas. The 

contention was that since this would 

raise t.1.e first-cost of electric resistance 

heating relative to gas heating, it would 

"reduce or eliminate fuel sv.·itching to 

electric resistance resulting from furnace 

standards by reducing the difierential 

costs-both first cost and operating 

oost-of gas 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 of ASHRAE 

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 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 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 

shorter payback with respect to increasing 

the efficiel1cy of the 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 if it had. a less than 

proportional price increase to reach the 

higher efficjency. 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 Amencan Council for an Energy~ 

Efficient 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 Btuth input is considerably 

greater than may be projected by 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 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 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 45,000 Btu/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 of house heating customers 

increased 17 percent." AGA also 

cornments that master meter 

prohibitions an.d 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 

evalua te :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 system for single 

family residences. The objective of these 

commEHlts 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. 3::1. at 3). NRDC contends. L1.at no 

. further switch to electric is likely as a ' 

result of the small gas furnace stcmdard 

going from 71 to 78 percentAFUE; since. 

first cost i.s alre'ady signifiqant for gas at 

71 percent versus eli3ctric. EEI stated 

that if a builder decides not to purchase 

gas it may be for reasons other than 

whether t.he furnace is 71 percent or 78 

·percerit AFUE. namely, reasons such as 

individual meterIng requirements, 

interruptible rate requirements, etc. (EEl, 

No. 20. at 5). Florida Natural Gas has 

stated ihat 40 percent of new 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 they

are 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

CE-RM-87-102 COMMENT 02

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 of more 

ther:r:rially 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) '\-"(Quld 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 8tu/h furnace (of 78 percent 

AFUE) would other"\iVisehave 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. iJ) 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 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 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 

i ................................ , .. , ................................. . 

2 .......................... , .......................................... . 

3 .. · .. · .. , .. ··· ...... ·· .. ·· .. ·· .. ·· ........ · .. ····· .. · .... ·· .. ··· .. · .. ·1 

AFUE 

(percent) 

71 

74 

78 

Payback Period. Table 3.5 presents 

the payback period for the efficiency 

levels analyzed. For both 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 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 ~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 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 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 of larger gas 

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 small furnaces 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.omic JustIfication-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. 

At that level of efficie"tli!:y. th.e price to 

the consumer increases $215.10 for 

indoor gas furnaces and $257.50 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 

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, it was 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 of a -'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 it important for 

marketing purposes to carry'a complete 

line of furnace 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' percent AFUE for 

small gas furnaGes would result in 

slightly fewer shipments. higher product 

prices. and lower net income and ROE 

than would occur in 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 and Net Present

Value. The LCC analysis indicates that

at each possible standard level the

increase in purchase price would be

offset by savings in operating expenses.

See Technical Support Document,

Tables 3.41 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.

CE-RM-87-102 COMMENT 02

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 

consumer price 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 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 and Net Present 

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, 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 Savhlgs. 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 the eXisting 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 

fUl;,naces use natural gas as their energy 

source. Nearly seven percent of the 

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 DeDartment 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 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 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 litHe 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 levelS standard. 

One small drawback 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 one that 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, 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 

Depaitment 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 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 

evaluated for separate levels of 

efficiency. DOE identified eight design 

options and requested data on power 

demand characteristics. 

The two classes are distinguishe4 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 nle 

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 follo\\ing 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. 

£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 options

be 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 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 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 + 3e

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

CE-RM-87-102 COMMENT 02

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 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 

Genera! Electric (GEJ brand television 

sets, opposed the establishment of 

energy standards for television sets. 

Thompson claimed that the 

technological advancement of solid 

state electronics in'reple,cing tubes had 

extensively increased the energy' 

efficiency of television sets. (Thompson. 

No.4, at 2). The company stated furtIler 

that its research revealed an 

incrementa! 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 (ElA), 

an industry trade association 

representing television manufacturers. 

(ElA. 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 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 of those recommended was based 

on the observed variation in power 

requirement between a ~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 ot portability 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 

of the design. options anaI:;'zed has a 

favorable life cycle cost and meets the 

other impact criteria under which DOE 

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 of new 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 coordinated by the Federal 

Communications Commission. (ElA, No. 

21, at 3). 

EIA 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 63 

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. Electmllic 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.~. at 6; and EIA. No. 21, at 5). 

4. Vertical Internal Reference (VIR) is 

no longer in production ~ccording to 

these comments. (Thompson. No.4. at 6; 

and EIA, No. 21. at 5). 

. 5. Brightness sensor is seen as an 

energy saver by 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 regulating power source 

contributes measurably to the energy 

consumption of televisionsetll ' .. 

dependingon the type of power 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 

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 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 z corresponds to the minimum lifecycle cost point. Levell corresponds to 

efficiency lower than that of levelZ. 

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 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 openitio!1. Section 321(a)(6)(A) of the 

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 not necessarily 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 (IN

YEARS) 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

CE-RM-87-102 COMMENT 02

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 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 t~e additional 

price of purchasing a product at nils 

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 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 of new television 

sets sold in absence of standards 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 

would be attributable to standards: 

Level 1-.66 Quads 

Level 2-.69 Quads 

1evel3-.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 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 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 forID of a higher price and a low' 

consumer demand elasticity with 

respect to price and operating cost. 

B. L~fe Cycle Cost and Net Present 

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 

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 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 net present value of $1 

billion from 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 of electricity. This level would 

require the reduction of standby power 

and reduction of screen power. including 

a more efficient screen display. 

D. Lessenblg of Utility or Performance 

of Products. As inilicated 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 wouid 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.lmpact of Lessening Competition. 

The determination of this factor must be 

made by the Attorney General. 

F. Need to Save Energy. Television 

sets use electricity'as 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 LBL-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. Other Factors. Television sets are 

presently not 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 of new technologies 

that characterize this industry. For 

example. a standard for televi.sion sets., 

involving the diversion ofresearchand 

development monies to complying l'."1th 

the standard, could have an impact on 

the development of high resolution 

televisions, which is a..!J. 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 Departme~t 

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 

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 small LCC 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.

CE-RM-87-102 COMMENT 02

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 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 oflimited 

available data on television sets, the 

standards analysis ''las 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 I]ot 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 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 on Environmental 

Quality regulations implementing the 

procedural provisions of NEPA (40 CFR 

Part 1500 et seq.), 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 of the impact of Federal 

regulations: and -

,. Oleo 

• 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 et seq.) which requires, in 

part, that an agency prepare an initial 

regulatory flexibility analysis for any 

proposed rule unless it determines that 

the rule will not have a "significant 

economic impact 011 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 determLtlation 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 1959, as 

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

et seq., and the implementing 

regulations of the Council on 

Environmental Quality (40 CFR Parts 

1500 through 1808). The EA addresses 

the possible incremental emironmental 

effects attributable to the application of 

the proposed standards to the design of 

three types of covered products: 

reD.'igerators, refrigeratm;-freezers. and 

freezers; small gas furnaces; and 

television sets. 

A Finding of No Significant Impact 

(FONS!) is published in today's Federal 

Register. The FONS! concludes L'J.at the 

proposed standards would result in no 

significant environmental impacts and 

that an environmental impact statement 

is not required. 

TheRA 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. R.egulatory impact 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 or prices for consumers. individual 

industries. Federal. State. or local government 

asencies.or geographic regions; 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 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 Anal~,sis is 

summarized below. This summary 

focuses on the major alternatives 

considered in arriving at the proptised 

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 

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 

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 I 

eXCJ.lJ1jned saved as much energy as the 

proposed rule. Also, most of the 

alternatives would require that enabling 

legislation be 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 representing feasible pohcy 

alternatives for achieving consumer 

product ellergy 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). 

Ea.ch alternative has been evaluated 

in terms of its ability to achieve 

significant energy savings at reasonable 

investment. productivity, innovation. or on tho 

ability of United 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.

CE-RM-87-102 COMMENT 02

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 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 of the base case. 

Another method of seWng 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 jnch 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 consuniers were assumed to be 15 percent of the 

increased cost of higher energy 

efficiency fea ture!) of these 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. het present 

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 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 norso likely to take advantage of ihe 

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 (ITe) 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 lTC. 

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 jn 10 years. In these scenarios, 

the five year delay would -result in . 

energy consumption by these appliimces 

of 43.01 Quads, energy savings of 3.93 

Quads, and a net present value of$8.41 . 

billion; the 10 year delay would result iIi 

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 llIrlversal 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 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 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'' 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. 

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 

tha t, 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 . ecollO'mic impacts does not constitute a 

"hiking" of private 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 of standards could 

bl:J·y}ewed by some as a "taking." 

Nevertheless; the Department believes 

that the fact that while an energy . 

conservation. standard may limit ~ome 

manuf,~cturers in the range of appliance 

efficiencies that they can produce. such 

narrow.i.ng of the eI}ergy efficiimcy range 

does not constitute a "taking" in the 

sense described above. 

In short, in none of the three parts of 

the. appliance stqndards program does 

the O~partmentbelieve that the 

provisions of E.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 manufac

turers

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

of the agency certifies that the tale

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

umber of small en 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 id by their larger competitors who significant economic impact on a pa

ith b i lum r in ome case 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,

e er uy n vo e o s s

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

CE-RM-87-102 COMMENT 02

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 on States, on 

ihe relationship between the National 

Govermnent and the States. m' on the 

distribution of power and . 

responsibilities among variolls levels of 

government. If there are sufficient 

substantial direct effects, then ExecuUve 

Order 12612 requires preparation of a 

federalism assessment to be llsed in all· 

decision;; invGlved in prorrm}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 would initially preempt 

inconsistent State reg!ilatioIls. However, 

DOE has concluded that the initially 

preemptive effect is not sufficient to 

warrant preparation of a federalism 

assessment for tv.'o 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 recei.ves 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 

Jess dominant in 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 of 78'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 

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 of fixed cost A 

coronary to tIllS observation is that 

profits 5re also not correlated to firm 

size. Some large firms are quile 

profitable, others earn norInal profits, 

while others are marginaliy profitable. 

and the same is true for smaller firms. 

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 of small entities" 

suggests that the provisions of section 

605(b) of the Regulatory Flexibility Act 

pertain. These provisions state that 

neither an initial nor a final regulatory 

flexi~ility analysis need be performed 

for a proposed or final rule "if the head 

of the agency certifies that the nile will 

not, if promulgated, have a significant 

economic impact on a substantial 

number of small entities." 

Secondly, the proposed energy 

conservation sta.ndards en refrigerator 

manufacturers needs to be addressed. It 

is not at all clear that the s1andard 

levels being proposed will "have a 

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 the consolidation process 

temporarily. Thi.s would lead to a 

temporary slowing down of the 

continuing decrease in this industry's 

competitiveness. However this 

prediction would be tempered by the 

observation that if standards were 

technologiCally difficult to meet they 

could hurt some smaller firms the most, 

since smaller firms tend to have less 

sophisticated research and development 

capaBilities. This should not be a 

serious consideration for regulatory 

flexibility. since the proposed standard 

levels on refrigerators ""ill not be 

technologically difficult to .meet. 

Of the 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 of combined-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 of the elasticity of demand 

in this market. One thing must be 

remembered when analyzing this 

problem: standards will increase the 

price of standard refrigerators and this 

will offset (partly or more than 

completely) the impact of the price 

increase of custom refrigerators. 

'The three small manufacturers of 

compact refrigerators are probably at 

the greatest risk, both without standards 

and from standards. They face stiff 

foreign competition from1arge foreign 

manufacturers. Some anecdotal 

evidence indicates that part of their 

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 higher price than that 

paid by their larger competitors who 

either buy in volume or in some cases 

manufacture their own. Still, it would 

seem that these small manufacturers 

must have some advantages fromthe 

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 

small compared with the major firms. -

Because of this, they have little time to 

cooperate with data colIectiml efforts 

and consequently relatively little is' 

know about them. Specifically, 

engineering cost data is not separately 

available for small firms nor are 

demimd elasticities availa:ble.Small 

firms are generally-not members of 

AHAM. Consequently, most were not 

included in information provided by· 

AHAM concerning the Department's 

analysis and, of the ones that were, only 

one "vas included. Because of this 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.

CE-RM-87-102 COMMENT 02

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 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 

Q. Participation in Ruiemalcing 

. DOE encourages the maximum level 

of public pal'ticipation possible in this 

l'ulemaking. 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 ill 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 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 of this 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 of thisnotice. Ten copies are 

requested to be submitted. All -

coinments recEdved by the date specified 

, at the beginning p£ this notice arid other 

relevant information will be considered 

by DOE before final action is taken QIl - the proposep regulation. . '. 

.' All written cOmIntmts received on the 

propbsed rule \VHf be avaiiable for 

public inspection at the Freedo:Jn of 

Information Reading Room. as provided 

at the beginning of this notif;e. . 

Pursuant to the provisions of 10 CFR 

1004.11. any persoll 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 

ipjormation 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 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 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 indicatedat the beginning of 

this notice~ DOE invites any person who' 

has an interest in these proceedings, or 

who is a representative of a group or, .' 

class of persons having an interest. to 

make a written request for an 

opportunity to make an oral . . 

presentation atthE! public hearing. Such 

requests should be labelerj both· OIl the 

letter and the envel{)pe. "Three Products 

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 of this notice. 

Requests may be hand-delivered or, 

phoned in to such address between the 

hourso~ 8:30 a.m. and 4:30 p.m .• Monday 

through Friday, except Federalhplidays. 

Th,e persoil making the request should 

briefly describe the interestconcerried. 

and. if appropriate, ~tate 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 questipns 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..V'lTitten 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 

sl.l.ch questioning is likely to result in a 

more timely and effective resolution of 

disputed issues of material fact. If the 

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 of any 

rebuttal statements and be prepared to 

state specific justification. including 

why the issue is one of disputed fact and 

how the proposed questions would 

expedite their resolution. 
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

CE-RM-87-102 COMMENT 02

Federal Register I Vol. 53, No. 232 I Friday, December 2, 1988 I Proposed Eul~s 48825 S! T ACt. 2ZC2G!:&i! .m::ua ~:::{!!~,,~_~::!~~: ~~~::: .. ~,~_::::::~~~ 

Any further procedural rules regarding 

proper conduct of the hearing wiH 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 Reque~ted for COIl/meat 

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 

elastici ties; 

• 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 of prototypical 

firms for the manufacturer impact 

analysis (LBL-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 

n of Title 10, Code of Federal 

Regulations, as set forth below. 

Issued in Washington, DC, November 22, 

198B. 

John R. Berg. 

Assistant Secretary, 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 citation for Part 430 

continues to r~ad as follows: 

Authority: Energy Policy and Conserv;'ltion 

Act. Title m. Part B. 8S amended by National 

Energy Conservation Policy Act, Title IV, Part 

2, National Appliance Energy Conservation 

Act of 1987. and National Appliance Energy 

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

6291-6309). 

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 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 

administered by the Department of 

Energy pursuant to the energy 

conservation program for consumer 

products oth\!r than automobiles under 

the Energy Policy and Cpnservation Act, 

as amended (4:2 U.S.C. 6291 et seq.). 

§ 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 ..