CHAPTER 11. LIFE­CYCLE COST SUB­GROUP ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION.......................................................................................................................11­1

11.2 PURCHASE PRICE INCREASES.............................................................................................11­1

11­i11­iiCHAPTER 11. LIFE­CYCLE COST SUB­GROUP ANALYSIS

11.1 INTRODUCTION

The life­cycle cost (LCC) sub­group analysis evaluates impacts on any identifiable

groups or customers who may be disproportionately affected by any national energy efficiency

standard level. The U.S. Department of Energy (DOE) will conduct this analysis as part of the

Notice of Proposed Rulemaking (NOPR). This will be accomplished, in part, by analyzing the

LCC and payback periods for those customers that fall into any identifiable groups. DOE plans

to evaluate variations in regional energy prices and variations in energy use that might affect the

net present value of a standard to customer subpopulations. To the extent possible, DOE will

obtain estimates of each input parameter’s variability and will consider this variability in its

calculation of customer impacts. Variations in energy use for a particular equipment type

depend on factors such as climate, building type, and type of business. DOE plans to perform

sensitivity analyses to consider how differences in energy use will affect sub­groups of

customers.

DOE will determine the impact on customer sub­groups using the LCC spreadsheet

model. The LCC spreadsheet model allows for different data inputs. The standard LCC analysis

(described in chapter 8) includes the different commercial establishments that use commercial

refrigeration equipment. The LCC for any sub­group, such as the superstores in the southern

United States, can be analyzed using the LCC spreadsheet model by sampling only that

sub­group. (Chapter 8 explains in detail the inputs to the spreadsheet used in determining LCC

and payback periods.)

11.2 PURCHASE PRICE INCREASES

DOE will be especially sensitive to increases in the purchase price of the equipment to

avoid negative impacts on identifiable population groups, such as small businesses (i.e., those

with low annual revenues), that may not be able to afford significant increases in equipment

price. For such customers that are sensitive to price increases, increases in first costs of a

product can preclude the purchase of a new model of that product. As a result, some customers

may retain products past their useful life. These older products are generally less efficient to

begin with, and their efficiency may deteriorate further if they are retained beyond their useful

life. Increases in first cost also can preclude the purchase and use of a product altogether,

resulting in a potentially large loss of utility to the customer.

Although business income and annual revenues are not known for the types of businesses

analyzed in the LCC analysis, the floor space occupied by a business may be an indicator of its

annual income. If this is generally true, then DOE will be able to perform sub­group analyses on

smaller businesses. If DOE determines that business income does not correlate with floor space,

then DOE may not be able to perform sub­group analyses on smaller businesses.

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