# .**-~**



## Thursday November 19, 1998



# Part 

# Ill 

# )Q3

Department of Energy

Office of Energy Efficiency and Renewable Energy

10 CFR 

## Part 430 

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Energy Conservation Program for Consumer Products: Energy Conservation Standards for Clothes Washers; Proposed Rule

# • • 64344 Federal 

### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430

[Docket No. EE-RM-94-403]

RIN 1904-AA67

Energy Conservation Program for Consumer Products: Energy Conservation Standards for Clothes Washers

AGENCY: Office ofEnergy Efficiency and Renewable Energy. Departmentof Energy.

ACTION: Supplemental Advance Notice ofProposed Rulemaking.

SUMMARY: The Energy Policy and Conservation Act, as amended (EPCA or Act). requires the DepartmentofEnergy (DOE orDepartment) to consider amendingthe energy conservation standards for certain major household appliances. This supplemental advance notice ofproposed rulemaking (ANOPR) addresses therequirement ofEPCA to consider amending the energy conservation standards for clothes washers no laterthan five years after the date ofpublication ofthe previousfinal rule (May 14. 1991).

The purpose ofthis supplemental ANOPR is to provide interested persons with an opportunityto commenton:

First, the product classes thatthe Department is planning to analyze;

Second, the analytical framework, models (e.g

.. the Government Regulatory Impact Model (GRIM)). and tools (e.g

.. a Monte Carlo sampling methodology, and life·-cycle-cost (LCC) and national energy savings (NES) spreadsheets) that the Departmentexpects to use hi performing analyses ofthe impacts of standards; and

Third, the results ofpreliminary analyses for life-cycle-cost. payback and nationa1 energy savings contained inthe PreliminaryTechnical Support Document: Energy Efficiency Standards for ConsumerProducts: Clothes Washer:; (TSD) andsummarized in this supplemental ANOPR.

DATES: Written comments must be received by February 2. 1999. The Departmentrequests 10 copies ofthe written comments and, ifpossible, a computer disk. The Office ofCodes and Standards iscurrently using WordPerfect 6.1.

A public hearing will be held on December 14 (1:00-4:00 p.m.) and 15 (9:00 a.rn.-4:00 p.m.). 1998. See SUPPLENIENTARY INFORMATION for further details. ADDRESSES: Written comments should be submitted to: U.S. Departmentof Energy. Attn: Brenda Edwards-Jones. Office ofEnergy Efficiency and Renewable Energy, "Energy Efficiency Standards for ConsumerProducts,'' (Docket No. EE-RM-94-403), EE-431, Forrestal Building. 1000 Independence Avenue, SW, Room lj-018, Washington, D.C. 20585, (202) 586-9127.

The public hearingwill be held atthe U.S. DepartmentofEnergy. Forrestal Building, 1000 Independence Avenue SW. Room lE-245, Washington, D.C. 20585.

Copies ofthe PreliminaryTechnical Support Document: Energy Efficiency Standardsfor ConsumerProducts: Clothes Washers (TSD) may also be obtained from: U.S. Department of Energy. Office ofCodes and Standards, 1000 IndependenceAvenue, SW, Rm lJ-018, Washington, D.C. 20585-0121, (202) 586-9127.

.

Public Information: The public may

access the Freedom ofInformation Reading Room, located at the U.S. DepartmentofEnergy, Forrestal Building. 1000 Independence Avenue, SW, Room lE-190, Washington. D.C. 20585 betweenthe hours of9:00 a.m. and 4:00 p.m

.. Monday through Friday. (except Federal holidays). Call (202) 586-6020for information.

For more information concerning public participation in thisrulemaking proceeding, see sectionIV, "Public Comment Procedures," ofthis document.

FOR FURTHER INFORMATION CONTACT: Bryan Berringer, U.S. Department of Energy. Office ofEnergy Efficiency and Renewable Energy. Forrestal Building. Mail StationEE-431, 1000 IndependenceAvenue, SW, Washington. D.C. 20585-0121. (202) 586-0371. E-mail: Bryan.Berringer@EE.DOE.GOV Eugene Margolis, Esq., U.S. Department

ofEnergy, Office ofGeneral Counsel, Forrestal Building. Mail Station GC72. 1000 Independence Avenue, SW. Washington, D.C. 20585, (202) 586- 9507, E-mail: Eugene.Margolis@HQ.DOE.GOV

SUPPLEMENTARY INFORMATION: I. Introduction

A. Authority B. Background I. History 2. Test Procedure 3. Process Improvement II. Clothes Washers Analyses

A. Preliminary Market and Technology

Assessment
l. Market Assessment

a. General b. Product Specific 2. Technology Assessment a. General b. Product Specific 3. Preliminary Base Case Shipments

Forecast

a. General b. Product Specific B. Screening Analysis I. Product Classes

a. General b. Product Specific 2. Baseline Unit

a. General b. Product Specific 3. Design Options/Efficiency Level

a. General b. Product Specific 4. Proprietary Designs

a. General b. Product Specific C. Engineering Analysis l. Energy Savings Potential and

Manufacturing Costs

a. General b. Product Specific I. Manufacturing Cost-Reverse

Engineering D. Life-Cycle-Cost (LCC) and Payback

Analysis

. I.Life-Cycle-Cost Spreadsheet

a. General b. Product Specific i. LCC Analysis ii. Payback Analysis (Distribution of

Paybacks}
iii. Rebuttableffest Procedure Payback 2. Preliminary Results

a. General b. Product Specific E. Preliminary National Impact Analyses 1. National Energy Savings (NES)

Spreadsheet Model

a. General b. Product Specific 2. Preliminary Results

a. General b. Product Specific 3. Indirect Employment Impacts

a. General b. Product Specific F. Consumer Ana!yses l. Purchase Price

a. General b. Product Specific 2. Consumer Participation

a. General

. b. Product Specific

G. Manufacturer Analysis l. Industry Cash Flow

a. General b. Product Specific 2. Manufacturer Sub-Group Analysis

a. General b. Product Specific 3. Interview Process

a. General b. Product Specific H. Competitive Impact Assessment

· a. General

b. Product Specific I. Utility Analysis l. Proposed Methodology

a. General b. Product Specific i. Assumptions ii. Results ). Environmental Analysis

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### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64345

I. Proposed Methodology

a. General b. Product Specific K. Regulatory Impact Analysis 

### m. Proposed Standards Scenarios IV. Public Comment Procedures

A. Participation in Rulemaking B. Written Comment Procedures C. Issues for Public Comment V. Review UnderExecutive Order 12866

I. Introduction

A. Authority

Part BofTitle illofthe Energy Policy and l;:onservation Act, Public Law 94- 163, as amended by the National Energy Conservation Policy Act, Public Law 95-619, the National Appliance Energy Conservation Act of 1987, Public Law 100-12, the National Appliance Energy Conservation Amendments of 1988, Public Law 100-357, and the Energy Policy Act. of 1992, Public Law 102-486 (the Act or EPCA), created the Energy Conservation Program for Various ConsumerProducts otherthan Automobiles. 42 U.S.C. 6291-6309.

The National Appliance Energy Conservation Act of 1987 amended the Act to impose prescriptive standards (design feature requirements) for clothes washers as part ofthe energy conservation program for consumer

· products. EPCA, Section 325(g), 42

U.S.C. 6295(g). The design feature requirementthatclothes washers shall have an unheated rinse optionwas effective for appliances manufactured

on or afterJanuary 1. 1988. The Act required the Department to conduct a rulemakingbyJanuary 1, 1990, to determine ifthe above mentioned standards should be amended. The Act provided that any amendmentto the standardswould applyto products manufactured threeyears after the rulemaking. The Final Rule was issued

on May 14, 1991. and is effective for products manufactured onor after May 14. 1994 (hereinafterreferred to as the May 1991 Final Rule). 56 FR 22279. The Act also requires the Department to

.conducta subsequentrulemaking no later than five years after the date of publication ofthe previous final rule.

Before the Department determines whether or not an energy conservation standard is economicallyjustified, it
mustfirst solicitcomments on the proposed standard. EPCA, Section 325(p). 42 U.S.C. 6295(p). Any new or amended standard is required to be designed so as to achieve the maximum improvement in energy efficiency that is technologically feasible and economicallyjustified. EPCA, Section 325(o)(2). 42 U.S.C. 6295(0)(2). After reviewing comments on the proposal. the Department must then determine that the benefits ofthe standard exceed its burdens based to the greatest extent practicable, on a weighing of.the following sevenfactors: (1) The economic impact ofthe standard on the manufacturers and on the consumers ofthe products subject to such standard;

(2) The savings in operating costs throughout the estimated average life of the covered product in the type (or

- class) compared to any increase in the price, initialcharges, or maintenance
expenses for the covered productsthat

are likely to resultdirectly from the imposition ofthe standard;

(3) The total projected amount of
energy. or as applicable, water, savings likely to result directly from the imposition ofthe standard;

(4) Any lessening ofthe utility orthe performance ofthe covered products likely toresult from the imposition of the standard;

(5) The impact ofany lessening of competition, as determined inwriting by the Attorney General. that is likely to result from the imposition ofthe standard; ·

(6) The need for national energy and
water conservation; and

.

(7) Otherfactors the Secretary considers relevant.

B. Background

l. History

The Departmentinitiated a clothes washerrulemakingto determine ifthe standards (design feature requirements) imposed by the Act shouldbe amended. The Departmentpublished an Advance Notice ofProposed Rulemaking (ANOPR) (53 FR 17712, May 18, 1988).

a Notice ofProposed Rulemaking (NOPR) (54 FR 32744, August 9, 1989). and the May 1991 Final Rule. The May 1991 Final Rule mandated performancebased energy conservation standardsfor clothes washers. The standards specified a minimum energy factor (EF) for two ofthe five classes ofclothes washers (top-loading standard and toploading compact). The energy conservation standards in the May 1991 Final Rule are effective for products manufactured on or after May 14, 1994.

In the May 1991 Final Rule, the Department announced that itwas accelerating the second review ofenergy efficiency standards for clothes washers because it became aware. after the rulemaking was closed. ofa design option (horizontal-axis (H-axis) wash tub in a top-loading washer) in use in Europe thatwas not included in the proposedrule and upon which no commentwas received. The Department did not consider establishing a standard based on the top-loading H-axis design option because this information came to the attention ofthe Department after the close ofthe comment period on the proposed rule and thus was not subject
to public debate.

On September 28. 1990, the Department published an ANOPR for nine products which included the second review ofenergy efficiency standards for clothes washers. 55 FR 39624. In response to that notice, a numberofenergy efficiency advocates and appliance manufacturers requested that the Departmentdelay the second review until a 1995-1996time frame. The additional time was requested in orderto allow manufacturers time to meetthe standards in the May 1991 Final Rule which became effective on May 14. 1994, and to fully evaluate new,

more energy efficient technologies such

as top-loading H-axis clotheswashers. This additionaltime, manufacturers contended, would enable them to provide more meaningful and relevant
commentson the next, legislatively required, rulemaking. The Department considered the request, and by letter, dated February 26, 1992, notified the parties requesting the delay that the Department had determined that it would conductthe rulemaking on the later schedule, asrequested.

On November 14, 1994. the Department issued an ANOPR to begin the second review ofenergy efficiency standards for clothes washers. dishwashers and clothes dryers. In this ANOPR. the Department presented the productclasses thatthe Department planned to analyze. the analytical framework and models thatthe Departmentexpected to use in performing analyses, and issues on which the Department was·interested in gathering data. The Department received
comments in response to this ANOPR and also collected data from the manufacturers which was compiled by .the Association ofHome Appliance Manufacturers (AHAM) on May 8. 1995, andJuly 6. 1995. (AHAM, No. 27 and 38.)

2. Test Procedure

Simultaneouswith the rulemaking for clothes washer standards, the Department was also in the process of revising the clothes washer test procedure. The Department needed to address a number ofinnovative technologies for which there were no test procedures. A number ofproposals

were published, one on December 22, 1993 (58 FR 67710). and another on March 23. 1995. 60 FR 15330. In its
comments to the March. 1995 proposed rule. AHAM requested that DOE adopt**~**



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### 64346 Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules

an additional new test procedure. based

on curr•ent consumerhabits, which would be used in considering the revision ofthe clothes washerenergy conservation standards. and would go into effect upon issuance ofstandards.

On April 22. 1996, the Department issued a supplemental NOPR proposing such a new test procedure, AppendixJI,

as well as certain additional revisions to the cun-ently applicable test procedure in AppendixJ to Si.ibpart B of IO CFR Part 430. 6I FR I7589. The supplemental notice waspublished to seek comments onwhether it should adoptthe AHAM recommendedtest procedurewith certain changes. The Final Rule, published on August 27, 1997, adopted thisrecommendation. 62 fR 45484. AppendixJI ofthe revised
test procedure wouldgo into effect upon issuance ofstandards. AppendixJI include.s a modified energyfactor (MEF) which replaces the EF. Contrastingwith the previous EF (Energy Factor) descriptor, the MEF descriptor incorporates clothes dryer energy by consideration ofthe remaining moisture
content (RMC) ofclothes leaving the clothes washer. Othersubstantive differences between the test procedures include using different water temperaitures for testing and using cloth loads in 

### Jl and not inJ. The issuance ofthe F:inal Rule was a major step in accelerating the development ofclothes washer :standards because itprovided thebasis upon which the energy and
water consumption, as well as the manufacturing costs would be submitted.

3. Process Improvement

During consideration ofthe fiscal year 1996·appropriations. there was conside:rable debate about the efficacy of the standards program. The Department ofthe Interior and Related Agencies Appropriations Act for Fiscal Year 1996 included a moratorium on proposing or issuing ,energy conservation appliance standards for theremainder ofFiscal Year 1996. SeePub. L. 104-134. Congress advised DOE to correct the standards-setting process and to bring together stakeholders (such as manufacturers and environmentalists) for assistance. In September I995, the Department announced a formal effort
to considerfurther improvements to the
process used to develop appliance efficiency standards, calling on energy efficiencygroups, manufacturers, trade associations, state agencies, utilities and other interested parties to provide input
to guide the Department. OnJuly 15, I996, the Department published a Final Rule: Procedures for Consideration of New orRevised Energy Conservation Standards for Consumer Products (hereinafter referred to as the Process Rule). 61FR36974.

The Process Rule outlines the procedural improvements identified by the interested parties. Theprocess improvement effort included a review of the: (I) economic models, such as the Manufacturer Analysis Model and Residential Energy Model; (2) analytical tools, suchas the use ofa Monte Carlo sampling methodology; and (3) prioritization offuture rules. The Process Rule includesthe accountingfor uncertainty and variability by doing scenario orprobability analysis (as detailed in the Process Rule, 10 CFR 430, Subpart C, Appendix A§§ I(t), 4(d)(2), and lO(t)(l)). In addition, an Advisory Committee on Appliance Energy Efficiency Standards, consisting ofa representative group ofthese interested parties, was established to make recommendations to the Secretary regardingtheimplementation ofthe Process Rule.

Theclothes washer standards rulemaking is the first rule to be developed underthe Process Rule. Although there were two previous ANOPRs, the Department made a commitment to use the Process Rule to the extentpossible in the development ofthe new clothes washer standards. In this supplemental ANOPR. the Department is presenting theframework by which it will develop the standards. The framework reflects improvements and steps detailed in the Process Rule. The rulemaking process is dynamic. If timely new data. models ortools that enhance the development ofstandards become available, they will be incorporated into the rulemaking. For example the Advisory Committee has made several recommendations and the Department has proposed responses which are discussed in this supplemental ANOPR.

On November 15, 1996, the Department held a workshop to discuss proposed design options and a preliminaryengineering analysis for clothes washers. Two reports were presented: "Draft Report on the Preliminary Engineering Analysis for Clothes Washers" and "Draft Report on Design Optionsfor ClothesWasner" (Clothes Washer PublicWorkshop, No. 55 B and C). A number ofconcerns were raised relating to the application ofthe Process Rule to the clothes washer rulemaking. includingthe need for a review ofthe manufacturing impact analysis model and methodologies, and

a review ofnon-regulatory approaches (Thiele. No. 55L, at 80), whether the manufacturing cost data collected needed to be updated (Topping. No. 55L, at 52), andwhetherthe Department ought to continue relying on the old methods ofdoing the analysis. (Perlis. No. 55L at 167.)

Responding to comments from the November 1996 workshop concerning the application ofthe Proces!! Rule to the clothes washerrulemaking. the Department developed an analytical framework for appliance standards rulemaking. It was presented during a clothes washer workshop held onJuly 23, 1997. The analytical framework describes the different analyses (e.g

.. the LCC. payback and national impact analyses) to be conducted (See Table 1). the method for conductingthem, e.g

.. the use ofa new LCC and NES spreadsheet andthe relationship between the various analyses. The framework will be tailored to each rulemaking. Therefore. the same procedures will not necessarily be followed in all ofthe rulemakings. For example, although manufacturing cost data needs to be collected for each rulemaking. the method for collecting the data can be customized to the specific product.

TABLE 1.-CLOTHES WASHER ANALYSES UNDER PROCESS RULE.

ANOPR**Screenin!~** Analysis

........................................... Engineering Analysis

........................................ Life-Cyclo-Cost Analysis

................................... Preliminary National Impacts Analysis

............. NOPR

Revised Pre·ANOPR Analyses (LCC and National Impacts Analyses) Consumer Sub-group Analysis. Industry Cash-flow Analysis (GRIM). Manufacturer Impact Analysis. Utility Impact Analysis. Final rule

Revise Analyses (LCC and National Impacts

Analyses).

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### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64347

TABLE 1.-CLOTHES WASHER ANALYSES UNDER PROCESS RULE-Continued

ANOPR

The Department is in the process of developingtwo new spreadsheet tools in an effort to meetthe objectives ofthe Process Rule. The first spreadsheet calculates LCC. and payback. The second one calculates national energy savings (NES). Both tools will be tailored for specific products. These spreadsheets and the results ofthe preliminary·analysiswere discussed at

a clotheswasher workshop held on March 1I. I998.

.

The Departmenthas reviewed the recommendations made by the Advisory Committee on Appliance Energy Efficiency Standards on April 21. 1998. (Advisory Committee, No. 96). These recommendations relate to usingthe full
range ofconsumer marginal energy rates (CMER) in the LCC analysis (replacing the use ofnational average energy prices), defining a range ofenergy price futures for eachfuel used inthe economic analyses and defining a range ofprimaryenergy conversionfactors and associated emission reductions. based onthe generation displacedby
energy efficiency standardsfor each rulemaking. The Department plansto incorporate the recommendations, when appropriate, into the various rulemaking analyses.

Today's supplemental ANOPR pertains to clothes washers and utilizes the framework described in Section II. Although the November, 1994 ANOPR included clothes dryers and dishwashers, clotheswa!!hers are considered a high priority product and have been separated out to accelerate the rulemaking. Comments previously received for the September 28, 1990, ANOPR and the November 1994 ANOPR relative to clotheswashers are being addressed in this document, where applicable.

II. ClothesWashersAnalyses

This section includes a general introduction to each analysis section and provides a discussion ofissues relative to the clotheswasherrule.

A. PreliminaryMarketand Technology Assessment

The preliminary market and technology assessment characterizes the relevant productmarkets and existing technology options includingprototype designs. NOPR

Environmental Analysis.

1. Market Assessment

a. General. When initiating a standards rulemaking, the Department develops information on the.present and past industry structure and market**ch~racteristics** ofthe product(s) concerned. This activity consists ofboth quantitative and qualitative efforts to

assess the industry and products based

on publicly available information. Issues to be addressed include: (1) manufacturer market share and characteristics; (2) trends in the number offirms; (3) the financial situation of manufacturers; (4) existing nonregulatory efficiency improvement initiatives; and (S) trends in product characteristics and retail markets. The information collected serves as resource material to be used throughoutthe rulemaking.

b. ProductSpecific. The Department reviewed existing literature and data

sources 

### to get an overall pictureofthe clotheswashermarket inthe United States. Information was compiled primarilyfrom industry publications (tradejournals), government agencies, trade organizations (AHAM) and researchreports. The Department gathered the following information: (1) manufacturer market share; (2) historical shipments; (3) washersales by outlettype; (4) top retailers; (5) price distribution; (6) market saturation; (7) voluntaryprograms; (8) fuel distribution ofwaterheaters; and (9) gas and electric sales ofdryers (brand names). Informationrelating to consumer impact and voluntary programs also was obtained. The information described is discussed in the sections where it is used in the analysis. The Preliminary TSD provides additional information.

2. Technology Assessment

a. General. Information relative to existing technology options and prototype designs are used as inputs to the screening analysis. In consultation with interested parties, the Department develops a list ofdesign optionsfor consideration. All technologically feasible design options are candidates in this initial assessment.

b. ProductSpecific. This clothes washerrulemaking analysis was originallyperformed using the design option approach. In this approach, information is gathered on all possible Final rule

energy saving design options. The Department gathered design option information from previousclothes washer analyses, trade publications, industryresearch organizations, product brochuresfrom domestic and foreign manufacturers, and appliance conferences, includingthe International Appliance Technical Conference (IATC). Fea5ures such as high spin speed (allowing for lower remaining moisture content) and automatic fill control became importantdue to changes in the clotheswashertest procedure. AHAM provided additional information on the energysavings potential and viability ofthese designs. The "Draft Report on Design Options for Clothes Washers" and "Draft Report on the PreliminaryEngineering Analysis for Clothes Washers" provide details on the potential technologies. (Clothes Washer Public Workshop. No. 55B and SSC).

The technology assessment began with a studyofthe efficiencies of washers currently on the market. To gain greater insight and to begin creating

an efficiency distribution ofcurrent productofferings, the Department used both Appendix

### Jand

### JI test procedures

on nine different clothes washers; seven vertical-axis (V-axis) models and two Haxis mod.els. Products from all five majorAmerican manufacturers were included. The complete results are given in the Preliminary TSD. The testing program results show a large ·variation in MEF values are possible for clothes washers with nearly identical EF ratings. The Federal Trade Commission (FTC) and manufacturers (through AHAM) also provided energy efficiency labeling information. Further descriptions ofthe most current data are provided in the engineering section of the Preliminary TSD.

3. Preliminary Base Case Shipments Forecast

a. General. The Department develops

a base case forecast ofproduct shipments in the absence ofnew standards. This forecast requires an assessment ofthe impacts ofpast and existing non-regulatory efforts by manufacturers, utilities and other interested parties. DOE considers information on the actual impacts of such initiatives to date, and also

## 64348 Federal 

### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules**~~~~~~~~~~~~~~~~~~~~~~~~~~~** considers information presented regarding the possible impacts that any existing initiatives might have in the

· future. Such information could include

a demonstration ofthe steps manufacturers, distribution channels, utilities orothers will take to realize such voluntary efficiency improvements.

The base case shipmentsforecast is used as inputto the national impacts analysis, in which a forecast ofannual shipments and theirweighted average energy efficiency is neededto the year 2030.

b. ProductSpecific. In orderto develop its base case forecast for clothes washer salesthe Departmentreviewed: (1) Federal procurementguidelines: (2) voluntary programs (i.e

.. utility and consortium educational materials and/

orrebates); (3) government and industry demonstration and information
programs (e.g

.. Energy StarProgram); and (4) documented discussions with organizations and individuals. Clothes washersales will be forecasted by efficiency level for the time periodof 2003 to 2030. Thisforecast willbe more difficult for the clothes washer rulemaking, because the efficiency factor (EF) was changedto themodified
energy factor (MEF). The Department

. has limited information concerningthe
energy performance ofexisting product offerings using theMEF descript9r. Given the vastly different nature ofthe variables and testing methods ofthe
currentJ and future

### J1 test procedures, the EF values cannot be translated to MEF values. In addition. the analysis revealed a rapidly evolving market response to the introduction ofnew Haxis model clothes washers. In 1997. the WashWise consortium interviewed manufacturers and askedthem to estimate the market share ofH-axis washers in five years. WashWise is a public/private partnership between Pacific Northwest electric, gas, water and wastewater utilities, appliance manufacturers and local retailers. Their goal is to reduce the use ofenergy and
water by encouraging consumers in Washington, Oregon, Idaho and western Montana to purchaseresource-efficient washers. The results showed a large divergence ofestimates ranging from a low of5 percent to a high of25 percent (Coming CleanAboutResource-Efficient Clothes Washers: AnInitial WashWise Program andMarketProgress ReportFinal Report, No. E98-003, January 28, 1998). (March 11, 1998 Workshop Material, No. 82 00).

For the purpose ofthe base case forecast in the preliminary national impacts·analysis, the effect ofvoluntary
programs has been expressed as the percent ofnew clothes washers sold each year that will have efficiencies corresponding to those ofH-axis washers. The H-axis washer is characterized using the data submitted by AHAM for a 35 percentenergy reduction from the baseline MEF. The spreadsheetuses disaggregated values (i.e

.. water heater energy. dryer energy and mechanical energy) provided by AHAM. Disaggregated values provided by AHAM for the baseline washer are also used for the base case forecast. Calculations based on disaggregated values reflect the efficiencies of machines actually being sold which
may differfrom the minimumrequired

. efficiency. Thepreliminarybase case

assumes a 1.5 percent share ofH-axis machines in 1995 with a 0.5 percent increase in H-axis sales every year thereafter, until 2030 (i.e

.. 19 percent).

TheNES spreadsheet allows for changes in the distribution of efficiencies ofclothes washers due to non-regulatory programs. The user specifies the percentofnewclothes washer sales thatwill achieve the selected energyreduction (relative to the baseline washer design) in future
years. In later analyses (i.e

.. the NOPR) the Departmentexpects to use a distribution ofcurrent andforecasted efficiencies based on the best available information. Information is still being gathered for this task. The Department seeks commenton this forecast and welcomes any available information on current productefficiencies.

B. ScreeningAnalysis

The screening analysis reviews various technologies with regard to whetherthey: (a) are impracticable to manufacture, install and service; (b) haye an adverse impact on product utility or product availability; and (c) have adverse impacts on health and safety. The screeninganalysis establishes product classes, baseline units, and efficiency levels (or

.combinations ofdesign options) for further analysis.

1. Product Classes

a. General. Product types are divided into classes using the following criteria: (a) the type ofenergy used: (b) capacity; and (c) performance-related features that affect consumerutility orefficiency. Different energy efficiency standards will apply to different product classes. In general, classes are defined using information obtained in discussions with appliance manufacturers, trade associations. and other interested parties.

b. ProductSpecific. The Department's three proposals regarding clothes washerproduct classes and a discussion ofrelated comments follow:

• Eliminate the Semi-Automatic TopLoading. Front-Loadingand Suds Saving classes identified in the May 1991 Final Rule. The Department is proposing to eliminate certain previously defined classifications (Semi-AutomaticTop-Loading, FrontLoading and Suds Saving) because they do not offer any added utility which is inherentlyless energy efficient and therefore would require protection from the energy conservation standards. EPCA. §325(o)(2)(B)(I)(IV), 42 U.S.C. 6295 (o)(2)(B)(I) (IV). In the May 1991 Final Rule, these classes were not subject to minimum energy conservation standards because they represented a small portion ofthe market, and due to a lack ofadequate information to analyze them. However, the 1988 standard requiring an unheated rinse option is still applicable to these classes. The Department has further reviewed this topic and believes that these products shouldbe subjectto the minimum energy conservation standards applicable to eithercompact

.or standard clothes washers.

• Divide all products into a Compact (less than 2.0 ft.3 capacity) Class and a Standard (2.0 ft.3 orgreater capacity) Class. In its written comments, Whirlpool asked the Department to maintain the currentefficiency requirement for the compact class due
to the limited potential for energyefficient improvements and the small market share for these products. Whirlpool also indicated that the V-axis compactclothes washer market and the manufacturing base for these products has changed since the current standards

were developed. The previous standalone 1.6 ft.3 compactV-axis clothes washerproducts have been replaced by

a product that maintains the small cabinet (22" width) utility and portability (via castors); however, its .basket capacity is slightly larger. Because ofthe limited market size, Whirlpool is currently the only American manufacturer ofthese products. They also supplythem to other appliance companies for sale under various brand names. For these
reasons, the Department will revise the compact V-axis product class definition (1.6 ft.3 capacity) to include all V-axis clothes washers less than 2.0 ft.3 (Whirlpool. No. 69 at 3). The Department plans to increase the compact class to include all clothes washers (both V- and H-axis machines) less than 2.0 ft.3 and seeks comments on this change.

• Classify H- and V-Axis clothes washers as compact or s.tandard rather

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### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64349**~**

than establish a separate classfor these products. Based on current information, the Department believes that there is no basis for separate classes for H- and Vaxis clothes washers. Recent and nearterm productofferings. and working prototypes ofhorizontal and vertical axis clothes washers demonstrate large
energy savings while maintaining important productfeatures. The Department received comments suggesting that it identify V- and H-axis machines as a single product class. Whirlpool stated thatthe DOE's analyses to date andthe recent

consumer acceptance in the market of H-axis products confirm the validity of

a single productclass, irrespective of the axis. Whirlpool further stated that the concerns overclothes washer performance, consumer utility and reliability are unfounded in either principal orfact. (Whirlpool, No. 93 at 1.) The Natural Resources Defense Council (NRDC) stated that the "H-axis" design option does not affect the utility ofclothes washers and itis not the only design option that can comply with the standards. According to the NRDC, the evidence does not support the establishment ofdifferent standards

even ifseparate classes were established. (NRDC. No. 60 at 1.)

However, othercommentersfeel that the Department should notreject separate product classes. General Electric Appliances (GEA) indicated that the Department is proceeding as if all relevant consumer utilities are met by H-axis products already on the market orby machines planned for production. GEA further stated that the port ofaccess is not the onlyrelevant

consumer utility that mustbe addressed. Many other consumer utilities, including reliability. must be addressed. (GEA. No. 88 at 2.) The Department seeks additional comments

on this issue and is currently working with stakeholdersto formulate a process to gather additional consumer input on the issues surroundingclothes washer utility. This process is discussedfurther in Section 11.F.2.b.

2. Baseline Units

a. General. In orderto analyze design optionsfor energy efficiency improvements. the Department defines a baseline unit. For each productclass, the assumed baseline unit is a unit that minimally exceeds the existing standard. To determine the characteristics ofthe baseline unit in this screening analysis, the Department gathered information from trade organizations, manufacturers, and consultants with expertise in specific product types. b. ProductSpecific. The Department issue.d two new test procedures during the course ofthis rulemaking: Appendices 

### "J" and "Jl." 62 FR 45484. (See Section I.B.2. on Test Procedure.) The engineering analysis for this supplementalANOPR is based on the Appendix

### Jl test procedure. This test procedure calculates a MEF descriptor. Unlike its EF predecessor, the MEF uses remaining moisture content (RMC) to accountfor energy saved due to lower drying times and temperature use factors (TUFs). Using cloth loads and different water temperatures are among the many other substantive differences between theJ andJ 1test procedures. Given these different testing methods andvariables, there is no computational relationship between the EF and MEF descriptors.

In orderto determine theMEF value for the baseline unit, clothes washer manufacturers were asked to take a representative clothes washer with an EF as close as possible to 1.18 (current minimum EF) and perform the new

### JI procedure. Ifno clothes washerwas available with an EF value close to 1.18, they were asked to adjust the water volume, machine energy. and/orhot
watervolume to obtain an EF of 1.18. Five manufacturers (Amana, Frigidaire, GEA, Maytag andWhirlpool) submitted data to AHAM. AHAM mathematically averaged these values to derive an industry average MEF value of0.817 for the baseline unit (based on an EF=l.18).

3. Design Options/Efficiency Levels

a. General. Following the development ofan initial listofdesign optionsduring the technology
assessment and the screening analysis, the Department, in consultation with interestedparties, will select appropriate efficiency levels (or combinations ofdesign options) for manufacturing cost and energy use data collection.

b. ProductSpecific. This clothes washerrulemaking analysis was originally performed usingthe design option approach. The November 1994 ANOPR included a listofdesign options that could be oonsidered in determining the potential energy savings from new clothes washers standards. Data on the
cost and energy consumption ofthese design options were obtained from U.S. clothes washer manufacturers through AHAM on May 8. 1995 (AHAM. No. 27). At theJuly 13, 1995, Workshop. DOE · presented a detailed design option analysis that also ranked the cost effectiveness ofeach option under consideration. OnJuly 6, 1995, AHAM provided additional design option information and comments about the waythe information shouldbe interpreted. (AHAM, No. 38.)

Areport using the updated design option information was presented during a screeningworkshop held on November 15, 1996. The report entitled. "Draft Report on Design Options for ClothesWashers," used criteria laid out in the Process Rule to screen outdesign· options and preclude them from further analysis. After the workshop. AHAM· commented that the manufacturers did
not believe thatdisclosure ofthe design options used to achieve a given efficiencylevel was practical. had value

orcould be released without disclosure ofproprietary information. (AHAM. No. 67 at 1,2.) Since the technical approach
to achieve anyparticularefficiency level above the baseline likely involves multiple design options speci.fic to each
company, AHAM stated that its members believed that supplyingcost and energy use data for several energy levelswas sufficient. Several efficiency levels were selected which corresponded approximately to the efficiency levels calculated using the design-option approach. These efficiency levelswere discussed at the March I I. 1998, workshop.

Itwas agreed thatthe efficiency level approach would be used. Levels were established and utilized in the engineeringanalysis (See Section II.c.1.b).

4. Proprietary Designs

a. General. In its analysis. the Departmentconsiders all design options that are commercially available or present in a working prototype. including proprietarydesigns. Proprietary designs are fully considered in the Department'sengineering and economic analyses.

b. ProductSpecific. At the November 15, 1996, workshop, it was acknowledged thatWhirlpool had four patented proprietary prototype designs that used V- and H-axis platforms. Whirlpool indicated that these were working prototypes. (Whirlpool. No. 55L at 77.) On November 29, 1996. the Department sent a letterto the · stakeholders with the patent numbers

. for the Whirlpool designs as requested

during the November workshop. (DOE. No. 57.)

In response to a Department request to obtain more information. AHAM stated that .it was inappropriate for its members to comment on the cost/ efficiencies ofthe Whirlpool designs. AHAM asked that prior to seeking cost/ efficiency information on these designs. DOE should verify thatthese clothes

. washer designs were viable, were able to perform their intended function and had

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usage patterns and lifetimes similarto existing clothes washers. (AHAM No. 67
at 2.) At theJuly 1997 workshop. GEA expressed concern thatthe Department had notverified that the Whirlpool designs met consumerutility performance requirements. (GEA. No. 

### 72L at**:~10.)**

In response to these concerns, the Department witnessed efficiency testing ofthe prototype design conducted accordi.ng to the revised DOE clothes washer test procedure. Theresults ofthe testing demonstratedthat the prototype could reach efficiency levels comparable to H-axis efficiency levels. The Department also witnessed other performance tests on theWhirlpool design. Tests performed include: (1) cleanliness testing. using several different stains; (2) gentleness ofaction testing: and (3) and rinsability. The test results were benchmarked by conducting identical tests ontwo other clothes washers: A top sellingV-axis model .:ind a top selling H-axis model. The tests were conducted twice for each machine using a seven pound test load. The American StandardsTesting Material ASTM-D4265 standardwas used for evaluating stain and soil removal. Nine different types ofstained swatches were evaluated, six samples of each stain. Theclothusedwas specified in the AHAM test methods in addition
to various othercloths. The gentleness testing was conducted using a material with a five hole pattern cut into the swatches and was evaluated based on the number ofstrands present after washing. The rinsabilitywas determined by placing the washed cloths :into a high speed exacter and analyzi.ng the residual detergent in the
water E'xacted. In all cases, the performance ofthe Whirlpool design · fell withinthe range ofresults obtained for the.otherclothes washers tested.

TheDepartment will considerthe Whirlpool prototype design in this rulemaking in the engineering and economic analyses. However, sincethe manufacturing costs estimates for the prototype are derived using a different approach than for otherefficiency levels
cost estimates. the economic analysis will be conducted separately. Further discussion on the costing ofthe Whirlpool prototype canbe found in Section Il.C.l .b.i.
C. Eng.fneeringAnalysis

The ,engineering analysis first determines the maximum technologically feasible energy efficiency level and then develops costefficiency relationships to show the manufacturer costs ofachieving increased efficiency. 1. Energy Savings Potential and Manufacturing Costs

a. General. The engineering analysis estimates the energy savings potential of the individual or combinations of design options not eliminated in the previous screeninganalysis. The Department, in consultation with stakeholders, uses the most appropriate

means available to determine energy consumption, including an overall system approach orengineering modeling. Ranges and uncertainties in performance are established. The energy savings measures developed in the engineering analysis are combined with end-usercosts in the LCC analysis.

Theengineering analysis involves adding individual or combinations of design optionsto thebaseline unit. A cost-efficiency relationship is developed
to show the manufacturer cost of achieving increased efficiency. The efficiency levels correspondingto various design option combinations are determined from manufacturer data submittals and from DOE engineering calculations.

The Act requires that. in considering
any new oramended standards, the Department must considerthose that "shall be designed to achieve the maximum improvement in energy efficiency that the Secretarydetermines is technologically feasible and economicallyjustified." EPCA. § 325(1)(2)(A). 42 U.S.C. 6295(1)(2)(A). Therefore an essential role ofthe engineering analysis consists of identifying the maximum technologically feasible level. The maximum technologically feasible level is one that can be reached by the addition ofefficiency improveme_nts and/or design options, both commerciallyfeasible and in prototypes. to the baseline units. The Department believes that the design options comprising the maximum technologically feasible level musthave been physically demonstrated in at least

a prototype form to be considered technologically feasible.

Three methodologies can be used to generate the manufacturing costs needed for the engineering analysis. These methods include: (I) The designoption approach. reporting the incremental costs ofadding design options to a baseline model; (2) the efficiency-level approach, reporting relative costs ofachieving energy efficiency improvements; and/or (3) the
cost-assessment approach which requires a "bottoms-up" manufacturing
cost assessment based on a detailed bill ofmaterials. The Department considers public comments in determining the best approach for a rulemaking.

Ifthe efficiency-level approach is used, the Department will select appropriate efficiency levels for data collection on the basis of: (I) Energy savings potential identified from engineering models; (2) observation of existing products on the market; and/or (3) information obtained for the technology assessment. Stakeholders will be consulted on the efficiency level selection.

The use ofa design-option approach provides useful information such as the identification ofpotential technological paths manufacturers could use to achieve increased productenergy efficiency. It also allows the use of engineering models to simulate the
energy consumptionofdifferent design

. configurations undervarious user profiles and applications. However, the Departmentrecognizes thatthe manufacturer cost information derived in the design-option approach does not reflect the variability in design strategies and cost structuresthat can exist between manufacturers. Therefore, the Department may derive additional manufacturing cost estimates from other approaches developed in consultation with interested parties.

The cost-assessmentapproach can be used to supplement the efficiency-level

or design option approaches under specialcircumstances when data is not publicly available because of proprietary reasons, the product is a prototype and/or the data is not provided by the manufacturers.

b. ProductSpecific. At the workshop held on November 15. 1996, a report entitled, "Draft Report on the Preliminary Engineering Analysis for Clothes Washers," was presented. This report analyzed the engineering.data submitted by AHAM concerningthe manufacturing cost and energy savings potential for different design strategies that combined design options. Stakeholders and peerreviewers at the workshop provided guidance on how the engineering analysis could be improved. Some manufacturers requested thatthe Department accept

new data in replacement ofthe data originally supplied. (AHAM, No. 6 at 1: Whirlpool. No. 65 at 2.) New cost and performance data was available owing
to recent experience in manufacturing efficient designs. It was noted that the existing data did not, as the process rule describes, consider uncertainty and variability in manufacturing costs. (Perlis, No. 55L at 161-5.) Additionally.
peer reviewers commented that cost effectiveness is manufacturer specific and suggested thatthe Department------------··

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### 64351**~~**

considersoliciting from manufacturers cost-efficiency curves that leave them

· free to select optimal design strategies.

(Topping, No. SSH at 6.) (Gordon, No. SSI at !:i.)

Following the workshop, the Department received a commentfrom a manufacturer which recommended that further engineering analyses for the rulemaking be focused on energy efficiency (MEF) levels and not o·n design options. Whirlpool also stated that cost-efficiency curves should be developed for the industry. (Whirlpool, No. 6S, at S). Whirlpool remarked that

a cost-efficiency approach, which shows manufacturer costs for increased efficiency, is the most suitable because it provi.des a high degree ofdesign confidentiality. It recommended that this me:thod be used in the engineering analysis, and that the Department shouldabandonthe practice ofadding design options orcombinations of optiom• to the baseline clothes washer. (Whirlpool, No. 69 at 3). Whirlpool recommended thatthe data base for the engineering analysis be updated where large variabilities and/oruncertainties existed. Theynoted that the market has continued to evolve as many new products had been introduced since the development ofthe currentdatabase. (Whirlpool, No. 92 at 3).

Responding to DOE's requestfor
comments on an approach to gathering data for the engineering analysis; AHAM stated that its members believed that supplying cost and energy use data for several energy levels was sufficient. These levels would include baseline and efficiencies ofS, 10, lS, 20, 3S, 40, 4S and SO percent above baseline. The efficiencies ofS, 10, lS and 20 percent would apply to a Y-axis clothes washer and, th':! efficiencies of3S, 40, 4S, and SO percent would applyto a H-axis clothes washer. (AHAM, No. 67 at I). These efficiency levels were selected to correspond approximately to the efficiency levels calculated using the design-option approach. The Department and the manufacturers later agreed to include data for Y-axis clothes washers 2S percent above the baseline
to adju:;t for a revision to the baseline MEF from .88 to .817. A complete description ofthe data collection methodology including a discussion of unceria.inty and variability in manufacturing costs, as well as the guidelines used to calculate manufacturing costs is included in the PreliminaryTSD.

ACEEE raised concerns relative to the manufacturer cost data provided by AHAM. ACEEE stated that. in general, the ave:rage incremental retail costs for high-efficiency washers (3S percent improvement and up) seemed a bit too high based on discussions·that it had with a variety ofmanufacturers and clothes washer technical experts. More specifically, ACEEE expressed concerns that these data show a substantial price jumpbetween the 40 percent and 4S percent improvement cases. ACEEE believes that the 4S percent improvement level can be met with standard H-axis machines with very small incremental costs relative to the 40 percent improvement H-axis machines. It recommends that DOE collect additional data on 40 percent and 4S percent improvement machines. including reverse engineering and revising the previous measure-based engineering analysis. (ACEEE, No. 94 at

. 1).

. The Department notes that the costs reported by AHAM atefficiency levels 40 percent and 4S percent are a representation ofindustry cost submitalsfor these levels. Also, given thechanges inthe test procedure, previous data from the design option engineering analysis cannot be used without causing significantconcerns about accuracy and relevance. The results ofthe cost assessment summarized in Section II.C.l .b.i. will however provide a secondary source of manufacturing costs for several efficiency levels.

At the March 11, 1998, workshop, the Department requested cost and consumption data for Y-axis clothes washers at efficiencies of30, 3S, and 40 percent above the baseline. The Department decided to make this request after receiving the results ofa third-party independenttesting that was conductedon top selling clothes washe·r models manufactured and sold in the U.S. This testing was held in orderto determine ifthere was a correlation between theEF and the MEF descriptors defined in the test procedure (Appendix J andJI) Final Rule for clothes washers. 62 FR 4S484. Since the test procedure

was recentlyfinalized, there was no information available on the MEF values for clothes washers currently on the market. This information is needed to determine a distribution ofshipments. The preliminarytest results indicated that there were at least two currently available Y-axis models on the market that could reach efficiency levels near a 30 percent improvement level.

AHAM responded to this request for additional information on April 3 and 8. 1998. AHAM commented that the testing performed for DOE reflects an incorrect assessment ofenergy efficiency on current models and indicated that manufacturers could not achieve these levels with traditional Yaxis clothes washers. (AHAM. No. 84 and 86). Based on follow-up testing conducted for DOE, there appears to be

a significant variation in the RMC values obtained in tests even for clothes washers ofthe same model. DOE plans
to further review this issue. Since the
two models approaching a 30 percent improvement in efficiency were "super capacity" models, the Department will try to determine ifcapacity orvolume effects the maximum achievable efficiency improvement in Y-axis designs. The Department seeks
commenton this issue.

i. Manufacturing Cost-Reverse Engineering. At the November 1996 workshop, it was acknowledged that Whirlpool had four patented proprietary, working prototype designs which included both vertical and horizontal axis platforms. (Whirlpool, No. SSL at 77). During the workshop, Whirlpool asked that the designs be included in tlie rulemaking analysis. It also indicated that it would be appropriate to conduct an independent studyto estimate the manufacturing
costs ofthe new designs. (Whirlpool. No. SSL at 169). Whirlpool did not see the practicality ofeach manufacturer estimating the cost ofthe Whirlpool designs. Estimates by other manufacturers would only be based on patent information. Therefore itcould
notbe expected to produce consistency in approach or a high degree of
accuracy. (Whirlpool. No. 69 at 4).

Maytag commented that the Whirlpool designs needed to be subjected to a full and complete engineering and cost analysis by DOE. Maytag requested that all manufacturers be given the opportunity to participate in this process since the cost ofapplying these designs to a manufacturer's own basic washer design varies greatlyfrom manufacturer to manufacturer. (Maytag. No. 64 at I). GEA also stated that the analysis needed to be expanded to cover the designs disclosed by Whirlpool. It further stated that only a revised method focusing on the technical knowhow, manufacturing capabilities and economic strengths ofindividual manufacturers would permitthe proper evaluation ofthe impacts on "atypical manufacturers." (GEA. No. 63 at 7).

In response the Department conducted a "tear-down" manufacturing
cost assessment ofone ofthe Y-axis Whirlpool prototypes. The main objective ofthe manufacturing cost assessment is to quantify the differential manufacturing costs ofproducing high efficiency clothes washers based on (l) the Whirlpool proprietary Y-axis design. and (2) commercially available Y- and

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H-axis designs. The overall project**consis~;** oftwo phases:

Phase I provides detailed cost estimates for two state-of-art, high volume, V-axis washers as a baselinefor further analysis. The major objective of this phase is to obtain stakeholder comme111t on the costing methodology and baseline costs. Preliminaryresults ofPhase I were presented during the March 1998 workshop. The Phase I methodology and final results are presented in the PreliminaryTSD.

Phase IIwill develop a differential
cost estimate for the proprietary V-axis design and for two commerciallyavailablle H-axis clothes washers, relative to the baseline clothes washers evaluated in Phase I. This phase is current1y in progress. Preliminary results will be made available for public review priorto publishingthe NOPR.

Raytheon Appliances (now Alliance Laundry Systems LLC) had questions · regardi111g a number ofassumptions in the reverse engineering analysis. These assumptions concernedwork shifts per day. equipment depreciation life, capacityutilization and production volume. Afterconsidering Raytheon's comments, the Department modified

some ofthe assumptions used in the manufacturing cost assessment approach.

As suggested byRaytheon, the assumption of2.5 shifts perday was reduced to 2.0 shifts perday. The Department agrees that 2.5 shifts per day is high based on additionalvisits to several clothes washer manufacturing plants and further discussions with manufacturing staffinthe industry. Originally. 2.5 shifts perday was chosen based on an average of2 shifts perday for asSE!mbly operations and 3.0 shifts
per dayfor fabrication processes (pressing, machining, injection molding, etc.). The baseline manufacturing cost analysis has been revised to reflect an average of2.0 shifts perdayfor the plant.

The assumption ofa 15-17year**lifetim<~** for baselineequipment depreciation life was not changed to 5- 7years as suggested. Based on the Department's industry structure analysis from publicly available sources. the Department believes a 5-7yearlife would be considered too shortfor an average equipmentdepreciation life. Although some equipment does have a relatively short service life (hand tools - 1year). an average of 15-17years is

more appropriate for the overall plant and equipment. In the analysis. various equipment depreciation lives are used depending on the specific type of equipment. When summarizingthe total investment, the overall average is approximately 15 years.

As suggested by Raytheon, the 100 percent capacity utilization assumption

was reduced. However it wasreduced to 95 percent not 80-90 percent as· proposed. Although 100 percent utilization might seem unrealistic, many operations run at or above capacity. depending oncurrent market conditions. Since utilization is dependent on the market. the Department has reduced the utilization
to 95 percent to reflect the less than ideal situation. The Department did not lowerthe utilization to 80 or 90 percent since currentmarket conditions for most manufacturers would indicate higher production. Furthermore, thetheoretical "greenfield" (entirely new) plantfor the baseline unit assumed that construction and sizing were based on currentsales and appropriate market forecasts.

The current assumption ofa production rate of 1.5 million units per yearremains unchanged even though it does notrepresent a smaller manufacturer such as Raytheon Appliances. The Department is aware that 1.5 million units is not representative ofthe smaller (or larger) manufacturers, butdoes represent a median volume. At this time, the Department is keeping the production volume for the "greenfield" plant at 1.5 million units peryear; however, DOE will be investigating an alternative scenario for a low volume (<500,000

. unitsperyear) manufacturer such as Raytheon Appliances. It is importantto
note thatthe baseline value will be used
to calculate a differential cost for production ofa higher efficiencywasher
at the same productionvolume.

In summary, the Department has considered all the suggested corrections and made changes to the baseline analysis as deemed appropriate at this time (2.5 shiftsreduced to 2.0 shifts, and 100 percentcapacityutilization reduced to 95 percent). For a baseline unit, the Department's industry analysis is based on public available data (e.g., Census ofManufacturers by U.S. Department ofCommerce) which indicates that equipmentdepreciation life should remain unchanged. The Department will be investigating the effects oflower production volumes in the NOPR analysis. A sensitivity analysis was used to evaluate each of the assumptions commented on by Raytheon. The impact ofthese changes

on the estimate ofbaseline cost is approximately 3 to 4 percent. D. Life-Cycle-Cost (LCC) andPayback Analysis

In determining economicjustification, the Act directs the Department to consider a number ofdifferent factors,

. including the economic impactof

potential standardson consumers. The Act also establishes a rebuttable presumption that a standard is economicallyjustified ifthe additional product costs attributed to the standard

are less than three times the value ofthe first yearenergy cost savings. EPCA, § 325(o) (2) (B) (iii). 42 U.S.C. 6295 (o) (2) (B) (iii).

To considerthese requirements the Departmentcalculates changes in LCCs
to the consumersthat are likelyto result from the proposed standard and two different simple paybackperiods: distributions ofpayback periods and a payback period (which follows the test procedurewithoutvariation). calculated for purposesofthe rebuttable presumption clause. The effect of standards on individual consumers includes a change in the operating
expense (usually decreased) and a change inthe purchase price (usually increased). The neteffect is analyzed by calculatingthe change in LCC as comparedto thebase case (the current analysis compares the LCC ofa new efficiency level to theAHAM baseline). Inputs to the LCC calculation include the installed consumercost (purchase price plus installation cost}, operating
expenses (energy. water, sewer, and maintenance costs). lifetime ofthe appliance, and a discount rate.

The LCC and oneofthe payback periods (distribution payback) are calculated using the LCC spreadsheet model developed in Microsoft Excel for Windows 95, combined with Crystal Ball (a commercially available software program) based on actual distributions ofinputvariables. The second payback,
test procedure payback. is not calculated using Crystal Ball and input variable distributions, but is instead based on the spreadsheet option allowing single input values.

Based on the results ofthe LCC analysis, DOE selects candidate standard levels for a more detailed analysis. The range ofcandidate standard levels typically includes: (I) the most energy-efficient combination of design options or most energy-efficient level; (2) the combination ofdesign options or efficiency level with the lowest LCC: and (3) the combination of design options orefficiency levels with

a payback period ofnot more than three
years. Additionally. candidate standard levels that incorporate noteworthy technologies or fill in large gaps

.

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between efficiency levels ofother candidate standards levels may be selected.

The payback, for purposes ofthe rebuttable presumption test. attempts to capture the payback to consumers affected ifa new standard was promulgated. It compares the cost and
energy use ofclotheswashers ·
consumers would buy in the year the standard becomes effective with what they would buywithout a new efficiency standard. In some cases this

means comparing the baselineenergy efficiency and cost with the trial standard level, in other

### cases the trial standard level would also be compared
to a higher efficiency washer purchased withoutnew standards (but at a lower efficiency than the trial standard level). A weighted average ofthesepayback periods, in theyeara new standard level wouldtake effect. is considered the paybackfor purposes oftherebuttable presumption clause. Infuture analyses (for the NOPR), all ofthe consumer economic analysis discussed above will be based on a projected distribution of efficiencies sold atthe time a new standardbecomeseffective (i.e

.. the base case).

In order to compare the LCCs to the distribution ofwasherefficiencies. the LCC spreadsheetwill be modified to enable the user to inputthe market share ofeach washerefficiency level in 5 percent increments.

1. Life-Cycle-Cost Spreadsheet Model

a. General. This section describes the LCC spreadsheet model usedfor analyzing the economic impacts of possible standards on individual ·
consumers. The LCC analysis is conducted using a spreadsheet model developed in Microsoft Excel for Windows 95, combined with Crystal Ball (a commercially available software program). The Model uses a Monte Carlo simulationto perform the analysis consideringuncertainty and variability. The spreadsheet is organized sothat
ranges (distributions) can be entered for each inputvariable needed to perform the calculations.

In recognition that each household is unique, variability is explicitly accounted for in the model by performing the LCC calculation for a large numberofindividual households. A Monte Carlo simulation is used to sample individual households from the Energy Information Administration's (EIA) Residential Energy Consumption Survey (RECS) database. The results are expressed as the number ofhouseholds having impacts ofparticular magnitudes. The statistics provided by the 1993 RECS are based on a sample of7, 111 households from the population ofall primary, occupied residential housing units in the United States. Each household is weighted so thatthe data properly represents the 96.6 million households in the 50 states and the District ofColumbia.

The spreadsheet hasthe capabilityto sampleonlysubsets ofhouseholdsfor the analysis ofparticular subpopulations, for example, low income households. It also has the capability of isolating households in the RECS database that have a particularfuel combination ofappliances (e.g., in the

case ofwater heating and clothes drying the possible combinations ofappliances includeelectric/electric, electric/gas, gas/electric, gas/gas, oil/electric, oroil/ gas). Alternately a combination offuel types, weighted to observed proportions

canbe specified. representing the entire population. The spreadsheet samples subsets ofthe U.S. population from the RECS to calculate the effect on subgroup populations. A description ofthe methodology and contents ofthe RECS database is contained in the Preliminary TSD.

Major inputsto the LCC analysis are: (1) consumerexpense for purchasing an appliance; (2) the period oftime the appliance will provide service (lifetime); (3) the value to a residential
customer ofsaving electricity. expressed

as cents per kilowatt-hour; (4) the value
to a residential customerofsavinggas, expressed as dollars per million British

· Thermal Unit (Btu); (5) the residential

price ofdistillate; (6) energyand/or
water consumption; (7) residential
customerrate for waterand wastewater (sewer)($/thousand gallons), excluding fixed charges; and (8) the rate at which expenditures (cash flows) are discounted to establish their present value. A more detailed discussion ofthe spreadsheet is contained inthe PreliminaryTSD.

. For LCC analyses the Advisory Committee recommended that DOE use the full range ofconsumermarginal
energy rates instead ofnational average energy prices. Absent consumer marginal energy rate information, the Committee recommended DOE use a range ofnet energy rates. calculated by removing all fixed charges. The Department agrees the use ofmarginal
energy rates would improve the
accuracy ofthe analysis (LCC and NES) and will attempt to determine marginal
rates. The Department believes itis unknown at this point ifremoving fixed
costs is more or less reflective of marginal rates and does not intend to take this intermediate step. In orderto develop consumer marginal energy rates. the Department
proposes to collect data on current rate schedules and energy consumption. These rates will be assigned to a national sample ofbuildings, weighted
to represent the total U.S. population of buildings. The result will be a weighted distribution ofconsumption by marginal
rates. This approach will be applied for residential and commercial customers.

DOE proposes to obtain a sample of residential buildingsfrom existing
surveys. such as the RECS or from a commercially available database. The commercially available database is more expensive, but has significantadded value in terms ofassigning the buildings
to states orto utilities, including a broader sample ofthe population, and permitting stratification ofthis larger sample to distinguish among some subpopulations. Each building will be assigned to a geographic region (e.g.,
state orutility service territory). Energy consumption by month will be included in the database for each building, in ordertotreatseasonalchangesin consumption and rates. Peak demand will be included for commercial buildings.

Recent Federal surveys (RECS, Commercial BuildingEnergy Consumption Survey (CBECS)) gather information by fuel on annual energy consumption and total expenditures. Total expenditures included customer and otherfixed charges, energy rates, demand charges, taxes, etc. butthese are nottabulated separately from each other. These surveys gathered customer bills butdid not extract information on rate schedules, fixed charges or marginal rates. The Department
proposes to explore the feasibility of extracting historical information on rate schedules, includingthe relationship between fixed charges and marginal
rates to average prices. This effort, if successful, will provide information about the extent to which marginal rates differ from average prices, or from
average prices less fixed charges.

Given restructuring ofparts ofthe
energy supply sector, customers may have more than one bill (e.g., one from the distribution company, and one or

more from generators or suppliers). To capture complete information. future
surveys are expected to gather energy pricing information directly from
customers. rather than from utilities or local distribution companies. The most efficient means to collect energy pricing information in the future involves changing the current processing ofthe billing information so as to gather more detail from the bills. to include consumption by month and pricing

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information. The pricing information would have for each customerthe rate schedu:te including the marginal rates, fixed charges, demand charges for commercial and industrial customers, or time-of-use rates where applicable. The Departmentwill express the need for these data in discussions with EIA concerningthe design offuture surveys.

Residential electricityrate schedules will be collected from Federal databases where available, or stateregulatory agencies. The information obtainedfor each rate schedulewill include any fixed charges (customercharges, etc.), block s;tructure, and rate per kilowatthour (kWh) by block. Information from utilities orlocal distribution companies will be examined to determine: confim1ation ofthe set ofrate schedules, the number ofcustomers by state using each rate schedule. the total electricity sales by state by rate schedule, and (if possible) monthly electricity sales by
state byrate schedule.

Residential natural gas rate schedules will becollected from Federal databases where available, orstate regulatory agencies. The information obtainedfor each rate schedule will include any fixed charges (customercharges. etc.), block structure. and rate pertherm by block. Information from utilities or local distribution companies will be examined to determine: confirml}tion of the setofrate schedules, the number of
customers by state using each rate schedule, the total gas sales bystate by
rate schedule, and (ifpossible) monthly
gas sales by state by rate schedule.

Commercial and industrial electricity
rate scheduleswill be examined in a similar process as for residential electricityrates, but with additional information to accountfor demand charges. The information obtainedfor each rate schedulewill distinguish any fixed charges (customer charges, etc.), block structure, rate perkWh by block, and demand charges.

In the database ofbuildings. such characteristics as energy consumption and expenditures and number of
customers by state orutility will be used
to map a rate schedule onto each ofthe buildings in the national sample. The marginal rate for each buildingwill be the block from the rate schedule corresponding to thatbuilding's month:ty energy consumption.

Forlife cycle savings calculations. monthiy energy savings will be estimated for eachbuilding. These savings will be evaluated for each building at the monthly marginal rate, using the·rate schedule assigned to each building. Until a time series ofmarginal rates is available, future trends in energy prices will be used to derive estimates of CMER to be used in the economic analysis ofpossible energyperformance standards. The trend in average price (by fuel and sector) will be used to
create an index relative to current prices and applied to the currentrange of marginal rates. In otherwords, it will be assumed thatthe marginal rates will change in proportionto the expected change in average price.

Given the uncertainty ofprojections offuture energy prices. scenario analysis will be used to examine the robustness ofpossible energyefficiency standards under different energyprice conditions. These scenarioswill be used in the LCC andthe NES calculations discussed in Section II.E.l. Each scenario will provide a self-consistent projection, integrating energy supply and demand. The scenarios will differ from each other inthe energyprices that result. The Committee suggested the use ofthree scenarios. While many scenarioscan be envisioned, specification ofthree scenarios should be sufficientto bound the range of
energy prices.

The mostrecent DOE Annual Energy Outlook 1998 (AEO 1998) reference case provides a well-defined middle scenario. In addition, the range of scenarios used in the AEO will be examined to establish the scenarios with the highest and lowestenergy prices in the sector andfuel ofinterest. As an example, for commercial products such

as fluorescent lamp ballasts, commercial and industrial electricityprices will be examined. AEO scenarios will serve as the fall back high and low scenarios, and the focus ofdiscussion with stakeholders on further refinements to the high and lowbounds. The range of
energy prices represented by these scenarios and the underlying assumptions will be made available to stakeholdersfor comment. Independent estimates offuture energyprices will also be considered. Based upon stakeholder input. the underlying assumptions may be further revised. This process will result in defining a likely high and lowbound on the energy price trends.

Theeconomic analysis will be conducted using a spreadsheet for LCC, and onefor NES. The future trend in
energy prices assumed in each ofthe three scenarios will be clearly labeled and accessible ineach spreadsheet. DOE and stakeholderswill be able to easily substitute alternative assumptions in the spreadsheets to examine additional scenarios as needed.

· Two approaches are proposed to estimate forecast marginal rates:

(I) Fornow, the trends from the three scenarioswill be converted to indexes and applied to the current range of

consumer marginal energy rates to estimate future consumermarginal
energy rates. So ifthe trend in average residential electricity priceswereto decline by 20 percentover some period oftime. then the marginal rate for each household would be assumed to decline from its initial observed value by 20 percentoverthatsame period oftime.

(2) Restructuring is expected to simplify rates and to homogenize rates
to some extent. That is. rates are expected to move toward the middle of therange. The iJ;ldex approach is subject

to question ifthe change in the range of marginal rates varies dependingupon the initial marginal rate. The current
range ofaverage residential prices is from about 2 to 14 cents perkWh. Ifin the future the highest current rates decline, but the lowestcurrentrates fail

to decline (or even increase) over time, then the index approach fails. A second approach can accountfor the differences intrends by usingregional data. National Energy Modeling System (NEMS) provides regional information

on average prices by sectorover time. Therates for buildings. including residential households. in each region will be scaled to correspond to the future trend in average prices for that region.

b. ProductSpecific. This section discussesthe approachesfor analyzing the economic impactson individual

consumers from potential new clothes washerstandards. A spreadsheet as described in Section II.D. l.a. is used to calculate these economic values. In future analyses. all three ofthe · economic metrics will be compared to a base case ofwasherefficiencies sold in the yearthe new standard would take effect. In this preliminary analysis, only the test procedure payback is compared
to a distribution ofefficiencies forecasted to theyear 2003.

i. LCC Analysis. Table 2 summarizes

some ofthe major assumptions used to calculatethe consumer economic impacts ofvarious energy-efficiency levels. In addition a number of assumptions are discussed in more detail.**~-----------------------------**



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### 64355

.

TABLE 2.-ASSUMPTIONS USED IN THE LCC PRELIMINARY ANALYSIS

Start year (effective date of standard) 2003. Retail Prices: Baseline Clothes Washer

................................................... Retail Price-$421 including tax; from retail price survey. Distribution (12-17 years). Lifetime

..................................................................................................... Cycles Per Year

........................................................................................ Distribution from RECS database (207-645). Energy Price Trend

................................................................................... AEO 1998 reference case to the year 2020 with extrapolations to the year 2030. Water Price

............................................................................................... Distribution from Ems! &Young, 1994 National Water and Wastewater

Annual Real change in Water and Sewer Cost (Water Price Escalator) Rate Survey ($0.00 to $7.84 per 1000 gallons). 0 percent.. Discount Rate

........................................................................................... Energy Consumption Per Cycle

............................................................... Distribution (C>-15 percent). AHAM data. Variation in Household Energy Prices, Energy Use, and Water Heater RECS data.

Shares.

RetailPrices: The analysis accompanying this supplemental ANOPR uses a 2-step mark-up approach
to estimate retail prices. First, the manufacturing costs (i.e., full production costs) are marked upto the manufacturer price using a manufacturer mark-up. Then the manufacturerprice is marked upby a retail mark-up to arrive atthe retail price. The price paid by theconsumer includes the sales taxin addition to the retail price. This sales tax isaccounted for by using a salestax mark-up over the retail price ofthe clothes washers.

Inthe PreliminaryTSD, the Department used a fixed retail mark-up of 1.40, and a fixed mark-up of 1.052 to

cover the sales tax. The manufacturer mark-up overfull production costs was bound by a maximum value of 1.35, which maintains industry (manufacturer) cost structure, and a minimum value of 1.00, which represents a pass-through offull production costs. The latter includes depreciation ofnew capital. Recuperation ofnon-production costs

are not included. In order to characterize the uncertainty in manufacturer mark-ups. the Department used a triangular distribution characterized by a maximum manufacturer mark-up of 1.35, a minimum manufacturer mark-up of 1.00, and a most likely mark-up of I°.18 (the average). Using a fixed retail markup of 1.40 and a sales tax mark-up of 1.052, the total mark-up from full production costs to consumerprice
ranges from a minimum of 1.473 to a maximum of 1.990.

The PreliminaryTSD presents a detailed discussion onretail mark-ups. The TSD also outlinesthe Department's methodology for estimating manufacturer mark-ups.

In the future NOPR analyses, the Department will use a consistent set of assumptions for prices across all analysis sections (manufacturer impact, national benefits, and consumer impacts). Manufacturer prices will be marked up by a fixed retail mark-up (currently estimated at 1.40). and a sales
tax mark-up (1.052) to arrive at the

consumer price. Whereas the development ofprice scenariosfor· the manufacturer impact analysis will be the subject ofa future workshop, the Department is considering an approach

. used inthe 1991 Arthur D. Little report 1 to AHAM. This approach entails creating manufacturer mark-up scenariosby conductinga financial analysis using the Government Regulatory ImpactModel (GRIM). The GRIM is a standard annual cash flow analysis which uses price, quantity, and
cost information to assess the impact of regulatory conditions on manufacturer income andcashflow. The model calculatesthe actual cash flows, byyear, · and then determines the present value ofthose cashflows. both without regulations and withregulations. The post-standard retail prices required in order to achieve several scenarios will be found by running the GRIM and treating manufacturer price as a variable. Additional price (mark-up) scenarios that might be considered include: (1) the price (mark-up) resulting in maintenance ofcurrent industryvalue; (2) the price (mark-up) reducing industryvalue to zero; and (3)

.the price (mark-up) resulting from passthrough ofincremental material, labor. and burdencosts only.

The Departmentreceived three
comments on the subject of manufacturer mark-up. Raytheon commented that the low end of 1.00 for therange ofmanufacturer mark-up should not be used. It recommended that the economicjustification involve
not onlyfull production costs butall anticipated costs. (Raytheon

..No. 91. at

•ArthurD. Little. Inc., Financial Impact of DOE Top LoadingHorizontalAxis Standards on U.S. Washing Machine Manufacturers. Report to Association of Home Appliance Manufacturers HorizontalAxis Task Force. August 1991. Page 19. (Speed Queen Company, No. 15, Appendix G) 1). GEA commented thatthe Department's conclusion on the estimated manufacturer price was

erroneous. GEA pointedoutthatthe Department had inexplicably transformed an average manufacturer mark-up of 1.35 into an upperbound. (GEA, No. 88 at 3-4). Whirlpool submittedthat an estimation ofaverage manufacturer mark-up of 1.18 is acceptable at this point in the rulemaking. (Whirlpool. No. 93, at 4). In response to these comments, the Department notes that a simple pass through ofincremental material costs coupledwithdeclining volumes has been suggested in a previous industry submital as the "the most likely

. scenario." As described previously, the Department proposes to use the GRIM model to conductscenario analysis on manufacturer mark-ups to keep the set ofassumptions for all analysis sections consistent withone another. The GRIM will use price-volume interactions and manufacturers will be able to comment

onthe likely price scenario.for different efficiency levels. Shipmentdata will be obtained from the NES spre.adsheet model described in Section 11.E.l. lt may be reasonable to assume that the ability
to pass through incremental costs will
vary as costs increase and/or product attributes are changed.

· TheAmerican Council for an EnergyEfficient Economy (ACEEE) commented that, at the March 1998 workshop. the Circuit City representative suggested that assuming an average 40 percent retail markup is probably too high. A 25 percent retail markup was more typical ofthe industry. The 40 percent estimate
may have factored in highermarkups on extended warranties and otherservices. (ACEEE. No. 94 at 3). In reviewing Circuit City's comment, the**Departm~nt** understandsthatthe statement referred
to a gross margin of25 percent which represents a mark-up of 1.33. This is in close agreement with the Department analysis ofretailer financial statements having an important component of

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appliances in theirproduct mix (25.2 percent to 26.3 percentgross margin). Also, as referenced in the Preliminary TSO, thisgross margin is the net of

some buying and warehousing costs. At present the Department has no basis for changingthe retail mark-up assumption. DOE willl continue to research data

sources and seeks commenton this issue.

Energy Prices: The LCC spreadsheet model Hamples the individual prices paidby households in RECS(93) (latest published version ofRECS). These prices are updated (scaled up or down based on AEO 1998 national prices) and converted to 1997 dollars.

Energy Price Trend: Several possible fuel price scenarios are built intothe LCC spreadsheet model, including: (1) constant; (2) AEO 1998 reference case; (3)Gas Research Institute 1998 (GRI 1998); (4) high growth; and (5) low growth. High growth and low growth currentlyrefer to AEO 1998 fuel price scenarios for high and low economic growth. GEA indicated thatthe Department needsto take additional steps inrevising the LCC analysis. Everything inrecent experience shows that energy prices continue to decline faster than the forecasters' ability to discern, butthe Department continues
to build in high price assumptions.

ACEEE indicated that the EIA residential electricity price**forec~st** used in the analysis is too low. It recommends that DOE focus on the EIA "high economic growth" case price projections. This case calls for an average residential electricityprice decrease of8.3 percent over the 1996- 2010 period. (ACEEE. No. 94, at 3).

In the future, as discussed inthe Department's response to the Advisory Commi1ttee, the Department will review the range ofscenarios used in the AEO
to establish the scenarios with the highest and lowest energy prices in the
sector and fuel ofinterest. The most recent DOE AEO 1998 reference case provides a well-defined scenario. Sensitivities both above andbelow these values can also be modeled inthe AEO low andhigh growth cases. For the above rieasons AEO 1998 was used as the forecast used in the preliminary analysis. The range ofenergy prices represented by these scenarios and the underlying assumptions will be made availabl.e to stakeholders for comments. This process will result in defining a likely high and low bound on the energy price trend.

Water and SewerPrices: Information

on water prices is not as readily available as fuel prices information. Some utilities have large fixed charges, while others are subsidized or paid for through taxes. Furthermore, there are no standard approaches to calculating
water and sewercosts. In some locations the price ofwater increases as

. consumption increases. In other areas. water price decreases with increasing consumption. Additional consideration
mustbe given to consumers who are not connected to a municipality water supply or sewage system. In some cases, only one or the other is connected. As with othervariables. the Department plans to use a range ofwater prices in the economic analysis to account for the variability among different households.

The main source ofdata onwater and

sewer prices is from a 1994 survey of
water prices in major metropolitan areas by Ernst & Young. The Ernst and Young data was adjusted for service population, base utility charges and
average household use byAl Dietemann ofSeattle Water. These adjusted values

are the basis for the water price used in the preliminary analysis. For the NOPR analysis DOE plansto update the 1994 prices.

Water Price Escalator: The Departmenthas found no national level
water price forecasts. Currently. DOE's analysis assumes that future waterrates

are constant. Whirlpool stated that
recent studies (Ernst & Young. 1994 National Water and Wastewater Rate Survey; Raftelis Environmental Consulting Group, 1996 Water and Wastewater Rate Survey) showthat
water and wastewatercharges have increased steadily each year during the period from 1986 to 1996. This trend should be expected to continue and should be reflected in the LCC calculations. (Whirlpool, No. 93 at 2).

ACEEE stated that the present analysis is much too conservative because it assumes that water prices will not increase in real terms. Submitted for the docketwas ajustpublished studyby Osann andYoung which summarized typical water/sewer bills over the 1986-1996 period. ACEEE recommended that a water/sewerbill inflation rate inthe 1.1-2.7percent range (real) be incorporated into the economic analysis. (ACEEE, No. 94 at 2-3).

The studyreferred to in the ACEEE
comment (Osann and Young) shows an average annual increase of5.7 % for a residential water/sewerbill over the 1986-1996 time period. Since the underlying inflation rate given was 3.1% this provided an annual increase inwater/sewer bills ofapproximately 2.6% real. In another analysis, using EPA data, in the (Osann and Young) report, infrastructure needs were estimated to be $280 billion. Accounting for the total gallons used and a discount rate. a rate increase of 1.1% (real) was estimated. The ACEEE commentrefers
to total cost increases and does not specify what portion ofthe increase can be assigned to an increase in marginal
rate. The ACEEE comment recommends

a water/wastewater escalation rate of 1.1
to 2.7% real but does not provide a single value or a distribution.

The Department agrees thatfuture
water prices should not be assumed to be constant and is therefore in the
process offurther analyzing both
current prices and future escalation
rates. The proposed analysis is ongoing and will be completed after the ANOPR is released. The proposed analysis consists ofupdating previous data from Ernst and Young report as adjusted by Al Dietemann, as well as the use ofnew data obtained from the American Water Works Association (AWWA). The Ernst and Young data is being updated by calling 125 utilities, getting their water rate schedules and theirforecasts for the future,

# as well as any historical information available. The Department is working on combining these two data

sources into one database. This data will be organized by utility and can be mapped ontoeither individual RECs households oronto regional areas. A distribution ofwaterprices (as in the
current analysis) will be used, as well as

a distribution ofescalation rates. In an attempt to be consistent with the methodology being developed for fuel rates, the Departmentwill attempt to establish marginal waterrates andwater prices and escalation rates thatvary with the water/wastewaterutility. The Department is seeking comments concerning this approach.

Energy consumptionpercycle:The energy use information used to calculate LCC is taken from the engineering analysis and adjusted to account for variability in field conditions. This adjustment is for the loads oflaundry washed perweek, which varies from house to house. It is expressed as

## a distribution ofwash cycles peryear that is obtained from the RECS.

Several comments were received on the subject ofRECS data. The use of outdated RECS data, especially that related to family size and annual loads,
must be discontinued ifa truer picture ofpotential savings is to be drawn. (GEA, No. 88, at 3). Whirlpool noted that a concern was raised at the March, 1998 workshop about the use of 1993 RECS data for the distribution ofgas vs. electric water heaters and dryers, family size and number ofwash loads peryear. Whirlpool agrees that the RECS data could be brought up to date, but this is
not a high priority. Whirlpool argues · that the use ofthe currently available

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### 64357

.

RECS data will not weaken any ofthe analyses for this rulemaking. (Whirlpool, No. 93 at 1). DOE intends to

use updated RECS data when itbecomes available.

Manufacturing cost: The LCC spreadsheet is organized so that a range (incorporating variability and uncertainty) can be entered to describe the manufacturing costs associated with increases in energy efficiency. Efficiency improvements overthe baseline model can be selected in increments of5 percentupto a 50 percent effkiency improvement. The
cost data used was provided by manufacturers. Itwasthencompiled and reported to the Departmentby AHAM.

Operatingcost: ACEEE stated thatthe present analysis ignores the possibility that some consumerswill use less detergentwith new high-efficiency machines than with standard machines. It recommendsthat DOE construct two alternative scenarios (one inwhich no detergent will be saved and the other that assumes some consumers will use less detergent). ACEEE indicated that the Bern Kansas studyprovided.some evidence for detergent savings. (ACEEE. No. 94 at 2). Procter and Gamble commented thatthe perception that detergent dosage will be reduced in horizontal axis ordrumwashers· proportionallyto water volume is invalid. While this appearsto be a popularbelief, the detergent dosage is
not substantiated by the facts. Procter and Gamble further stated thatthe important impact is that users ofnew lowerwateruse/energy efficient washers cannotexpect to find detergent
cost savings. (Procter & Gamble, No. 9
at 1). DOE seeks additional data on this issue.

ii. Payback Analysis (Distribution of Paybacks). Payback is calculated based

on the same inputs used for the LCC analysis (with the difference thatthe values are based onlyonthe first year the standard takes effect). Theoutput is

a distribution ofpayback periods. The

mean payback period is also reported. Additional information is available in the LCC spreadsheet but is not reported in the Supplemental ANOPR or PreliminaryTSD. This data includes charts ofcash flow taking into account the changing annual fuel prices.

In orderto compare the Payback Periods to the distribution ofwasher efficiencies, the LCC spreadsheet will be modified to enable the user to input the market share ofeach washer efficiency level in 5 percent increments. iii. Rebuttable/Test Procedure Payback. The payback for purposes of the rebuttable presumptionclause is calculated on the LCC spreadsheet but withoutusing anydistributions or Crystal Ball. Payback periods are first calculated between the new standard level and each washer efficiency being sold in the year 2003. The paybacks are then weighted and averaged according
to the percentage ofeach washer efficiency sold before a new standard is enacted. Rather than distributions, single pointvalues for the inputs are used. These values (including cycles per year, electric fuel source. etc.) will correspond to those outlined in the DOE
test procedure, Appendix

### J1. The result is a single paybackvalue and not a distribution. The payback is calculated for the expected effectiveyear ofthe standard (e.g

.. 2003). Examples and further details are presented in the TSD.

With the presently available data, the baseline efficiency level is weighted with market shares of94.5 percentfor vertical axis washers (baseline) and 5.5 percentfor horizontal axis washers (35 percentefficiency improvement). If available, data ona forecasted distribution ofwasherefficiencies in the
year 2003 will be used to refine the above calculationsfor the NOPR analysis.

2. Preliminary Results

a. General. Calculation ofLCC capturesthe tradeoffbetween the purchase price and operating expenses for appliances. In addition, two other

measures ofeconomic impact are calculated: distributions ofpayback periods and a payback period calculated for purposes ofthe rebuttable presumption clause. The outputsofthe LCC spreadsheet include distributions ofthe impactfor each energy efficiency level compared to the baseline. A variety ofgraphic displays illustrate the implications ofthe analysis results. These include: (1) Acumulative probability distribution showing the percentage ofU.S. households which would have a net saving by owning a

more energy efficient appliance, and (2)

a chart depicting the variation in LCC for each efficiency level considered.

b. Product Specific. This section presents preliminaryresults for LCCs and payback periods for all efficiency levels in the engineering analysis. Since the value ofmost inputs are uncertain and must be represented by a distribution ofvalues rather than a discrete value, the results presented in the Preliminary TSD are also described by a distribution ofvalues. Tables 3.and 4 provide a briefoverview by showing percentile LCCs and payback periods, respectively. for the efficiency level irriprovements. These tables are generated with the current LCC spreadsheet and have notyet taken into
account a distribution ofpre-newstandard washerefficiencies. but instead are based on the AHAM baseline value. Greater detail is provided in the PreliminaryTSD.

The LCC spreadsheetcalculates and reports changes in LCC (delta LCC). The output is a distribution best illustrated by the cumulative chartsfor LCC difference shown in the Preliminary TSO.The convention is used whereby all values in parentheses are negative. Negative delta LCCs mean thatthe LCC after standards is lower than that without standards (i.e

.. the base case).

Table 3 showing the percentilesof LCC change is best described by an example. The 0 percentvalue means that all delta LCCs are greater than the value shown. The value for the 50th percentile means halfofthe delta LCCs

are higher and halfare lower. The 100 percentvalue means that 100 percent of the calculated values ofdelta LCC are less than the shown value.

Taking the first row (5 percent efficiency level) as an example, the values are interpreted as follows. The value shown for 0 percent means that there is a 0 percent probability that a household will have a reduction in LCC larger than the $83 in absolute value. Toward the middle, there is a 50 percent probability that a household will have a reduction in LCC larger than $16. The 100 percentcolumn indicatesthatthere is a 100 percent probability that a household will have a reduction in LCC larger than $2.

The column labeled "mean" refers to the mean ofthe distribution. In other words, the average ofall ofthe results ofthe Monte Carlo runs.

The column labeled "percent with LCC less than the baseline" establishes
at what percentile there will not be any difference in LCC between the standards

case and AHAM baseline (i.e., the delta LCC is 0). For example, for the first row ofthe table (5 percent energy efficiency increase level). there is a 100 percent probability that households will have a lowerLCC ifa standard were enacted. For the 50 percent efficiency level. there is a 74.2 percent probability that households will have a lower LCC (In other words, 74.2 percent ofhouseholds will have a lower LCC ifa 50 percent standard level is enacted).

### 64358 Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules

TABLE 3.-PERCENTILE 

### LCC

Change Percent with LCC less than baseline inLCC from baseline, shown by
Percent efficiency level percentiles of the 90 100 Mean distribu- 0 10 25 50 75

tion of re-

sults2 (values in $)

5

................................................... ($83) ($33) ($24) ($16) ($11) ($8) ($2) ($19) 100.0 10

.................................................... ($232) ($82) ($55) ($36) ($23) ($15) $13 ($43) 99.5 15

................................................... ($402) ($140) ($90) ($55) ($33) ($19) $63 ($68) 95.6 20

................................................... ($504) ($161) ($98) ($55) ($26) $10 $129 ($67) 86.7 25

................................................... ($1,486) ($465) ($303) ($164) ($67) $4 $137 ($205) 89.2 35

................................................... ($1,997) ($639) ($408) ($211) ($59) $79 $570 ($252) 83.4 40

................................................... ($2,039) ($649) ($412) ($207) ($64) $75 $645 ($253) 83.7 45

................................................... ($2,068) ($606) ($365) ($155) $9 $159 $666 ($199) 73.6 50

................................................... ($2,075) ($617) ($374) ($156) $6 $153 $571 ($204) 74.2

, The baseline LCC, based on SWA of the most likely costs, is $1,554. 2For sample size of 10,000 trials. Energy price trends are for AEO 1998. Operating costs include water prices. No escalator is assumed for water price.

TABLE 4.-PAYBACK PERIOD

Payback period in years shown by percentiles of the distribution of results

, Percent efficiency level 0 10 25 50 75 90 100 Mean

5



### ....................................................................... 

### o.o 0.0 0.0 0.0 0.0 0.2 3.7 0.1 10 

### ······································································· 

### o.o 0.0 0.0 0.1 0.5 1.6 15.8 0.6 15 

### ······································································· 

### o.o 0.0 0.1 0.2 0.6 4.1 40.7 1.4 20 

### ······································································· 0.0 0.1 0.2 0.5 5.2 10.8 57.9 3.6 25 

### ······································································· 

### o.o 0.8 1.8 3.6 6.0 8.8 34.5 4.4 35



### ....................................................................... 0.8 2.0 2.8 4.2 6.9 11.4 49.8 5.8 40



### ....................................................................... 0.7 2.0 2.8 4.3 6.9 11.4 57.8 5.8 45



### ....................................................................... 0.7 2.4 3.6 5.8 9.3 13.9 54.0 7.2 50 

### ······································································· 0.9 2.7 3.8 5.9 9.1 13.5 54.5 7.2

, For sample size of 10,000 trials. Energy price trends are for AEO 1998. Operating costs include water prices. No escalator is assumed for water price.

Table 5 below showsthe simple payback for purposesoftherebuttable presumption clause. This means it follows test procedure assumptionsfor electric water heaters and dryers.

TABLE 5.-REBUTTABLE PRESUMPTION PAYBACK INYEARS1

Percent effi- 

### oper- 35 per- Weightciency level cent to cent to ed paystandard standard back

5



### ................ 0.1 NA 0.1 10



### ................ 0.2 NA 0.2 15



### ................ 0.6 NA 0.6 20



### ................ 1.8 NA 1.8 25



### ................ 2.7 NA 2.7 35



### ................ 3.7 NA 3.7 40



### ................ 3.7 3.7 3.7 45



### ................ 4.9 29.2 6.2 50



### ................ 5.0 19.6 5.8

, Market shares of 94.5 percent V-axis and 5.5 percent H-axis are assumed for the year 2003.

. E. PreliminaryNationalImpacts Analysis

The national impacts analysis

assesses the net presentvalue (NPV) of total consumer LCC. energy (and water, ifappropriate) savings and indirect employment impacts. A preliminary
assessment ofthe aggregate impacts at the national level is conducted for the ANOPR. Analyzing impacts ofFederal energy-efficiency standardsrequires a comparison ofprojected U.S. residential
energy consumption with and without standards. The base case, which is the projected U.S. residential energy consumption without standards, includes the mix ofefficiencies being sold at the time the standard becomes effective. Sales projections together with efficiency levels ofthe washers sold, are important inputsto determine the total
energy consumption due to clothes washers underboth base case and standards case scenarios. The· differences between the base case and standards case provides the energy and
cost savings. Depending on the analysis method used, the sales under a standards case projection may differ from those ofa base case projection.

The Department estimates national
energy and water, ifapplicable. consumption for each year beginning with the expected effective date ofthe standards. National annual energy and
water savings are calculated as the difference between two projections: a base case and a standards case. Analysis. includes estimatedenergy savings by fuel type for electricity. natural gas, and oil. Energy consumption and savings are estimated based on site energy (kWh of electricity. million Btu ofnatural gas or oil used in the home). then the electricity consumption and savings are converted to source energy

.

DOE agrees with the Advisory Committee's recommendation that the assumption ofa constant conversion factor should be dropped in favor ofa conversion factor that changes from year

### Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64359

toyear. The conversion factor would be calculated for eachyearofthe analysis based on the generating capacity displaced and the amount ofsite energy saved (see detail procedure below). For future conversion factors, DOE proposes to use the following method: (1) Startwith an integrated projection ofelectricity supply and demand (e.g., the NEMS Annual Energy Outlook reference case), and extract the source energy consumption.

(2) Estimate projected energy savings due to possible standardsfor each year (e.g., usingthe NES spreadsheet).

(3) Feed these energy savings back to NEMS as a new scenario, specifically a deviation from the reference case, to obtain the corresponding source energy consumption.

(4) Obtain the difference in source energy consumption betweenthis standard level scenario and the reference case.

(5) Dividethe source energy savings in Btu, adjusted for class specific transmission and distribution losses, by the site energy savings in kilowatt-hours
to provide the time series ofconversion factors in Btu perkilowatt-hour.

The resulting conversion factors will change overtime, and will accountfor the displacement ofgenerating sources. Furthermore, the NES spreadsheet models will include a clearlydefined column ofconversion factors, onefor eachyear ofthe projection. DOE and stakeholders can examine the effects of alternative assumptions by replacing this column ofnumbers.

Measures ofimpact reported include the NPV oftotal consumerLCC, NES and watersavings, ifappropriate, and indirect employment impacts. Each of the above are determined for selected trial standard levels. These calculations

are done by the use ofa spreadsheet tool called the NES SpreadsheetModel, which has been developed for all the standard rulemakings and tailored to each specific appliance rulemaking.

1. National Energy Savings (NES) SpreadsheetModel

a. General. In orderto make the analysis more accessible and transparentto all stakeholders, a spreadsheet model was developed using Microsoft Excel in Windows 95 to calculate the nationalenergy and water savings, and the national economic
costs and savings from new standards. Input quantities can be changed within the spreadsheet. For example, the markup factor to determine retail price from the manufacturing cost can be easilychanged in the spreadsheet. Unlike the LCC analysis, in the NES Spreadsheet, distributions 

### ate not used for inputs or outputs. Sensitivities can be demonstrated by running different scenarios.

Oneofthe more important components ofany estimate offuture impact is shipments. Forecasts of shipments for the base case and the standardcase need to be obtained as an inputto the NES.

The most basic method for forecasting future shipments is a simple saturationbased method which assumes saturations remain unchanged and solvesfor a growth rate in shipments sufficientto keep saturations constant in light ofpopulation growth. There are severalfactors that can make this estimate inaccurate. These factors include possible changes in: the number ofhouseholds, saturation levels, appliance lifetimes, prices (including

. operating costs), and consumer

decisions about whetherto repairrather than replace an appliance. Because of these complexities, and to improve on the forecasts, the following four different statistical models were studied. Auto-Regressive Moving Average (ARIMA) Model

Underthis model, a univariate time series data analysis approach is used to predictfuture values ofa time series using only its current and past data. The advantage ofthe ARIMA univariate approach is that only time series data is needed to run the model. The disadvantages ofthis approach are that (1) historical trends may notbe a good guide to the future. and (2) the model
cannot explicitly accountfor changes in the number ofhouseholds, percent of household owning washers. price. or operating expense.

AHAM has commented that it 'believes that the use ofregression analysis is inappropriate to project shipmentsofwashers to the year 2030. AHAM suggests that a time series (ARIMA) type model is better. AHAM commented that since the method presented at theJuly 23, 1997, workshop seemsto be heavilybased on assumptions regarding the saturation of· certain housing types, the Department needsto providethese underlying assumptions prior to any calculation of NES. (AHAM, No. 76.) An ARIMA type model is among those being analyzed to obtain shipment forecasts by the Department.

Multi-Variate Time Series Fit

In addition to the ARIMA univariate
process for projecting sales, a multivariate time series data analysis was also reviewed. This analysis is based not only on salesbut new housing starts as well. The advantage ofthe multi-variate time series method is that only two time series are needed to build the model (i.e., shipmentsfrom the previousyear and the change in the number of households from the previousyear). The disadvantages ofthis approach are that (1) again, historical trends may not be a good guide to the future, and (2) the model cannotexplicitly accountfor replacement sales, changes in saturation, price, and operating cost.

Saturation/LifetimeModel

A saturation/lifetime (SIL) model was developed as yet another alternative for forecasting sales. The S/L model

assumes that the saturation ofan appliance varies with time. Appliance removals are based upon assumptions regarding the distribution ofthe appliance lifetimes, and the above functional form ofthe model allows for flexibility in that different assumptions regarding saturations and lifetimes can be used in an attemptto get the best fit
to historical data. The advantages ofthe saturation/lifetime methoq are that (1) the method explicitly accounts for lifetimes. (2) housing and saturation stocks are based onlyon time-series data, so that different housing and saturationfits can be usedto get "good" fits to historical sales. The disadvantages ofthis approach are that (I) removals mustbe based on assumptions about lifetimes, and (2) the modelcannotexplicitlyaccount for the impact ofprice and operating cost on housing and saturation stocks. AccountingModel

The accounting model seeks to forecast shipments by determining sales destined for new homes plus the additional sales meant to replace appliances beingretired from service. For those sales meantfor the replacementmarket, the model accounts for. the impactofhomes which are being retired from the existing housing stock. The advantages ofthe accounting model

are that (1) it is a straightforward and simple model, (2) it explicitly accounts for new appliances separatelyin new houses and replacements, and (3) price and operating costs can be incorporated into saturation terms. The disadvantages ofthe accounting model are that (1) saturations ofappliances in new and stock homes must be forecasted. (2) housing starts must be forecasted (e.g

.. based on AEO projections), and removals must be based on assumptions about lifetimes.

Table 6 shows the degree to which each approach accounts for different variables that impact actual shipments.

### ·6436(]1 Federal Register/Vol. 63, No. 223/Thursday. November 19, 1998/Proposed Rules

TABLE 6.-VARIABLES ACCOUNTED FOR BY DIFFERENT FORECAST APPROACHES

Variable accounted for:

Model Washer sales Number of households Saturation Washer lifetime Price and operating

cost

ARIMA

....................................................................................................... 

## x x 

## x x Multi-variate

.............................................................................................. 

## x 

## x x Saturatkm/Life

........................................................................................... Accounting

.....:

..........................................................................................

Among the important drivers of
energy consumptionare: voluntary
programs promotinghigher energy efficiency products andconsumers response to changes in price and operatingexpense. Theextent to which voluntaryprograms may increase the share ofenergy efficient products, prior
to the implementation date ofany new standards, is estimated inthe base case. How consumersrespond to changes in prices and operating expenses can be expressed by means ofelasticities. An elasticity is the percentchange in one quantity inresponse to a percentchange in a drivingvariable. Elasticitywill be taken i:nto account ifa method of quantifying the price elasticity can be developed orperhaps several scenarios

can be modeled.

Other quantities in the NES spreadsheetare: energy price projections including an analysis of

consumermarginal energy rates for each fuel (See Section 11.D.l.a); effective date ofthe standard (startyear); discount rate and the year ofthe NPV (1997); manufacturing cost; appliance purchase price; water costandescalationrate; baseline energy use;, impacts ofother appliances applicable to the rulemaking analysis; lifetime; fuel mix; and the conversion factor from site to source energy.

The energy savings and NPV are calculated from the expected date any standard level would take effect to the 

### x x 

### x 

## x x

year 2030. Both individualyear and cumulative data are generated. Output charts and tables provide: cumulative
energy andwater savings. (where applicable), the cost and savings per year (in a chart) and the cost and NPV due to standards.

b. ProductSpecific. The model to be used for the clothes washer rulemaking is the one described above in Section 11.E.l.a. Following is a discussion ofthe application ofthis model for the clothes washerrulemaking analysis.

Table 7 shows the assumptions used in NES for the preliminary analysis which are summarized below and discussed in greater detail in the PreliminaryTSD.

TABLE ?.-ASSUMPTIONS USED FOR GENERATING PRELIMINARY NATIONAL IMPACTS

Fuel Price

.................................................................................................. EIA Annual Energy Outlook 1998 to the year 2020 and extrapolated to the year 2030. Water Price

............................................................................................... Average-$3.18 per 1000 gallons. Discount Rate and the Year of the NPV

.................................................. Start Year for New Standards

.................................................................. 7 percent discounted to the year 1997. 2003. Annual 1Real Change in Water & Sewer Cost (water price escalator)

..... Opercent. Manufac:turing Cost

................................................................................... Total Mark up on Manufacturer Costs

...................................................... Shipment-weighted average of the most likely (from AHAM data}. 1.731. Energy Consumption Data

...................................................................... AHAM data. Clothes Washer Shipments

...................................................................... Assumed same for standards and base case (inelastic to price and energy savings). Percent Horizontal-Axis Washers

............................................................. Primary Energy Conversion Factors

........................................................ 1.5 percent In 1995, increasing by 0.5 percent each year. AEO 1998.

Fuel Price: The energy price scenarios
to be considered for the clothes washer analysi.s include: AEO 1998 reference; GRI 1998; and high and low cases (which are currently AEO high and low economic cases.) Otherboundary cases may be analyzed in response to the Advisory Committee on Appliance Energy Efficiency Standards recommendations relating to defining a range ofenergy price futures for each fuel used in the rulemaking economic analysi.s. (Advisory Committee, No. 96
at 2) (See Section II.D.1.a). See PreliminaryTSD for more information

on extrapolation ofprices between 2020 and 2030. The Departmentisplanning
to revise the method contained in the
current spreadsheet used for the preliminary ANOPR analysis. AEO 1998 forecasts onlygo outto theyear 2020. Since the analysis needs projections to the year 2030, other methods mustbe used for this time period. The Department plans to use the EIA approach to forecast fuel prices for the Federal Energy Management Program (FEMP). For petroleum prices, EIA uses the average annual growth rate ofthe world oil price over theyears 2010 to 2020 and then adds the implied refinery and distribution markups for each petroleum product to arrive at the regional prices for the 2021 to 2030 period. Natural gas prices are similarly derived·usingthe average annual growth ofwellhead natural gas over 2010 to 2020 and adding on regional markups. Electricity prices are assumed to be
constant after 2020 on the assumption that the transition to a restructured industry will have been completed.

AnnualReal Change in Water and Sewer Cost (waterprice escalator): For the preliminary analysis the cost of
water and the escalation rate ofwater prices used in the analysis is specified in Table 7. For the NOPR analysis. DOE plans to update prices and estimate future prices and escalation rates. (See Section Il.D.b.i.)

AHAM commented that the Department cannotuse water savings in its economicjustification ofstandards. Under the provisions ofNAECA, this is
not a specified consideration and is no

more than a side-benefit ofthe energy savings. (AHAM, No. 76 at 1.) The

### Federal 

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### 64361

Department believes that water savings should be accounted for. EPCA states that in determining whether a standard is economicallyjustifiedthe Secretary shall determine whetherthe benefits of the standard exceed its burdens by, to the greatest extent practicable considering "thetotal project amount of
energy or as applicable, water savings likely to result directly from the · imposition ofthe standard," "the need for national energy andwater conservation" and "otherfactors the Secretary considersrelevant.'' EPCA, § 325(o)(2)(B)(0

### (IIO (VI) (VII). 42 U

## .s.c. 6295(0)(2)(B) (I)

### (IIO (VO(VII).

Clothes Washer Shipments:In the analysis presented in thePreliminary TSD the salesforecast for the base case and the standard case are assumedto be the same. While DOE is reviewing the different models to forecast shipments, shipmentforecasts were created using the Residential Energy Model (REM). The purpose for using this data is to provide some data to demonstrate the NES methodology. This data does not reflect how shipmentswill be determined. Theseforecasts will be changed for the NOPR analysis.

The accounting model is still under development as price and operating cost effects have yetto be incorporated. Research is on-going to develop new estimates ofprice and operatingexpense elasticities to accountfor: (1) cha.nging the definition ofoperatingexpense to include water and wastewaterrates; (2) changingthe definition ofthe value of
energy savings from average prices to marginal rates; and (3) a longer time series to include more recent data. Inasmuch as the accounting model is the only approach that will take into
account price and operating costs, the Department believes it should be the primary tool for forecasting clothes washershipments. The Department

. seeks commentsabout the determination ofprice andoperating
cost elasticities.

The base case assumes that clothes washers efficiencies will increase due to non-regulatory reasons. Voluntary
programs are expected to increase the share ofhigher energy efficiency clothes washers sold. The Department has reviewed existing literature relating to voluntary programs (e.g

.. the Energy

__ Star and WashWise Programs). See the voluntary programs section ofthe PreliminaryTSD for a summary ofthis review.

Based on this review, in the preliminary analysis the impact of voluntary programs is expressed as the percent ofnew clothes washers each
year that have efficiencies correspondingto those ofH-axis washers (35 percent energy reduction from the baseline MEF). The initial share ofH-axis machines is estimated to be 1.5 percent oftotal washer sales in 1995. The'impact ofvoluntary programs is estimated to cause a·o.5 percent increase in H-axis share everyyear thereafter. Thecurrent assumption is that in 2003 the percentage ofhorizontal axis washers will be 5.5 percent. The
energy information used in the spreadsheet is taken from the disaggregated data provided by AHAM for the standard level with the lowest efficiency H-axis model (35 percent increase inenergy efficiency). Additional work is underway to

. estimatefuture efficiencies underthe base case scenario. Current estimates will be revised as additional data becomesavailable. The Department welcomes any additional data useful for forecasting future sales ofhighefficiencywashers due to nonregulatory reasons.

PrimaryEnergy Conversion Factors: In the spreadsheet DOE is using the AEO 1998 projections.

Clothes WasherLifetime:To account for the savings over the lifetime ofnew clothes washer sales, the analysis continuesto the year 2030. Clothes washers are expected to have a lifetime ofabout 12-16years. Some washers bought in 2002-priorto the new standards-are expected to be replaced

as late as 2018. In those cases, one lifetime for washers meeting the new standardswill end in 2030-2034.

2. Preliminary Results

a. General. National energy consumption is calculated for thebase

case and each candidate standards level by multiplying the number ofclothes washers by vintage times unitenergy consumption by vintage. The vintage is the age ofthe washer (one-year old up to sixteen-years old). National annual
energy savings are calculated as the difference between two projections: a base case (without new standards) and

a standardscase. Cumulative energy and

· water savings, ifappropriate, are the

sumofthe annual national energy or water savings, respectively, over several time periods (e.g

.. 2003-2010. 2003- 2020, and 2003-2030).

Once the energy savings have been determined, economic impacts are calculated. The primary metric for measuring national economic impact is the NPV. NPV (oftotal life-cycle costs) is the difference between the present value ofthe energy savings over the life ofthe appliance and the present value of (usually increased) initial costs ofa

more efficient appliance. The NPV calculations also captures any differences in installation or maintenance costs. On a national level the efficiencies and number of appliances sold each year are also taken into account. Another way ofdescribing NPV is to determine the LCCs (for all appliances sold) with andwithout standards and take the difference.

Costs are typically increases in the purchaseprice associated with the higherenergy efficiency ofappliances purchased in the standards case compared to the base case. Costs are calculated as the difference in the purchase price between the base case and standards case for new appliances purchased each year multiplied by the appliance sales in the standardscase. Price increases appear as negative values in the NPV.

Savings are typically decreases in operatingcosts associated with the higherenergy efficiency ofappliances purchased in the standards case compared to the base case. Total operating costsavings is the productof savings per unit and the number ofunits ofeach vintage surviving in a particular
year. Savings appear as positive values in the NPV.

Net savings eachyearare calculated

as the difference between Total Operating Cost Savings andTotal Equipment Costs. The savings are calculated over the life ofthe appliance, accounting for the differences inyearly
energy rates.

Future annual costs and savings are discounted to the presenttime and summed. The NPV is the difference between the present value ofincreased
costs ofa more efficient appliance and the present value ofenergy savings. relative to the base case expenditures. In otherwords the NPV resembles the difference in total consumerLCC between the base case and standards
case, after correcting for any change in sales ofclothes washers. NPV greater than zero indicates net savings (i.e

.. that the standard reduces consumer expenditures in the standards case relative to the base case). NPV less than

zero indicates that the standard incurs
net costs.

The elements ofthe NPV can be expressed in anotherform, as the benefit/cost ratio. The benefit is the savings in decreased energy expenses, while the cost is the increase in the purchase price due to standards relative
to the base case. When the NPV is greater than zero, the benefit/cost ratio is reater than one

.

.ProductSpecific. The results shown in Table 8 below. are based on a single shipmentweighted average (SWA) cost instead ofa cost distribution. Below is

a description ofthe columns in the

## 64362 Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules

Preliminary National Energy Savings Results, Table 8.

The fi.rst column shows the efficiency**improv(~ment** over the base case. This is the value ofenergy efficiency improvementbased on the baseline MEF prnvided by AHAM.

The second column shows the energy savings in quads. This represents the
amount ofprimary energy savings accumulatedfrom theyears 2003 to 2030. The energy savings are a result of

consumersbuyingmore efficient washen; than they would normally have bought had no new standard levels been enacted.

The third column shows the water savings in trillions ofgallons at the correspondingefficiency level.

The fourth column, NPV, showsthe dollar savings correspondingto the
energy andwater savings and accountingfor increase in the purchase price. The energyprices changefrom
year to year and AEO 1998 projections offuture prices are used.

The PreliminaryTSD explainsthe results variables in greater detail and has charts to accompanythe tables.

TABLE :S.-PRELIMINARY NATIONAL ENERGY SAVINGS RESULTS (2003 TO 203(1 CUMULATIVE)

Percent effi- Net Water

. present ciency im- Energy savings benefit provement savings (trillion (NPV) over the base (quads) gallons) (billion caso 1997$)

5 

### ·················· 0.36 0.46 1.02 10



### ................ 1.18 0.46 2.41 15 

### ················ 2.18 0.45 3.80 20



### ................ 2.66 0.59 3.67 25 

### ················ 5.09 10.13 11.07 35
················ 7.85 14.62 13.47 40



### ................ 7.90 14.62 13.53 45 

### ················ 9.49 12.47 8.81 50



### ................ 10.06 12.47 9.07

3. IndirectEmployment Impacts



### a. Gweral. TheJuly 1996 Process Rule includes employment impacts among the factors to be considered in selecting a proposed standard. The Department estimates the impacts of standards on employmentfor appliance manufacturers, relevant service industries, energy suppliers, and the
economy ingeneral. Employment impactsare separated into indirect and direct impacts. Direct employment impact; would result ifstandards lead
to a change in the numberofemployees
at manufacturing plants and related supply and service firms. Direct impacts will be further discussed in the section

on manufacturing analysis. Indirect impacts are impacts on the national economy otherthan in the manufacturing sector being regulated. Indirect impacts may result from both expenditures shifting among goods (substitution effect). and income changing. which will lead to a change in overall expenditure levels (income effect).

Indirect employment impactsfrom standards are defined as netjobs eliminated or created in the general
economy as a consequence ofincreased spendingonthepurchase price of appliances and reduced household spending onenergy. New appliance standards are expected to increase the purchase price ofappliances (retail price plus sales tax, and installation). The same standards are also expected to decrease energy consumption, and therefore reduce household expendituresfor energy. Over time, the increased purchase price is paid back through energy savings. The savings in
energy expenditures may be spenton other items. Using an input/output model ofthe U.S. economy, this analysis seeks to estimate the effects on different sectors. and the net impact on jobs. National impacts will beestimated for major sectors ofthe U.S. economy. Public and commercially available data

sources and software will be utilized to estimate employment impacts. At least three scenarios will be analyzed to boundtherange ofuncertainty infuture
energy prices. All methods and documentation will be made available for review.

b. ProductSpecific. For purposes of· national impact analysis, possible indirectemployment impacts for appliance manufacturers, relevant service industries, energy suppliers, and the economy ingeneral (i.e., national employment) due to efficiency standards will be analyzed. The Department is proposing to use a model. which focuses on those sectors ofthe
economy most relevant to buildings. developed by the Office ofBuilding Technologies and State Programs. This software, IMBUILD. is a PC-based economic analysis system that characterizes the interconnections
among 35 sectors as national inputoutput structural matrices. The model

can be applied to future time periods. The IMBUILD outputincludes employment, industry output, andwage income. The impacts ofnew appliance standards are estimated in the NES spreadsheet as household eriergy savings (reduced energy expenditures). and increased appliance purchase price. These impacts are outputfrom NES and input to IMBUILD. Additional detail is provided in the Preliminary TSD. F. ConsumerAnalyses
The consumer analysis evaluates impacts to any identifiable groups. such

as consumers ofdifferent income levels, who may be disproportionately affected by any national energy efficiency standard level.

The Department could evaluate variations in regional energy prices,
water and sewerprices, variations in
energy use and variations in installation
coststhatmight affect the NPV ofa standardto consumer sub-populations. To the extentpossible. DOE obtains estimates ofthe variability in each input quantity and considers this variability in its calculation ofconsumer impacts. The analysis is structured to answer questions such as: How many households are better offwith standards and by how much? How many households are notbetter offand by how much? The variability in each input quantity and likely sources of information are discussed with stakeholders.

Variations in energy use for a particular appliance can depend on factors such as: climate, type of household. people in household, etc. Annual energy use can be estimated by

a calculation based on an accepted test procedure or it can be measured directly in thefield. The Department could perform sensitivity analyses to consider howdifferences in energy use will affect sub-groups ofconsumers.

The impact onconsumer sub-groups will be determined using the LCC spreadsheet model. Details ofthis model

are explained in the LCC section ofthe PreliminaryTSD. Ofparticular interest is the potential effect ofstandards on households with different income levels.

1. Purchase Price

a. General. The Department will be sensitive to increases in the purchase price to avoid negative impacts to identifiable population groups, such as

consumers ofdifferent income levels. Additionally. the Department will

assess the likely impacts ofan increased purchase price on product sales and fuel switching.

b. Product Specific. In order to determine the effect ofan increase in the purchase price, it would be useful
to know what the elasticity ofclothes washerprices is. The Department is still determining how these data could be

. obtained. While preliminary analyses indicate that factors, such as the current state ofthe economy have a greater correlation to sales ofwashers than do

an increase in clothes washer prices, it is still important to estimate the impact

### Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 64363

ofchanging prices on the sales of clothes washers. In making estimates of these price effects, the Department needs to gauge the difference in clothes washersalesfrom a change in the price ofall clothes washers, as could result from revised energy efficiency standards. In addition, the Department will be estimating how price changes from revised energy efficiency standards for clothes washers will affect the behavior ofconsumers.
2. Consumer Participation

a. General. The Departmentseeks to inform and involve consumers and

consumerrepresentatives in the process ofdeveloping standards. This includes notification ofconsumerrepresentatives duringthe rulemaking process and where appropriate, seeking direct

consumer input.

b. ProductSpecific. The Act requires that "the Secretary consider, among otherfactors, ifany lessening ofthe utility orthe performance ofthe products is likelyto result from the imposition ofthe standard. EPCA. § 325 (o)(2)(B)(I)(3), 42 U.S.C. 6295 (o)(2) (B)(I)(3). In this rulemaking because comments have been received specifically to the consumerutility and performance ofV- and H-axis clothes washers, the Departmentreviewed existing literature pertainingto these issues.

.

The Departmenthas made available a "Draft Report on Consumer Research for ClothesWashers." This document is included in the appendix ofthe PreliminaryTSD. Thereport summarizes research relative to

consumer satisfaction with H-axis washing machines. Sources and projects summarized in the report include:

• Major studies by consortia,

• Individual utility demand side management & market transformation studies,

• Consumertest publications,

• Trade organizations, and

• Government projects. Based on the December 1997 Advisory Committee meeting. the Consumer Subcommittee made two key recommendations to obtain consumer input:

(1) Adopt a three-step process:

• Obtain background research

• Hold focus groups

• Conduct interviews/surveys. (2) Initiate the consumeranalysis
process in the clothes washer rule.

In accordance with the Advisory Committee's recommendations, the Department reviewed background information regarding consumer issues related to clothes washers as discussed in the "'Draft Report on Consumer Research for Clothes Washers." At the March 11

, 1998. Clothes Washer Workshop, the background research findings were presented and a working
group was formed to develop a method for obtaining additional consumer input pertinentto the rule. Two comments

were received on the subject of additional consumerresearch. ACEEE found the body ofexisting studies to be fairly compelling, and did not see a need for extensive additional work. (ACEEE, No. 94 at 4). Raytheon recommended that consumer purchase studies should involve consumers at all income levels and be made using existingretail prices excludingrebate incentives, for both V-axis and H-axis clothes washers. (Raytheon, No. 91 at 2).

The workinggroup held a conference call on April 30, 1998, to evaluate different techniques for obtaining

consumer input. Focus groups, surveys. and a conjoint analysis were all considered. The working group recommended a three-step approach for obtaining additional consumer input:

(1) Develop a list ofattributes. Based

on the working groups' individual members' research and knowledge. Each member has submitted a list ofclothes washer attributes valued by consumers,

(2) Conduct a consumersurveyto refine the list ofattributes thatwould be included in a quantitative consumer analysis study,

(3) Conduct a conjoint analysis to quantitatively estimate the value

consumers place on the clothes washer attributes.

The Department must first announce the process to use for 'conducting any type ofpublic survey in theFederal Register notice in accordance withthe requirements ofthe Paperwork Reduction Act of 1995, Public Law 104- 13 (44 U.S.C. 3506(c)(2)(A)). This will be a, separate notice which is in process ofbeing published. The Department will then solicit bidsfor a marketing research firm to conductthe focus
groups to refine the list ofattributes and
to conductthe conjoint analysis.

G. ManufacturerImpactAnalysis

The manufacturer impact analysis estimates the financial impact of standards on manufacturers and calculates impacts on competition. employment, and manufacturing capacity.

Priorto initiating the detailed manufacturing impact analysis the Department will prepare an approach document and have it available for review. While the general framework will serve as a guide, the Department intends to tailor the methodology for each rule on the basis ofstakeholder comments. The document will outline procedural steps and outline issues for consideration. Three important elements ofthe approach consistofthe preparation ofan industry cash-flow, the development ofa process to consider sub-group cash-flow, and the design ofan interview guide.

The policies outlined in the process rule required substantial revisions to the analytical framework to be used in performing manufacturer impact analysis for each rulemaking. In the approach document, the Department will describe and obtain commentson the methodology to be used in performing the manufacturer impact analyses. The manufacturer impact analyses will be conducted in three phases. Phase 1consists oftwo activities, namely, preparation ofan industry characterization and identification ofissues. The second phase has as its focus the larger industry. In this phase. the GRIM will be used to perform an industrycash flow analysis. Phase 3 involves repeating the process described in Phase 2 (the industrycash-flow analysis) but

on different sub-groups of manufacturers. Phase 3 also entails calculating additional impacts on competition, employment, and manufacturing capacity.

1. Industry Cash Flow

a. General. A change in standards affects the analysis inthree distinct
ways. Increased levels ofstandardswill require additional investment. will raise production costs, and will affect

revenue through higher prices and, possibly. lower quantities sold. To quantify these changes the Department performs an industry cashflow analysis using the GRIM. Usually this analysis will use manufacturing costs, shipments forecasts, and price forecasts developed for the other analyses. Financial information. also required as an input to GRIM, will be developed based on publicly available data and confidentially submitted manufacturer information.

The GRIM analysis uses a number of factors-annual expected revenues: manufacturer costs such as cost ofsales. selling and general administration costs, taxes, and capital expenditures related
to depreciation, new standards, and maintenance-to arrive at a series of annual cash flows beginning from before implementation ofstandards and continuing explicitly for several years after implementation. The measure of industry net present values are calculated by discounting the annual cash flows from the period before implementation ofstandards to some**~.** •I 

### ·64364 Federal 

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future point in time. The Preliminary TSD describes the GRIM's operating principles and presents alternative approaches to developing the information necessary to perform the computations.

b. ProductSpecific. The Department has received manufacturing cost data from manufacturers whichwas compiled and reported by AHAM. This data wm be used to conduct an industry cash flow analysis for the NOPR. A draft document "Financial Inputs to GRIMfor the Clothes Washer Rulemaking Analysis" has been prepared for stakeholderreview. This document outlines and documents thefinancial assumptionstobe used in GRIM when performing the industrycash flow analyses. The Department intends to use the ma:nufacturing costs, retail prices, and sh!ipment valuesfrom the prelim:tnary analysis in the GRIM model. Thiswill be distributedto interested parties priorto the workshop
to be held after publicationofthis Supplemental ANOPR.

2. Manufacturer Sub-Group Analysis

a. General. Using industry "average"
cost values is not adequate for assessing the variation in impacts among subgroups ofmanufacturers. Smaller manufacturers, niche players or manufacturers exhibiting a cost structure largely different from industry
averages could be more negatively impacted. Ideally. the Department would considerthe impacton every firm individually. In highly concentrated industriesthis may be possible. In industries having numerous participants, the Department will use the results ofthe industry charac1terization to group manufacturers exhibiting similar characteristics. The financial analysis ofthe "prototypical" firm performed in the Phase 2 industry analysi.s can serve as a benchmark against: which manufacturer sub-groups

can be analyzed.

The manufacturing cost datacollected for the engineering analysis will be used
to the extent practical in the sub-group impact analysis. To be useful

..however, this data should be disaggregated to reflect the variability in costs between relevant sub-groups offirms.

The Department will conductdetailed interviews with as many manufacturers

as is possible to gain insight into the potenUal impacts ofstandards. During these i:nterviews, the Department will solicit the information necessary to evalua1ce cashflows and to assess competitive, employment and capacity impacts. Firm-specific cumulative burden will also be considered. b. Product Specific. In order to conduct a manufacturer sub-group analysis, it will be·necessary to define representative sub-groups and conduct separate cash flow analysis for each. For example, one option consists of conducting separate cash flows for all manufacturers. Another option, could entailconductingcash flow analysis only for those manufacturers which believe their impacts are more severe then industry average. The**~epartment** will outline and discuss these and other approaches at the post supplemental ANOPR analysis workshop.

Whirlpool proposedthat the GRIM model be changed from input to output aggregation. Each industry member would develop its own inputsto the GRIM inodel over a range ofMEF levels proposed by the DOE. The GRIM models would be run by industry members to generate a range ofindividual company outputs. The outputs ofthe individual companies could then be aggregated to determine industry impact. Individual companies would not be required to submit detailed input assumptions, but onlychanges in revenues, shipments, profit after tax, and cash flow, capital investment and design and marketing spendingcould also be provided. A third party coulddo the aggregation and then conduct a reality checkby comparing the aggregated outputto currently available industry data. (Whirlpool No. 66 at 3). The Department seeks further input as to how the data for the GRIM analysis should be collectedfrom the manufacturers and how it should be utilized.

3. Interview Process

a. General. The revised rulemaking
process provides for greater public input and for improved analytical approaches. with particularemphasis on earlier and

more extensive information gathering from interested parties. The proposed three-phase manufacturer impact analysis process will draw on multiple information sources, including structured interviews with manufacturers and a broad cross-section ofinterested parties. Interviews maybe conducted in any and all phases ofthe analyses as determined in Phase 1.

The interview process has a key role in the manufacturer impact analyses. since it provides an opportunityfor interested parties to privately express their views on important issues. A key characteristic ofthe interview process is that it is designed to allow confidential information to be considered in the rulemaking decision.

.

The initial industry characterization will collect information from relevant industry and market publications, industry trade organizations, company financial reports, and product literature. This information will aid in the development ofdetailed and focused questionnaires, as needed, to perform all phases ofthe manufacturer impact analyses. It is the intention ofthe Department thatthe contentsof questionnaires and the list ofinterview participants be publiclyvetted priorto initiating the interview process.

The Phase 3 (sub-group analysis) .questionnaire will solicit information on the possible impacts ofpotential efficiency levels on manufacturing costs, productprices, and sales. Evaluation ofthe possible impacts on direct employment, capital assets. and industrycompetitiveness willalso draw heavily on the information gathered during the interviews. The questionnaires will solicitboth qualitative and quantitative information. Supporting information will be requested whenever applicable.

Interviews will be conducted according to DOE procedures. Interviews will be scheduledwell in advance in order to provide every opportunityfor key individuals to be available for comment. Although a written response to the questionnaire is acceptable, an interactive interview
process is preferred because it helps clarify responses and providesthe opportunity for additional issues to be identified.

Interview participants will be requested to identify all confidential information provided in writing or orally. Approximately two weeks following the interview, an interview summarywill be provided to give participants the opportunity to confirm the accuracy and protectthe confidentiality ofall collected information. All the information transmitted will be considered, when appropriate, in DOE's decision-making
process. However, confidential information will not be made available in the public record.

DOE.will collate the completed interview questionnaires and prepare a summary ofthe major issues and
outcomes. The Department will seek
comment on the outcome ofthe interview process.

b. Product Specific. The Department is developing an interview guide to supplement the sub-group GRIM cashflow analysis. The interview will solicit information on the possible impacts of potential efficiency levels on manufacturing costs. product prices. and sales. As such it will contribute to the Department's understanding ofhow sub-groups may have different values for these quantities compared with the

### Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64365 '

overall industry. This will allowthe· Department to report and explain significant variances when publishing the analysis results.

Evaluation ofthe possible impacts on direct employment, capital assets, and industrycompetitivenesswill also draw heavily on the information gathered during the interviews. The questionnaires will solicitboth qualitative and quantitative information. Supporting information will be requested whenever applicable.

The Department plans to make a draft

· ofthe questionnaire available priorto

the post-supplemental ANOPR analysis workshop.

H. 

### CompetitiveImpactAssessment

a. General. Legislation directs the Department to consider any lessening of competition that is likely to result from standards. It further directs the Attorney General to gauge the impacts, ifany. of
any lessening ofcompetition. DOE will make a determined effortto gather and report firm-specific financial information and impacts. The competitive analysiswillfocus on assessing the impacts to smaller; yet significant, manufacturers. The
assessment will be based on manufacturing cost data and on information collected from interviews with manufacturers, consistent with Phase 3 ofthe manufacturer impact analyses. The Department ofJustice (DOJ) has offered to help in drafting questions to be used'in the · manufacturer interviews. These. questions will pertain to the assessment ofthe likelihood ofincreases in market concentration levels and other market conditionsthat could lead to anticompetitive pricing behavior. The manufacturer interviews will focus on gathering information that would help in assessing asymmetrical cost increases
to some manufacturers, increased proportion offixed costs potentially increasingbusinessrisks, and potential barriers to market entry (proprietary technologies, etc.).



### b. ProductSpecific. The Department
met with DOJ onJune 11, 1998. for initial discussions pertainingto the manufacturer impacts ofpotential clothes washers standards. DOJ has agreed to review the manufacturer questionnaire priorto discussions with the manufacturers.

I. 

### UtilityAnalysis

The utility analysis estimates the effects ofproposed standards on electric· and gas utilities. · 1. Proposed Methodology



### a. General. The Department proposes to use a version ofEIA's widely recognized NEMS for the utility and environmental analyses. NEMS is a large multi-sectoral partial equilibrium model ofthe U.S. energy sector that has been developed over several years by the EIA primarilyfor the purpose of preparingthe Annual Energy Outlook (AEO). NEMS produces a widely recognized baseline forecast for the U.S. through 2020 and is available in the public domain. The version ofNEMS to be used for appliance standards analysis will be called NEMS-NAECA. andwill be based on the AEO 1998 version with minor modifications.2

NEMS offers a sophisticated picture of the effect ofappliance standards since its scale allows it to measure the interactionsbetween the various energy supply and demand sectors and the
economy as a whole. In addition, the scale ofNEMS permits analysis ofthe effects ofstandardsonboth the electric andgas utility industries.

To analyze the effect ofstandards, NEMS-NAECA is first run exactly as it would be to produce an AEO forecast, then a second run is conducted with residential energy usage reduced by the
amount ofenergy (gas. oil, and electricity) saved due to appliance standards for the appliance being analyzed. The energy savings input is obtained from the NES spreadsheet. Outputs available are the same as those in the original NEMS model including residential energy prices, generation and installed capacity (and in the case of· electricity, which primaryfuel is used for generation). ·



### b. ProductSpecific. I. Assumptions. Other than the difference in energy consumption due to clothes washer standards, inputassumptions into NEMS-NAECA will follow those used
to produce AEO 1998. The entire utility analysis will be conducted as a policy deviation from the AEO 1998, and the assumptions will be the basic set of assumptions applied. For example. the operating characteristics (energy conversion efficiency, emissions rates, etc.) offuture electricity generating plant will be exactly those used in AEO 1998, and the prospects for natural gas supplywill be exactly those assumed in AEO 1998.

2EIA approves use ofthe name NEMS onlyto ·describe an AEO version ofthe model withoutany modification to code or data. Since, in thiswork. there will be some minor code modifications and the model will be run undervarious policy scenarios that deviate from AEO assumptions. DOE
proposes use ofthe name NEMS-NAECA for the model as used here. Since the AEO 1998 version of NEMS-NAECA forecasts onlyto the
year 2020. a method for extrapolating price data to 2030 is required. The adopted method uses the EIA approach
to forecast fuel prices for the Federal Energy Management Programs (FEMP). These are the prices used by FEMP to estimate life-cycle costs ofFederal equipment procurements. For petroleum products, the average growth rate for the world oil price over the years 2010 to 2020 is used in combination with the refinery and distribution markups from theyear 2020 to determine the regional price forecasts. Similarly, natural gas prices are derived from an average growth rate figure in combination with regional price margins from the year 2020. Electricity prices are held
constant at 2020 levels on the assumption that**~e** transition to a restructured utility industrywill have been completed.

ii. Results. In principle, any ofthe forecaststhatappear in AEO 1998 could be estimated by NEMS-NAECA to take into account the effects ofa particular clothes washer standard level. The Department intends to report the major results onresidential sales offuels, prices offuels, and generating sources displaced by energy savings. As might be expected, as the total energy use of America is much larger than that possible due to the savings from clothes washers. there is little expected · difference in the forecasted price of
energy. 

### ]. EnvironmentalAnalysis

An Environmental Assessment is required pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 

### etseq.). regulations ofthe Council on Environmental Quality (49 CFR parts 1500-'1508), the Department regulations for compliance with NEPA (10 CFR part 1021), and the Secretarial Policy on the National Environmental Policy Act Oune 1994). The Environmental Assessment will be presented as part of the NOPR and an opportunitywill be provided for comments priorto the final rule.

The main environmental concern addressed is emissions from fossil fuelfired electricitygeneration. Power plant emissions include oxides ofnitrogen (NOx) and sulfur (S02), as well as carbon dioxide (C02 ). The first two are major causes ofacid precipitation, which can affect humans by reducing the productivity offarms, forests and fisheries, decreasing recreational opportunities and degrading susceptible buildings and monuments. NOx is also

a precursor gas to urban smog and is - 

### ..

### ·6436U Federal 

### Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules

particularly detrimental to airquality during hot, stillweather. C02emissions contribute to raising the global temperature via the "greenhouse effect." The long-term consequences ofhigher temperatures may include perturbed air and ocean currents, perturbed precipltation patterns. changes in the
gaseous equilibrium between the atmosphere and the biosphere. and the melting ofsome ofthe ice now covering polar lands and oceans. causing a rise in

sea level.

1. Proposed Methodology



### a. General. The Department proposes to use 1the EIA widelyrecognized NEMS for the appliance environmental

. analyses (as well as the utility analyses). The version ofNEMS tobe.usedfor appliance standardsanalysis will be called NEMS-NAECA. and will be based on theAEO 1998 version with minormodifications. NEMS-NAECA is

run exactlythe same asthe original NEMS except thatresidential energy usage is reduced by the amount of
energy (gas. oil, andelectricity) saved dueto appliance standardsfor the appliance being analyzed. The inputof
energy savings is obtained from the NES spreadsheet. For the environmental analysts, the output is the forecasted physicalemissions. The net benefits of

a standardwill be the difference between emissionsestimated by.the AEO 1998 version ofNEMS-NAECA and those itestimates with a standard in place.

b. 

### ProductSpecific. The environmental analysis shouldbe relatively straightforward using NEMSNAECA. Carbon emissions are tracked in NEMS using quite a detailed carbon module that provides good results because ofits broad coverage ofall
sectors and inclusion ofinteractive effects. The only form ofcarbon tracked by NEMS-NAECA is C02. so thecarbon discussed in this report is only in the form ofC02 but is reported as elemental carbon to remain consistentwith the AEO 1998.3

The :two airborne pollutant emissions that have been reported in past analyses, S02and NOx. are reported by NEMS-

. NAECA. In the case ofS02
, the Clean Air Acr. Amendmentsof 1990 setan S02 emissions cap on all powergeneration. The attainmentofthis target is flexible
among generators through the use of emissions allowances and tradable permits. NEMS includes a module for S02 allowance trading and delivers a forecast ofS02allowance prices. Please
note that accurate simulation ofS02

JThe canverslon factor from carbon to C02 is approximately 3.6667. trading tends to implythat physical emissions effects will be zero because emissions will always be at the ceiling. This fact has caused considerable confusion in the past. However. there is

an S02benefit from conservation in the form ofa lower allowance price and, if big enough to be calculable by NEMSNAECA. this value will be reported. Please see TSD for further discussion of this issue. One small effect that NEMSNAECA must consider in addition to AEO 1998 calculations is the effect of standards on S02 emissions from inhouse combustion ofoil, since the emissions capdoes not apply to households. This effect is calculated using simpleemissionsfactors

.

The NEMS algorithm for estimating NOx emissions also does not estimate in-house emissions. nor are the emissionscalculated for ozone nonattainmentareas. In-house emissions
accountfor thecombustion offossil fuels. primarilynatural gas, within individual homes. Since households that use natural gas, fuel oil or coal do contributeto NOx emissions. the effect

on in-home NOx emissions will be calculated externallyto NEMS-NAECA. using simple emissionsfactors.

Energy use for selected appliance efficiency levelswillbe the same as those in theNES spreadsheet. Other · input assumptions into NEMS-NAECA will follow those used to produce AEO 1998. In principle, any ofthe forecasts that appear in AEO 1998 could be estimated by NEMS-NAECA to take into
account theeffects ofa particular clothes washerstandardlevel. but in the standardreporting, the Department intends to report emissions ofS02
, NOx and C02. Thetime horizon ofNEMSNAECA is 2020. Beyond this point. results willbe extrapolated using a simpleformula (for methodology. see preliminaryTSD) to extend theforecast
to 2030. Alternative priceforecasts corresponding to the side cases found in AEO 1998 will also be generated for use by NES and will be explored in a similar fashion with NEMS-NAECA runs.
K. 

### RegulatoryImpactAnalysis

DOE will be preparinga draft regulatory analysis pursuantto E.O. 12866, "Regulatory Planning and Review," which will be subject to review underthe Executive Orderby the Office ofInformation and Regulatory Affairs (OIRA) 58 FR 51735 (October 4. 1993). Six major alternatives were identified by DOE as representing feasible policy options to achieve

consumerproductenergy efficiency. Each alternative will be evaluated in
terms ofability to achieve significant
energy savings at a reasonable cost and will be compared to the effectiveness of the rule.

As part ofthe docket for the Refrigerator Products Energy Conservation Standards (Docket No. EERM93-80l) AHAM stated thatthe Department needs to improve the evaluation ofnon-regulatory means of achieving energy savings. (AHAM. No. 207 at 7).

Underthe Process Rule policies, the Department is committed to continually explore non-regulatory alternatives to standards. In the table below is a discussion ofwhat wasexamined in 1994 and what is beingproposed for this rulemaking. The Department is seeking commentson this approach. This approach is further discussed in the TSD.

Alternatives examined in 1994

-No action

...............
-Consumertax credits. -Manufacturer tax

credits. -Perfonnance standards. -Consumer rebates -Prescriptive standards -Voluntary standard

-Enhanced labeling.

and consumer education Alternatives to examine in 1998

-No new regulatory

action.

--consumer tax credits. -Manufacturer tax

credits. -Perfonnance standards. -Rebates.

-Voluntary energy

efficiency targets.

-Earty replacement. -Mass government

purchases.

ill. Standards Scenarios

Upon reviewing the preliminary LCC and NES results, the Department observes thatthe efficiency levels analyzed, 5 to 50 percent efficiency improvement over baseline efficiency. produced a range ofimpacts. For example, the NES impacts show a range from 0.36-10.06 quads ofenergy saved

overthe 2003 to 2030 period. As expected, the higher the efficiency level. the greater the savings. Similarly, the analysis shows an increase in water savings from 0.46 to 12.47 trillions of gallons saved. On the other hand, the NPV shows an increasefrom $1.02 billion at the 5 percent level, to a maximum of$13.53 billion at the 40 percent level. and then a reduction to $9.07 billion at the 50 percent level. The LCC and payback analyses show results similar to the NPV analysis where the greatest economic benefit is at the 40 percent level.

Based on the analyses performed, the 40 percentefficiency level standard would appearto result in the greatestFederal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

## 64367

economic benefit to the Nation. (See Tables 3, 4 and 8.) The national net present benefit at the 40 percent efficiency level (which represents an equivalent to a moderate H-axis level) is $13.53 billion. This is approximately 22 percent higher than the NPV benefit at the 25 percent efficiency level (which represents the current highest V-axis level) and 49 percent higher than the 50 percent level, the maximum technologically feasible level. The LCC results inTable 3 indicate that a 40 percent efficiency level has the greatest

consumer mean LCC savings. At 40 percent, the consumermean LCC savings is $253, or $48 and $49 greater than the 25 and 50 percent levels, respectively. In addition, atthe 40 percent level, therange in LCC impacts is a savings of$2,039 (0th percentile) to

an increase of$645 (lOOth percentile}. The LCC analysis further shows that at the40 percentlevel approximately 83.7 percent ofconsumers willexperience a LCC savings; and that only 16.3 percent ofthe Nation's population will experience an increase in LCC. Whereas, the LCC analysis indicates that at the 25 percent efficiency level, standardswill negatively impact 10.8 percent ofthe Nation's population and atthe 50 percent level, standards will adversely impact 25.8 percentofthe population. (See Table 3.)

Also, the rebuttable presumption payback periods shown in Table 5 indicate that all efficiency levels from 5 percent up to 25 percent showa less than 3yearpayback. The 40 percent efficiency level shows a 3.7year payback which represents a reasonable payback period considering the increased energy savings at this level. There is a significantjump in the payback period at the 45 and 50 percent efficiency levels therefore making these efficiency levels look less attractive.

These observations are based on preliminary LCC and NES results which will be updated and revised in the NOPR and final rule analyses. These observations, however, do not include analyses results from the manufacturer impact orconsumersubgroup and
survey information.

The following are examples of possible alternative standards scenarios for consideration by the Department:

• A moderate standard at an early effective date. For example, a level at a 25 percent improvement, effective three
years after the publication ofthe Final Rule.

• A stringent standard. at a later effective date. For example, a level at 45 percent improvement effective five
years after the publication ofthe Final Rule. • A two phase approach. For example. a level at 20 percenteffective three years after the publication ofthe Final Rule (projected effective dateOctober, 2002) and a level at 40 percent effective eightyears after publication of the Final Rule.

The Department seeks comments on the alternative standard scenarios for consideration in the analysis for the proposed rule.

IV. Public Comment Procedures

A. Participation inRulemaking

The Department encourages the

. maximum level ofpublic participation possible in thisrulemaking. Individual
consumers, representatives ofconsumer groups. manufacturers, associations, States or othergovernmental entities, utilities. retailers. distributors, manufacturers, and others are urged to submitwritten statements on the proposal.

The Departmenthas established a period of75 days following publication ofthis document for persons to comment on this proposal. All public
comments received will be available for review in the Department's Freedom of Information Reading Room. In addition, the following data is available inthe Department's Freedom ofInformation Reading Room:

• Copies ofthe Preliminary TSD

• Transcripts ofthe public hearings

• Copies ofthe public comments received by the Department

• Previous FederalRegister notices relating to this clothes washer rulemaking

- .

· A public hearingwill be held on

December 14 (I:00-4:00 p.m.) and 15 (9:00 a.m.-4:00 p.m.), 1998, at the U.S. Department ofEnergy, Forrestal · Building, 1000 Independence Avenue SW, Room lE-245, Washington. D.C. 20585. The December 14 session will be

a training session for the Government Regulatory Impact Model (GRIM). More detailed information about this hearing will be on the Office ofCodes and· Standardsweb site beginning in November. The web site address is as follows: http://www.eren.doe.gov/ buildings/codes_standards/index.htm.

B. Written CommentProcedures

Interested persons are invited to participate in this proceeding by submitting written data, views, or arguments with respect to the subjects
setforth in this document. Comments will not be**~ccepted** by fax or e-mail. Instructions for submitting written
comments are set forth at the beginning ofthis document and below.

Comments should be labeled both on the envelope and on the documents. "Clothes Washer Rulemaking (Docket No. EE-RM-94-403)." and must be received bythe date specified at the beginning ofthis document. Ten copies

are requested to be submitted. Additionally, the Department wpuld appreciate an electronic copyofthe
comments to the extent possible. The Department is currently using WordPerfectTM 6.1. All comments and otherrelevant information received by the date specified atthe beginning of this document will be considered by the Department in the proposed rule.

All written commentsreceived on the supplemental Advance Notice of Proposed Rulemaking will be available for public inspection at the Freedom of Information Reading Room, as provided
at the beginning ofthis document.

Pursuant to the provisions of 10 CFR 1004.11, anyperson submitting information ordata that is believed to be confidential, and exempt by lawfrom public disclosure, should submit one complete copy ofthe document and ten (IO) copies. ifpossible, from which the information believed to be confidential has been deleted. The Department will make its own determination withregard
to the confidential statusofthe information or data andtreat it according to its determination.

Factors ofinterest to the Department, when evaluatingrequests to treat information as confidential. include: (1)

a description ofthe item; (2) an indication as to whether and why such items ofinformation have been treated by the submitting party as confidential. and whether and why such items are customarily treated as confidential, and whether and why such items are customarilytreated as confidential within the industry; (3) whetherthe information is generallyknown or available from othersources; (4) whetherthe information has previously been available to others without obligation concerning its confidentiality; (5) an explanation ofthe competitive injury to the submitting
person that would result from public disclosure; (6) an indication as to when such information might lose its confidential character due to the passage oftime; and (7) whether disclosure ofthe information would be in the public interest.

C. Issuesfor Public Comment

The Department is interested in receiving comments and data to improve its preliminary analysis. In particular, the Department is interested in seeking response to the following questions and/orconcerns that were addressed In this rulemaking.

### Federal 

### Register/Vol. 63, No. 223/Thursday. November 19, 1998/Proposed Rules

Information on the energy efficiency and relative market shares ofcurrent products on the market as described by the Modified Energy Descriptor (MEF):

• The Departmenthas limited information concerningthe energy performance ofexisting product offerings using the MEF descriptor. Given the vastly different nature ofthe variables and testing methods ofthe
current ] and future ]1test procedures, the EF values cannotbe translated to MEFvalues.

Proposed product classes for products in this rulemaking:

• In their written comments, Whirlpool asked the Departmentto mainta:ln the currentefficiency requirementfor the compactclass due
to the limited potentialfor energyefficient improvements and the small market share for these products. Whirlpool also indicated that theV-axis compactclothes washer market and the manufacturingbase for these products has changed since the current standards

were developed. The previous standalone 1.6 ft.3 compactV-axis clothes washer products have been replaced by

a product that maintains the small cabinet (22" width) utility and portability (via castors); however, its basket 1:apacity is slightly larger. Because ofthe limited market size, Whirlpool is currently the only manufocturer ofthese products. J'hey also supplythem to other appliance companies for sale undervarious brand

names. For these reasons, the Department will revise the compactVaxis productclass definition (1.6 ft.3 capacity) to include all V-axis clothes washers less than 2.0 ft.3 (Whirlpool. No. 69 at 3). The Department plans to increase the compact class to include all clothes washers (both V- and H-axis machines) less than 2.0 ft.3 and seeks
comments on this change.

• The Departmentreceived comments suggesting that it identify V- and H-axis machines as a single product class. Whirlpool stated that the DOE's analyses to date and the recent

consumer acceptance inthe market of H-axis products confirm the validity of

a single productclass, irrespective of the axis. Whirlpool further stated that the concerns over clotheswasher performance, consumerutility and reliability are unfounded in either principle orfact. (Whirlpool. No. 93 at I.) The Natural Resources Defense Council (NRDC) stated that the "H-axis" design option does not affect the utility ofclothes washers and it is not the only design option that can comply with the standards. According to the NRDC, the evidence does not support the establishment ofdifferent standards even ifseparate classes were established. (NRDC, No. 60 at 1.)

However, othercommentersfeel that the Department should not reject separate productclasses. General Electric Appliances (GEA) indicated that the Department is proceeding as if all relevant consumerutilities are met by H-axis products already on the market orby machines planned for production. GEA further stated that the portofaccess is not the onlyrelevant

consumerutilitythat mustbe addressed. Manyotherconsumer utilities, includingreliability, must be addressed. (GEA, No. 88 at 2.) The Department seeks additional comments

on this issue and is currently working with stakeholders to formulate a process to gather additional consumer input on the issues surroundingclothes washer utility. Thisprocess is discussed further in Section 11.F.2.b.

Therelationship between clothes washer capacity and the maximum achievable efficiency using conventional V-axis designs:

• AHAM commented that the testing performed for DOE reflects an incorrect
assessment ofenergy efficiency on currentmodels and indicated that manufacturers could not achieve these levels with traditional V-axis clothes washers. (AHAM. No. 84 and 86). Based

on follow-up testing conducted for DOE, there appears to be a significant variation in the RMC values obtained in
tests even for clothes washer5 ofthe

same model. DOE plans to further review this issue. Sincethe two models approaching a 30 percent improvement in efficiency were "supercapacity" models, the Departmentwill try to determine ifcapacity orvolume effects · the maximum achievable efficiency improvement inV-axis designs. The Department seeks comment onthis issue.

Data as to whether detergent use is a factor in consumeroperating cost and savings:

• ACEEE stated that the present analysis ignores the possibility that

some consumers will use less detergent with new high-efficiency machines than with standard machines. They recommend that DOE construct two alternative scenarios (one that no detergent willbe saved and the other that some consumers will use less detergent). ACEEE indicated that the Bern Kansas studyprovided some evidence for detergent savings. (ACEEE. No. 94 at 2). Proctor and Gamble commented that the perception that detergent dosage will reduce in horizontal axis or drum washers essentiallyproportionally to water volume is invalid. This appears to be a popularbelief, but it is not substantiated by the facts. The important impact is that users ofnew lowerwater/energy efficient washers cannot expect to find detergent cost savings. (Proctor & Gamble, No. 9 at 1). DOE seeks additional data on this issue.

Data onretail mark-up assumption:

• The American Council for an Energy-Efficient Economy (ACEEE) commented that attheMarch 1998 workshop the Circuit City representative suggested that assuming an average 40 percent retail markup is probably too high. A 25 percentretail markupwas

more typical ofthe industry. The 40 percent estimate may have factored in highermarkups on extended warranties and other services. (ACEEE, No. 94 at 3). In reviewing Circuit City's comment, the Department understands that the
statementreferred to a gross margin of 25 percent which represents a mark-up of 1.33. This is in close agreement with the Department analysis ofretailer financial statements having an importantcomponentofappliances in their product mix (25.2 percent to 26.3 percent gross margin). Also, as referenced in the PreliminaryTSD, this
gross margin is the net ofsomebuying and warehousing costs. At presentthe Department has no basis for changing the retail mark-up assumption. DOE will continue to research data sources and seeks comment on this issue.

Information on national level historical. current, and projections of
water and sewerrates:

• Information onwater prices is not

as readily available as fuel prices information. Some utilities have large fixed charges, while others are subsidized orpaid for through taxes. Furthermore, there are no standard approaches to calculating water and

sewer costs. In some locations the price ofwater increases as consumption increases. In other areas, water price decreases with increasing consumption. Additional consideration mustbe given
·to consumers who are not connected to

a municipality water supplyor sewage system. In some cases, only one or the other is connected. As with other variables, the Department plans to use a range ofwater prices in the economic analysis to account for the variability
among different households. DOE seeks information on national level historical. current, and projections ofwater and

sewerrates.

• The Department agrees thatfuture
water prices should not be assumed to be constant and is therefore in the
process offurtheranalyzing both
current prices and future escalation
rates. The proposed analysis is on going and will be completed after the ANOPRFederal Register/Vol. 63, No. 223/Thursday, November 19, 1998/Proposed Rules 

### 64369

..

is released. The proposed analysis consists ofupdating previous data from Ernst andYoung report as adjusted by Al Dietemann, as well as the use ofnew data obtained from the American Water Works Association (AWWA). The Ernst and Young data isbeing updated by calling 125 utilities, getting their water
rate schedules and theirforecasts for the future, as well as any historical information available. The Department is working on combiningthese two data

sources into one database. This data will be organized by utility and can be mapped ontoeither individual RECs households orontoregional areas. A distribution ofwaterprices (as in the
current analysis) will be used, as well as

a distribution ofescalation rates. In an attempt to be consistent with the methodologybeing developed for fuel rates, the Departmentwill attempt to establish marginal waterrates andwater prices and escalation rates that vary with the water/wastewaterutility. The Department is seeking comments concerning this approach.

Information relating to the' determination ofprice and operating
cost elasticities:

• In orderto determine the effect of

an increase in the purchase price. it would be useful to know whatthe elasticity ofclothes washer**~rices** is. The Department is still determining how these data could be obtained. While preliminary analyses indicate thatfactors, suchas the current state of the economy have a greater correlation
to sales ofwashersthan do an increase in clothes washer prices. it is still**i~portant** to estimatethe impact of changing prices on the sales ofclothes washers. In making estimates ofthese price effects, the Departmentneeds to gauge the difference in clothes washer salesfrom a change in the price ofall clothes washers, as could result from revised energy efficiency standards. In addition, the Departmentwillbe estimating how price changesfrom revised energy efficiency standardsfor clothes washers willaffect the behavior ofconsumers.

. ·

Information on how the data for the GRIM analysis should be collected from the manufacturers:

• Whirlpool proposed thatthe GRIM model be changed from inpu,t to output aggregation. Each industry member would develop their own inputs to the GRIM model overa range ofMEF levels proposed by the DOE. The GRIM models would be run by industry members to generate a range ofindividual company outputs. The outputs ofthe individual companies could then be aggregated to determine industry impact. Individual companies would not be required to submit detailed input assumptions, but only changes in revenues, shipments, profitafter tax, and cash flow, capital investmer:it and design and marketing spendingcould also be provided. A third partycould do the aggregation and then conduct a reality checkby comparing the aggregated output to currently available industry data. (Whirlpool No. 66 at 3). The Department seeks further inputas to how the data for the GRIM analysis should be collectedfrom the manufacturers and how it should be utilized.

Comments on the proposed DOE approach for determining shipments:

• In as much as the accounting model is the only approach thatwilltake into
accountprice and operating costs, the Department believes it should be the primary tool for forecasting clothes washer shipments. The Department seeks comments aboutthe determination ofprice and operating
cost elasticities.

• For the purpose ofthebase case forecast in the preliminary analysis, the impact ofvoluntary programs hasbeen expressed as the percent ofnew clothes washers sold each year that will have efficiencies corresponding to those ofHaxis washers. The H-axis washer is characterized using the data submitted byAHAM for a 35 percentenergy reduction from the baseline MEF. The spreadsheetuses disaggregated values (i.e., water heater energy, dryer energy and mechanical energy) provided by AHAM. Disaggregated values provided by AHAM for the baseline washer are also used for the base case forecast. Calculationsbased on disaggregated values reflect the efficiencies of machines actually being sold which
may differ from the minimum required efficiency. The preliminarybase case

assumes a 1.5 percent share ofH-axis machines in 1995 with a 0.5 percent increase in H-axis sales every year thereafter, until 2030 (i.e., 19 percent).

The NES spreadsheet allows for changes in the distribution of efficiencies ofclothes washers dueto non-regulatory programs. The user specifiesthe percentofnew clothes washer sales that will achieve the selected energy reduction (relative to the baseline washer design) in future
years. In later analyses (i.e., the NOPR) the Department expects to use a distribution ofcurrent andforecasted efficiencies based on the best available information. Information is still being gathered for this task. The Department seeks comment on this forecast and welcomes any available information on current product efficiencies.

Data on the possible adverse affects of standards on identifiable groups of consumers thatexperience belowaverage utility orusage rates:

• The consumer analysis evaluates impacts to any identifiable groups. such

as consumers ofdifferent income levels, who may be disproportionately affected by anynational energy efficiency standard level.

Information on what non-regulatory alternatives to standards need to be reviewed:

• Underthe Process Rule policies. the Department is committed to continually explore non-regulatory alternatives to standards. In the table below is a discussion ofwhatwas examined in 1994 andwhat is being proposed for this rulemaking. The Departmentis seeking comments on this approach. This approach is further discussed in theTSD.

.

Alternatives examined in 1994

-No action

...............
-Consumertax credits. -Manufacturertax

credits. -Performance standards. -Consumer rebates -Prescriptive standards. -Voluntary standards

-Enhanced labeling

and consumer education

.. Alternatives to examined

-No new regulatory

action. -Consumertax credits. -Manufacturer tax

credits. -Performance standards. -Rebates.

-Voluntary energy

efficiency targets.

-Ear1y replacement. -Mass government

purchases.

Comments on the alternative standard scenarios:

• The following are examples of possible alternative standards scenarios for consideration by the Department:

• A moderate standard at an early effective date. For example, a level at a 25 percent improvement, effective three
years after the publication ofthe Final Rule.

• A stringent standard, at a later effective date. For example, a level at 45 percent improvement effective five years after the publication ofthe Final Rule.

• A two phase approach. For example, a level at 20 percent effective threeyears after the publication ofthe Final Rule (projected effective dateOctober, 2002) and a level at 40 percent effective eightyears after publication of the Final Rule.

V. Review UnderExecutive Order 12866

DOE provided to the Office of Information and Regulatory Affairs

### <64370 Federal Register/Vol. 63, No. 223/Thursday, November 19, 1998 I

### Proposed Rules

(OIRA) inthe Office ofManagement and Budget a copy ofthis document for
comment. Atthe proposal stage for this rulemaking. DOE and OIRA will determi.ne whetherthis rulemaking is a significant regulatory action under Executive Order 12866, Regulatory Planning and Review. 58 FR 51735 (Octobe·r 4, 1993). Were DOE to propose amendments to the energy conservation standards for clothes washer, the rulemaking could constitute an economically significant regulatory action and DOE would prepare and submit to OIRA for review the
assessment ofcosts and benefits required by Section 6(a)(3) ofExecutive Order 12866. Other procedural and analysis requirements in other Executive Orders and statutes also may applyto such future rulemaking action, including the requirements ofthe Regulatory Flexibility Act, 5 U.S. C. 601

etseq.; the Paperwork Reduction Act, 44 U.S.C. 3501 etseq.; and the Unfunded Mandates Act of 1995, Pub. 

### L. 104-4; and the National Environmental Policy Act of 1969, 42 U.S. C. 4321 etseq.

The draft oftoday's action and any otherdocuments submitted to OIRA for review have been made a part ofthe rulemaking record and are available for public review in the Department's Freedom ofInformation Reading Room. 1000 Independence Avenue, SW. Room lE-190, Washington, DC 20585 between the hours of9:00 and 4:00, Monday through Friday, telephone (202) 586- 6020.

Issued inWashington, DC, on October 23. 1998.

DanW. Reicher,
AssistantSecretary. EnergyEfficiencyand RenewableEnergy. [FR Doc. 98-30555 Filed 11-18-98; 8:45 am]

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