Revised on 4/27/2010

8-i 

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

TABLE OF CONTENTS

8.1 INTRODUCTION ........................................................................................................... 8-1

8.1.1 General Approach for LCC and PBP Analyses ................................................... 8-1

8.1.2 Overview of LCC and PBP Inputs ....................................................................... 8-3

8.2 LIFE-CYCLE COST INPUTS ........................................................................................ 8-6

8.2.1 Definition ............................................................................................................. 8-6

8.2.2 Total Installed Cost Inputs ................................................................................... 8-7

8.2.2.1 Installation Costs ...................................................................................... 8-8

8.2.3 Operating Cost Inputs .......................................................................................... 8-9

8.2.3.1 Operating Hours ..................................................................................... 8-10

8.2.3.2 Power Rating .......................................................................................... 8-11

8.2.3.3 Electricity Prices .................................................................................... 8-11

8.2.3.4 Electricity Price Trend ........................................................................... 8-12

8.2.4 Lifetime .............................................................................................................. 8-13

8.2.5 Replacement Cost .............................................................................................. 8-14

8.2.6 Disposal Cost ..................................................................................................... 8-15

8.2.7 Analysis Period .................................................................................................. 8-15

8.2.8 Discount Rate ..................................................................................................... 8-15

8.2.8.1 Residential Discount Rate ...................................................................... 8-16

8.2.8.2 Commercial Discount Rate .................................................................... 8-18

8.2.9 Effective Date of Standard ................................................................................. 8-22

8.3 PAYBACK PERIOD INPUTS ...................................................................................... 8-23

8.3.1 Definition ........................................................................................................... 8-23

8.3.2 Rebuttable Presumption Payback Period ........................................................... 8-23

8.3.3 Inputs.................................................................................................................. 8-24

8.4 BALLAST PURCHASING EVENTS ........................................................................... 8-24

8.5 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS ...................................... 8-26

REFERENCES .......................................................................................................................... 8-35

LIST OF TABLES

Table 8.1.1. Summary Information of Inputs for the Life-Cycle Cost and Payback Period 

Analyses ............................................................................................................... 8-6

Table 8.2.1. Labor Times for Fluorescent Lamp-and-Ballast Systems (Commercial and 

Industrial)*

............................................................................................................ 8-8

Table 8.2.2. Relamping and Lamp-and-Ballast Labor Costs for Fluorescent Lamp-andBallast Systems (Commercial and Industrial)*

 .................................................... 8-9

Table 8.2.3. Average Operating Hours by Sector ...................................................................... 8-10

Table 8.2.4. Average Operating Hours for Two- and Four-Lamp PS Ballasts Operating 4-

Foot MBP and 2-Foot U-Shaped Lamps in the Commercial Sector ................. 8-11

Table 8.2.5. Electricity Prices by Census Division, 2008 .......................................................... 8-11

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Table 8.2.6. Average Percentage Shares of Household Debt and Equity Types ....................... 8-16

Table 8.2.7. Average Nominal and Real Interest Rates for Household Debt Classes ............... 8-17

Table 8.2.8. Average Nominal and Real Interest Rates for Household Equity Types .............. 8-17

Table 8.2.9. Shares and Interest or Return Rates Used for Household Debt and Equity 

Types .................................................................................................................. 8-18

Table 8.2.10. Variables Used to Estimate Company Discount Rates ........................................ 8-20

Table 8.2.11. Real Discount Rates by Ballast Ownership Category ......................................... 8-21

Table 8.2.12. Estimated Share of Ballast Purchases by Ownership Category in the 

Commercial Sector*

 ........................................................................................... 8-21

Table 8.2.13. Ballast Ownership by Sector* .............................................................................. 8-21

Table 8.2.14. Average Discount Rate by Sector ........................................................................ 8-22

Table 8.2.15. Effective Dates of Standards for Ballast Designs Addressed in Life-Cycle 

Cost and Payback Period Analyses* .................................................................. 8-22

Table 8.4.1. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot and 8-

Foot T12 Lamps (including MBP, Slimline, and RDC) .................................... 8-25

Table 8.4.2. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot and 8-

Foot T8 Lamps (including MBP, Slimline, and RDC) ...................................... 8-25

Table 8.4.3. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot T5 

MiniBP Lamps ................................................................................................... 8-26

Table 8.5.1. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot 

MBP and 2-Foot U-Shaped Lamps in the Commercial Sector (F32T8 

Baseline) ............................................................................................................ 8-28

Table 8.5.2. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot MBP 

and 2-Foot U-Shaped Lamps in the Commercial Sector ................................... 8-28

Table 8.5.3. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot 

MBP and 2-Foot U-Shaped Lamps in the Commercial Sector (F34T12 

Baseline) ............................................................................................................ 8-29

Table 8.5.4. Summary of the LCC and PBP Results for 4-Lamp RS and IS Ballasts 

Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in the Commercial 

Sector ................................................................................................................. 8-29

Table 8.5.5. LCC and PBP Results for Four-Lamp PS Ballasts Operating 4-Foot MBP 

and 2-Foot U-Shaped Lamps in the Commercial Sector ................................... 8-30

Table 8.5.6. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 8-Foot 

RDC HO Lamps in the Industrial Sector (F96T12HO/ES Baseline) ................ 8-30

Table 8.5.7. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 8-Foot 

RDC HO Lamps in the Industrial Sector (F96T8HO Baseline) ........................ 8-31

Table 8.5.8. LCC and PBP Results for Two-Lamp IS Ballasts Operating 8-Foot Slimline 

Lamps in the Commercial Sector (F96T12ES Baseline) ................................... 8-31

Table 8.5.9. LCC and PBP Results for Two-Lamp IS Ballasts Operating 8-Foot Slimline 

Lamps in the Commercial Sector (F96T8 Baseline).......................................... 8-32

Table 8.5.10. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot T5 MiniBP 

SO Lamps in the Commercial Sector ................................................................... 8-32

Table 8.5.11. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot T5 

MiniBP HO Lamps in the Industrial Sector ........................................................ 8-32

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Table 8.5.12. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot 

MBP and 2-Foot U-Shaped Lamps in the Residential Sector (Low Power 

Factor, F34T12 Baseline)................................................................................... 8-33

Table 8.5.13. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot 

MBP and 2-Foot U-Shaped Lamps in the Residential Sector (Low Power 

Factor, F32T8 Baseline)..................................................................................... 8-33

Table 8.5.14. LCC and PBP Results for Four-Lamp RS and IS Ballasts Operating 8-Foot 

RDC HO Lamps (Cold Temperature/Sign Ballasts) in the Commercial 

Sector ................................................................................................................. 8-34

Table 8.5.15. LCC and PBP Results for Four-Lamp RS and IS Ballasts Operating 8-Foot 

RDC HO Lamps (Cold Temperature/Sign Ballasts) in the Industrial Sector .... 8-34

LIST OF FIGURES

Figure 8.1.1. Flow Diagram of Inputs for the Determination of LCC and PBP .......................... 8-5

Figure 8.2.1. Residential Sector Electricity Price Trend ........................................................... 8-12

Figure 8.2.2. Commercial Sector Electricity Price Trend .......................................................... 8-13

Figure 8.2.3. Industrial Sector Electricity Price Trend .............................................................. 8-13

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CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

8.1 INTRODUCTION

This chapter describes the analysis the U.S. Department of Energy (DOE) conducts to 

evaluate the economic impacts on individual consumers of proposed amended energy 

conservation standards for fluorescent lamp ballasts (hereafter “ballasts”). Because ballasts are 

designed to operate fluorescent lamps, DOE chooses the most common fluorescent lamp used 

with each ballast to develop representative lamp-and-ballast systems. Fluorescent lamps will not 

be regulated under the proposed amended energy conservation standards for ballasts; however, 

the characteristics of complete lamp-and-ballast systems (e.g., energy consumption, installed 

cost, etc.) must be considered for estimating economic impacts of analyzed ballast designs. 

Amended standards usually decrease operating costs and increase purchase costs for 

consumers. This chapter describes the three metrics used in this analysis to determine the impact 

of standards on individual consumers: 

• Life-cycle cost (LCC) is the total (discounted) consumer cost over the analysis period 

including purchase price, operating costs (including energy expenditures), and 

installation costs. 

• Payback period (PBP) is the number of years it takes a customer to recover the generally 

higher purchase price of a more energy-efficient product through the operating cost 

savings of using the more energy-efficient product. The PBP is calculated as the change 

in first cost divided by the change in operating costs in the first year.

• Rebuttable payback period is a special case in which the PBP is calculated based on 

laboratory conditions, specifically DOE test procedure inputs. DOE calculates the 

aforementioned LCC and PBP using a range of inputs, which are designed to reflect 

actual conditions. 

Sections 8.2 and 8.3 discuss inputs to the LCC and PBP, respectively. Section 8.4

discusses the different purchasing events DOE analyzes, which affect consumer economics. 

Section 8.5 presents the results for the LCC and PBP. Key variables and calculations are 

presented for each metric. DOE performs the calculations discussed here using a series of 

Microsoft Excel spreadsheets developed for this rulemaking. Stakeholders are invited to 

download and examine the spreadsheets available at 

www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html. 

Appendix 8A presents details and instructions for using the spreadsheets. 

8.1.1 General Approach for LCC and PBP Analyses 

Recognizing that several inputs to the LCC and PBP analysis are either variable or 

uncertain, DOE will incorporate Monte Carlo simulation and probability distributions into its 

LCC and PBP model in the notice of proposed rulemaking (NOPR) stage of this rulemaking. 

DOE incorporates both Monte Carlo simulation and probability distributions by using Microsoft 

Excel spreadsheets combined with Crystal Ball, a commercially available add-in program. 

EERE-2007-BT-STD-0016 COMMENT 25
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The relationship between increasing selling price and increasing energy efficiency is the 

predominant influence on the LCC and PBP results. However, other factors related to the 

characteristics of the consumer using the products also affect the results. Based on the 

geographic region, sector, and application in which a consumer uses the ballasts, factors such as 

energy prices, sales tax, and energy usage can vary. DOE will account for this variability by 

using the Monte Carlo simulation and separate sensitivity runs. 

For the LCC and PBP analyses, DOE considers variability in the discount rate. DOE also 

models variability in operating hours by sector, ballast type, and building applications. By 

developing samples by building type, DOE can perform the LCC and PBP calculations and 

account for the variability in operating hours, electricity price, and sales tax among a variety of 

buildings. DOE uses the Energy Information Administration’s (EIA) 2005 Residential Energy 

Consumption Survey (RECS), 2003 Commercial Buildings Energy Consumption Survey 

(CBECS), and 2002 Manufacturing Energy Consumption Survey (MECS) to develop samples by 

building type, as well as U.S. Lighting Market Characterization: Volume I (LMC) to develop the 

operating hour characteristics by application in those buildings. The LCC and PBP spreadsheets 

present the results of the analysis as average values, relative to the baseline conditions. 

In the standards case for the LCC and PBP analyses, DOE assumes that consumers will 

achieve energy savings by choosing a ballast that meets or exceeds the standard while generally 

keeping system light output within 10 percent of the output of the baseline system. While 

consumers would have other choices in addition to those presented in the LCC, DOE considers 

only energy-saving ballast designs in the LCC.

DOE considers various scenarios that prompt consumers to buy a ballast in the base 

versus standards cases. Specifically, the “event” that prompts the purchase of a new ballast 

(either a ballast failure or new construction/renovation) is assumed to influence the costeffectiveness of the consumer purchase decision. For example, DOE assumes that a consumer 

will replace a failed ballast with an identical ballast in the base case, or a new standardscompliant lamp-and-ballast system with comparable light output in the standards case. Section 

8.4 discusses the ballast purchasing events in more detail. The LCC and PBP analyses 

spreadsheet reports results per purchasing event. 

DOE is conducting the LCC and PBP analyses on the baseline ballasts from the 

representative product classes identified in the ballast market and technology assessment 

(preliminary technical support document [TSD] chapter 3). The following list shows the

representative product classes that DOE is evaluating in this analysis.

• Two-Lamp Instant Start (IS) and Rapid-Start (RS) Ballasts Operating 4-Foot Medium 

Bipin (MBP) and 2-Foot U-Shaped Lamps (Commercial Sector Only) (F32T8 Baseline)

• Two-Lamp Programmed-Start (PS) Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped 

Lamps (Commercial Sector Only)

• Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps

(Commercial Sector Only) (F34T12 Baseline)

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8-3 

• Four-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps

(Commercial Sector Only)

• Four-Lamp PS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps

(Commercial Sector Only)

• Two-Lamp RS and IS Ballasts Operating 8-Foot Recessed Double Contact (RDC) HighOutput (HO) Lamps (Industrial Sector Only) (F96T12HO/ES Baseline) 

• Two-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps (Industrial Sector 

Only) (F96T8HO Baseline) 

• Two-Lamp IS and RS Ballasts Operating 8-Foot Single-Pin Slimline (Slimline) Lamps 

(Commercial Sector Only) (F96T12ES Baseline) 

• Two-Lamp IS and RS Ballasts Operating 8-Foot Slimline Lamps (Commercial Sector 

Only) (F96T8 Baseline)

• Two-Lamp PS Ballasts Operating 4-Foot T5 Miniature Bipin (MiniBP) Standard Output 

(SO) Lamps (Commercial Sector Only)

• Two-Lamp PS Ballasts Operating 4-Foot T5 MiniBP HO Lamps (Industrial Sector Only) 

• Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps 

(Residential Sector Only, Low Power Factor) (F34T12 Baseline) 

• Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps 

(Residential Sector Only, Low Power Factor) (F32T8 Baseline)

• Four-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps (Cold Temperature and 

Sign Ballasts) (Commercial and Industrial Sectors Only)

The time period used for the LCC and PBP analyses in this rulemaking is the service life 

of the baseline ballast, assumed as 49,054 hours (commercial and industrial sectors) and 11,385 

hours (residential sector). 

8.1.2 Overview of LCC and PBP Inputs

As mentioned previously, the LCC represents the total consumer expense over the 

analysis period, including purchase expenses, operating costs (including energy expenditures), 

and installation costs. DOE discounts future operating costs to the time of purchase and sums 

them over the analysis period. The PBP represents the number of years it takes customers to 

recover the purchase price of more energy-efficient equipment through lower operating costs. 

The PBP is calculated as the change in first cost divided by the change in operating costs in the 

first year. 

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

establishing the purchase expense, otherwise known as the total installed cost; and (2) inputs for 

calculating the expenses incurred during operation of the lamp-and-ballast system otherwise 

known as the operating cost. 

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8-4 

The primary inputs for establishing the LCC and PBP are:

• End-User Product Price: The end-user product prices represent the consumer price before 

tax and installation. 

• Sales Tax: DOE then applies sales tax to convert the end-user product price to a final 

product price including sales tax. Chapter 7 describes the sales tax markup in detail. 

• Installation Cost: This input represents the cost to the commercial or industrial customers 

of installing the lamp-and-ballast systems. The installation cost represents all costs 

required to install the system but does not include the end-user product price. The 

installation cost includes labor and overhead. Thus, the total installed cost equals the enduser product price, including sales tax plus the installation cost. 

• Disposal Costs: After a ballast or fluorescent lamp reaches its end of life, some 

consumers pay to recycle those items. The disposal costs represent the cost of recycling a 

ballast or fluorescent lamp and are only applicable to those consumers in the commercial 

and industrial sectors. 

The primary inputs for calculating the operating cost include the following:

• Annual Operating Hours: The annual operating hours are the hours that a lamp-andballast system is estimated to be in use during 1 year. The energy use characterization 

(chapter 6) details how DOE determines the system operating hours as a function of enduser sector, geographic region, and building type. 

• Power Rating: The power consumption is the site-energy usage rate associated with 

operating the lamp-and-ballast system. The energy use characterization (chapter 6) details 

how DOE determines the power ratings for the lamp-and-ballast systems considered in 

the analyses.

• Electricity Prices: DOE uses the average price per kilowatt-hour (i.e., $/kWh) paid by 

customers. DOE determines electricity prices using national average residential, 

commercial, and industrial electricity prices for the sample calculation. For the Monte 

Carlo distribution, DOE will use average residential, commercial, and industrial values for 

13 regions and large States. DOE develops all electricity price inputs using 2009 EIA data.

• Electricity Price Trends: DOE uses the EIA’s Annual Energy Outlook 2009 (AEO2009) 

to forecast electricity prices.

1

• Lifetime: Lifetime is the total hours in operation after which the consumer retires the 

ballast from service. 

 For the results presented in this chapter, DOE uses the 

original (March) AEO2009 reference case.

• Discount Rate: The discount rate is the rate at which DOE discounts future expenditures 

to establish their present value. 

• Analysis Period: Analysis period is the time span over which DOE calculates the LCC. 

EERE-2007-BT-STD-0016 COMMENT 25
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Figure 8.1.1 depicts the relationships between the installed cost and operating cost inputs 

for the calculation of the LCC and PBP. In this figure, the rectangular boxes indicate the inputs, 

the parallelograms indicate intermediate calculated values, and the diamond boxes indicate the 

analysis outputs (the LCC and PBP). 

End-User 

Product Price

Sales Tax

Final 

Product 

Price

Installation

Cost

Total 

Installed 

Cost

Electricity

Prices Annual 

Electricity 

Usage 

Cost

PBP

Electricity

Price Trend

Discount Rate

Analysis

Period

Operating 

Cost Over 

Analysis 

Period

Replacement

Cost

LCC

Power Rating

Operating

Hours

Product

Lifetime

Service 

Life

Energy 

Consumption

Total 

Replacement 

Cost

Calculated 

Value LCC Input LCCOutput

Legend

Disposal Cost

Figure 8.1.1. Flow Diagram of Inputs for the Determination of LCC and PBP

Table 8.1.1 summarizes the input values that DOE uses to calculate the LCC and PBP for 

ballasts. Each row summarizes the total installed cost inputs, operating cost and replacement 

cost, including the lifetime, discount rate, and electricity price trend. DOE characterizes all of the 

total cost inputs with single-point values, but will characterize several of the operating cost 

inputs with probability distributions that capture the input’s uncertainty and/or variability in the 

Monte Carlo analysis. Table 8.1.1 also lists the TSD chapter that details the inputs.

EERE-2007-BT-STD-0016 COMMENT 25
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Table 8.1.1. Summary Information of Inputs for the Life-Cycle Cost and Payback Period 

Analyses 

Factor Weighted-Average Value TSD Reference Section

Total Installed Cost Primary Inputs

End-User Product Price Varies with lamp-and-ballast system Chapters 5, 7

Sales Tax Varies by census region Chapter 7

Installation Cost Varies by equipment installed and sector Chapter 8

Operating Cost Primary Inputs

Annual Operating Hours Vary by lamp-and-ballast system type, sector, and 

building type

Chapter 6

Power Rating Varies with lamp-and-ballast type Chapter 6

Electricity Prices Vary by sector and census region Chapter 8

Electricity Price Trends Vary with price forecast scenario Chapter 8

Discount Rate Varies with sector Chapter 8

Analysis Period Varies with sector Chapter 8

Replacement Cost Primary Inputs

Total Installed Cost Varies with lamp-and-ballast system, census region, 

equipment installed and sector

Chapters 7, 8

Ballast Lifetime Varies with lamp-and-ballast system Chapters 5, 8

Disposal Cost Varies by lamp-and ballast system type and sector Chapter 8

Discount Rate Varies with sector Chapter 8

Analysis Period Varies with sector Chapter 8

Sections 8.2 and 8.3 discuss the inputs depicted in this table of installed costs and 

operating costs.

8.2 LIFE-CYCLE COST INPUTS

8.2.1 Definition

LCC is the total customer cost over the life of a product, including total installed costs, 

operating costs, replacement costs, and residual value. Future operating costs and replacement 

costs are discounted to the analysis start year (2014) and summed over the analysis period. The 

LCC is defined by the following equation: 

∑=

















+

+

+

+

+=

N

t

t t

tt

r

DC

r

OC RC ICLCC

1 )1()1( Eq. 8.1

Where:

LCC = life-cycle cost ($),

IC = total installed cost ($), 

N = analysis period,

∑ = sum over the analysis period, from year 1 to year N, 

OC = operating cost ($), 

RC = lamp replacement cost ($),

r = discount rate, 

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8-7 

t = year for which operating cost, replacement cost, or disposal cost is 

determined, and

DC = disposal cost of the ballast or lamp. 

DOE expresses all the costs in its LCC and PBP analyses in 2008$. 

8.2.2 Total Installed Cost Inputs

The total installed cost to the customer is defined by the following equation:

IC FPP += INST Eq. 8.2

Where: 

FPP = final product price (i.e., customer price for the product only, including 

sales tax; $), and 

INST = installation cost or the customer price to install products (i.e., the cost for 

labor and materials; $). 

In the markups analysis (chapter 7), DOE develops end-user product prices and sales 

taxes to derive final product prices. DOE then applies installation costs where necessary to 

derive the total installed costs for use in the LCC. The following shows inputs to determine total 

installed costs: 

• end-user product price ($)

• sales tax ($), and 

• installation cost ($). 

The end-user product price represents the average purchase price a consumer pays before 

sales tax for lamp-and-ballast designs. The sales tax represents State and local sales taxes applied 

to the end-user product price. It is a multiplicative factor that increases the end-user product 

price. The installation cost represents all costs required to install the lamp-and-ballast system but 

does not include the final product price. The installation cost includes labor and overhead. Thus, 

the total installed cost equals the final product price plus the installation cost. DOE calculates the 

total installed cost for the ballasts analyzed based on the following equation: 

PRICE MU INST

IC FPP INST

TAX +×=

+=

Eq. 8.3

Where: 

IC = total installed cost,

FPP = final product price, 

INST = installation cost,

PRICE = end-user product price, and 

MUTAX = sales tax mark up. 

EERE-2007-BT-STD-0016 COMMENT 25
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Chapter 7 provides detail on the end-user product price and sales tax. Discussion about 

installation costs follows.

8.2.2.1 Installation Costs 

On September 19, 2000, DOE issued a final rule establishing energy conservation 

standards for ballasts (hereafter “the 2000 Ballast Rule”). 65 FR 56740; 10 CFR 430.23(m)(4). 

To account for relamping that occurs during the analysis period, DOE uses estimates of the 

prevalence of group versus spot relamping from the 2000 Ballast Rule. DOE then weighs the 

spot and group relamping times by the percent occurrence of spot versus group relamping to 

derive weighted averaged relamping times. According to the 2000 Ballast Rule, group relamping 

occurs, on average, 25 percent of the time for 4-foot MBP systems, 37 percent for 8-foot slimline

systems, and 31 percent for 8-foot recessed double contact (RDC) high output (HO) systems.2

Table 8.2.1

These percentages are used to calculate an average time to change fluorescent lamps in 

conjunction with ballast purchase events. The 2000 Ballast Rule did not address relamping for 

8-foot RDC HO cold temperature/sign applications; consequently, DOE assumes that labor times 

and costs are the same as for standard 8-foot RDC HO systems.

lists average labor times to install a fluorescent lamp and ballast. For new 

construction and renovation purchase events, DOE adds 2.5 minutes to the labor times in the 

table to account for the installation of a luminaire disconnect. This is because the 2005 National 

Electric Code requires a means for disconnecting luminaires before they are serviced for lamp or 

ballast replacements.3

Table 8.2.1. Labor Times for Fluorescent Lamp-and-Ballast Systems (Commercial and 

Industrial)*

Lamp-and-Ballast System Type Time

minutes

Relamp Install Lamps and 

Ballasts** Spot Group Average

Two-Lamp 4-Foot MBP and 2-Foot U-Shaped 27.0 14.0 23.8 30.0

Four-Lamp 4-Foot MBP and 2-Foot U-Shaped 28.0 15.0 24.8 40.0

Two-Lamp 8-Foot Slimline 20.5 10.5 16.8 55.0

Two-Lamp 8-Foot RDC HO 26.5 13.5 22.5 60.0

Two-Lamp 4-Foot MiniBP 27.0 14.0 23.8 30.0

Four-Lamp 8-Foot RDC HO (Sign Ballasts) 26.5 13.5 22.5 60.0 * Labor times are obtained from the 2000 Ballast Rule. 

** For new construction and renovation ballast purchase events, labor times are increased by 2.5 minutes to 

allow for the installation of a luminaire disconnect.

For lamp-and-ballast system installations, DOE derives labor rates for electricians and 

helpers from RS Means. Labor rates are the sum of the wage rate, employer-paid fringe benefits 

(i.e., vacation pay, employer-paid health, and welfare costs), and any appropriate training and 

industry advancement funds costs. According to RS Means, an electrician’s average hourly rate 

with overhead and profit is typically $69.79 (in 2008$), and a helper’s average hourly rate is 

$45.28 (in 2008$). DOE assumes that 50 percent of the electrician labor rate plus 50 percent of 

the helper labor rate (for a total of $55.41) comprise the lamp-and-ballast system installation rate. 

EERE-2007-BT-STD-0016 COMMENT 25
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For lamp replacements in the commercial sector, DOE assumes that the task is performed 

by a general maintenance worker. The labor rate of $16.55 (adjusted to 2008$ from $15.01 in 

2005) was obtained from the U.S. Bureau of Labor Statistics for a General Maintenance 

Worker.4 Using these labor rates and the labor times listed in Table 8.2.1, DOE derives the 

average cost to install a lamp and the average cost to install a lamp and ballast, as shown in Table

8.2.2. 

Table 8.2.2. Relamping and Lamp-and-Ballast Labor Costs for Fluorescent Lamp-andBallast Systems (Commercial and Industrial)*

Lamp-and-Ballast System Type Labor Cost

$

Relamping Installation

Two-Lamp 4-Foot MBP and 2-Foot U-Shaped 6.55 31.17 

Four-Lamp 4-Foot MBP and 2-Foot U-Shaped 6.83 40.76 

Two-Lamp 8-Foot Slimline 4.63 55.14 

Two-Lamp 8-Foot RDC HO 6.20 59.93 

Two-Lamp 4-Foot MiniBP 6.55 31.17 

Four-Lamp 8-Foot RDC HO (Sign Ballasts) 6.20 59.93 * For new construction and renovation ballast purchase events, labor times are increased by 

2.5 minutes to allow for the installation of a luminaire disconnect.

8.2.3 Operating Cost Inputs

The operating cost represents the costs incurred in the operation of the lamp-and-ballast 

system. Below are the inputs for operating costs: 

• annual operating hours 

• power rating (W) 

• electricity prices ($/kWh) 

• electricity price trends

• discount rate (%), and 

• analysis period (yrs). 

The analysis period, discount rate, and effective date of the amended standard are 

required for determining the operating cost and for establishing the operating cost present value. 

The electricity consumption for the baseline and other candidate standard levels (CSLs) 

examined enable comparison of standards’ operating costs. 

The annual operating hours are the estimated hours that a lamp-and-ballast system is in 

use during 1 year. Power rating refers to the rate of site energy usage associated with operating 

the lamp-and-ballast system. Both the annual operating hours and power rating are used to 

calculate the total annual energy consumption. Electricity prices used in the analysis are the price 

per kilowatt-hour in cents or dollars (e.g., $/kWh) paid by each customer for electricity. DOE 

uses electricity price trends to forecast electricity prices for future year analysis. These trends 

with the electricity price and annual energy consumption are used to calculate the energy cost in 

each year. DOE defines energy cost by the following equation: 

EERE-2007-BT-STD-0016 COMMENT 25
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( ) PWR OH EPTEP

OC Econs EPTEP

×××=

××=

Eq. 8.4

Where:

OC = operating costs,

Econs = annual energy consumed, 

EP = electricity price,

EPT = electricity price trend factor relative to 2007, 

PWR = power rating (rate of energy use, measured in watts), and

OH = annual operating hours. 

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the operating costs.

8.2.3.1 Operating Hours

The energy use characterization (chapter 6) details how DOE determines the annual 

energy consumption for baseline and standard-compliant products. An important input to 

determining the energy consumption is the total hours per year that the product is in operation. 

The operating hours are also used to calculate the ballast service life, which is ultimately used in 

calculating the total replacement cost. 

As described in chapter 6, DOE establishes operating hour distributions for fluorescent 

lamp-and-ballast systems. In conjunction with data from LMC, DOE uses data from EIA’s 

CBECS 2003, RECS 2001, and the MECS 2002. These EIA studies provide information on the 

distribution of buildings within the United States by building type and census division. DOE 

associates the LMC’s operating hour data by building type with the EIA’s data by building type 

and census division to derive operating hours by census division and large States. This allowed 

DOE to correlate its electricity price distribution and sales tax distribution (chapter 7) with its 

operating hour distribution by census division and large State in the LCC spreadsheet. 

Table 8.2.3 presents the mean operating hours for lamp-and-ballast systems for each sector. 

Table 8.2.3. Average Operating Hours by Sector

Sector Average Annual Operating

hrs/yr

Residential 789

Commercial 3,435

Industrial 4,795

In this rulemaking, DOE evaluates two- and four-lamp PS ballasts operating 4-foot MBP 

and 2-foot U-shaped lamps in the commercial sector, and assumes these lamp-and-ballast 

systems are operated on occupancy sensors. Occupancy sensors detect the presence or absence of 

people within their coverage area and turn lights on and off accordingly, thereby reducing 

operating time and energy consumption. Based on a range of estimated energy savings from 

occupancy sensors compiled in E Source,5 DOE assumes energy savings of 30 percent for 

operating lamp-and-ballast systems on occupancy sensors in the commercial sector. To account 

EERE-2007-BT-STD-0016 COMMENT 25
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for these energy savings, DOE reduces average operating hours for affected lamp-and-ballast 

systems by 30 percent. Table 8.2.4 presents the adjusted mean operating hours for lamp-andballast systems operating on occupancy sensors in the commercial sector.

Table 8.2.4. Average Operating Hours for Two- and Four-Lamp PS Ballasts Operating 4-

Foot MBP and 2-Foot U-Shaped Lamps in the Commercial Sector

Sector Lamp-and Ballast System Type Annual Operation

hrs/yr

Commercial Two- and Four-Lamp PS Ballast Operating 4-Foot T8 MBP Lamps 2,405

8.2.3.2 Power Rating

As described in the energy use and end load characterization (chapter 6), DOE uses the 

power rating (in watts) with the annual operating hours (in hours) to calculate the annual energy 

usage (in kilowatt-hours) of the lamp-and-ballast designs DOE considers. 

8.2.3.3 Electricity Prices

DOE estimates electricity prices for residential, commercial, and industrial consumers in 

each of the 13 regions and large States by using EIA Form 861 data.6 Table 8.2.5 lists the 13 

geographic regions. 

Table 8.2.5. Electricity Prices by Census Division, 2008

Census Division Electricity Prices*

2008$/kWh

Residential Commercial Industrial

New England 0.150 0.103 0.085 

Middle Atlantic 0.124 0.096 0.066 

East North Central 0.100 0.076 0.050 

West North Central 0.086 0.071 0.053 

South Atlantic 0.098 0.075 0.053 

East South Central 0.087 0.084 0.052 

West South Central 0.093 0.083 0.062 

Mountain 0.097 0.080 0.056 

Pacific 0.091 0.083 0.060 

New York State 0.162 0.104 0.066 

California 0.149 0.123 0.089 

Texas 0.128 0.102 0.082 

Florida 0.117 0.101 0.081 

U.S. Weighted Average 0.110 0.090 0.061 * DOE converts dollars to 2008$ by multiplying costs in 2007$ by the ratio of 2008 

CPI (215.30) to 2007 CPI (207.34). DOE converts the price in 2006 to the price in 

2008 by multiplying the 200 price by the ratio of the average AEO electricity price in 

2008 to the average AEO electricity price in 2006. 

The EIA Form 861 data are published annually and include annual electricity sales in 

kilowatt-hours; revenues from electricity sales; and number of consumers for the residential, 

commercial, and industrial sectors for every utility serving final consumers. The calculation of 

an average electricity prices proceeds in two steps:

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1. For each utility, estimate an average residential, commercial, or industrial price by 

dividing the residential, commercial, or industrial revenues by residential, commercial, or 

industrial sales.

2. Calculate a regional average price, weighting each utility with customers in a region by 

the number of residential, commercial, or industrial consumers served in that region. 

The calculation uses the most recent available EIA data at the time the analysis was 

conducted, from 2007. Table 8.2.5 shows the results for each geographic region. Because DOE 

conducted the LCC and PBP analyses in 2008$, it needed to convert all electricity prices into 

2008$. To perform the necessary monetary conversion, DOE uses the consumer price index 

(CPI) to convert the electricity prices from 2007$ to 2008$. As described in the following section 

on electricity price trends, DOE normalizes energy prices to 2008. Therefore, to forecast energy 

prices for any given future year, DOE establishes energy prices in 2008$. In Table 8.2.5, DOE 

uses data from the original March version of the AEO2009 to estimate the electricity prices in

2008$.1 DOE multiplies the electricity price in 2007 by the ratio of the AEO2009-estimated 

residential, commercial, or industrial prices for 2008 and 2007. 

8.2.3.4 Electricity Price Trend

The electricity price trend projects the future cost of electricity to 2030. DOE calculates 

the LCC and PBP using three separate projections from AEO2009: reference case, low economic 

growth, and high economic growth.7

Figure 8.2.1

These three cases reflect the uncertainty of economic 

growth in the forecast period. The high and low growth cases show the projected effects of 

alternative growth assumptions on energy markets. DOE normalizes these three AEO2009

scenarios to the 2008 electricity price, and then uses that electricity price factor to scale the 2008 

electricity prices. through Figure 8.2.3 show the residential, commercial, and 

industrial electricity price trends, respectively, based on the three AEO2009 projections. The 

LCC results presented in this chapter are based on the AEO2009 reference case. 

Figure 8.2.1. Residential Sector Electricity Price Trend

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Figure 8.2.2. Commercial Sector Electricity Price Trend

Figure 8.2.3. Industrial Sector Electricity Price Trend

In the LCC spreadsheet, these electricity price trends are used to project electricity prices 

into the future, which are then multiplied by the annual energy usage. The resulting operating 

costs are presented in both the LCC spreadsheets and the LCC results tables in this chapter. 

8.2.4 Lifetime

DOE defines lifetime as the age in hours in operation when a ballast or lamp is retired 

from service. For ballasts in the commercial and industrial sectors, DOE uses the average ballast 

lifetime used in the 2000 Ballast Rule (49,054 hrs). Combining DOE’s estimate of 49,054 hours 

and the average operating hours for fluorescent lamps in the commercial and industrial sectors 

(Table 8.2.3) yields average ballast lifetimes of 14.2 years and 10.2 years, respectively. The 

commercial sector lifetime is consistent with a study on the “measure life” of ballasts (i.e., the 

true service life of a ballast in the field), which found that the average ballast lifetime after a 

retrofit in the commercial sector is 13 years, and the average ballast lifetime after new 

construction is 15 years.8 Manufacturer interviews indicate that ballasts in the industrial sector 

are typically operated in higher temperature environments and are commonly replaced on an 

approximate 10-year renovation cycle, which corroborates the shorter estimated lifetime. DOE 

found in a separate measure life report that the average fixture and ballast in the residential sector 

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lasts for 15 years.9

8.2.3.1

Therefore, DOE established 15 years as the average ballast lifetime in the 

residential sector. Assuming the average annual operating lifetime of a fluorescent lamp in the 

residential sector of 789 hours as discussed in section , the ballast lifetime is therefore 

11,835 hours in the residential sector.

As with the calculation of relamping costs, DOE averages the group versus spot 

relamping impact on lamp lifetime by their percent occurrence. DOE assumes a lamp subject to 

group relamping practices operates for 75 percent of its rated life. DOE obtained this estimate 

from the 2000 Ballast Rule. DOE then applies this life impact factor to the rated lifetimes from 

the manufacturing literature for the lamps in the lamp-and-ballast systems it is analyzing. For 

4-foot MBP lamps and 4-foot MiniBP lamps, the average lifetime DOE uses in the analysis is 

94 percent of the rated lifetime. For 8-foot slimline lamps, the average lifetime is 91 percent of 

the rated lifetime. For 8-foot RDC HO lamps, the average lifetime is 92 percent of the rated 

lifetime.

As discussed in the technology assessment (chapter 3), ballast technology options 

(e.g., starting method) often affect the lifetime of the lamp. For this reason, the baseline and 

standard level designs for the LCC and PBP analyses have a range of lamp lifetimes. 

8.2.5 Replacement Cost

As stated previously, the lifetime is the age (total hours in operation) at which a ballast or 

lamp is retired from service. The lifetime paired with the operating hours yields the service life 

of the ballast or lamp in years. Because lamp lifetimes are typically shorter than ballast lifetimes, 

DOE must address lamp replacements within the analysis period for the lamp-and-ballast system 

designs considered. Replacement costs include the labor and materials costs associated with 

replacing a lamp at the end of its lifetime. By using the service life and replacement cost, one can 

calculate the total replacement cost each year. 

Each year in which a lamp reaches the end of its life, a new lamp is purchased and 

installed at the beginning of that year, and the first cost and installation cost are discounted back 

to the base year of the analysis period. During years in which replacement is necessary, DOE 

based the replacement costs on the total installed cost inputs, as seen in the following equation: 

L TAX L

L L

PRICE MU INST

FPPRC INST

+×=

+= Eq. 8.5

Where:

RC = replacement cost, expressed in dollars, 

FPPL = final product price (price for the product only) expressed in dollars, 

INSTL = installation cost,

PRICEL = end-user product price expressed in dollars, and 

MUTAX = sales tax.

For the years when no replacement is necessary, the replacement costs are set to zero. 

The replacement costs only include the end-user product price of the lamp and the installation 

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cost of the lamp, rather than prices or costs associated with the entire lamp-and-ballast system. 

For the LCC and PBP analyses, the analysis period corresponds with the ballast lifetime; for this 

reason, ballast replacement is not considered and only lamp price and labor costs are included in 

the calculation of total installed costs.

8.2.6 Disposal Cost 

When a ballast or fluorescent lamp fails, some consumers choose to recycle these system 

components. The cost of recycling the ballast or lamp is its disposal cost. DOE performed 

research on recycling costs for ballasts and fluorescent lamps and found that, on average, 

disposing of a ballast costs about $3.50 and disposing of lamps costs about 10 cents per linear 

foot.10 Ballast recycling rate data are not available, so DOE conservatively assumes 5 percent of 

ballasts used in the commercial and industrial sectors are recycled, and assumes no ballasts are 

recycled in the residential sector. A report released by the Association of Lighting and Mercury 

Recyclers in 2004 noted that, nationwide, approximately 30 percent of lamps used by businesses 

and 2 percent of lamps in the residential sector are recycled.11

8.2.7 Analysis Period 

 Thus, DOE applies a cost of 10 

cents per linear foot in the commercial and industrial sectors every time a lamp is replaced 

during the LCC analysis period. In the Monte Carlo analysis, DOE will assume that commercial 

and industrial consumers pay recycling costs for approximately 5 percent of ballast failures and 

30 percent of lamp failures. DOE does not expect the 2 percent residential lamp recycling rate to 

impact the residential sector LCC substantially, however, and thus does not apply the recycling 

costs to this sector.

The analysis period is the time span over which the LCC is calculated. DOE bases the 

analysis period on the baseline ballast life in a certain sector divided by the annual operating 

hours of that ballast. If the user chooses to run the LCC using weighted average values (i.e., in 

“sample calculation” mode), then the analysis period is based on the baseline ballast life divided 

by the average annual operating hours for that ballast in a chosen sector. For example, the 

baseline ballast life for commercial and industrial sectors is 49,054 hours. If the user chooses to 

analyze this ballast in the commercial sector, then the analysis period is the ballast lifetime of 

49,054 hours divided by the average annual operating hours of this product in the commercial 

sector, 3,435 hours per year, or 14.3 years. If the user chooses to run the LCC using the Monte 

Carlo simulation (i.e., in “Crystal Ball mode”), the analysis period is based on the baseline 

ballast life divided by Crystal Ball’s chosen annual operating hours. For example, the user may 

choose to evaluate a product in the commercial sector using Crystal Ball. If Crystal Ball selects a 

building used for religious worship, the analysis period for the ballast for that selection will be 

based on a ballast lifetime of 49,054 hours divided by the annual operating hours in a building 

used for religious worship, 1,609 hours per year (30.5 years). 

8.2.8 Discount Rate

The discount rate is the rate at which DOE discounts future expenditures to establish their 

present values. DOE derives the discount rates for this rulemaking separately for residential and 

commercial/industrial consumers. For residential consumers, DOE estimates the discount rate by 

looking across all possible debt or asset classes that might be used to purchase ballasts. For the 

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commercial and industrial consumers, DOE estimates the cost of capital for commercial and 

industrial companies by examining both debt and equity capital, and develops an appropriately 

weighted average of the cost to the company of equity and debt financing. 

8.2.8.1 Residential Discount Rate

DOE’s approach involves identifying all possible debt or asset classes that might be used 

to purchase replacement equipment, including household assets that might be affected indirectly 

(e.g., household assets sold to pay off a loan or credit card debt that might have been used to 

finance the actual equipment purchase). DOE does not include debt from primary mortgages and 

equity of assets considered non-liquid (such as retirement accounts), since these would likely not 

be used to finance lighting equipment purchases. DOE estimates the average shares of the 

various debt and equity classes in the average U.S. household equity and debt portfolios using 

the Federal Reserve’s Survey of Consumer Finances (SCF) data for 1989, 1992, 1995, 1998, 

2001, and 2004.12 Table 8.2.6 shows the average shares of each considered class. DOE uses the 

mean share of each class across the six survey years (15 years) as the basis for estimating 

household financing of lighting equipment. 

Table 8.2.6. Average Percentage Shares of Household Debt and Equity Types

Type SCF

1989 1992 1995 1998 2001 2004 Mean

%

Home Equity Loans 4.3 4.5 2.7 2.8 2.8 4.4 3.6

Credit Cards 1.6 2.1 2.6 2.2 1.7 2.0 2.0

Other Installment Loans 2.8 1.7 1.4 1.7 1.1 1.3 1.7

Other Residential Loans 4.4 6.9 5.2 4.3 3.1 5.8 4.9

Other Line of Credit 1.1 0.6 0.4 0.2 0.3 0.5 0.5

Checking Accounts 5.8 4.7 4.9 3.9 3.6 4.2 4.5

Savings and Money Market 19.2 18.8 14.0 12.8 14.2 15.1 15.7

Certificate of Deposit (CD) 14.5 11.7 9.4 7.0 5.4 5.9 9.0

Savings Bond 2.2 1.7 2.2 1.1 1.2 0.9 1.5

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 10.0

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 29.1

Mutual Funds 8.0 11.1 20.9 20.1 21.3 23.4 17.5

Total* 100.1 100.1 100.1 100.0 100.1 99.9 100.0 * Total may not equal 100 percent due to rounding. 

DOE estimates interest or return rates associated with each type of equity and debt. The 

data source for the interest rates for loans, credit cards, and lines of credit is the Federal Reserve 

Board’s SCF in 1989, 1992, 1995, 1998, 2001, and 2004. The top half of Table 8.2.7 shows the 

average nominal interest rates in each year and the inflation rates used to calculate real rates. For 

home equity loans, DOE calculates effective interest rates in a similar manner as for mortgage 

rates, since interest on such loans is tax deductible. The bottom half of the table shows the 

average effective real interest rates in each year and the mean rate across all the years. Since the 

interest rates for each debt carried by households in these years were established over 15 years, 

DOE believes they are representative of rates that may be in effect in 2014. 

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Table 8.2.7. Average Nominal and Real Interest Rates for Household Debt Classes

Type SCF

1989 1992 1995 1998 2001 2004 Mean

%

Nominal Interest Rates (%)

Home Equity Loans 11.5 9.6 9.6 9.8 8.7 5.7 9.2

Credit Cards* -- -- 14.2 14.5 14.2 11.7 13.6

Other Installment Loans 9.0 7.8 9.3 7.8 8.7 7.4 8.3

Other Residential Loans 8.8 7.6 7.7 7.7 7.5 6.0 7.5

Other Line of Credit 14.8 12.7 12.4 11.9 14.7 8.8 12.5

Inflation Rate 4.82 3.01 2.83 1.56 2.85 2.66 --

Real Interest Rates (%)

Home Equity Loans 3.8 4.3 4.4 5.8 3.8 1.9 4.0

Credit Cards* -- -- 11.0 12.7 11.1 9.1 11.0

Other Installment Loans 4.9 5.8 7.0 6.6 6.1 5.4 6.0

Other Residential Loans 4.0 4.7 4.8 6.0 4.6 3.3 4.6

Other Line of Credit 9.6 9.4 9.3 10.2 7.3 6.0 8.7 * No interest rate data available for credit cards in 1989 or 1992.

To account for variation among new households, DOE samples a rate for each household 

from a distribution of rates for each of the above debt classes. DOE develops a probability 

distribution of interest rates for each debt class based on the SCF data. Appendix 8C presents the 

probability distribution of interest rates for each debt class that DOE used in the LCC and PBP 

analyses.

Similar rate data are not available from the SCF for the asset classes, so DOE derives 

data for these classes from national historical data. The interest rates associated with certificates 

of deposit (CDs),13 savings bonds,14 and bonds (AAA corporate bonds) 15 are from Federal 

Reserve Board time-series data 1977–2005. DOE assumes rates on checking accounts to be zero. 

Rates on savings and money market accounts are from Cost of Savings Index data covering 

1984–2005.16 The rates for stocks are the annual returns on the Standard and Poor’s (S&P) 500 

1977–2005.17

Table 8.2.8

The mutual fund rates are a weighted average of the stock rates (two-thirds 

weight) and the bond rates (one-third weight) in each year from 1977 to 2005. DOE adjusts the 

nominal rates to real rates using the annual inflation rate in each year. Average nominal and real 

interest rates for the classes of assets are shown in . Since the interest and return rates 

for each asset type cover a range of time, DOE believes they are representative of rates that may 

be in effect in 2014. 

Table 8.2.8. Average Nominal and Real Interest Rates for Household Equity Types 

Type Average Rate

%

Nominal Real

Checking Accounts -- 0.0

Savings and Money Market 5.5 2.3 

CDs 6.9 2.4

Savings Bonds 8.0 3.5

Bonds 8.8 4.2

Stocks 13.3 8.8

Mutual Funds 11.6 7.0

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To account for variation among new households, DOE samples a rate for each household 

from a distribution of rates for each of the above asset types. DOE develops a normal probability 

distribution of interest rates for each asset type by using the mean value and standard deviation 

from the distribution. Appendix 8C presents the probability distribution of interest rates for each 

asset type that DOE used in the LCC and PBP analysis. 

Table 8.2.9 summarizes the mean real effective rates of each type of equity or debt. DOE 

determines the average share of each debt and asset using SCF data for 1989, 1992, 1995, 1998, 

2001, and 2004. Each year of SCF data provides the debt and asset shares for U.S. households. 

DOE averages the debt and asset shares over the 6 years of survey data to arrive at the shares 

shown below. The average rate across all types of household debt and equity, weighted by the 

shares of each class, is 5.6 percent.

Table 8.2.9. Shares and Interest or Return Rates Used for Household Debt and Equity 

Types

Type Average Share of Household Debt 

Plus Equity

%*

Mean Effective Real Rate

%**

Home Equity Loans 3.6 4.0 

Credit Cards 2.0 11.0 

Other Installment Loans 1.7 6.0 

Other Residential Loans 4.9 4.6 

Other Line of Credit 0.5 8.7 

Checking Accounts 4.5 0.0 

Savings and Money Market Accounts 15.7 2.3 

CDs 9.0 2.4 

Savings Bonds 1.5 3.5 

Bonds 10.0 4.2 

Stocks 29.1 8.8 

Mutual Funds 17.5 7.0 

Total/Weighted-Average Discount Rate 100.0 5.6 * Not including primary mortgage or retirement accounts.

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

8.2.8.2 Commercial Discount Rate

Most companies use both debt and equity capital to fund investments; for most 

companies, therefore, the cost of capital is the weighted average of the cost to the firm of equity 

and debt financing.18

DOE estimates the cost of equity financing using the Capital Asset Pricing Model 

(CAPM). Among the most widely used models to estimate the cost of equity financing, the 

CAPM assumes that the cost of equity is proportional to the amount of systematic risk associated 

with a firm. For example, the cost of equity financing tends to be high when a firm faces a large 

degree of systematic risk, and the cost tends to be low when the firm faces a small degree of 

systematic risk. 

 

The degree of systematic risk facing a firm and the subsequent cost of equity financing 

are determined by several variables, including the risk coefficient of a firm (beta, β), the 

EERE-2007-BT-STD-0016 COMMENT 25
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expected return on risk-free assets (Rf), and the additional return expected on assets facing 

average market risk (known as the equity risk premium, or ERP). The beta indicates the degree 

of risk associated with a given firm, relative to the level of risk (or price variability) in the 

overall stock market. Betas usually vary between 0.5 and 2.0. A firm with a beta of 0.5 faces half 

the risk of other stocks in the market; a firm with a beta of 2.0 faces twice the overall stock 

market risk.

Following this approach, the cost of equity financing for a particular company is by the 

equation: 

Rk fe ( ) β ×+= ERP Eq. 8.6

Where:

ke = the cost of equity for a company, expressed in dollars,

Rf = the expected return of the risk free asset, expressed in dollars,

Β = the risk coefficient, and 

ERP = the expected equity risk premium, expressed in dollars. 

The cost of debt financing (kd) is the yield or interest rate paid on money borrowed by a 

company (raised, for example, by selling bonds). As defined here, the cost of debt includes 

compensation for default risk and excludes deductions for taxes. 

DOE estimates the cost of debt for companies by adding a risk adjustment factor to the 

current yield on long-term corporate bonds (the risk-free rate). This procedure is used to estimate 

current and future company costs to obtain debt financing. The adjustment factor is based on 

indicators of company risk, such as credit rating or variability of stock returns. 

The discount rate of companies is the weighted average cost of debt and equity financing, 

less expected inflation. DOE estimates the discount rate using the equation:

Eq. 8.7 

Where:

k = the (nominal) cost of capital, 

ke and kd = the expected rates of return on equity and debt, respectively, and 

we and wd = the proportion of equity and debt financing, respectively. 

The real discount rate deducts expected inflation from the nominal rate. 

The expected return on risk-free assets, or the risk-free rate, is defined by the current 

yield on long-term (20-year) government bonds, as suggested by Ibbotson’s Associates19 and 

Damodaran.20

Table 8.2.10

The ERP represents the difference between the expected (average) stock market 

return and the risk-free rate. As shows, DOE uses an ERP estimate of 5.1 percent, 

which it took from the Damodaran Online site (a private website associated with New York 

e e d wd k = k × w + k ×

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University’s Stern School of Business, which aggregates information on corporate finance, 

investment, and valuation).21

Table 8.2.10. Variables Used to Estimate Company Discount Rates 

Variable Symbol Average Value

% 

Source

Risk-Free Asset Return Rf 7.3 Damodaran Online

Equity Risk Premium ERP 5.6 Damodaran Online

Expected Inflation R 3.1 U.S. Bureau of Economic Analysis

Cost of Debt (After Tax) kd 6.9 Damodaran Online

Percent Debt Financing wd 25.6 Damodaran Online

Systematic Firm Risk B 1.02 Damodaran Online

DOE calculates an expected inflation of 3.1 percent from the average of five quarters’ 

change in gross domestic product prices.22

Table 8.2.10

 DOE obtained the cost of debt, percent debt 

financing, and systematic firm risk from the Damodaran Online website. shows 

average values across all private companies. However, the cost of debt, percent debt financing, 

and systematic firm risk vary by sector. 

In the commercial building sector, ballasts are purchased and owned by commercial 

building property owners, commercial companies, industrial companies and the government. 

DOE uses a sample of 4,207 companies drawn from these owner categories to represent ballast

purchasers. It took the sample from the list of companies included in the Value Line investment 

survey23

DOE estimates the cost of debt financing for these companies from the long-term 

government bond rate and the standard deviation of the stock price. For government-office-type 

owners, the discount rate represents an average of the Federal rate and the State and local bond 

rate. DOE drew the Federal rate directly from the U.S. Office of Management and Budget 

discount rate for investments in government building energy efficiency.

 and listed on the Damodaran Online website. DOE obtained the cost of debt, the firm 

beta, the percent of debt and equity financing, the risk-free return, and the equity risk premium 

from Damodaran Online. 

24 DOE estimates the 

State and local discount rate from the interest rate on State and local bonds between 1977 and 

2001.25

The cost of capital may be viewed as the discount rate that should be used to reduce the 

future value of typical company project cash flows. It is a nominal discount rate, since 

anticipated future inflation is included in both stock and bond expected returns. Deducting 

expected inflation from the cost of capital provides estimates of the real discount rate by 

ownership category (

DOE uses this information to estimate the weighted-average cost of capital for the 

sample of companies included in the commercial property owner, commercial, and industrial 

company database. 

Table 8.2.11). The mean real discount rate for these companies varies 

between 2.3 percent (government offices) and 8.3 percent (commercial companies).

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Table 8.2.11. Real Discount Rates by Ballast Ownership Category

Ownership Category Mean Real 

Discount Rate

% 

Standard 

Deviation

% 

Number of 

Observations

Industrial Companies 7.6 2.3 1942

Commercial Companies 8.3 2.4 2339

Commercial Property Owners 6.3 2.0 7

Government Offices 2.3 1.1 N/A

DOE’s approach for estimating the cost of capital provides a measure of the discount rate 

spread as well as the average discount rate. DOE infers the discount rate spread by ownership 

category from the standard deviation, which ranges between 1.1 percent and 2.4 percent 

(Table 8.2.11). 

Different combinations of commercial property owners and commercial, industrial, and 

government buyers purchase the ballast types considered in the LCC analysis. Accordingly, DOE 

constructs the discount rates associated with each building sector from different combinations of 

commercial property owner, commercial, industrial, and government rates. 

To estimate the share of each ownership category in total commercial sector purchases of 

ballasts, DOE uses the share of each category in total commercial building square footage with 

lighting provided by EIA’s 2003 CBECS.26 Table 8.2.12 presents the estimated shares of 

commercial ballast purchases by ownership category of commercial building space. 

Table 8.2.12. Estimated Share of Ballast Purchases by Ownership Category in the 

Commercial Sector* 

Ownership Category Percent

Property Owners and Managers 22.3

Industrial Firms 10.1

Commercial Firms 54.8

Government 12.8 * Source: 2003 CBECS. The share of total square footage occupied by property 

owners is actually 44.6 percent. However, in some of these buildings, the tenants 

purchase ballasts. DOE assumes that this is the case for half of the square footage 

occupied by property owners. DOE allocates this quantity among the other 

categories in proportion to their shares of total square footage.

Table 8.2.13 presents the distribution of ballast ownership for the commercial and 

industrial lighting sectors.

Table 8.2.13. Ballast Ownership by Sector*

Sector Property Owners

% 

Industrial 

Companies

% 

Commercial 

Companies

% 

Government

% 

Industrial 0.0 100.0 0.0 0.0

Commercial 22.3 10.1 54.8 12.8 * Sources: Commercial, CBECS; Industrial, DOE estimate.

DOE estimates discount rate distributions for the different sectors as a weighted average 

of the distributions for the different ownership types. The resulting weighted average discount 

EERE-2007-BT-STD-0016 COMMENT 25
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8-22

rates are 7.6 percent for the industrial sector and 7.0 percent for the commercial sector. 

Table 8.2.14 summarizes the weighted average discount rates in all three sectors.

Table 8.2.14. Average Discount Rate by Sector

Sector Discount Rate

% 

Industrial 7.6

Commercial 7.0

Residential 5.6

8.2.9 Effective Date of Standard

The effective date is the date when an amended standard becomes operative (i.e., the date 

by which ballast manufacturers must manufacture products that comply with the amended

standard). DOE’s publication of a final rule in this standards rulemaking is scheduled for 

completion in June 2011. For ballast designs not addressed in previous rulemakings (i.e., ballasts 

operating T8 MBP and T5 MiniBP lamps, and low power factor ballasts for residential use), the 

effective date of any new energy conservation standards for these ballasts must be at least 3 years 

after the final rule is published, (42 U.S.C. 6295(g)(4)(C)), which will be June 2014. For ballast 

designs subject to existing standards (i.e., certain T12 ballasts), the effective date of any 

amended energy conservation standards for these ballasts must be at least 5 years after the 

effective date of the previous amendment (42 U.S.C. 6295(g)(4)(C)(i)). Table 8.2.15 presents the 

anticipated effective dates of standards for representative ballast designs addressed in the LCC 

and PBP analyses. The new standards will also affect additional ballast designs not directly 

addressed in the LCC and PBP analyses (e.g., one- and three-lamp versions of ballasts operating 

4-foot MBP lamps). 

Table 8.2.15. Effective Dates of Standards for Ballast Designs Addressed in Life-Cycle Cost

and Payback Period Analyses*

Ballast Design Existing 

Standard

Effective Date of Existing Standard Effective Date

of Amended 

Standard

Two-Lamp F34T12

Two-Lamp F96T12/ES

Two-Lamp F96T12HO/ES

42 U.S.C. 

6295(g)(8)

Manufactured for Luminaires July 1, 2009 July 1, 2014

Sold to Luminaire Manufacturer October 1, 2009 October 1, 2014

Incorporated into Luminaires July 1, 2010 July 1, 2015

Manufactured as Replacement July 1, 2010 July 1, 2015

Sold as Replacement October 1, 2010 October 1, 2015

Commercial and 

Industrial

Two-Lamp F32T8

Four-Lamp F32T8

Two-Lamp F96T8

Two-Lamp F96T8HO

Two-Lamp F28T5

Two-Lamp F54T5HO

N/A N/A June 2014

Residential, Low-PF

Two-Lamp F34T12

Two-Lamp F32T8

N/A** N/A June 2014

* The new standards also affect additional ballast designs not directly addressed in the LCC and PBP analyses 

(e.g., one- and three-lamp versions of ballasts operating 4-foot MBP lamps), with an effective date of June 2014. ** Residential ballasts were not regulated under the 2000 Ballast Rule.

EERE-2007-BT-STD-0016 COMMENT 25
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DOE calculates the LCCs for all consumers as if each would purchase a new product in 

the year the amended standard takes effect. However, DOE bases the cost of the equipment on 

the most recent available data; all dollar values are expressed in 2008$. 

8.3 PAYBACK PERIOD INPUTS 

8.3.1 Definition

The PBP is the amount of time it takes the consumer to recover the assumed higher 

purchase cost of a more energy-efficient product as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in annual operating expenditures. This type of 

calculation is known as a “simple” PBP, because is does not take into account changes in 

operating cost over time or the time value of money. That is, the calculation is done at an 

effective discount rate of 0 percent.

The equation for PBP is: 

OC

IC PBP

∆

∆ = Eq. 8.9

Where:

PBP = payback period (years),

∆IC = difference in the total installed cost between the more efficacious standard 

level; equipment (efficacy levels 1, 2, etc.) and baseline (efficacy level 0) 

equipment, and 

∆OC = difference in annual operating costs.

PBPs are expressed in years. PBPs greater than the life of the product mean that the 

increased total installed cost of the more efficacious product is not recovered in reduced 

operating costs over the lifetime of that product. Because all lamp-and-ballast designs in the 

LCC and PBP analyses save energy and thus yield a positive ∆OC, PBPs that are negative 

indicate that the total installed cost of the equipment that meets the more efficacious CSL is less 

than that of the baseline. 

8.3.2 Rebuttable Presumption Payback Period

Section 325(o)(2)(B)(iii) of the Energy Policy and Conservation Act (EPCA) establishes 

a rebuttable presumption that an amended standard for ballasts is economically justified 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.” (42 U.S.C. 6295(o)(2)(B)(iii)) This rebuttable 

presumption test is an alternative path to establishing economic justification compared to 

consideration of the seven factors set forth in 42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII).

EERE-2007-BT-STD-0016 COMMENT 25
Revised on 4/27/2010

8-24

The applicable ballast test procedure uses resistors to simulate a lamp load and measure

input power for the lamp-and-ballast system rather than measure energy consumption 

(i.e., measured over a duration or operating time period). Therefore, to calculate energy savings 

for the rebuttable presumption payback period, one would need to multiply the input power 

rating of the lamp-and-ballast system by the usage profile (i.e., hours of operation) of that 

system. For the engineering analysis, DOE measured the input power of ballasts operating actual 

lamps, essentially duplicating real-world operating conditions for these lamp-and-ballast 

systems. Energy savings calculations in the LCC and PBP analyses use both the real-world 

system power ratings as well as the applicable usage profiles. Because DOE calculates PBPs in a 

methodology consistent with the rebuttable presumption test in the LCC and PBP analyses, DOE 

is not performing a stand-alone rebuttable presumption analysis, as it is already embodied in the 

LCC and PBP analyses. Because calculations of energy savings in the LCC are based under realworld conditions, DOE will also rely on standard PBPs for this rulemaking. 

8.3.3 Inputs

The data inputs to PBP are the total installed cost of the product to the customer for each 

CSL and the annual (first year) operating costs for each CSL. The inputs to the total installed 

cost are the final product price and the installation cost. The inputs to the operating costs are the 

lamp-and-ballast system input power rating, annual operating hours, and electricity cost. The 

PBP uses the same inputs as the LCC calculation described in section 8.2, except that electricity 

price trends are not required. Since the PBP is a “simple” (undiscounted) PBP, the required 

electricity cost is only for the year in which an amended energy conservation standard is to take 

effect (e.g., 2014). The electricity price DOE uses in the PBP calculation for electricity cost is 

the price projected for 2014, expressed in 2008$, but not discounted to 2008. DOE does not use 

discount rates in the PBP calculation. 

8.4 BALLAST PURCHASING EVENTS

DOE designs the LCC and PBP analyses for this rulemaking around scenarios where 

consumers need to purchase a ballast; DOE refers to these collectively as “ballast purchasing 

events.” Each of these events may present the consumer with a different set of ballast or lampand-ballast designs and therefore a different set of LCC savings for a certain CSL. For ballasts, 

DOE has identified two possible scenarios under which consumers would purchase a ballast and 

potentially be affected by an amended energy conservation standard. These scenarios are: 

(1) ballast failure; and (2) new construction/renovation. The two ballast purchasing events are 

described in more detail below. In addition to these descriptions, Table 8.4.1 and Table 8.4.2

summarize the ballast purchasing events considered in this analysis. 

• Ballast failure: This is a scenario in which the installed ballast has failed. DOE 

recognizes that energy conservation standards set by the 2000 Ballast Rule and the 

Energy Policy Act of 2005 (EPACT 2005), Pub. L. 109–58, are effective in 2010 and 

may affect the types of systems available to the consumer to purchase. These standards 

ban the sale of most magnetic 4-foot MBP and 8-foot slimline ballasts. The 2000 Ballast 

Rule, however, allows the continued sale of magnetic cold temperature ballasts, which 

operate a large portion of the installed base of T12 RDC HO lamps. Magnetic ballasts 

will also continue to be sold for the residential sector. Therefore, in the baseline, most 

EERE-2007-BT-STD-0016 COMMENT 25
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8-25

users who had a magnetic or electronic T12 ballast would be expected to replace it with 

an electronic T12 ballast and corresponding standards-compliant lamp (if available), but 

failed HO ballasts as well as residential ballasts and fixtures are expected to be replaced 

with magnetic ballasts or fixtures containing magnetic ballasts. Users who had a T8 

ballast fail would be expected to replace it with a T8 ballast and corresponding standardscompliant lamp. However, in the standards case, end-users would generally select a 

standards-compliant lamp-ballast combination such that the system light output never 

drops below 10 percent of the baseline system. There are exceptions to this assumption 

with residential sector products, where typical standards-compliant systems produce 

significantly (i.e., greater than 10 percent) more light than the baseline system. Although 

more efficacious, the residential sector CSLs have higher input wattages than the baseline 

systems, yielding negative LCC values and precluding economic payback. 

• New construction and renovation: This ballast purchasing event encompasses all the new 

fixture installations where the lighting design will be completely new or can be 

completely changed. In response to this event, the spatial layout of fixtures in the 

building space is not constrained to any previous configuration. Because new fixtures can 

be installed, consumers could install a lamp-and-ballast system that would not maintain 

the light output of the baseline system. For instance, if light output of the standards case 

system is lower than the base case system, consumers can increase the number of 

standards case lamp-and-ballast systems installed in the building by a certain percentage 

to maintain the light output of base case lamp-and-ballast systems. Table 8.4.1, Table 

8.4.2, and Table 8.4.3 outline the events and actions taken by consumers in response to 

those events both in the base case and the standards case. 

Table 8.4.1. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot and 8-Foot 

T12 Lamps (including MBP, Slimline, and RDC)

Event Base Case Action Standards Case Action

Type 1. Ballast Failure Installs a T12 ballast and lamps in the 

existing fixture. HO ballasts are magnetic, 

while other ballasts are electronic.

Installs a new T12 or T8 ballast and lamps, 

where the system light output generally 

never drops below 90 percent of the 

baseline system. 

Type 2. New

Construction and 

Renovation

Installs a new T12 system. Installs a new T12 or T8 system where the 

system light output never drops below 90 

percent of the baseline system. Light output 

can be maintained through spacing.

Table 8.4.2. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot and 8-Foot 

T8 Lamps (including MBP, Slimline, and RDC)

Event Base Case Action Standards Case Action

Type 1. Ballast Failure Installs a T8 electronic ballast and lamps 

in the existing fixture. 

Installs new T8 ballast and lamps, where the 

system light output generally never drops 

below 90 percent of the baseline system. 

Type 2. New 

Construction and 

Renovation

Installs a new T8 system. Installs a new T8 system, where the system 

light output never drops below 90 percent of 

the baseline system. Light output can be 

maintained through spacing.

EERE-2007-BT-STD-0016 COMMENT 25
Revised on 4/27/2010

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Table 8.4.3. Framework of Event-Type Scenarios for Ballasts Operating 4-Foot T5 MiniBP

Lamps 

Event Base Case Action Standards Case Action

Type 1. Ballast 

Failure/Replacement

Installs a T5 electronic ballast and lamps 

in the existing fixture. 

Installs new T5 ballast and lamps, where the 

system light output never drops below 

90 percent of the baseline system. 

Type 2. New 

Construction and 

Renovation

Installs a new T5 system. Installs a new T5 system, where the system 

light output never drops below 90 percent of 

the baseline system. Light output can be 

maintained through spacing.

8.5 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS

This section presents LCC results for each lamp-and-ballast design DOE considers. This 

section uses the terms “positive LCC savings” and “negative LCC savings.” When an amended

standard results in “positive LCC savings,” the LCC of the standards-compliant system is less 

than the LCC of the baseline system and the consumer benefits. A consumer is adversely 

affected when an amended standard results in “negative LCC savings” (i.e., when the LCC of the 

standards-compliant system is higher than the LCC of the baseline system).

As stated earlier, DOE conducts a series of LCC calculations for each baseline lamp-andballast system. Key inputs consist of using historical electricity prices from EAI File 861, 

electricity price projections from the AEO2009 reference case, and an analysis period of 31 

years. In all cases, DOE considers only designs that save energy and maintain light output above 

a maximum 10 percent decrease from the baseline lamp or system whenever possible. 

All replacement options are designed around two possible ballast purchasing events 

where consumers be affected by an amended energy conservation standard. These events are 

ballast failure/replacement, and new construction/renovation. The LCC spreadsheet calculates 

the LCC impacts for each of these scenarios separately. 

DOE is analyzing 14 representative product classes for ballasts, as discussed in section 

8.1.1. Table 8.5.1 through Table 8.5.15 present the preliminary results for each of these 

representative product classes by ballast purchasing event, which influences the LCC and PBP 

results. DOE is also presenting the installed prices of the lamp-and-ballast systems in order to 

compare the up-front costs that consumers must bear when purchasing baseline or standards-case 

systems.

In general, the results show higher installed prices and lower operating costs at higher 

efficiency levels. However, this is not always the case. For example, ballasts operating 4-foot MBP 

and 2-foot U-shaped lamps in the residential sector (Table 8.5.12) have a lower installed price but 

higher operating costs at higher efficiency levels than in the base case. This is from the 

significantly higher input power for the evaluated CSLs, which would result in increased energy 

use and costs despite their more efficient designs. The evaluated CSLs also produce significantly 

more light output (i.e., greater than 30 percent more) than the baseline system, which would exceed 

the illumination requirements for a replacement scenario. On the other hand, for ballasts operating 

4-foot MBP and 2-foot U-shaped lamps in the commercial sector (

EERE-2007-BT-STD-0016 COMMENT 25
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Table 8.5.3), the higher CSLs exhibit both lower installed prices and lower operating costs than the 

F34T12 base case.

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

8-28

Table 8.5.1. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in 

the Commercial Sector (F32T8 Baseline) 

Event Response CSL Ballast 

Efficacy 

Factor

(BEF)

Lamp 

Type

LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0/1 1.450 F32T8 273.24 N/A 55.87 N/A N/A N/A

Lamp and Ballast 

Replacement

2 1.535 F32T8 265.90 7.35 61.25 1.39 3.9 (2)

3 1.561 F32T8 264.88 8.37 59.08 1.26 2.5 (1)

II: New 

Construction/

Renovation

Baseline 0/1 1.450 F32T8 275.52 N/A 58.27 N/A N/A N/A

Lamp and Ballast 

Replacement

2 1.535 F32T8 271.21 4.30 63.65 1.06 5.1 0 

3 1.561 F32T8 267.57 7.95 61.47 1.22 2.6 0 * A number in parentheses indicates a negative value.

Table 8.5.2. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in the 

Commercial Sector

Event Response CSL BEF Lamp 

Type

LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

% 

I: Ballast 

Failure/

Replacement

Baseline 0 1.418 F32T8 251.57 N/A 59.19 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.518 F32T8 238.54 13.03 61.89 1.46 1.9 (4)*

II: New 

Construction/

Renovation

Baseline 0 1.418 F32T8 253.99 N/A 61.58 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.518 F32T8 246.29 7.70 64.29 0.96 2.8 0 

* A number in parentheses indicates a negative value.

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

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Table 8.5.3. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in 

the Commercial Sector (F34T12 Baseline) 

Event Response CSL BEF Lamp 

Type

LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 1.359 F34T12 315.84 N/A 75.66 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.450 F32T8 273.24 42.59 55.87 2.53 (7.8)* (2)

2 1.535 F32T8 265.90 49.94 61.25 3.92 (3.7) (3)

3 1.561 F32T8 264.88 50.96 59.08 3.80 (4.4) (3)

II: New 

Construction/

Renovation

Baseline 0 1.359 F34T12 318.14 N/A 78.06 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.450 F32T8 271.47 46.67 58.27 2.98 (6.6) 0 

2 1.535 F32T8 267.40 50.74 63.65 4.01 (3.6) 0 

3 1.561 F32T8 263.79 54.35 61.47 4.17 (4.0) 0 * A number in parentheses indicates a negative value. For PBP, negative values indicate standards that reduce operating and installed costs.

Table 8.5.4. Summary of the LCC and PBP Results for 4-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot UShaped Lamps in the Commercial Sector

Event Response CSL BEF Lamp 

Type

LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.768 F32T8 489.53 N/A 101.23 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.781 F32T8 503.97 (14.44)* 107.29 (0.91) (never)

** 3 

II: New 

Construction/

Renovation

Baseline 0 0.768 F32T8 491.78 N/A 103.63 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.781 F32T8 495.25 (3.47) 109.69 0.28 21.5 0 

* A number in parentheses indicates a negative value.

** An entry of “never” for PBP indicates standards that do not reduce operating costs.

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

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Table 8.5.5. LCC and PBP Results for Four-Lamp PS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in the 

Commercial Sector

Event Response CSL BEF Lamp 

Type

LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.708 F32T8 454.92 N/A 104.88 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.755 F32T8 447.61 7.31 107.59 0.93 2.9 2 

II: New 

Construction/

Renovation

Baseline 0 0.708 F32T8 457.36 N/A 107.28 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.755 F32T8 445.47 11.89 109.99 1.35 2.0 0 

Table 8.5.6. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps in the Industrial 

Sector (F96T12HO/ES Baseline)

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

% 

I: Ballast 

Failure/

Replacement

Baseline 0 0.440 F96T12HO/ES 757.35 N/A 150.71 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.500 F96T12HO/ES 679.49 77.86 153.74 11.39 0.3 (8)*

1 0.550 F96T8HO 523.52 233.82 135.39 31.06 (0.5) (11)

2 0.549 F96T8HO 492.41 264.94 140.51 36.16 (0.3) (18)

II: New 

Construction/

Renovation

Baseline 0 0.440 F96T12HO/ES 759.81 N/A 153.11 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.500 F96T12HO/ES 710.06 49.75 156.14 7.43 0.4 0 

1 0.550 F96T8HO 585.50 174.32 137.79 22.68 (0.7) 0 

2 0.549 F96T8HO 654.86 104.95 142.91 13.64 (0.7) 0 * A number in parentheses indicates a negative value.

EERE-2007-BT-STD-0016 COMMENT 25
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Table 8.5.7. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps in the Industrial 

Sector (F96T8HO Baseline) 

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0/1 0.550 F96T8HO 523.52 N/A 135.39 N/A N/A N/A

Lamp and Ballast 

Replacement

2 0.549 F96T8HO 492.41 31.11 140.51 5.10 1.0 (8)*

II: New 

Construction/

Renovation

Baseline 0/1 0.550 F96T8HO 525.92 N/A 137.79 N/A N/A N/A

Lamp and Ballast 

Replacement

2 0.549 F96T8HO 585.63 (59.71) 142.91 (7.68) (never)** 0 

* A number in parentheses indicates a negative value.

** An entry of “never” for PBP indicate standards that do not reduce operating costs.

Table 8.5.8. LCC and PBP Results for Two-Lamp IS Ballasts Operating 8-Foot Slimline Lamps in the Commercial Sector

(F96T12ES Baseline) 

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.797 F96T12ES 516.55 N/A 111.15 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.807 F96T12ES 525.09 (8.54) 124.32 0.50 26.1 0 

II: New 

Construction/

Renovation

Baseline 0 0.797 F96T12ES 518.85 N/A 113.55 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.807 F96T12ES 527.67 (8.82) 126.71 0.47 27.8 0 

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

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Table 8.5.9. LCC and PBP Results for Two-Lamp IS Ballasts Operating 8-Foot Slimline Lamps in the Commercial Sector

(F96T8 Baseline) 

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.790 F96T8 463.12 N/A 91.98 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.809 F96T8 458.81 4.31 92.58 0.54 1.1 1 

II: New 

Construction/

Renovation

Baseline 0 0.790 F96T8 465.38 N/A 94.37 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.809 F96T8 457.95 7.42 94.98 0.88 0.7 0 

Table 8.5.10. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot T5 MiniBP SO Lamps in the Commercial Sector

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

% 

I: Ballast 

Failure/

Replacement

Baseline 0 1.309 F28T5 326.11 N/A 67.16 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.441 F28T5 291.02 35.10 69.37 4.07 0.5 0 

2 1.482 F28T5 303.62 22.50 80.52 3.91 3.4 (2)*

II: New 

Construction/

Renovation

Baseline 0 1.309 F28T5 328.63 N/A 69.56 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.441 F28T5 293.32 35.31 71.77 4.09 0.5 0 

2 1.482 F28T5 298.32 30.31 82.92 4.76 2.8 0 * A number in parentheses indicates a negative value.

Table 8.5.11. LCC and PBP Results for Two-Lamp PS Ballasts Operating 4-Foot T5 MiniBP HO Lamps in the Industrial Sector

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.688 F54T5HO 403.19 N/A 69.54 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.791 F54T5HO 366.26 36.93 72.01 5.54 0.4 0 

2 0.837 F54T5HO 369.13 34.06 79.93 6.26 1.7 0 

II: New 

Construction/

Renovation

Baseline 0 0.688 F54T5HO 405.66 N/A 71.94 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.791 F54T5HO 368.69 36.97 74.40 5.55 0.4 0 

2 0.837 F54T5HO 364.61 41.06 82.33 7.24 1.4 0 

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

8-33

Table 8.5.12. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in 

the Residential Sector (Low Power Factor, F34T12 Baseline) 

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 1.277 F34T12 115.82 N/A 60.26 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.457 F32T8 113.98 1.84 55.29 (0.29)* (never)

** 29 

2 1.492 F32T8 122.79 (6.97) 62.10 (0.49) (never) 38 

II: New 

Construction/

Renovation

Baseline 0 1.277 F34T12 118.20 N/A 62.66 N/A N/A N/A

Lamp and Ballast 

Replacement

1 1.457 F32T8 104.04 14.16 57.68 0.90 (5.5) 0

2 1.492 F32T8 110.01 8.19 64.49 0.98 1.9 0 * A number in parentheses indicates a negative value.

** Negative PBP values indicate standards that reduce operating costs and installed costs. Entries of “never” for PBP indicate standards that do not reduce 

operating costs.

Table 8.5.13. LCC and PBP Results for Two-Lamp RS and IS Ballasts Operating 4-Foot MBP and 2-Foot U-Shaped Lamps in 

the Residential Sector (Low Power Factor, F32T8 Baseline) 

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0/1 1.457 F32T8 113.98 N/A 55.29 N/A N/A N/A

Lamp and Ballast 

Replacement

2 1.492 F32T8 122.79 (8.81)

* 62.10 (0.19) (never)** 7 

II: New 

Construction/

Renovation

Baseline 0/1 1.457 F32T8 116.37 N/A 57.68 N/A N/A N/A

Lamp and Ballast 

Replacement

2 1.492 F32T8 122.05 (5.68) 64.49 0.11 62.0 0 

* A number in parentheses indicates a negative value.

** An entry of “never” for PBP indicates standards that do not reduce operating costs.

EERE-2007-BT-STD-0016 COMMENT 25
 Revised on 4/27/2010

8-34

Table 8.5.14. LCC and PBP Results for Four-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps (Cold 

Temperature/Sign Ballasts) in the Commercial Sector

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

% 

I: Ballast 

Failure/

Replacement

Baseline 0 0.196 F96T12HO 1552.56 N/A 224.53 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.238 F96T12HO 1167.42 385.14 214.18 40.87 (0.3) 0 

II: New 

Construction/

Renovation

Baseline 0 0.196 F96T12HO 1554.86 N/A 226.92 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.238 F96T12HO 1343.48 211.38 216.58 21.92 (0.5) 0 

Table 8.5.15. LCC and PBP Results for Four-Lamp RS and IS Ballasts Operating 8-Foot RDC HO Lamps (Cold 

Temperature/Sign Ballasts) in the Industrial Sector

Event Response CSL BEF Lamp Type LCC

$ 

LCC 

Savings

$ 

Installed 

Price

$ 

Operating 

Cost Savings 

$ 

PBP

yrs

System

Mean Lumens 

from Baseline

%

I: Ballast 

Failure/

Replacement

Baseline 0 0.196 F96T12HO 1242.84 N/A 224.53 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.238 F96T12HO 959.50 283.33 214.18 38.43 (0.3) 0 

II: New 

Construction/

Renovation

Baseline 0 0.196 F96T12HO 1245.17 N/A 226.92 N/A N/A N/A

Lamp and Ballast 

Replacement

1 0.238 F96T12HO 1088.40 156.77 216.58 20.61 (0.5) 0

EERE-2007-BT-STD-0016 COMMENT 25
Revised 4/23/10

8-35

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EERE-2007-BT-STD-0016 COMMENT 25