#23.4

Energy Price Forecasts

Electricity

2000

- - - High Growth - Res

-+-- Reference - Res

- o - High Growth - Comm

Reference - Comm

Low Growth - Res

Low Growth - Comm

2005 2010 2015 2020 2025 2030 2035 2040 2045

Year

1 . 10

1 .05

1.00

in 0.95

O

N

0.90

L

H

2 0.85

0

0.80

0 .75

0.70 A

A

A.

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Year

n Energy price projections to 2030 based on EIA/AEO Reference Case

n AEO High Growth and Low Growth cases can be run as a sensitivity

n Electricity price forecasts to 2042 : Based on average rate of change from 2020-2030

n Natural Gas and Oil price forecasts to 2042 : Based on average rate of change from 2015-2030

Natural Gas

-j -+- High Growth - Res

Reference - Res

-A Low Growth-Res

- - - High Growth -Comm

- Reference - Comm

-e - Low Growth - Comm

94

EE-2006-STD-0127 COMMENT 23.4
Water and Wastewater Price Forecasts

600 -

500

400

200

--- ♦--- Water CPI

♦- Linear Extrapolation

♦

100 Y♦♦^♦

0

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Year

n Water price projections from 1970 -2005 based

on CPI national water price index (U.S. city

average)

n Price projections to 2042 based on average

growth rate from 1970-2005

#23.4

95

EE-2006-STD-0127 COMMENT 23.4
#23.4

Other Inputs

n Discount Rates

' Based on the finance cost of raising funds to purchase appliances

- Financial cost of any debt incurred to purchase equipment

- Opportunity cost of any equity used to purchase equipment

• Residential Rates

- New Housing = Average real mortgage rate = 3.2%

- Replacements = Weighted-average real rate associated with various household equity (e.g., savings

bonds, stocks, CDs) and debt (e.g., credit card, home equity loans) = 5.6%

- Primary data source: Federal Reserve Board's Survey of Consumer Finances for the years 1989, 1992,

1995, 1998, 2001, and 2004

• Commercial Rates

- Calculated from the weighted-average cost of capital to the firm (WACC) to obtain equity and debt

financing

- Weighted-average real value = 5.7% for purchasers of commercial clothes washers

n Equipment Lifetime

' Based on various sources including Appliance magazine and past DOE TSDs

' Lifetimes (years)

- Dishwashers: Min = 7; Average = 12.3; Max = 17.6

- Dehumidifiers: Min = 5; Average = 11; Max = 17

- Cooking Products: Min = 10 (elec), 12 (gas); Average = 19; Max = 28 (elec), 26 (gas)

- Microwave Ovens: Min= 7; Average = 9; Max = 10

- Commercial CW: Min = 7 (MF), 5 (Laund); Average = 11.3 (MF), 7.1 (Laund); Max = 15.5 (MF), 9.3 (Laund)

n Repair and Maintenance Costs

• Assumed no changes with increased efficiency for all products

96

EE-2006-STD-0127 COMMENT 23.4
#23.4

Repair and Maintenance Costs (Issue #11)

n Primarily because it did not receive any specific data on the impacts

that standards might have on repair and maintenance costs, DOE

did not include any changes in repair and maintenance costs due to

standards for any of the four appliance products.

DOE requests feedback on its understanding of repair and

maintenance costs.

97

EE-2006-STD-0127 COMMENT 23.4
#23.4

Equipment Assignment in the Base Case

n LCC and PBP analysis typically analyzes standard levels

relative to a baseline efficiency level

n Not all consumers purchase products at baseline levels

• Must account for consumers purchasing more efficient products to

accurately estimate consumer economic impacts

n Base case efficiency distributions define the percentage of

products being purchased at various efficiency levels

• Consumers already purchasing products at efficiencies greater than

or equal to a prospective standard level are not impacted by the

standard

98

EE-2006-STD-0127 COMMENT 23.4
#23.4

Equipment Assignment in the Base Case

Dishwashers

Level EF Market Share

Baseline 0 .46 3.0%

* 0.50 2.0%

* 0.54 2.0%

1 0.58 43.0%

* 0.60 17.0%

2 0.62 22.0%

3 0.65 8.0%

4 0.68 2.5%

5 0.72 0.2%

6 0.80 0.2%

7 1.11 0.2%

Dehumidifiers

0-35.00 pints/day 35.0 1-45.00 pints/day 54.01-74.99 pints day

Level EF Market

Share*

Level EF Market

Share Level EF Market

Share

Baseline 1.20 27% Baseline 1.30 27% Baseline 1.50 31%

1 1.25 35% 1 1.35 35% 1 1.55 0%

2 1.30 0% 2 1.40 0% 2 1.60 57%

3 1.35 0% 3 1.45 0% 3 1.65 12%

4 1.40 38% 4 1.50 38% 4 1.70 0%

5 1.45 0% 5 1.74 0% 5 1.80 0%

* Market share data unavailable. DOE used the same market shares as for the 35.01-45.00 product class.

99

EE-2006-STD-0127 COMMENT 23.4
#23.4

Equipment Assignment in the Base Case

Cooking Products

Gas Cooktops Gas Standard Ovens

Level EF

Market

Share Level EF

Market

Share

Baseline 0 .156 6.8% Baseline 0 .0298 17.6%

1 0.399 93.2% 1 * 0.0536 82.4%

2 0.420 0% 2 0.0566 0%

3 0.0572 0%

4 0.0593 0%

5 0.0596 0%

6 0.0600 0%

la* 0.0583 0%

Commercial Clothes Washers

Level MEF WF Market Share

Baseline 1.26 9.50 79.7%

1 1.42 9.50 0.0%

2 1.60 8.50 0.0%

3 1.72 8.00 0.0%

4 1.80 7.50 0.0%

5 2.00 5.50 20.3%

6 2.20 5.10 0.0%

n Electric coil and smooth cooktops,

Electric standard and self-clean

ovens, Gas self-clean ovens, and

Microwave ovens assumed to have

100% of market at baseline levels

n Deduced from AHAM shipmentweighted efficiency data

n Assumed bi -modal distribution at

baseline and 2.00 MEF/5.50 WF

efficiency levels

100

EE-2006-STD-0127 COMMENT 23.4
#23.4

Efficiency Distributions in the Base Case (Issue #12)

n To accurately estimate the percentage of consumers that would be

affected by a particular energy conservation standard level, DOE

took into account the distribution of product efficiencies currently

in the marketplace.

n In other words , DOE conducted its LCC and PBP analyses by

considering the full breadth of product efficiencies that consumers

purchase under the base case (i.e., the case without new energy

efficiency standards) to account for those consumers who already

purchase more efficient products.

n DOE developed base case efficiency distributions for each of the

four appliance products based on a combination of data sources

and estimates.

DOE requests feedback on the data sources and estimates it used

for developing its base case product efficiency distributions.

101

EE-2006-STD-0127 COMMENT 23.4
LCC and PBP Results

Example: Dishwashers, Standard-Sized

$1,180

$1,160

$1,140

$1,120

$1,100

$1,080

$1,060

$1,040

-^- LCC

PBP

32

28

24

20

16

12

8

4

$1,020 !T--^ - 0

0.45 0.55 0.65 0.75 0.85 0.95 1.05 1.15

EF

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

0.58 0.62 0.65 0.68 0.72 0.8 1.11

EF

#23.4

q Net Benefit

q No Impact

q Net Cost

102

EE-2006-STD-0127 COMMENT 23.4
Other Issues

The Department seeks comments and recommendations from

stakeholders on any other aspects related to the Life-Cycle Cost

Analysis.

#23.4

103

EE-2006-STD-0127 COMMENT 23.4
#23.4

Energy Conservation Standards for

Residential Dishwashers, Dehumidifiers , Cooking Products and

Commercial Clothes Washers

ANOPR Public Meeting

National Impact Analysis

Building Technologies Program

Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy

December 13, 2007

EE-2006-STD-0127 COMMENT 23.4
ANOPR Analyses Flow Diagram

M

ANOPR ) NOPR

Market and

Technology Markups for

Assessment Engineering Equipment

Analysis Price

Analysis ,

Screening Determination

Framework

Document

Energy Use and

Water Use

Characterization

IN=

Final

Rule

#23.4

EE-2006-STD-0127 COMMENT 23.4
#23.4

Purpose

n Shipments Analysis

• To estimate home appliance shipments over time.

n National Impact Analysis

• To estimate the National Energy Savings (NES) from home appliance

efficiency standards at different levels.

• To estimate the national economic impact on the nation (or the Net Present

Value (NPV)) from home appliance efficiency standards at different levels.

106

EE-2006-STD-0127 COMMENT 23.4
#23.4

liz

National Impact Analysis Process

LCC

Analysis

Results and

Other Inputs

Shipments

Model

National National

Energy Economic

Savings Impacts ,

National

Energy Savings

(Quads)

National

Net Present Value

(2006 US $, billion)

n National energy savings calculated for period from 2012-2042 (30 years)

n NPV calculated for products shipped over the period from 2012-2042

107

EE-2006-STD-0127 COMMENT 23.4
#23.4

ANOPR Issues for Public Comment

n Commercial Clothes Washer Shipments Forecasts (Issue #13)

n Base Case and Standards Case Forecasted Efficiencies (Issue #14)

n Dehumidifier Cost and Efficiency Relationships (Issue #15)

108

EE-2006-STD-0127 COMMENT 23.4
Appliance Stock

New Building

Appliance

Saturation

Replacement

Shipments

New

Construction

Shipments

Shipments to

Exist Bldg Stock

Early Retirement

I J- Rate

(Calibration Variable)

Rate of Non-

"

t

(Calibration Variable)

wlo Appliance

Units not

Replaced

Total

Shipments

Total

Shipments

by Class,

#23.4

109

EE-2006-STD-0127 COMMENT 23.4
#23.4

Shipments Model Inputs

Input .. .- .

Replacements

Appliance Lifetime From Life-Cycle Cost Analysis

New Construction Shipments

Dishwashers and Cooking Products

Forecasted New Housing U.S. DOE-EIA, 2007 Annual Energy Outlook, New Housing Completions

New Housing Saturations U.S. DOE-EIA, 1993, 1997, 2001 Residential Energy Consumption Survey

Commercial Clothes Washers

Forecasted New Construction U.S. DOE-EIA, 2007 Annual Energy Outlook, Multi-Family Completions

New Building Saturations Consortium for Energy Efficiency, 1998 Commercial Family-Sized Washers:

An Initiative Description of the Consortium for Energy Efficiency

Historical Shipments

Dishwashers, Dehumidifiers,

Cooking Products AHAM Data Submittal, AHAM Fact Book, Appliance magazine

Commercial Clothes Washers

,

AHAM Data Submittal, Appliance magazine, U.S Bureau of Economic

Analysis' Quantity Index data

Shipments by Product Class

Dehumidifiers, Cooking Products AHAM Data Submittal

110

EE-2006-STD-0127 COMMENT 23.4
#23.4

Commercial Clothes Washer Base Case Shipments Results

0.40T0.35 -

0.30

Historical Shipments

-Total Shipments

Retired Units

Replacement Shipments

0.10 -----------------------------

0.05

0.00

1985 1995 2005 2015 2025 2035

Year

n To calibrate Shipments Model , retired units (units not replaced) start in 1999 and

end in 2013

n Shipment forecasted to increase as shipments are tied to new multi-family starts

111

EE-2006-STD-0127 COMMENT 23.4
#23.4

Commercial Clothes Washer Shipments Forecasts (Issue #13)

n Based on historical data, commercial clothes washer shipments

dropped significantly between 1998 and 2005.

n Because DOE tied forecasted shipments to the growth in new multifamily construction, DOE forecasted a continued increase in clothes

washer shipments over the analysis period (Le., 2012-2042).

n However, due to the dramatic drop in shipments seen in the

historical data , DOE is uncertain as to whether shipments will

continue to increase.

DOE requests feedback on its basis for estimated commercial

clothes washer shipments.

112

EE-2006-STD-0127 COMMENT 23.4
#23.4

Purchase Price and Operating Cost Impacts

n Shipments impacts due to purchase price and operating cost changes

are accounted for when forecasting standards case shipments

n Shipments Model used Relative Price (RP) elasticity to estimate the

impacts from purchase price (PP) and the present value of operating

cost (PVOC) changes

RP =

PP+PVOC

Income

n Purchase price effects dominate but mitigated by household income

n Based on historical shipments , retail price, efficiency, and income data

for home appliances , RP elasticity = -0.34

• 10% increase in RP results in a 3.4% drop in shipments

• Consumers become less sensitive to initial changes in purchase price

- Based on economic literature, RP elasticity drops 65% in ten years

113

EE-2006-STD-0127 COMMENT 23.4