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CHAPTER 18. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

18.1 INTRODUCTION ............................................................................................................ 18-1

18.2 METHODOLOGY ........................................................................................................... 18-1
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CHAPTER 18. REGULATORY IMPACT ANALYSIS

18.1 INTRODUCTION

As part of the notice of proposed rulemaking (NOPR) for high-intensity discharge (HID) 

lamps, the U.S. Department of Energy (DOE) will draft a regulatory impact analysis in 

compliance with Executive Order 12866, “Regulatory Planning and Review,” which will be 

subject to review by the Office of Management and Budget’s Office of Information and 

Regulatory Affairs (ORIA). 58 FR 51735 (Sept. 30, 1993). 

18.2 METHODOLOGY

As part of the regulatory impact analysis, and as discussed in interim technical support 

document (TSD) chapter 13, Manufacturer Impact Analysis, DOE will identify and seek to 

mitigate the overlapping effects on manufacturers of new DOE standards and other regulatory 

actions affecting the same equipment. Through manufacturer interviews and literature searches, 

DOE will compile information on burdens from existing and impending regulations affecting

HID lamps. 

The regulatory impact analysis will also address the potential for non-regulatory 

approaches to supplant or augment energy conservation standards to improve the efficiency of 

HID lamps. The NOPR analysis will include a complete quantitative analysis of alternatives to 

the proposed conservation standards. DOE will use the national energy savings (NES) 

spreadsheet model (as discussed in interim TSD chapter 11, National Impact Analysis) to

calculate the NES and net present value (NPV) for the alternatives to the proposed conservation 

standards. Listed below are some of the alternative ways to achieve energy efficiency 

improvements that DOE has considered in prior rulemakings. The TSD in support of DOE’s 

NOPR will include a complete analysis of each alternative. Some possible non-regulatory 

alternatives include: 

• no new regulatory action, 

• customer tax incentives,

• manufacturer tax incentives,

• performance standards,

• customer rebates,

• manufacturer rebates,

• voluntary energy efficiency targets,

• early replacement (i.e., retrofit), and 

• bulk government purchases.

To compare each alternative quantitatively to the proposed energy conservation 

standards, DOE will need to quantify the effect of each alternative on the purchase and use of 

more-efficient HID lamps. Once DOE estimates the effects of alternatives on the standard, DOE

will run these non-regulatory alternative cases in the national impact analysis (NIA) spreadsheet 

model. Key inputs that DOE may adjust in the NIA spreadsheet model for this analysis include: 
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• energy prices and escalation factors; 

• implicit market discount rates for trading off purchase price against operating expense 

when choosing equipment efficiency; 

• customer purchase price, operating cost, and shipment scenarios; 

• customer price-versus-efficiency relationships; and 

• equipment stock data (purchase of new equipment or turnover rates for inventories). 

The output from the NIA spreadsheet model for each alternative considered will be as 

follows: 

 

• Energy use (in quadrillion British thermal units) is the cumulative energy use of the 

equipment purchased from 2017–2046. DOE will report electricity use as source energy. 

• National energy savings is the cumulative national energy use from the base case 

projection less the alternative policy case projection. 

• Net present value is the value of future operating cost savings from HID lamps bought in 

the period between the effective date of the standard and the close of the analysis period. 

DOE calculates the NPV as the difference between the present value of equipment and 

operating expenditures (e.g., energy usage) in the base case, and the present value of 

equipment and operating expenditures in the various non-regulatory alternative cases. 

These differences will be discounted to the year the analysis is performed using two 

discount rates: 7 percent and 3 percent. DOE will also calculate operating expenses 

(including energy consumption) over the life of the equipment.