CHAPTER 2: ANALYTICAL FRAMEWORK, COMMENTS FROM

INTERESTED PARTIES, AND DOE RESPONSES

TABLE OF CONTENTS

2.1 INTRODUCTION.................................................................................................................................2-1

2.2 MARKET AND TECHNOLOGY ASSESSMENT..............................................................................2-3

2.2.1 Scope of Coverage................................................................................................................2­3

2.2.1.1 General-Purpose Alternating-Current Motor...............................................................2-5

2.2.1.2 Categories of Induction Motors...................................................................................2-7

2.2.1.3 Frame Sizes and Metric Equivalents...........................................................................2-9

2.2.1.4 Motor Enclosure ........................................................................................................2-10

2.2.2 Market Assessment .............................................................................................................2­11

2.2.2.1 Manufacturers of Small Electric Motors...................................................................2-11

2.2.2.2 Equipment Classes.....................................................................................................2-12

2.2.2.3 Equipment Shipments................................................................................................2-15

2.2.2.4 Regulatory and Non-Regulatory Programs ...............................................................2-16

2.2.3 Technology Assessment......................................................................................................2­17

2.2.3.1 Reducing I

2

R Losses..................................................................................................2-17

2.2.3.2 Reducing Core Losses...............................................................................................2-17

2.2.3.3 Reducing Friction and Windage Losses....................................................................2-18

2.2.3.4 Impact on Motor Performance...................................................................................2-18

2.3 SCREENING ANALYSIS..................................................................................................................2-19

2.3.1 Technology Options Screened Out.....................................................................................2­19

2.3.1.1 Air Gap between Rotor and Stator ............................................................................2-19

2.3.1.2 Plastic Bonded Iron Powder......................................................................................2-20

2.3.1.3 Permanent Magnet Electric Motor ............................................................................2-20

2.3.2 Technology Screening ........................................................................................................2­21

2.3.3 Baseline Equipment............................................................................................................2­21

2.4 ENGINEERING ANALYSIS .............................................................................................................2-21

2.4.1 Approaches for Conducting the Engineering Analysis......................................................2­22

2.4.1.1 Design-Option Approach...........................................................................................2-22

2.4.1.2 Efficiency-Level Approach .......................................................................................2-23

2.4.1.3 Cost-Assessment Approach.......................................................................................2-23

2.4.2 Preliminary Engineering Analysis Approach.....................................................................2­24

2.4.3 Equipment Classes and Efficiency Levels Analyzed...........................................................2­24

2.4.4 Baseline Models and Efficiency Levels Analyzed...............................................................2­26

2.4.5 Cost Model .........................................................................................................................2­27

2.4.5.1 Bill of Materials.........................................................................................................2-28

2.4.5.2 Labor Costs and Assumptions...................................................................................2-29

2.4.5.3 Manufacturer Markups..............................................................................................2-29

2.4.6 Scaling Between Equipment Classes..................................................................................2­30

2.5 ENERGY USE AND END-USE LOAD CHARACTERIZATION ...................................................2-31

2.6 MARKUPS FOR EQUIPMENT PRICE DETERMINATION...........................................................2-34

2.6.1 Distribution Channels........................................................................................................2­34

2.6.2 Estimation of Markups.......................................................................................................2­35

2.6.3 Summary of Markups .........................................................................................................2­36

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES ........................................................2-37

2.7.1 Approach............................................................................................................................2­37

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.7.2 Life­Cycle Cost Inputs........................................................................................................2­38

2.7.2.1 Baseline Manufacturer Selling Price and Manufacturer Selling Price Increase........2-39

2.7.2.2 Distribution Markups and Sales Taxes......................................................................2-39

2.7.2.3 Installation Costs.......................................................................................................2-39

2.7.2.4 Energy Prices and Energy Price Trend......................................................................2-40

2.7.2.5 Repair and Maintenance Costs..................................................................................2-40

2.7.2.6 Lifetime .....................................................................................................................2-40

2.7.2.7 Discount Rate ............................................................................................................2-41

2.7.2.8 Product Energy Efficiency in the Base Case .............................................................2-42

2.7.2.9 Payback Period ..........................................................................................................2-42

2.8 NATIONAL IMPACT ANALYSIS....................................................................................................2-42

2.8.1 Shipments Analysis.............................................................................................................2­43

2.8.2 National Energy Savings and Net Present Value Analyses................................................2­44

2.8.3 Rebound Effect ...................................................................................................................2­46

2.8.4 Electricity Prices and Discount Rate .................................................................................2­46

2.9 LIFE-CYCLE COST SUBGROUP ANALYSIS ................................................................................2-46

2.10 MANUFACTURER IMPACT ANALYSIS .......................................................................................2-47

2.10.1 Sources of Information for the Manufacturer Impact Analysis .....................................2­48

2.10.2 Industry Cash­Flow Analysis.........................................................................................2­48

2.10.3 Manufacturer Subgroup Analysis..................................................................................2­49

2.10.4 Competitive Impacts Assessment ...................................................................................2­49

2.10.5 Cumulative Regulatory Burden......................................................................................2­49

2.10.6 Preliminary Results for the Manufacturer Impact Analysis ..........................................2­49

2.10.7 Production Line Capital Investment..............................................................................2­50

2.10.8 Maintaining Product Availability and Features............................................................2­50

2.10.9 Enforcement of Standards..............................................................................................2­50

2.11 UTILITY IMPACT ANALYSIS.........................................................................................................2-51

2.12 EMPLOYMENT IMPACT ANALYSIS.............................................................................................2-52

2.13 ENVIRONMENTAL ASSESSMENT................................................................................................2-53

2.14 REGULATORY IMPACT ANALYSIS .............................................................................................2-55

LIST OF FIGURES

FIGURE 2.4.1 STANDARD METHOD OF COST ACCOUNTING FOR STANDARDS RULEMAKING .............2-27

LIST OF TABLES

TABLE 2.2.1 NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION MG1-1987 SERVICE FACTOR

REQUIREMENTS FOR SMALL ELECTRIC MOTORS..............................................................................2-6

TABLE 2.2.2 NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION MG1-1987 REQUIREMENTS

FOR MINIMUM LOCKED-ROTOR TORQUE, OUNCE-FEET* ................................................................2-7

TABLE 2.2.3 EQUIPMENT CLASSES FOR POLYPHASE MOTORS...........................................................2-14

TABLE 2.2.4 EQUIPMENT CLASSES FOR CAPACITOR-START, INDUCTION-RUN MOTORS..................2-14

TABLE 2.2.5 EQUIPMENT CLASSES FOR CAPACITOR-START, CAPACITOR-RUN MOTORS .................2-14

TABLE 2.2.6 ESTIMATED POLYPHASE SMALL ELECTRIC MOTOR NATIONAL SHIPMENTS, 2007.......2-15

TABLE 2.2.7 ESTIMATED CAPACITOR-START, INDUCTION-RUN SMALL ELECTRIC MOTOR NATIONAL

SHIPMENTS, 2007 ............................................................................................................................2-16

TABLE 2.2.8 ESTIMATED CAPACITOR-START, CAPACITOR-RUN SMALL ELECTRIC MOTOR NATIONAL

SHIPMENTS, 2007 ............................................................................................................................2-16

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EERE-2007-BT-STD-0007 COMMENT 07.2
TABLE 2.4.1 CHARACTERISTICS OF THE THREE REPRESENTATIVE EQUIPMENT CLASSES ANALYZED .2-

26

FIGURE 2.4.1 STANDARD METHOD OF COST ACCOUNTING FOR STANDARDS RULEMAKING .............2-27

TABLE 2.5.1 MOTOR OPERATION CHARACTERISTICS BY APPLICATION ............................................2-32

TABLE 2.5.2 SHARES OF SMALL ELECTRIC MOTOR APPLICATIONS BY EQUIPMENT CLASS..............2-33

TABLE 2.5.3 AVERAGE OPERATING CHARACTERISTICS FOR SMALL ELECTRIC MOTORS .................2-33

TABLE 2.5.4 AVERAGE ANNUAL ELECTRICITY USE BY EFFICIENCY LEVEL FOR SMALL ELECTRIC

MOTORS 2-34

TABLE 2.6.1 SUMMARY OF SMALL ELECTRIC MOTOR DISTRIBUTION CHANNEL MARKUPS ............2-36

TABLE 2.7.1 MOTOR OWNER TYPE BY APPLICATION ........................................................................2-38

TABLE 2.7.2 SUMMARY OF INPUTS USED IN THE LIFE-CYCLE COST ANALYSIS................................2-39

TABLE 2.7.3 MOTOR LIFETIMES USED IN THE LIFE-CYCLE COST ANALYSIS ....................................2-40

TABLE 2.7.4 SMALL ELECTRIC MOTOR ENERGY EFFICIENCY IN THE BASE CASE.............................2-42

TABLE 2.8.1 ANNUAL AND CUMULATIVE SHIPMENTS FORECAST FOR SMALL ELECTRIC MOTORS..2-44

2-iii

EERE-2007-BT-STD-0007 COMMENT 07.2
CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM

INTERESTED PARTIES, AND DOE RESPONSES

2.1 INTRODUCTION

This chapter provides a description of the analytical framework that the Department of

Energy (DOE) is using to develop energy conservation standards for small electric motors,

including a description of the methodology, the analytical tools, and relationships among the

various analyses that are part of this rulemaking. Chapter 2, also serves as part of the

preliminary activities conducted by DOE, providing an overview of those activities and a

discussion of the comments received. In addition, chapter 2 serves as a reference to the

preliminary technical support document (preliminary TSD) executive summary, providing more

detail on key issues. Finally, chapter 2 provides citations and cross-references to the preliminary

TSD chapters that address the analytical approach, inputs, and findings.

The analyses presented in this preliminary TSD include:

• A market and technology assessment that characterizes the small electric motor market,

and reviews techniques and approaches that improve the efficiency of small electric

motors;

• A screening analysis that reviews technology options to improve small electric motor

efficiency and weighs them against the four prescribed screening criteria;

• An engineering analysis that estimates the manufacturer selling prices (MSPs) associated

with more energy-efficient small electric motors;

• An energy use and end-use load characterization that generates energy use estimates and

end-use load profiles of small electric motors;

• A markup methodology that converts average MSPs to consumer installed prices;

• A life-cycle cost (LCC) analysis that calculates, at the consumer level, the discounted

savings in operating costs throughout the estimated average life of the small electric

motor, compared to any increase in the installed costs likely to result directly from the

imposition of the standard;

• A payback period (PBP) analysis to estimate the amount of time it takes consumers to

recover the higher purchase expense of more energy efficient equipment through lower

operating costs;

• A shipments analysis that estimates shipments of small electric motors over the time

period examined in the analysis;

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EERE-2007-BT-STD-0007 COMMENT 07.2
• A national impact analysis that assesses the aggregate impacts at the national level of

potential energy conservation standards as measured by the net present value (NPV) of

total consumer economic impacts and national energy savings; and

• A preliminary manufacturer impact analysis that begins to evaluate the effects on

manufacturers that may result from a new efficiency standard.

DOE may revise any of its analyses, based on comments and new information received.

The analyses DOE will perform in the subsequent notice of proposed rulemaking (NOPR) stage

include those listed below:

• An LCC subgroup analysis that evaluates the economic impacts on identifiable groups of

customers of small electric motors, including various categories of electric motor

purchasers or owners, who may experience disproportionate impacts from a national

energy conservation standard;

• A manufacturer impact analysis (MIA) that estimates the financial impact of standards on

small electric motor manufacturers and calculates impacts on competition, employment at

the manufacturing plant, and manufacturing capacity;

• A utility impact analysis that estimates the effects of proposed standards on the installed

capacity and the generating base of electric utilities;

• An employment impact analysis that estimates the impacts of standards on net jobs

eliminated or created in the general economy as a consequence of increased spending on

the installed price of electric motors and reduced customer spending on energy;

• An environmental assessment that assesses the impacts of proposed standards on certain

environmental indicators; and

• A regulatory impact analysis that presents major alternatives to proposed standards that

may achieve comparable energy savings at a reasonable cost.

DOE developed this analytical framework and documented its findings in the Energy

Conservation Standards Rulemaking Framework Document for Small Electric Motors (July 30,

2007). DOE presented the analytical approach to interested parties during a public meeting held

on September 13, 2007. The framework document is available at

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.h

tml.

In response to the publication of the framework document and the framework public

meeting, DOE received comments from interested parties regarding DOE’s analytical approach.

This chapter (chapter 2) of the preliminary TSD summarizes the key comments DOE received

from interested parties and describes DOE’s responses to those comments. In addition,

subsequent sections of this chapter summarize any significant changes in analytical approach

made since the framework document that DOE used in its preliminary analyses. Lastly, in the

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EERE-2007-BT-STD-0007 COMMENT 07.2
executive summary of the preliminary TSD, DOE identified issues for which DOE seeks public

comment, each of which is explained in the relevant analysis sections below.

2.2 MARKET AND TECHNOLOGY ASSESSMENT

When DOE begins a standards rulemaking, it develops information that provides an

overall picture of the market for the equipment concerned, including the nature and market

characteristics of the equipment and the industry structure. This activity consists of both

quantitative and qualitative efforts based primarily on publicly available information. The

subjects addressed in the market and technology assessment for the preliminary TSD analysis

include the scope of coverage, equipment classes, manufacturers, retail market trends, shipments

of covered equipment, regulatory and non-regulatory programs, and technologies that could be

used to improve the efficiency of small electric motors. This information serves as a resource

throughout the rulemaking.

DOE reviewed existing literature and spoke with manufacturers to get an understanding

of the small electric motors industry in the United States. Industry publications (e.g.,

manufacturer catalogs, trade journals), government agencies, and trade organizations provided

the bulk of the information, including the overall state of the industry, small motor

manufacturing and market shares, shipments by equipment class, general technical information

on small electric motors, and industry trends.

The discussion below summarizes the analytical approach and the comments DOE

received in response to the Framework Document.a More detailed discussion on DOE’s

approach can be found in the market and technology assessment, Chapter 3 of the preliminary

TSD.

2.2.1 Scope of Coverage

Section 340(13)(G) of the Energy Policy and Conservation Act, as amended, (EPCA)

defines the term “small electric motor” to mean “a NEMA [National Electrical Manufacturers

Association] general-purpose alternating-currentb single-speed induction motor,c built in a twodigit frame number seriesd in accordance with NEMA Standards Publication MG1–1987.e

” (42

a For more information on the Framework Document, visit

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html

b “General-purpose alternating current” is a NEMA term used for alternating-current motors that are not designed

with a specific application in mind. c An induction motor is a machine that converts electrical power into rotational mechanical power. It depends on

electromagnetic induction for its operation and has one or more component members capable of rotary movement.

d The terms “two-digit frame number series” and “frame size” refers to a motor’s standard system of numbers in

combination with letters for designating the size and mounting dimensions of a motor, according to NEMA

Standards Publication MG1 for “Motors and Generators.” In the case of small motors, it is the “D” dimension in

inches multiplied by 16. The “D” dimension is measured from the centerline of the shaft to the bottom of the

mounting feet. For example, a 48 frame motor would have a “D” dimension of 3.00 inches (16 x 3.00 = 48). Such

standard dimensions are essential to fitting a motor to the equipment it drives and for interchangeability among

motors.

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EERE-2007-BT-STD-0007 COMMENT 07.2
U.S.C. 6311(13)(G)) Such motors include: polyphase and single-phase motors specifically,

non-servo three-phase motors; capacitor-start, induction-run (CSIR) motors; and capacitor-start,

capacitor-run (CSCR) motors. There are many other types of small electric motors

manufactured, which include, for example, shaded-pole motors, which are not part of the

preliminary TSD analysesf. Covered motors for the preliminary TSD analyses include

polyphase, CSIR, and CSCR small electric motors that are general purpose; have a NEMA frame

size of 42, 48, or 56 (or their equivalents); and are manufactured with an open construction.

DOE discusses how it arrived at this interpretation of the EPCA definition in the sections that

follow, noting that this scope is slightly narrower than that considered for the determination

analysis.

Section 346(b)(1) of EPCA directs the Secretary of Energy to prescribe, by rule, testing

requirements and energy conservation standards for those small electric motors for which the

Secretary determines that standards would be technologically feasible and economically

justified, and would result in significant energy savings. (42 U.S.C. 6317(b)(1))

Section 346(b)(3) of EPCA provides an additional stipulation relating to the coverage of

small electric motors. (42 U.S.C. 6317(b)(3)) According to the statute, any energy conservation

standard prescribed under EPCA section 346(b)(2) shall not apply to small electric motors that

are components of a covered product under section 322(a) of EPCA or of covered equipment

under section 340. Such small motors are not covered in this preliminary TSD. Some examples

of covered products and equipment that incorporate small motors are residential central air

conditioners and heat pumps, furnaces, refrigerators and freezers, clothes washers and dryers,

commercial packaged air-conditioning and heating equipment, and commercial refrigeration

equipment.

On July 10, 2006, DOE published in the Federal Register its determination that energy

conservation standards for small electric motors appear to be technologically feasible and

economically justified, and would result in significant energy savings. 71 FR 38799, 38807. A

key issue that arose early in the analytical process was the scope of coverage under the EPCA

definition of a “small electric motor”. The EPCA definition of this term incorporates several key

terms that are defined within the context of NEMA MG1-1987, such as “NEMA generalpurpose,” “two-digit frame number series,” and “in accordance with NEMA Standards

Publication MG1–1987.” Thus, EPCA’s definition of “small electric motor” is tied to the

NEMA MG1-1987 terminology and performance requirements established for (1) generalpurpose alternating-current motors, (2) certain categories of induction motors, and (3) the NEMA

system for designating (two-digit) frames. In the following subsections, DOE addresses each of

the elements in the definition of “small electric motor.”

e MG1 is a standards publication for electric motors and generators (MG) issued by NEMA and updated

periodically. The particular issue of MG1 explicitly cited in the legislation for the purposes of defining the scope of

coverage for the small electric motors rulemaking is MG1-1987. f In general, these motors do not meet certain performance characteristics of general-purpose alternating-current

motors as defined by NEMA MG1-1987.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.2.1.1 General-Purpose Alternating-Current Motor

One element in the statutory definition of “small electric motor,” which derives from

NEMA MG1-1987, is “general-purpose alternating-current.” In NEMA MG1-1987, paragraph

MG1–1.05, sets forth the definition of “general-purpose alternating-current motor:”

A general-purpose alternating-current motor is an induction motor, rated 200

horsepower and less, which incorporates all of the following: (1) open construction, (2)

rated continuous duty, (3) service factor in accordance with MG1-12.47, and (4) Class A

insulation system with a temperature rise as specified in MG1-12.42 for small motors or

Class B insulation system with a temperature rise as specified in MG1-12.43 for medium

motors. It is designed in standard ratings with standard operating characteristics and

mechanical construction for use under usual service conditions without restriction to a

particular application or type of application.

The four criteria that NEMA uses in MG1-1987 to define a general-purpose alternatingcurrent motor are open construction, continuous duty, service factor, and Class A insulation

system. First, the term “open construction” refers to the type of enclosure that houses the motor.

An open construction enclosure allows outside air to pass through and cool the motor when it is

operating. Electric motors are also manufactured with closed construction housings, which do

not circulate external air for cooling.

Second, a motor “rated continuous duty” refers to a motor that can operate a driven

machine indefinitely at rated load, speed, and temperature without injury to the motor.

Representatives both of Emerson Motor Technologies (Emerson) and NEMA commented that

“continuous duty” is one of the critical elements in the definition of an electric motor, under the

Energy Policy Act of 1992. (Emerson, Public Meeting Transcript, No. 3.6 at p. 35 and pp. 38–

39; NEMA No. 5.1 at p. 1) DOE agrees with Emerson, recognizing that the statutory language

directs DOE to cover and evaluate general-purpose alternating-current motors, which are motors

rated for continuous duty, which is distinct from other ratings such as “short-time.” (NEMA

MG1-1987, paragraph 1.40.) Therefore, in the preliminary TSD analyses, DOE proposes to

consider only those motors rated for continuous duty.

Third, MG1-1987 defines a general-purpose alternating-current motor as having a service

factor in accordance with MG1–12.47. Service factor is a measure of the overload capacity at

which a motor can operate without damage, while operating normally within the correct voltage

tolerances. The rated horsepower multiplied by the service factor determines that overload

capacity. For example, a 1 horsepower motor with a 1.25 service factor can operate at 1.25

horsepower (1 horsepower x 1.25 service factor). NEMA MG1-1987, requires that the service

factor for general-purpose alternating-current motors is in accordance with MG1–12.47. (See

Table 2.2.1). Therefore, in the preliminary TSD analyses, DOE proposes to cover only those

small electric motors that meet the NEMA service factor requirements.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.2.1 National Electrical Manufacturers Association MG1-1987 Service Factor

Requirements for Small Electric Motors

Horsepower Required Service Factors by Synchronous Speed, revolutions per

minute (rpm)

3,600 1,800 1,200 900

1/20 1.4 1.4 1.4 1.4

1/12 1.4 1.4 1.4 1.4

1/8 1.4 1.4 1.4 1.4

1/6 1.35 1.35 1.35 1.35

1/4 1.35 1.35 1.35 1.35

1/3 1.35 1.35 1.35 1.35

1/2 1.25 1.25 1.25 -

3/4 1.25 1.25 - -

1 1.25 - - -

The MG1-1987 definition of a general-purpose alternating-current motor next states that

a small motor has a Class A insulation system with a temperature rise as specified in MG1–

12.42. This section establishes the maximum temperature rise, over a 40°Celsius (C) ambient

temperature, the various parts of the motor can withstand without injury to the motor in any

respect. For example, the temperature rise of the windings of a small motor with open

construction and a Class A insulation system must not exceed 60°C, or if the motor’s service

factor is greater than 1.15, it cannot exceed 70°C. Manufacturers do make Class B, Class F, or

Class H insulation systems for small electric motors. However, DOE proposes to cover only

motors with Class A insulation systems to be consistent with the requirements of NEMA MG1–

1987.

Lastly, MG1-1987 requires that a general-purpose alternating-current motor be designed

in standard ratings with standard operating characteristics and mechanical construction for use

under usual service conditions without restriction to a particular application or type of

application. This provision is consistent with the definition of general-purpose motor under Title

10 of the Code of Federal Regulations, Part 431 (10 CFR Part 431) at 10 CFR 431.12.

Essentially, both MG1–1.05 and 10 CFR 431.12 require general-purpose motors to meet

“standard ratings,” which are any performance or physical characteristics established as a rule or

model by authority, custom, or general consent. The NEMA MG1 standard is based on general

consent, meaning that NEMA members who manufacture motors and generators covered in

MG1 can vote to approve (or disapprove) a standard. For small electric motors, examples of

“standard ratings” include minimum breakdown torque (see NEMA MG1–12.32.1) and

minimum locked-rotor torque (see NEMA MG1–12.32.2). Such requirements limit the scope of

covered small motors. For example, the breakdown torques of many shaded-pole and

permanent-split capacitor motors do not fall within the breakdown torque ranges of MG1 Table

10–5. Section 12.32.2 of MG1–1987 requires that the locked-rotor torque shall be not less than

certain values, as replicated below in Table 2.2.2.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.2.2 National Electrical Manufacturers Association MG1-1987 Requirements for

Minimum Locked-Rotor Torque, Ounce-Feet*

Horsepower 60-Hz Synchronous Speed

(rpm)

50-Hz Synchronous Speed

(rpm)

3,600

3,450

1,800

1,725

1,200

1,140

3,000

2,850

1,500

1,425

1,000

950

1/8 - 24 32 - 29 39

1/6 15** 33 43 18 39 51

1/4 21 46 59 25 55 70

1/3 26 57 73 31 69 88

1/2 37 85 100 44 102 120

3/4 50 119 - 60 143 -

1 61 - - 73 - -

* On the high-voltage connection of dual-voltage motors, minimum locked-rotor torques up to 10 percent less than

these values may be expected.

** Each value in this table depicts the ounce-feet of locked rotor torque for this combination of horsepower and

synchronous speed. For this particular combination (i.e., 1/6 horsepower with a speed of between 3,450 and 3,600),

manufacturers must ensure the motor have at least 15 ounce-feet of locked rotor torque in order to meet this

requirement of NEMA MG1-1987.

In the preliminary TSD analyses, DOE proposes to cover only those small electric motors

that meet the standard ratings defined in MG1-1987, including minimum breakdown torque and

locked-rotor torque requirements.

2.2.1.2 Categories of Induction Motors

The statutory definition of small electric motor also provides that small electric motors

are induction motors built in accordance with NEMA MG1-1987. These induction motors

include five categories: split-phase,g shaded-pole,h capacitor-start (both CSIRiand CSCRj),

permanent-split capacitor (PSC),k and polyphase motors.l In the discussion that follows, DOE

addresses its examination of these induction motor categories and its preliminary conclusion that

g A split-phase motor is a single-phase induction motor equipped with an auxiliary winding displaced in magnetic

position from, and connected parallel to, the main winding. Unless otherwise specified, DOE assumed that the

auxiliary circuit is open when the motor attains a predetermined speed. The term “split-phase motor” describes a

motor to be used without impedance other than that offered by the motor windings themselves. h A shaded-pole motor is a single-phase induction motor provided with an auxiliary short-circuited winding or

windings displaced in magnetic position from the main winding. i

A capacitor-start induction-run motor is a single-phase motor with a main winding arranged for direct connection

to a source of power and an auxiliary winding connected in series with a capacitor. The motor has a capacitor phase,

which is in the circuit only during the starting period.

j

A capacitor-start capacitor-run motor is a single-phase motor which has different values of effective capacitance for

the starting and running conditions. k A permanent-split capacitor motor is another category of single-phase motor that has the same value of capacitance

for both starting and running conditions. l

A polyphase motor is an electric motor that uses the phase changes of the electrical supply to induce a rotational

magnetic field and thereby supply torque to the rotor.

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EERE-2007-BT-STD-0007 COMMENT 07.2
the CSIR, CSCR, and polyphase motors are the only three categories that meet the requirements

of EPCA 340(13)(G) and are therefore covered in the preliminary TSD analyses.

At the September 13, 2007, public meeting, Emerson agreed with DOE’s determination

that split-phase motors are not covered under the EPCA definition of a small electric motor.

(Emerson, Public Meeting Transcript, No. 3.6 at pp. 35 and 36). Regal Beloit agreed with

Emerson, adding that split-phase motors were considered definite-purpose motors and should not

be covered. (Regal Beloit, Public Meeting Transcript, No. 3.6 at p. 52). DOE understands that

split-phase motors are designed for specific purposes and applications, and is unaware of any

general-purpose split-phase motors. DOE agrees with Emerson and Regal Beloit and concludes

that split-phase motors are not covered small electric motors.

The American Council for an Energy Efficient Economy (ACEEE) expressed interest in

including shaded-pole motors as part of this rulemaking. (ACEEE, Public Meeting Transcript,

No. 3.6 at p. 59). Notwithstanding this interest, DOE understands that shaded-pole motors tend

to have low efficiency ratings (i.e., less than 50 percent) and are sold in high volume for

consumer applications, such as portable fans. DOE reviewed the statutory definition of small

electric motor and came to the preliminary conclusion that shaded-pole motors are not covered

because they fail to meet the torque requirements for general-purpose motors, under NEMA

MG1–1987.

Emerson commented that PSC motors do not meet the performance requirements for

NEMA general-purpose continuous duty motors and should not be given further consideration.

(Emerson, Public Meeting Transcript, No. 3.6 at p. 52). DOE examined the performance

characteristics of PSC motors in view of the statutory definition of small electric motor and the

explicit performance requirements under the NEMA MG1–1987 definition of general-purpose

alternating-current motor. DOE concluded that PSC motors, such as those used in fans, business

machines, and hermetic motor compressors used in refrigeration equipment are not able to meet

the torque requirements under NEMA MG1-12.32 for covered general purpose small electric

motors.m Therefore, DOE agrees with Emerson’s comment and will not give further

consideration to PSC motors.

In addition, where the “general purpose” element in the EPCA definition of small electric

motor is tied to NEMA MG1–1987 performance requirements, DOE considered the Emerson,

Regal Beloit, and ACEEE comments and noted that the NEMA MG1–1987 definition of

“general-purpose alternating-current motor” provides that the motor be “designed in standard

ratings with standard operating characteristics and mechanical construction for use under usual

service conditions without restriction to a particular application or type of application.” (See

also the definition of “general purpose motor” under 10 CFR 431.12.) Among the small motors

DOE considered in its “Analysis of Energy Conservation Standards for Small Electric Motors,”

in June 2006, DOE examined shaded-pole, permanent-split capacitor, and split-phase designs

and determined that those motors do not meet the performance requirements established for

m A hermetic motor consists of a stator and rotor without a shaft, end shields or bearings for installation in

refrigeration compressors of the hermetically sealed type.

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EERE-2007-BT-STD-0007 COMMENT 07.2
general-purpose motors.n DOE agrees with Emerson and Regal Beloit, that small motors with

shaded-pole, permanent-split capacitor, and split-phase designs do not meet the NEMA

requirements for “general purpose” and are not covered under the EPCA definition of small

electric motor at section 340(13)(G).

The remaining categories of small electric motors include CSIR, CSCR, and polyphase.

In view of its July 10, 2006 Determination (71 FR 38799), DOE reexamined the standard

performance characteristics, construction specifications, and ratings for these three motor

categories and concluded that they meet the EPCA requirements for small electric motors.

Furthermore, CSIR, CSCR, and polyphase small motors are manufactured in two-digit frame

sizes, can be rated for continuous-duty applications, and can meet other performance

requirements for general-purpose motors, including the torque requirements under NEMA MG1–

1987, paragraph 12.32. Therefore, DOE will address three classes of small electric motors in

today’s preliminary TSD: single-phase, CSIR; single-phase, CSCR; and polyphase.

2.2.1.3 Frame Sizes and Metric Equivalents

Under the statutory definition, a small electric motor must be “built in a two-digit frame

number series in accordance with NEMA Standards Publication MG1–1987.” NEMA MG1–

1987 establishes a system for designating frames of motors, which consists of a series of

numbers in combination with letters. The frame number for a small motor is determined by

measuring the distance in inches between the centerline of the shaft to the bottom of the

mounting feet multiplied by 16. The two-digit frame series encompasses NEMA frames 42, 48,

and 56. Two-digit NEMA frames have standard dimensions and tolerances specified in

paragraphs MG1–11.31 and MG1–11.34, which are necessary for mounting and

interchangeability among general-purpose applications.

At the September 13, 2007, Framework Document public meeting, Emerson commented

that NEMA two-digit frames only cover the 42, 48, and 56 series, and that manufacturers had not

perceived other standard two-digit NEMA frames. (Emerson, Public Meeting Transcript, No.

3.6 at p. 44). NEMA MG1–1987 only assigns standard dimensions to 42, 48, and 56 frame

motors. However, DOE is aware that other non-standard frame sizes, such as a 66 frame size,

are manufactured and sold. While “66” is a “two-digit” frame size, it does not appear in NEMA

MG1–1987. Consequently, DOE believes that a 66 frame motor is not be covered under the

EPCA definition of “small electric motor.” Further, DOE believes that any non-standard twodigit frame size (i.e., other than 42, 48, and 56) falls outside the scope of the preliminary TSD

analysis for small electric motors. Such non-standard frame sizes are likely definite-purpose or

special-purpose motors and not used in general-purpose applications.

Also at the public meeting there was discussion about metric equivalents for the two-digit

NEMA frame series, uncertainty about cross-references, and potential issues with imports of

small electric motors, whether manufactured alone or as a component of another piece of

equipment. Emerson and Regal Beloit both indicated that metric motors would probably not be

sold in the U.S. market individually, but would certainly be imported as components of systems

n For more information, see

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html.

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EERE-2007-BT-STD-0007 COMMENT 07.2
or equipment purchased overseas. (Emerson and Regal Beloit, Public Meeting Transcript, No.

3.6 at pp. 45-46). ACEEE asserted that such motors should be covered if they are generalpurpose motors; otherwise, loopholes that create enforcement problems could develop.

(ACEEE, Public Meeting Transcript, No. 3.6 at pp. 46-47).

EPCA section 340(13)(G), as amended by the Energy Independence and Security Act of

2007 (EISA 2007), 42 U.S.C. 6311(13)(G), defines a small electric motor in terms of “NEMA

Standards Publication MG1–1987,” which is based on the construction and rating system in

NEMA MG1–1987 and uses English units of measurement and power output ratings in

horsepower. By contrast, general-purpose electric motors manufactured outside the United

States and Canada are defined and described with reference to International Electrotechnical

Commission (IEC) Standard 60034–1 series, “Rotating electrical machines,” which employs

terminology and criteria different from EPCA. The performance attributes of these IEC motors

are rated pursuant to IEC Standard 60034–1, “Rating and performance,” which uses metric units

of measurement and construction standards that are different from NEMA MG1–1987, and a

rating system based on power input in kilowatts instead of power output in horsepower. One

industry document, however, the Institute of Electrical and Electronics Engineers Standard 112

recognizes this difference in the market and defines the relationship between horsepower and

kilowatts. To eliminate any confusion over coverage and regulatory standards, in 10 CFR

431.12, DOE defines “electric motor” in terms of both NEMA and IEC equivalents, and 10 CFR

431.25 provides a table of horsepower and kilowatt equivalent ratings. DOE views this

treatment of electric motors as a precedent for similar treatment of small electric motors.

Although the statutory definition of small electric motor does not address metric or

kilowatt-rated motors, DOE believes that EPCA covers any motor that is equivalent to or can be

used as a substitute for a covered small electric motor. In general, IEC metric or kilowattequivalent motors can perform the identical functions of covered small electric motors and

provide comparable rotational mechanical power to the same machines or equipment. Moreover,

IEC metric or kilowatt-equivalent motors can be interchangeable with covered small electric

motors. Therefore, DOE interprets EPCA to mean that a “small electric motor” is any motor that

is identical or equivalent to a motor constructed and rated in accordance with NEMA MG1 and

covered by the statute. Otherwise, placing energy efficiency requirements on NEMA small

electric motors, but not on equivalent IEC or kilowatt-rated small electric motors, could give

preferential treatment to the latter by not subjecting them to equivalent regulatory requirements,

should DOE adopt standards for small electric motors.

2.2.1.4 Motor Enclosure

At the September 13, 2007, Framework Document public meeting, Emerson and Regal

Beloit commented that a small electric motor covered by EPCA is, by definition, an open motor,

even though general-purpose motors are manufactured as totally enclosed motors that might

otherwise be covered. Both asserted that only open motors are covered. (Emerson and Regal

Beloit, Public Meeting Transcript, No. 3.6 at p. 62).

DOE examined the definition of “general-purpose alternating-current motor” as it appears

in NEMA Standard MG1–1987. It explicitly states that a general-purpose alternating-current

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EERE-2007-BT-STD-0007 COMMENT 07.2
motor incorporates “open construction.” Later versions of NEMA Standard MG1 revised the

definition and expanded it to incorporate open or enclosed construction. Nevertheless, this is not

the case with the EPCA-directed definition, which explicitly directs DOE to reference MG1-

1987. Therefore, in contrast to DOE's earlier views regarding the coverage of small motors (i.e.

open and enclosed construction), DOE now interprets the EPCA definition of a “small electric

motor” to cover only open construction because MG1-1987 only contemplates open construction

in its definition of “general-purpose alternating-current motor.”

2.2.2 Market Assessment

The market assessment focuses on developing a qualitative and quantitative

characterization of the small electric motors industry. It characterizes the market structure based

on publicly available information and data supplied by manufacturers and other interested

parties. Further, the market assessment includes information about manufacturers of small

electric motors, equipment classes, equipment shipments, and existing regulatory and nonregulatory efficiency improvement initiatives.

2.2.2.1 Manufacturers of Small Electric Motors

Four large U.S. manufacturers dominate the small electric motor market: A.O. Smith

Electrical Products Company, Baldor Electric Company, Emerson Motor Technologies, and

Regal Beloit Corporation. These four manufacturers have diverse portfolios of products,

including many other categories of electric motors, other related electrical equipment, and

switchgear.

DOE does not have data about which company holds the largest market share for small

electric motors. Nevertheless, shipments of small motors from these four companies constitute

more than 90 percent of the total small electric motor shipments in the United States. All four

companies are members of NEMA, which provides some assurance that NEMA’s cumulative

shipment estimates constitute a reasonable estimate of overall national shipments.

Although the small motor market is predominantly supplied by large manufacturers, for

the NOPR stage of the rulemaking analysis, DOE intends to conduct a study of small businesses

that manufacture small electric motors. The Regulatory Flexibility Act (5 U.S.C. 601 et seq.)

requires preparation of an initial regulatory flexibility analysis for every rule which by law must

be proposed for public comment, unless the agency certifies that the rule, if promulgated, will

not have a significant economic impact on a substantial number of small entities. A regulatory

flexibility analysis examines the impact of the rule on small entities and considers alternative

ways of reducing negative impacts. The Small Business Administration defines small business

manufacturing enterprises for small electric motors under the North American Industry

Classification System product code 335312, Motor and Generator Manufacturing, as those

having 1,000 or fewer employees. This includes the total number of employees in the parent

company, not only those in the division that produces small electric motors. DOE invites

interested parties to provide names and contact information for any small businesses that

manufacture small electric motors who should be consulted before DOE publishes a NOPR.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.2.2.2 Equipment Classes

In general, when evaluating and establishing energy conservation standards, DOE divides

covered equipment into classes by (1) the type of energy used; (2) the capacityo of the

equipment; or (3) any other performance-related feature that necessitates different standard

levels, such as features affecting consumer utility. (42 U.S.C. 6295(q)) Different energy

conservation standards may apply to different equipment classes.

For the determination analysis of small electric motors, DOE examined the following

products as separate equipment class categories: single-phase, capacitor-start, induction-run

motors; single-phase, capacitor-start, capacitor-run motors; and polyphase motors. DOE

proposed these divisions because of the different efficiency values, physical characteristics, and

starting torques (i.e., consumer utility). In the Framework Document, DOE sought comments on

the appropriateness of using these categories, and any finer subdivision of them, for the standards

rulemaking.

Emerson commented that any minimum efficiency standard should not be set at a level

that prevents installation of a replacement motor into an existing application, because the new

[energy efficient] motor is too large to fit within the available space of that application.

(Emerson, Public Meeting Transcript, No. 3.6 at pp. 86 and 104) Regal Beloit also expressed

concern about installation of replacement motors, indicating that CSCR motors are not

necessarily replacements for CSIR motors. (Regal Beloit, Public Meeting Transcript, No. 3.6 at

pp. 134-35) DOE understands that for most capacitor-start motors, the starting capacitor is

attached in an external shell on the motor. When a run capacitor is added for CSCR motors, a

second external shell is usually added to the motor to accommodate the second capacitor. The

second shell often inhibits a CSCR motor from replacing a CSIR motor because of the physical

and dimensional differences associated with the CSCR motor housing.

DOE studied the issue of equipment categories and efficiency and decided to classify the

CSIR, CSCR, and polyphase small electric motors separately, as in the determination analysis.

DOE agrees with both Emerson and Regal Beloit that CSCR and CSIR motors belong in separate

equipment classes because the addition of a run capacitor affects the efficiency and performance

of the electric motor. Furthermore, polyphase motors should be treated separately from

capacitor-start motors because polyphase motors do not require start or run capacitors. Instead,

they use a slightly different form of electricity (three-phase power rather than single-phase

power); and all other factors being equal, they are more energy efficient.

NEMA indicated its support for maintaining the three equipment categories. (NEMA,

No. 5.1 at pp. 1-2) NEMA also commented that if DOE were to set standards for each

equipment class, it should subdivide the equipment class by horsepower, speed, and enclosure.

(NEMA, No. 5.1 at pp. 1-2) DOE evaluated this comment relative to published efficiency values

in catalogs as well as existing standards for 1–200 horsepower electric motors.

DOE agrees with NEMA that horsepower (or kilowatt) ratings should subdivide the

equipment categories. DOE found that motor efficiency varies with rated horsepower by

o In the context of small electric motors, the term “capacity” is associated with the horsepower rating of the motor.

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EERE-2007-BT-STD-0007 COMMENT 07.2
evaluating manufacturers' catalog data, the efficiency ratings of the 1–200 horsepower energy

conservation standards (10 CFR 431.25), and the efficiency requirements of the NEMA Premium

Motor program. Therefore, this aspect of end-user utility (i.e., rated power capacity of the

motor), has a direct impact on small motor efficiency. Thus, DOE agrees with NEMA and

proposes to subdivide the small electric motor equipment categories by horsepower ratings.

DOE also agrees with NEMA that motor speed is another differentiator for equipment

classes because of its impact on efficiency. The rated speed of a small electric motor varies with

the number of poles incorporated into the design. Also, the locked rotor torque varies with the

number of poles and that the motor with the highest number of poles has the slowest speed and

the highest torque. The most common pole configurations include two, four, and six, with two

poles representing the highest speed/lowest torque and six poles representing the lowest

speed/highest torque. By studying the efficiency ratings for 1–200 horsepower motors (10 CFR

431.25), the NEMA Premium Motor standard, and manufacturer catalogs, DOE observed that

efficiency percentages tend to decrease with the number of poles. Consequently, changing the

number of poles will change the speed and torque characteristics of a motor and affect end-user

utility. For this reason, DOE proposes to subdivide small electric motor categories by the

number of poles.

DOE is less certain about what NEMA intended when suggesting that DOE differentiate

capacitor-start and capacitor-run small motors to “account for various combinations of

horsepower, rpm, and enclosure.” (NEMA, No. 5.1 at pp. 1-2) In its determination analysis,

DOE considered both open- and enclosed-construction types of small electric motors. However,

DOE now believes that the statutory definition of small electric motor covers only motors with

open construction. Presently, totally enclosed small electric motors are not considered in the

preliminary TSD analyses. If NEMA’s comment referencing “enclosure” was intended to be

applicable to the frame size associated with a motor’s enclosure, DOE requires additional

information about how frame size affects efficiency. DOE is unaware of any impact or technical

impediment associated with the efficiency of two different frame sizes at the same horsepower

rating. Nevertheless, DOE invites comments on this matter from interested parties.

In Table 2.2.3, 2.2.4, and Table 2.2.5, DOE presents its proposals for small electric motor

equipment classes. DOE proposes to subdivide each of the three categories of small electric

motors into equipment classes by horsepower and number of poles. Although the small electric

motor industry generally considers 3-horsepower as the upper limit for rated capacity, some

manufacturers produce motors that would otherwise meet the definition of small electric motor,

but have higher horsepower ratings. For this reason, DOE proposes to insert a “greater than or

equal to” symbol (≥) for the 3-horsepower equipment class to clarify that the largest motors are

still covered and subject to standards (presuming they meet the other design requirements).

Therefore, the efficiency rating for these equipment classes will be based on DOE’s analysis of a

three horsepower motor, yet will be applicable to small electric motors greater than or equal to 3-

horsepower. For all three equipment categories, DOE proposes 72 equipment classes for small

electric motors. DOE will propose percentage efficiency values for each equipment class in the

NOPR.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.2.3 Proposed Equipment Classes for Polyphase Motors

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW

1/3 hp/0.25 kW

1/2 hp/0.37 kW

3/4 hp/0.55 kW

1 hp/0.75 kW

11⁄2 hp/1.1 kW

2 hp/1.5 kW

≥ 3 hp/2.2 kW

Table 2.2.4 Proposed Equipment Classes for Capacitor-Start, Induction-Run Motors

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW

1/3 hp/0.25 kW

1/2 hp/0.37 kW

3/4 hp/0.55 kW

1 hp/0.75 kW

11⁄2 hp/1.1 kW

2 hp/1.5 kW

≥ 3 hp/2.2 kW

Table 2.2.5 Proposed Equipment Classes for Capacitor-Start, Capacitor-Run Motors

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW

1/3 hp/0.25 kW

1/2 hp/0.37 kW

3/4 hp/0.55 kW

1 hp/0.75 kW

11⁄2 hp/1.1 kW

2 hp/1.5 kW

≥ 3 hp/2.2 kW

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.2.2.3 Equipment Shipments

To calculate the national energy savings from any regulatory standard on small electric

motors, DOE needs to prepare shipment estimates disaggregated by equipment class. For the

preliminary TSD, shipment estimates were prepared using the shipment data NEMA had

provided to DOE for the determination analysis in 2000.p DOE also used publicly available

historical shipment data from the U.S. Census Bureau to calculate an annual growth rate and

project the 2000 NEMA data to a shipment estimate for 2007.

DOE disaggregated the NEMA data for open construction motors by motor category

(CSIR, CSCR, and polyphase), horsepower rating, and number of poles. DOE then used U.S.

Census Bureau data from 1990 through 1999 to calculate a market trend to project the NEMA

data from 2000 to 2007. DOE calculated an average annual growth rate from the capacitor-start

motor data and then applied it to the disaggregated NEMA data for both CSIR and CSCR

shipments. In other words, DOE assumed the average annual growth rate to be the same for

CSIR and CSCR motors. DOE used the same methodology for projecting the disaggregated

NEMA polyphase motor data. Table 2.2.6, 2.2.7, and provide the scaled shipment results for the

equipment classes provided by NEMA.

Table 2.2.6 Estimated Polyphase Small Electric Motor National Shipments, 2007

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW 1,967 7,637 1,967 11,571

1/3 hp/0.25 kW 4,784 16,289 3,264 24,338

1/2 hp/0.37 kW 8,181 49,884 3,607 61,671

3/4 hp/0.55 kW 12,286 59,460 82,596 154,342

1 hp/0.75 kW 17,608 71,708 17,608 106,925

11⁄2 hp/1.1 kW 5,885 146,033 5,885 157,804

2-3 hp/1.5-2.2 kW - 28,268 12,817 41,084

Total 50,712 379,278 127,745 557,735

p “Energy Conservation Program for Certain Industrial Equipment: Determination Concerning the Potential for

Energy Conservation Standards for Small Electric Motors,” 71 FR 38799 (July 10, 2006), docket number: EE–

DET–02–002 and RIN 1904–AA87.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.2.7 Estimated Capacitor-Start, Induction-Run Small Electric Motor National

Shipments, 2007

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW 348,160 384,581 223,615 956,357

1/3 hp/0.25 kW 597,471 659,971 383,742 1,641,183

1/2 hp/0.37 kW 326,266 534,194 504,566 1,365,025

3/4 hp/0.55 kW 290,405 475,480 449,108 1,214,994

1 hp/0.75 kW - 57,456 155,520 212,976

>1 hp/0.75 kW - 25,605 26,964 52,569

Total 1,562,302 2,137,288 1,743,514 5,443,104

Table 2.2.8 Estimated Capacitor-Start, Capacitor-Run Small Electric Motor National

Shipments, 2007

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW 18,324 20,241 11,769 50,335

1/3 hp/0.25 kW 31,446 34,735 20,197 86,378

1/2 hp/0.37 kW 17,172 28,115 26,556 71,843

3/4 hp/0.55 kW 15,284 25,025 23,637 63,947

1 hp/0.75 kW - 3,024 8,185 11,209

> 1 hp/0.75 kW - 1,348 1,419 2,767

Total 82,226 112,489 91,764 286,479

Scaling the small electric motors shipment data NEMA provided in 2002, DOE estimates

that the 2007 annual shipments of covered small electric motors to be approximately 5.7 million

units for capacitor-start motors and 0.5 million units for polyphase motors. These motors are

used in a wide variety of commercial and industrial machine and processing applications, the

largest of which are pumping equipment and commercial/industrial heating, ventilating, and airconditioning equipment. DOE requests comments about the shipment estimates presented

above, including the methodology DOE followed and the accuracy of the scaled shipments from

NEMA. If more recent shipment data are available, DOE would review that data and consider

using it in preparing the NOPR.

2.2.2.4 Regulatory and Non-Regulatory Programs

DOE is unaware of any energy efficiency non-regulatory programs (e.g., ENERGY

STAR, NEMA Premium Motors) that are directly focused on improving the performance of

small electric motors. However, several well-established programs and successful nonregulatory initiatives have worked to improve the efficiency of larger (e.g., 1–200 horsepower)

electric motors. Chapter 3 of the preliminary TSD discusses these programs and initiatives.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.2.3 Technology Assessment

The purpose of the technology assessment is to develop a preliminary list of technology

options that could improve the efficiency of small electric motors. Motor efficiency is a

measurement of the effectiveness with which electrical energy is converted to mechanical energy

and is expressed as the ratio of power output to power input. Motor efficiencies are usually

reported at full load, 3/4 load, and 1/2 load. To remain consistent with EPCA standards (as

amended by EPACT 1992) for medium motors and to have more repeatable results, DOE will

examine and provide candidate standard levels at the full-load efficiency rating.

Motor losses are typically characterized in four different groups: conductor losses (I2R),

core losses, friction and windage losses, and stray-load losses, discussed below. In this section,

DOE categorizes the technology options it considered into these categories based on the type of

loss the option aims to reduce. DOE did not identify any technology options that reduce strayload losses.

DOE developed this list of technology options by reviewing manufacturer catalogs,

recent trade publications, and technical journals, and by consulting with technical experts

familiar with small electric motor designs and applications. DOE examined each of these

technology options in further detail in chapter 3 of the preliminary TSD.

2 2.2.3.1 Reducing I R Losses

I

2

R losses originate from the flow of electrical current through the windings in the stator

and conductor bars in the rotor. These conductor bars are usually made of aluminum, but some

high-efficiency motors use copper. Reducing the resistance in the components of the motor

where electrical current flows will help reduce I

2

R losses. These losses are manifested as waste

heat, which can directly affect the winding insulation and shorten the service life of an electric

motor. There are several ways that manufacturers work to reduce losses created by electrical

currents, shown in the following list of DOE’s technology options:

• using copper die-cast rotor cages;

• removing skew on the conductor cage;

• increasing the cross-sectional area of the rotor conductor bars;

• increasing the end-ring size;

• changing gauges of copper wire in the stator;

• manipulating slot size geometry; and

• decreasing the air gap between the rotor and stator.

2.2.3.2 Reducing Core Losses

Core losses are created by the type and quantity of magnetic steel components in an

electric motor. These losses are manifested as heat, which can reduce the service life of a motor.

There are several ways that manufacturers work to reduce core losses, shown in the following list

of DOE’s technology options:

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EERE-2007-BT-STD-0007 COMMENT 07.2
• adding stack height (i.e., length, more laminations) to the motor;

• changing grades of electrical steel (to both conventional or exotic steel types);

• annealing laminations;

• thinning laminations;

• using plastic bonded iron powder (PBIP) as a core material; and

• using a permanent magnet electric motor.

2.2.3.3 Reducing Friction and Windage Losses

Bearing friction and an imperfect cooling fan system create friction and windage losses in

electric motors. These losses also add heat to a motor’s system and decrease the overall

efficiency of the motor. Technology options that DOE identified to reduce friction and windage

losses are as follows:

• improving mechanical components and design (e.g., bearings and bearing lubricant); and

• improving the efficiency of the cooling system.

2.2.3.4 Impact on Motor Performance

Emerson and NEMA provided the following list of motor characteristics that DOE should

examine in its analysis of efficiency improvements in order to avoid oversimplifying the analysis

and potentially designing a motor that would not operate in the same application:

• rotor forces and stresses;

• bar shapes and fits;

• aluminum versus copper cages and other alloys;

• rotor skew and air gap;

• the cooling circuit;

• length to diameter ratios;

• speed torque characteristics and slip;

• end ring forces;

• unbalanced magnetic forces and noise;

• application requirements;

• stator core design factors;

• winding elements;

• stator and frame construction; and

• rotor design and construction.

(Emerson, Public Meeting Transcript, No. 3.6 at pp. 70-71; NEMA, No. 5.1 at p. 2)

DOE carefully reviewed this list of motor characteristics and discussed them with its

technical consultants. DOE agrees with Emerson and NEMA that incorporating design changes

to an electric motor to make it more efficient could affect its ability to perform work. If this

were to happen, the more efficient motor would not work in the same application and could not

be considered a substitute for the less efficient motor. After discussing this issue with its

technical consultants, DOE established a set of specific design parameters that were not

exceeded when preparing the engineering analysis. Preliminary TSD chapter 5 discusses these

design parameters.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.3 SCREENING ANALYSIS

After DOE identified the technologies in the technology assessment that could potentially

improve the energy efficiency of small electric motors, DOE conducted the screening analysis.

The purpose of the screening analysis is to evaluate the technology options that improve the

efficiency of equipment to determine which options to consider further and which options to

screen out. DOE consults with industry, technical experts, and other interested parties in

developing a list of design options. DOE then applies the following set of screening criteria to

determine which design options are unsuitable for further consideration in the rulemaking (10

CFR Part 430, subpart C, appendix A at 4(a)(4) and 5(b)):

• Technological Feasibility - DOE will consider technologies incorporated in commercial

equipment or in working prototypes to be technologically feasible.

• Practicability to Manufacture, Install, and Service - If mass production of a technology

in commercial equipment and reliable installation and servicing of the technology could

be achieved on the scale necessary to serve the relevant market at the time of the effective

date of the standard, then DOE will consider that technology practicable to manufacture,

install, and service.

• Adverse Impacts on Equipment Utility or Equipment Availability - If DOE determines a

technology to have significant adverse impact on the utility of the equipment to

significant subgroups of consumers, or to result in the unavailability of any covered

equipment type with performance characteristics (including reliability), features, sizes,

capacities, and volumes that are substantially the same as equipment generally available

in the United States at the time, it will not further consider this technology.

• Adverse Impacts on Health or Safety - If DOE determines that a technology will have

significant adverse impacts on health or safety, it will not further consider this

technology.

For a complete discussion of the screening analysis, refer to preliminary TSD chapter 4.

This section of the preliminary TSD focuses on three technology options that were

screened out due to their failure to comply with one or more of the four screening criteria. DOE

discusses those technology options that were not screened out in chapter 4 of the preliminary

TSD.

2.3.1 Technology Options Screened Out

DOE examined all of the technology options presented in the technology assessment. Of

those options, DOE screened out three: a radial air gap below ten thousandths of an inch, plastic

bonded iron powder, and permanent magnet electric motors. The following discussion details

DOE’s consideration of each option in the context of the four screening criteria.

2.3.1.1 Air Gap between Rotor and Stator

Motor efficiency can be improved by reducing the radial air gap between the rotor and

stator. For small electric motors, the air gap is commonly set at 15 thousandths of an inch.

While this air gap can be reduced to improve efficiency, at some point, the air gap is too tight for

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EERE-2007-BT-STD-0007 COMMENT 07.2
the motor to be practical to manufacture. DOE believes that radial air gaps below ten

thousandths of an inch would exceed the threshold for practicability to manufacture.

Considering the four screening criteria for this technology option, DOE screened out

decreasing the radial air gap below ten thousandths of an inch as a means of improving

efficiency. Because smaller air gaps do not present a technological barrier, DOE considers this

option to be technologically feasible, but it is not “practicable to manufacture, install, and

service.” Such a tight air gap may cause problems in manufacturing and service, because the

rotor could come into contact with the stator. DOE also believes this technology option fails the

screening criterion of adverse impacts on consumer utility and reliability, because the motor may

experience higher failure rates in service when the manufactured air gaps are less than ten

thousandths of an inch. Finally, DOE is unaware of any adverse impacts on health or safety that

might be associated with reducing the radial air gap below ten thousandths of an inch.

2.3.1.2 Plastic Bonded Iron Powder

Plastic bonded iron powder (PBIP) is an invention that could cut production costs while

increasing the output of electric motors. While there may be other researchers working on this

technology option, DOE is aware of a research team at Lund University in Sweden who recently

published a paper about PBIP. The technology option is based on an iron powder alloy that is

suspended in plastic and can be used in certain motor applications such as fans, pumps, and

household appliances. The compound is then shaped into motor components using a centrifugal

mold, reducing the number of manufacturing steps. In addition, researchers claim that this

technology option could cut core losses by as much as 50 percent. The university team is already

producing inductors, transformers, and induction heating coils using PBIP, but has not yet

produced a small electric motor. In addition, it appears that this technology is aimed at torus,

claw-pole, and transversal flux motors–none of which are “small electric motors” under the

EPCA definition.

Considering the four screening criteria for this technology option, DOE screened out

PBIP as a means of improving efficiency. DOE does not consider this technology option to be

technologically feasible, because it has never been incorporated into a working prototype of a

small electric motor and DOE is uncertain whether the material has the structural integrity to be

formed into the shape of a small electric motor steel frame. DOE is also uncertain whether PBIP

would be practical to manufacture, install, and service because a prototype PBIP small electric

motor has not been made and there is insufficient information available on the ability to

manufacture this technology to make a judgment. Furthermore, if PBIP proves applicable to

small electric motors, it would represent the only path to achieve a higher efficiency level and be

screened out as such. DOE is unaware of any adverse impacts on product utility or product

availability that may arise from the use of PBIP in small electric motors, or of any adverse

impacts on health or safety.

2.3.1.3 Permanent Magnet Electric Motor

A permanent magnet synchronous motor is a rotating machine whose stator is similar to

that of a polyphase induction motor, but has surface-mounted permanent magnets. In this

respect, the permanent magnet motor is the same as an induction motor except that the air gap

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EERE-2007-BT-STD-0007 COMMENT 07.2
magnetic field is produced by permanent magnets. This use of magnets to create the air gap

magnetic flux makes it possible to design highly efficient permanent magnet motors.

Considering the four screening criteria for this technology option, DOE screened out

permanent magnet electric motors as a means of improving efficiency, chiefly because these

motors cannot be manufactured as small electric motors, as defined in EPCA. Because of the

associated controls necessary to start and operate the motor, it may be impractical to install the

electric motor in certain equipment. DOE considered but is unaware of, any adverse impacts on

consumer utility or reliability associated with permanent magnet electric motors. Similarly,

DOE is unaware of any adverse impacts on health or safety associated with permanent magnet

electric motors.

2.3.2 Technology Screening

DOE developed an initial list of efficiency enhancement technology options from the

technologies identified in the technology assessment (preliminary TSD chapter 3). In

consultation with technical experts, DOE then reviewed the list to determine if these technology

options pass all of the screening criteria. DOE used efficiency enhancement design options that

pass the four screening criteria in the engineering analysis. DOE did not consider those options

that fail one or more of the screening criteria in the analysis. Preliminary TSD chapter 4

discusses which design options DOE considered in the small electric motor engineering analysis.

Also included is a list of emerging technologies that could affect future small electric motor

manufacturing costs.

2.3.3 Baseline Equipment

To analyze design options for energy efficiency improvements, DOE typically defines a

baseline unit against which to compare more efficient units. For products with existing

standards, the baseline unit is usually a unit just meeting the standard. However, small electric

motors, those with a NEMA defined two-digit frame size, do not have existing efficiency

standards. Therefore, DOE consulted manufacturers and subject matter experts to obtain

reasonable performance characteristics for representative units. Baseline units were then chosen

as the lowest efficiency units manufactured, which represent the most commonly sold. More

detail on the baseline equipment selected can be found in preliminary TSD chapter 5.

2.4 ENGINEERING ANALYSIS

The engineering analysis (detailed in preliminary TSD chapter 5) develops curves that

estimate the manufacturer selling price that corresponds to increasing small electric motor

efficiency. The efficiency values range from a typical motor sold today (i.e., the baseline motor)

to the maximum technologically feasible efficiency level. DOE then marks-up the estimated

manufacturer selling prices to determine retail prices for the life-cycle cost analysis.

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The engineering analysis estimates the efficiency improvement associated with

incorporating design options that meet the four criteria applied in the screening analysis. DOE

always works to identify the least cost path to efficiency (i.e., design options that provide the

greatest efficiency improvement for the least cost) when conducting the engineering analysis.

As discussed in chapter 1, DOE considers establishing energy conservation standards for

small electric motors that achieve the maximum improvement in energy conservation that the

Secretary determines are technologically feasible and economically justified. (42 U.S.C.

6295(o)(2)(A)) In the engineering analysis, DOE works to identify the maximum

technologically feasible level. This level is reached by adding efficiency improvements and/or

design options, both commercially available and in prototypes, to the baseline units. The design

options comprising the maximum technologically feasible level must have been physically

demonstrated in at least a prototype form.

2.4.1 Approaches for Conducting the Engineering Analysis

In general, the engineering analysis is based around one of three possible approaches:

1. the design-option approach–reporting the incremental costs of adding design

options to a baseline model;

2. the efficiency-level approach–reporting relative costs of achieving energy

efficiency improvements; and

3. the reverse-engineering or cost-assessment approach–involves a “bottoms-up”

manufacturing cost assessment based on a detailed bill of materials derived from

tear downs of commercially available product and/or prototypes.

DOE considers public comments in determining the best approach for a rulemaking, and

sometimes selects a combination of these approaches. The following sections describe each

approach.

2.4.1.1 Design-Option Approach

The design-option approach identifies individual design options or combinations that

increase efficiency. These increases in efficiency are typically based on manufacturer or

component supplier estimates or on engineering computer simulation models. DOE then

determines the incremental manufacturing costs of adding design options to a baseline model.

DOE adds individual design options or combinations to the baseline model in ascending order of

cost-effectiveness. Typically, DOE uses the payback period to establish a design option’s costeffectiveness. The payback period is determined by the ratio of the change in total consumer

cost to the change in operating cost.

The primary advantage of the design-option approach is its ability to analyze individual

technologies. The approach is transparent because the impact of any single technology on cost

and efficiency is explicit. An additional advantage is its ability to incorporate designs that have

been demonstrated to perform in prototypes, but are not yet commercialized. Thus, maximum

technologically feasible designs are more easily established in the design-option approach.

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Although individual technologies are assessed, the design-option approach tends to

complicate analysis. The material combinations DOE considers are sometimes combinations

manufacturers do not typically use; this makes it difficult to assess the impact of a design on

system cost and efficiency. Another drawback of the design-option approach is its imperfect

compatibility with the manufacturer impact analysis. DOE recognizes that the manufacturer

selling price information derived in a component-based analysis does not reflect the variability in

baseline units, design strategies, and cost structures that can exist among manufacturers.

Therefore, in the manufacturer impact analysis (see preliminary TSD chapter 12), DOE may

need to derive additional manufacturing cost estimates, using other approaches developed in

consultation with manufacturers.

2.4.1.2 Efficiency-Level Approach

The efficiency-level approach establishes the relationship between manufacturer sales

price and increased efficiency at incremental increases in efficiency levels. Manufacturers

provide incremental manufacturer selling prices for incremental increases in efficiency. Then

cost-efficiency curves are easily constructed to clearly identify at what point manufacturers incur

significant costs to raise efficiency. Additionally, the efficiency-level approach allows

manufacturers to supply detailed cost data without revealing their unique design strategies for

increasing efficiency levels.

The simplicity of the efficiency-level approach is also its primary drawback. Namely,

since technological details are not provided, it is extremely difficult to verify whether the costs

provided for each specific efficiency level are truly representative of that level. In addition,

prototypical designs become difficult to evaluate and maximum technologically feasible designs

are then difficult to ascertain. As a result, some other type of supplementary analysis is likely

needed to verify the accuracy of the costs supplied through the efficiency-level approach.

2.4.1.3 Cost-Assessment Approach

The cost-assessment approach is also called the reverse-engineering approach. Under

this approach, DOE dismantles actual pieces of equipment on the market, component by

component, to determine what technologies and designs manufacturers use to increase product

energy efficiency. DOE then uses detailed costing methods and manufacturer and component

supplier data to estimate component costs. This approach has the distinct advantage of using real

market equipment to establish the technologies that manufacturers use and establish the

manufacturing cost to produce more energy efficient units.

The primary disadvantage of reverse engineering is the time and effort required to

analyze real equipment. Occasionally, several models from a diverse range of manufacturers are

assessed to ensure that an accurate representation of technological paths for increasing efficiency

is identified. In addition, because DOE only analyzes equipment on the market, prototypical

designs are periodically excluded, which makes it difficult to establish maximum technologically

feasible designs.

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2.4.2 Preliminary Engineering Analysis Approach

At the Framework Document public meeting, DOE solicited comments on a proposed

approach for the engineering analysis. DOE proposed using a modified design-option approach,

where DOE would employ a technical expert with motor design software to develop a range of

efficiencies for a set of representative motors. DOE invited comments on this proposed

approach, as well as any recommended software tools.

At the meeting, stakeholders commented that motor design software tools are proprietary

to manufacturers and that information is not shared between manufacturers. Emerson and

NEMA both stated that they had no recommendations for software DOE might use in its

engineering analysis because each manufacturer is only familiar with its own internal software.

They added that if a commercial product is used, it should be disclosed so manufacturers can

validate its performance. (Emerson, Public Meeting Transcript, No. 3.6 at pp. 96-97; NEMA,

No. 5.1 at p. 4) NEMA committed to provide engineering data to DOE for use in the preliminary

TSD analysis. However, DOE was unable to use the data because of the small number of

companies on which the data were based. Therefore, DOE contracted with a third-party electric

motor design firm that owns and uses its own proprietary software design tool. In preliminary

TSD chapter 5, DOE presents the engineering analysis for manufacturers and other stakeholders

to review and/or run their own software design models to validate DOE’s findings published

with this preliminary TSD.

ACEEE and Emerson recommended that DOE consider an efficiency-level approach to

the engineering analysis. (ACEEE and Emerson, Public Meeting Transcript, No. 3.6 at p. 77 and

p. 97; NEMA No. 5.1 at p. 5) They suggested that either NEMA or an independent consulting

group operating under a confidentiality agreement would aggregate the input from each

manufacturer to create industry-wide engineering curves. ACEEE added that DOE should do its

own analysis verify the reasonableness of the data it receives from the industry. (ACEEE, Public

Meeting Transcript, No. 3.6 at p. 77) NEMA also recommended establishing efficiency levels

and allowing each manufacturer to generate its own motor designs to comply with those levels.

(NEMA, No. 5.1 at p. 5).

DOE agreed with these comments and worked with motor manufacturers to develop data

on four representative motors for the engineering analysis, including information on design

options and associated costs. However, DOE did not receive sufficient input from manufacturers

so that it could aggregate the data without revealing proprietary information. Therefore, the

engineering analysis curves presented in the preliminary TSD today are solely the work of a

small electric motor design consulting group under subcontract to DOE. This consulting group,

Yeadon Energy Systems, was retained because of its capabilities, including with small electric

motor design software, and past experience working in design engineering within the electric

motor industry. More information about Yeadon Energy Systems and DOE’s methodology for

the engineering analysis can be found in chapter 5 of the preliminary TSD.

2.4.3 Equipment Classes and Efficiency Levels Analyzed

Of the 72 equipment classes that DOE is considering in today’s preliminary TSD, NEMA

recommended that DOE examine 46, including a baseline model selected from each of the

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following representative equipment classes: 1/4, 1/3, 1/2, 3/4, and 1 horsepower at two-, four-,

and six-pole configurations for single-phase motors (and the IEC/kilowatt equivalents); and

1/4,1/3, 1/2, 3/4, 1, 1.5, 2, and 3 horsepower for polyphase motors (and the IEC/kilowatt

equivalents). (NEMA, No. 5.1 at p. 2). DOE appreciates this comment, and ideally it would

analyze every equipment class individually. DOE found from studying industry-generated

efficiency tables, such as those published in NEMA MG1, that losses for electric motors can be

scaled with certain performance or design characteristics. That is, DOE found it possible to

analyze and curve-fit the losses according to horsepower and number of poles. Therefore, DOE

did not follow NEMA’s recommendation, but instead selected a limited number of representative

equipment classes from which it would base its analysis. Later in its analysis, DOE

demonstrates how it then extrapolates these representative equipment classes to other equipment

classes that are not analyzed.

To guide the selection of representative equipment classes to analyze, DOE reviewed

data from the small electric motor determination analysis and from manufacturers' sales catalogs.

DOE had three variables to consider when selecting which equipment classes to analyze: motor

categories (three categories); horsepower rating (eight rating categories); and number of poles

(three configurations). These categorizations were selected because they are the same ones used

for the 1-200 horsepower electric motor energy conservation standards, and are the same

categorizations used in the NEMA MG1 document. Specific discussion on each of these three

variables follows in the paragraphs below.

The highest priority when selecting representative equipment classes was to ensure that

each motor category was represented. DOE believed that representing all three motor categories

among the analyzed equipment classes was necessary to obtain analytical findings that could

eventually be scaled to all equipment classes within those categories. Therefore, DOE analyzed

the CSIR, CSCR, and polyphase categories.

Next, DOE selected the appropriate horsepower ratings within each of the three motor

categories. Motors at different horsepower ratings will have different cost-efficiency

characteristics. Since examination of all horsepower ratings within each motor category was not

feasible, DOE selected a horsepower rating for each motor that was commonly available in

several manufacturer catalogs and could readily be scaled to other equipment classes.

Finally, DOE had to select a number of poles for its representative equipment classes.

After reviewing the determination analysis and catalog data, DOE chose four-pole motors for

each motor category and corresponding horsepower level for two reasons. First, four-pole

motors have the highest estimate shipment volume for 2007. Second, four-pole motors fall

between two and six poles, so that any error that may be introduced by scaling between the

number of poles would be minimal.

Table 2.4.1 shows the characteristics of the three motors that DOE studied in its

engineering analysis. DOE also considered a fourth motor -- a CSIR 1/2 horsepower, four-pole,

56 frame motor that had the same (scaled) cost-efficiency curve as the CSIR 1/2 horsepower,

four-pole, 48 frame size motor analyzed. DOE decided not to include the 56 frame size CSIR

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EERE-2007-BT-STD-0007 COMMENT 07.2
motor because efficiency does not scale with frame size and DOE believes that the smaller

horsepower ratings are more commonly manufactured in the smaller frame sizes.

Table 2.4.1 Characteristics of the Three Representative Equipment Classes Analyzed

Motor Category Horsepower Number of Poles Frame Size

Polyphase 1 4 56

CSIR 1/2 4 48

CSIR* 1/2 4 56

CSCR 3/4 4 56

* DOE identified these four motors as the representative units to study, and then conducted an engineering analysis

to study the relationship between motor efficiency and manufacturer selling price. DOE found that there was

virtually no difference between the 48 and 56 frame sizes for the 1⁄2-horsepower, four-pole CSIR motors. Therefore,

DOE elected to drop the 56 frame size from its analysis, since frame size tends to scale with horsepower, and at this

rating it would be more common to find a 48 frame than a 56. This issue is discussed in some detail in the

engineering analysis (chapter 5) and the appendix to the engineering chapter (appendix 5A).

Using the collected data it analyzed, DOE developed efficiency ranges for each of the

representative small electric motors. As discussed in the market assessment, EPCA (as amended

by EPACT 1992) did not establish standards or create incentive programs for small electric

motors and DOE is unaware of any voluntary or market transformation programs designed to

improve the efficiency of these motors. Therefore, DOE selected a baseline efficiency

(referencing low-efficiency designs available in several manufacturer catalogs), a level

equivalent to the EPACT 1992 efficiency level, a level approximately equal to the NEMA

Premium Motor level, and a maximum technologically feasible efficiency level (i.e., max tech).

For the polyphase motor, the range of efficiency values spans from a baseline motor of

75.8 percent to a higher efficiency of 86.7 percent with silicon steel and 90.4 percent with a

boron-based steel. The CSIR motor ranges from a baseline efficiency of 62.3 percent to 81.7

percent with silicon steel and 82.0 percent with boron-based steel. The CSCR motor efficiency

ranges from a baseline efficiency of 68.6 percent to a higher efficiency of 87.0 percent with

silicon steel and 88.3 percent with boron-based steel.

2.4.4 Baseline Models and Efficiency Levels Analyzed

For each equipment class, DOE selected a baseline model as a reference point against

which to measure changes resulting from energy conservation standards. As discussed in section

I.B.1 above, DOE chose the baseline model in each equipment class to represent the typical

characteristics of equipment in that class. Because there are no existing minimum energy

conservation standards for small electric motors, DOE based its selection of baseline model

efficiency on the motors used in the determination analysis, manufacturer catalogs, conversations

with manufacturers, and consultation with technical experts.

DOE used the performance characteristics of these motors and other published catalog

data to identify the baseline motor. DOE paid particular attention to characteristics such as

breakdown torque, locked-rotor torque, and locked-rotor current. DOE was careful to select

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EERE-2007-BT-STD-0007 COMMENT 07.2
baseline motors with performance characteristics within the specifications of NEMA MG1-1987

for general-purpose small electric motors.

DOE conducted its engineering analysis using the baseline models DOE selected. DOE

started with these baseline models and then applied a modified design-option approach to

improve their efficiency. DOE was careful to ensure that critical performance characteristics of

the baseline model performance were maintained to the greatest extent possible and that the

motor designs can be manufactured.q DOE worked to ensure that modifications to the baseline

models could serve as drop-in replacements for the baseline model itself, so that the costefficiency curve would be an accurate representation of that equipment class. To do this, DOE

set design constraints on some critical performance characteristics (e.g., maintaining locked-rotor

torque within 10 percent of the baseline model value) and other design constraints focused on

manufacturability (e.g., an air gap no less than 10 thousandths of an inch or not exceeding 75-

percent peak slot fill). DOE invites comments from interested parties about these constraints,

presented in chapter 5 of the preliminary TSD.

2.4.5 Cost Model

DOE uses a standard method of cost accounting to determine the manufacturer’s

production costs, illustrated in Figure 2.4.1. DOE combined production costs and nonproduction costs to determine the full cost of a product.

Manufacturer Production Cost (MPC)

Full Production Cost Non­Production Cost

Research & Interest

Develop.

General &

Admin.

Direct Overhead Selling

Material

Direct

Labor

Figure 2.4.1 Standard Method of Cost Accounting for Standards Rulemaking

To develop the cost estimates shown in Figure 2.4.1, DOE consulted with technical

experts in the motor industry; experts in related industries; and SEC-10K reports from A.O.

Smith Corporation, Baldor Electric Company, Emerson Motor Company, and Regal Beloit

Corporation. Full production cost is a combination of direct labor, direct materials, and

overhead. The overhead contributing to full production cost includes indirect labor, indirect

material, maintenance, depreciation, taxes, and insurance related to company assets. Nonq DOE discussed whether a particular design option could be manufactured with its technical experts and some

manufacturers. For example, DOE did not reduce the air gap between the rotor (moving parts) and stator (static

parts) to less than ten thousandths of an inch. While further reducing the air gap would theoretically improve

efficiency, DOE believes that doing so would be impractical to manufacture and create operational reliability

problems such as the rotor striking the stator during use, particularly when stack length is increasing.

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EERE-2007-BT-STD-0007 COMMENT 07.2
production cost includes the cost of selling (e.g., market research, advertising, sales

representatives, logistics), general and administrative costs, research and development, and

interest payments.

DOE used this cost methodology to estimate the manufacturer’s cost of production for

the engineering analysis. The output from the small electric motor design software includes a

complete bill of materials that specifies quantities and dimensions of all parts associated with the

manufacturing of each finished design. DOE multiplied these materials by their associated costs

and manufacturer markups. The software output also includes an estimate of labor time

associated with each step of motor construction. DOE multiplied these time estimates by fully

burdened labor rates to estimate the labor cost portion of the total cost. DOE then combined

these labor costs with the marked-up bill of materials to arrive at an estimate of the manufacturer

selling price.

DOE discusses each of these component costs below. See preliminary TSD chapter 5 for

more detail on these component costs.

2.4.5.1 Bill of Materials

DOE developed and presented a bill of materials (BOM) for each of the small electric

motors designed for the engineering analysis in preliminary TSD chapter 5 and its appendices.

The BOM contains three types of material costs: fixed costs, semi-fixed costs, and variable

costs. Fixed costs represent material costs that remain constant across a range of efficiencies.

These parts are found in all motors, regardless of the operating efficiency. Semi-fixed costs vary

by design as a function of the amount of material found in the motor. For example, rotor bars are

made of either aluminum or copper. The assumed price per pound for aluminum or copper is the

same from design to design; however, the cost per design can vary because the quantity of

aluminum or copper may vary with efficiency. DOE considered variable costs for each motor

design that incorporated the cost of the raw material and the quantity of that material the motor

used. For example, stator and rotor lamination costs are variable costs because the price for the

different steel grades changes as well as the amount of the steel needed (i.e., stack height) for

each design.

Emerson and NEMA commented that motor pricing information over the last few years

may not be an accurate representation of future prices due to the recent increase in the price of

copper. Emerson and NEMA believe that motor pricing information in mid-2007 would be a

more appropriate indicator of future prices. (Emerson, Public Meeting Transcript, No. 3.6 at pp.

95-96; NEMA, No. 5.1 at p. 3) DOE consulted with other industry experts and steel suppliers,

and agrees with Emerson and NEMA. DOE is concerned about material prices and accurately

projecting the cost-efficiency relationship for small electric motors. DOE gathered material

pricing in late 2007 and used these prices to calculate the MSP for the small electric motors in

the engineering analysis. DOE obtained pricing data through publicly available data sources,

which DOE then reviewed and verified with industry experts and component suppliers, such as

steel suppliers.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.4.5.2 Labor Costs and Assumptions

Labor costs are a significant part of a manufacturer's costs in building a small electric

motor. As an input to the engineering spreadsheet, DOE used the same fully burdened hourly

labor rate for all small electric motors manufactured. DOE took the base hourly rate from the

2002 Economic Census of Industry by the U.S. Census Bureau. DOE applied several markups to

this hourly rate to obtain a fully burdened hourly rate of $58.75, which is representative of

average labor costs associated with manufacturing electric motors. The markups applied include

percentages for indirect production, overhead, fringe benefits, assembly, labor up-time, and nonproduction markup. DOE also used 2002 U.S. Census data to determine the markup for fringe.

DOE derived the non-production markup by studying the 2006 and 2007 SEC-10K reports for

four major motor manufacturers in the United States.

DOE used design software to estimate the manufacturing time per motor by labor task for

the stator assembly, rotor assembly, end cap assembly, housing and hardware assembly, and final

assembly. The majority of the labor times DOE calculated consisted of fixed component times.

The stator assembly list includes time estimates for punching and stacking the laminations,

adding slot liner, winding coils, inserting coils, forming end-turns, lead stripping, placing

terminals, splicing wires, applying varnish, and testing. Rotor assembly labor tasks include

adding the fan, machining the shaft, pressing the shaft onto the rotor, balancing the rotor, and

heat shrinking bearings onto the shaft. For end cap assembly, the software estimates time for

machining the bearing bore at each end, pressing the cap, washing, and performing the die-cast

press. The labor times under the housing and hardware section are estimates of adding the

following components to the motor: various washers, bolts, studs, screws, grommets for

capacitor wire (when applicable), start and/or run capacitors (when applicable), and adding a

start switch (when applicable). The last section for fixed labor costs is the final assembly, which

includes times for actual assembly, motor testing, labeling, and packaging.

Across the designs prepared for the engineering analysis, DOE found little variance in the

labor estimates between the baseline efficiency and higher efficiency motor designs. The labor

process steps and estimated corresponding manufacturing times for small electric motors were

discussed with technical experts and manufacturers, asking specifically which steps might have

longer manufacturing times associated with high-efficiency designs. While most acknowledged

that the labor time to manufacturer a motor with a longer stack and more copper wire would be

greater, manufacturers considered this difference to be small, if not negligible.

2.4.5.3 Manufacturer Markups

DOE used three markups, described below, to account for the costs associated with the

materials used in manufacturing each motor. The markups are meant to represent average

markups for the industry as a whole. Scrap factors, factory overhead, and non-production

markups will be different for each manufacturer. DOE based these markups on conversations

with manufacturers and experts familiar with the electric motor manufacturing industry. Also,

DOE averaged non-production markups taken from the SEC-10K reports of four manufacturers

based in the United States.

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EERE-2007-BT-STD-0007 COMMENT 07.2
• Scrap factor: 2.5­percent markup. DOE applied a scrap factor markup to the total of

costs associated with the BOM. The scrap factor markup is part of the direct material

production costs of each motor. It accounts for the handling of material (loading into

assembly or winding equipment) and the scrap material that cannot be used in the

production of a finished small electric motor (e.g., lengths of wire too short to wind).

• Factory overhead: 12.5­percent markup. Factory overhead includes all the indirect costs

associated with production, indirect materials, energy use, taxes, and insurance. DOE

only applied factory overhead to the direct material production costs.

• Non­production: 37­percent markup. This markup reflects costs including sales and

general administrative costs, research and development, interest payments, and profit.

DOE applied the non-production markup to the sum of the direct material production, the

direct labor, and the factory overhead. Note that this markup is accounted for in the fully

burdened labor rate applied to the labor time estimates.

NEMA commented that when DOE aggregates cost information, DOE should incorporate

weighting to the average, based on individual manufacturer sales volumes. (NEMA, No. 5.1 at

p. 3). While DOE recognizes this approach would result in a more accurate average value for the

Nation, manufacturers did not provide individual company-level sales volumes, so DOE has no

data with which to calculate the weighted average. If manufacturers were to provide this data

during the preliminary TSD comment period, DOE with use the data to calculate average values

for the NOPR.

2.4.6 Scaling Between Equipment Classes

As discussed earlier, DOE reduced the analytical burden associated with small electric

motors by identifying and studying select representative units for analysis. DOE would then

extrapolate the findings from those representative motors to other covered equipment classes that

were not analyzed. DOE discusses the extrapolation, or scaling of analysis results between

equipment classes, in the engineering analysis (see preliminary TSD chapter 5). However, the

results of the scaling are actually used in the national impacts analysis (see preliminary TSD,

chapter 10).

In developing its scaling relationships between equipment classes, DOE found that power

law scaling equations can approximate the energy loss characteristics and incremental cost of

small electric motors.r DOE found that the relative losses of a motor at full-load scales as the

motor’s rated horsepower raised to the exponent -0.25. That is, if one compares two motors of

different sizes but a similar category and construction, the relative losses of the larger motor will

be smaller by a factor that is equal to the ratio of the horsepower ratings raised to the negative

0.25 power.

Detail on the scaling relationships between equipment classes, including the derivation of

the equations, are presented in chapter 5 of the preliminary TSD. DOE invites public comment

r A power law is a standard type of relationship between parameters or variables in engineering. The variable Y is

related to X by a power law of exponent a if there is a constant C such that: Y = C * X a

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EERE-2007-BT-STD-0007 COMMENT 07.2
on the use of this scaling relationship to extrapolate findings from the representative equipment

classes to other equipment classes.

2.5 ENERGY USE AND END-USE LOAD CHARACTERIZATION

The energy use and end-use load characterization analysis (chapter 6) produces energy

use estimates and end-use load shapes for small electric motors. The energy use by small

electric motors derives from three components: energy converted to useful mechanical shaft

power, motor losses, and reactive power.s Motor losses consist of I

2

R losses, core losses, stray

losses and friction and windage losses. Core losses and friction and windage losses are relatively

constant with variations in motor loading, while I

2

R losses increase with the square of the motor

loading. Stray losses are also dependent upon loading. DOE models the I

2

R losses and stray

losses as load-dependent losses.

In practice, reactive power may not result in substantial increases in energy consumption

if capacitors in the electrical system compensate (i.e., mitigate) the reactive power. DOE

assumes that, while reactive power may result in extra energy supply costs, actual losses before

power factor compensation (through distribution system capacitor banks) are likely to be small.

Actual fractional consumptive losses due to reactive power are approximately equal to the

fractional losses on the electrical distribution system in general, which means that actual

consumptive losses due to reactive power are likely to be less than 10 percent of total reactive

power and indicates that reactive power makes a minor contribution to net energy use compared

to the other two types of losses.

DOE’s analysis of energy use separates motor losses into a constant component and a

component that depends on motor loading. In DOE’s analysis, the design efficiency of the motor

at full load determines the total losses at 100-percent motor loading. DOE then estimates that

approximately 50 percent of these losses are load independent, while 50 percent vary as the

square of the motor loading. DOE analyzed motor efficiency data available from voluntary

industrial efficiency programs to determine the approximate equality of constant and loaddependent losses at full load. (See chapter 6 of the preliminary TSD for details.) To determine

the annual energy use in kilowatt hours (kWh), DOE adjusts the full-load losses using the

estimate of the motor duty factor (hours of operation per year) and loading. All losses are

proportional to duty factor, and DOE approximates the load-dependent losses as proportional to

both the duty factor and the square of the loading. Annual energy use Eann is represented by the

following equation:

s In an alternating current power system, the reactive power is the root mean square (RMS) voltage times multiplied

by the RMS current, multiplied by the sine of the phase difference between the voltage and the current. Reactive

power occurs when the inductance or capacitance of the load shifts the phase of the voltage relative to the phase of

the current. While reactive power does not consume energy, it can increase losses and costs for the electricity

distribution system. Motors tend to create reactive power because the windings in the motor coils have high

inductance.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2 Eann = Hop × (PNL + PLL × L )

Where:

Eann = annual energy use;

Hop = the annual operating hours, also known as the duty factor;

PNL = the power of load-independent losses (set equal to 0.5 times the losses at full load);

PLL = the power of load-dependent losses (set equal to 0.5 times the losses at full load); and

L = motor loading as a fraction of rated power.

To calculate the annual kWh use at each efficiency level in each equipment class, DOE

used the efficiencies and losses from the engineering analysis, along with estimates of operating

hours and motor loading from the determination analysis for the applications that use equipment

containing small electric motors (Table 2.5.1).

Table 2.5.1 Motor Operation Characteristics by Application

Motor Loading

No. Application Hours/Year (Percent of Rated)

1 Air and gas compressors 800 85

2

Commercial and Industrial heating, ventilating, airconditioning (HVAC)/refrigeration equipment

2,500 60

3 Commercial laundry machinery 2,000 60

4 Conveyors 3,000 50

5 Farm machinery 1,000 70

6 Food machinery 3,000 60

7 General industrial machinery 2,000 70

8 Industrial and commercial fans and blowers 5,000 80

9 Machine tools 2,000 60

10 Packaging machinery 3,000 60

11 Pumps and pumping equipment 3,000 65

12 Service industry machinery 1,500 60

13 Textile machinery 3,000 70

14 Woodworking machinery 2,000 35

DOE derived the distribution of values for operating hours and motor loading from the

shares of the applications in the motor stock for each equipment class, as estimated in the

determination analysis (Table 2.5.2).

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.5.2 Shares of Small Electric Motor Applications by Equipment Class

No. Application

Polyphase

(%)

CSIR

(%)

CSCR

(%)

1 Air and gas compressors 9.2 8.1 8.1

2

Commercial and Industrial HVAC/refrigeration

equipment 4.3 8.4 8.4

3 Commercial laundry machinery 0.4 1.2 1.2

4 Conveyors 18.8 11.8 11.8

5 Farm machinery 3.0 10.9 10.9

6 Food machinery 8.2 2.1 2.1

7 General industrial machinery 3.4 2.4 2.4

8 Industrial and commercial fans and blowers 5.6 5.9 5.9

9 Machine tools 7.3 1.9 1.9

10 Packaging machinery 1.0 0.3 0.3

11 Pumps and pumping equipment 33.0 41.1 41.1

12 Service industry machinery 1.5 3.0 3.0

13 Textile machinery 1.2 0.4 0.4

14 Woodworking machinery 3.1 2.4 2.4

TOTAL 100.0 100.0 100.0

Table 2.5.3 shows the average values of operating hours and motor loading for each

equipment class, weighted by the shares of each application.

Table 2.5.3 Average Operating Characteristics for Small Electric Motors

Equipment Class Annual Operating Hours

Motor Loading

(% of rated)

Polyphase 2,665 63.2

CSIR 2,557 64.8

CSCR 2,557 64.8

Table 2.5.4 shows the average annual electricity use for each energy efficiency level in

each equipment class.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.5.4 Average Annual Electricity Use by Efficiency Level for Small Electric

Motors

Polyphase CSIR CSCR

Efficiency

(%)

kWh Efficiency

(%)

kWh Efficiency

(%)

kWh

75.8 444 62.3 410 68.6 465

84.0 265 70.9 278 80.2 250

85.5 236 73.6 243 82.1 222

86.5 217 75.4 220 83.3 203

88.0 190 78.2 189 85.2 177

90.0 154 81.8 151 87.6 143

See chapter 6 of the preliminary TSD for additional detail on the energy use

characterization.

2.6 MARKUPS FOR EQUIPMENT PRICE DETERMINATION

DOE’s markup analysis estimates the markups to equipment prices that it used to derive

installed prices for small electric motors. DOE added the supply-chain markups it developed

(along with sales taxes and installation prices) to the manufacturer selling prices that were

developed from the engineering analysis, to arrive at the final installed prices for baseline

equipment as well as higher-efficiency equipment. Details of this analysis are provided chapter

7 of the preliminary TSD.

2.6.1 Distribution Channels

Before it could develop markups, DOE needed to identify distribution channels (i.e., how

the equipment is distributed from the manufacturer to the end user) for each category of motor

addressed in the preliminary analyses. Because most of the small electric motors are used as

components in larger pieces of equipment, most of the market passes through original equipment

manufacturers (OEMs) that design, assemble, and brand products that contain small electric

motors. OEMs obtain their motors either directly from the motor manufacturers or from

distributors.

For small electric motors, DOE defined three distribution channels and estimated their

respective shares of shipments in the Determination Analysis: (1) from manufacturers to OEMs

and then to end-users through OEM distribution: 40 percent of shipments; (2) from

manufacturers to wholesale distributors to OEMs and then to end-users through OEM equipment

distribution: 25 percent of shipments; and (3) from manufacturers to end-users through

distributors and retailers: 35 percent of shipments. Contractors also play a role in installing

motors in equipment. DOE used the same distribution channel types and market shares in the

preliminary TSD analysis.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.6.2 Estimation of Markups

DOE based its markups on financial data from the U.S. Census Bureau Business

Expenses Survey (BES). In this analysis, DOE assumed that the sales revenues reported by

firms reflect the prices that they charge for products, while the expenses that they reported to the

BES reflect costs. DOE organized the financial data into balance sheets that break down cost

components incurred by firms that sell the products and related these cost components to

revenues to estimate the markups that determine sales price.

NEMA commented that DOE should consult manufacturers’ published pricing to

determine channel price relationships. (NEMA, No. 5.1 at p. 5) While DOE collected data on

published motor prices from a range of manufacturers, these data were not sufficient to

determine how the installed price of equipment will change with increasing efficiency. Instead,

DOE used BES data to calculate markups. Such data allow DOE to estimate the increased

installed price of equipment when there is a specific efficiency improvement.

DOE’s markup analysis developed both baseline and incremental markups to transform

the manufacturer sales price into an end-user equipment price. DOE used the baseline markups

to determine the price of baseline models. DOE considers baseline models to be equipment sold

under existing market conditions (i.e., without new energy conservation standards). Incremental

markups are coefficients that describe the change in the manufacturer sales price of higherefficiency models to the change in the OEM, retailer, or distributor sales price. DOE considers

higher-efficiency models to be equipment sold under market conditions with new energy

conservation standards.

DOE used financial data from the following BES categories: “Electrical Goods Merchant

Wholesalers”(to calculate markups used by distributors of motors for direct distribution);

“Machinery, Equipment, and Supplies Merchant Wholesalers” (to calculate markups used by

distributors of equipment containing small electric motors); and “Building materials, hardware,

garden supply and mobile home dealers” (to calculate markups used by retailers for products

containing motors).

DOE based the OEM markups on data from the “2002 Economic Census Manufacturing

Industry Series,” which reports on the payroll (production and total), cost of materials, capital

expenditures, and total value of shipments for manufacturers of various types of machinery. Six

years of data are reported for each manufacturer type. DOE collected data for 11 types of

OEMs.

For the OEM markups, DOE calculated baseline markups for each U.S. Census Bureau

industry category. The resulting markups range between 1.20 (industrial machinery, machine

tools) and 1.56 (heating equipment), with an average of 1.37. DOE estimated incremental

markups using a least squares regression of the value of shipments on payroll and cost of

materials. Because there is a large range in the size of OEM types, companies with sales values

greater than $10 billion were separated from those with sales values less than $10 billion. The

incremental markup for larger companies was 1.28; the incremental markup for smaller

companies was 1.33. DOE assumed that larger companies obtained their motors directly from

manufacturers, and smaller OEMs obtain their motors through wholesale distributors.

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EERE-2007-BT-STD-0007 COMMENT 07.2
DOE used information from RS Means Electrical Cost Datat

to estimate markups used by

contractors to install motors and OEM equipment. RS Means estimates material expense

markups for electrical contractors as 10 percent, leading to a markup factor of 1.10.

The sales tax represents state and local sales taxes that are applied to the end-user

equipment price. DOE derived state and local taxes from data provided by the Sales Tax

Clearinghouse. These data represent weighted averages that include county and city rates. DOE

then derived population-weighted average tax values for each U.S. Census Bureau division and

large state, and then derived U.S. average tax values using a populated-weighted average of the

U.S. Census Bureau division and large State values. This approach provides a national average

tax rate of 6.84 percent.

2.6.3 Summary of Markups

Table 2.6.1 summarizes the markups at each stage in the distribution channel and the

overall baseline and incremental markups, as well as sales taxes, for each of the three identified

channels. Weighting the markups in each channel by its share of shipments yields an average

overall baseline markup of 2.42 and an overall incremental markup of 1.75. DOE used these

markups for each equipment class.

Table 2.6.1 Summary of Small Electric Motor Distribution Channel Markups

Direct to OEMs

(40%)

Via Distributors to

OEMs (25%)

Via Distributors to EndUsers (35%)

Baseline Incremental Baseline Incremental Baseline Incremental

Wholesale Distributor - - 1.28 1.10 1.28 1.10

OEM 1.37 1.27 1.37 1.33 - -

Retail and Post-OEM

Distributor

1.43 1.18 1.43 1.18 1.44 1.18

Contractor or Installer 1.10 1.10 1.10 1.10 1.10 1.10

Sales Tax 1.0684 1.0684 1.0684

Overall 2.30 1.76 2.95 2.03 2.17 1.53

Using these markups, DOE generated motor end user prices for each efficiency level it

considered, assuming that each level represents a new minimum efficiency standard. Because it

generated a range of price estimates, DOE describes prices within a range of uncertainty.

Chapter 7 of the preliminary TSD provides additional detail on the markups analysis.

t

RS Means Construction Publishers & Consultants, “Electrical Cost Data, 31st Annual Edition.” 2008. J.H. Chiang,

ed. Kingston, MA.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

The LCC and PBP analysis is used to determine the economic impact of potential

standards on end users. The effects of standards on individual end users include changes in

operating expenses (usually lower) and changes in total installed cost (usually higher). DOE

analyzed the net effect of these changes for small electric motors, first by calculating the changes

in end-users’ LCCs likely to result from various candidate standard levels compared to a base

case (no new standards). The LCC calculation considers total installed cost (which includes

manufacturer selling price, sales taxes, distribution chain markups, and installation cost),

operating expenses (energy, repair, and maintenance costs), equipment lifetime, and discount

rate. DOE performed the LCC analysis from the perspective of users of small electric motors.

DOE also analyzed the effect of changes in operating expenses and installed costs by

calculating the PBP of potential standards relative to a base case. The PBP estimates the amount

of time it would take the end user to recover the higher purchase expense of more energy

efficient equipment through lower operating costs. Similar to the LCC, the PBP is based on the

total installed cost and operating expenses. However, unlike the LCC, only the first year's

operating expenses are considered in the PBP calculation. Because the PBP does not account for

changes in operating expense over time or the time value of money, it is also referred to as a

simple payback period. For more detail on the LCC and PBP analyses, see chapter 8 of the

preliminary TSD.

2.7.1 Approach

DOE conducted the LCC and PBP analysis by modeling both the uncertainty and

variability in the inputs using Monte Carlo simulation methods and probability distributions.

(See appendix 8B of the preliminary TSD for a detailed explanation of Monte Carlo simulation

and the use of probability distributions.) DOE implemented Monte Carlo simulation and

probability distributions by using Microsoft Excel spreadsheets combined with Crystal Ball, a

commercially available add-in program.

DOE defined the use characteristics of small electric motors by characterizing a set of

end-use applications for the equipment that contains small electric motors. These end-use

applications determine the profiles of motor use and the economic characteristics of motor

owners.

DOE used data from the Energy Information Administration (EIA) on electricity prices

for different customer classes and electrical utilities to establish the variability in energy pricing.

Due to the large range of applications and motor use characteristics considered in the LCC and

PBP analysis, the range of annual energy use is quite broad. Although the annual energy use

and/or energy pricing are not uncertain for any particular application, the variability across all

applications contributes to the range of LCCs and PBPs calculated for any particular standard

level.

In each Monte Carlo simulation, one application is identified by sampling a distribution

of applications for each equipment class. The selected application determines the number of

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EERE-2007-BT-STD-0007 COMMENT 07.2
(%)

operating hours per year as well as the motor loading. DOE used the operating hours and the

motor loading for each application to estimate motor energy use.

There is also a distribution of owner types associated with each application (Table 2.7.1).

The sector to which the application belongs determines the energy price and discount rate DOE

used in the LCC calculation in each simulation.

Table 2.7.1 Motor Owner Type by Application

Motor Owner Type

No. Application Industrial

(%)

Commercial

(%)

Agricultural

(%)

Residential

(%)

1 Air and gas compressors 40 49 10 1

2 Commercial and industrial HVAC/refrigeration

equipment 40 50 10 0

3 Commercial laundry machinery 0 100 0 0

4 Conveyors 40 40 20 0

5 Farm machinery 0 0 100 0

6 Food machinery 20 60 20 0

7 General industrial machinery 40 40 20 0

8 Industrial and commercial fans and blowers 50 50 0 0

9 Machine tools 65 20 10 5

10 Packaging machinery 75 10 10 5

11 Pumps and pumping equipment 40 40 20 0

12 Service industry machinery 40 40 20 0

13 Textile machinery 100 0 0 0

14 Woodworking machinery 75 10 5 10

2.7.2 Life-Cycle Cost Inputs

For each efficiency level analyzed, the LCC analysis requires input data for the total

installed cost of the motor, the operating cost, and the discount rate. Table 2.7.2 summarizes the

inputs DOE used to calculate the total installed cost and operating cost of various energy

efficiency levels for small electric motors. A more detailed discussion of the inputs follows. For

more information on data sources and assumptions used, see chapter 8 of the preliminary TSD.

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EERE-2007-BT-STD-0007 COMMENT 07.2
Table 2.7.2 Summary of Inputs Used in the Life-Cycle Cost Analysis

Input Characterization

Baseline Manufacturer Selling

Price

Single-point value

Manufacturer Selling Price

Increase

Cost curve using power law interpolation

Markups Single-point value

Sales Tax Single-point value

Installation Cost Single-point value

Hours of Operation Variability determined from distribution of applications

Annual Energy Use Variability based on applications

Energy Prices Variability based on application, owner types, and utility

Repair and Maintenance Costs No cost increase with efficiency

Lifetime Weibull distribution from minimum to maximum values

Discount Rate Variability based on application owner types and variation in the cost of capital

Energy Price Trend Two sensitivities: High and Low Growth Cases

2.7.2.1 Baseline Manufacturer Selling Price and Manufacturer Selling Price

Increase

DOE determined the baseline MSP and the MSP increases associated with increases in

product efficiency standard levels for each small electric motor equipment class in the

engineering analysis (chapter 5 of the preliminary TSD). MSPs are the prices of the equipment

at the factory door. They do not include distribution markups, but do include manufacturer

markups.

2.7.2.2 Distribution Markups and Sales Taxes

DOE determined the baseline and incremental markups for each point in the small

electric motor supply chain, as well as the sales tax, in the markups analysis (chapter 7 of the

preliminary TSD). The overall baseline (2.42) and incremental (1.75) markups, which include

sales tax, are weighted averages based on the share of shipments in each of the three identified

distribution channels. DOE applied the same markups for each equipment class.

2.7.2.3 Installation Costs

DOE derived installation costs for small electric motors from data in the “RS Means

Electrical Cost Data, 2008.”u This book provides estimates on the labor required to install

electric motors. DOE estimated that the average installation cost is $253. Since it found no

information to indicate differences in installation costs among motor applications, DOE used the

same installation cost for each equipment class. DOE determined that installation costs would

not be affected with increased energy efficiency levels.

u RS Means Construction Publishers & Consultants, “Electrical Cost Data, 31st Annual Edition.” 2008. J.H.

Chiang, ed. Kingston, MA.

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EERE-2007-BT-STD-0007 COMMENT 07.2
2.7.2.4 Energy Prices and Energy Price Trend

DOE developed nationally representative distributions of electricity prices for different

customer categories (industrial, commercial, and residential) from 2006 EIA Form 861 data.

DOE estimates that marginal energy prices for electric motors are close to average prices, which

vary by customer type and utility. The average prices for each sector are 6.3 cents for the

industrial and agricultural sectors, 9.5 cents for the commercial sector, and 10.7 cents for the

residential sector.

DOE used recent price forecasts by EIA to estimate future trends in electricity prices in

each sector. To arrive at prices in future years, DOE multiplied the average prices described in

the preceding section by the forecast of annual average price changes in EIA’s “Annual Energy

Outlook (AEO) 2008.”v To estimate the trend after 2030, DOE followed past guidelines

provided to the Federal Energy Management Program (FEMP) by EIA and used the average rate

of change from 2020 to 2030 for electricity.

DOE calculated LCC and PBP using three separate projections from “AEO 2008:

Reference, Low Economic Growth, and High Economic Growth.” These three cases reflect the

uncertainty of economic growth in the forecast period. For the LCC results presented in this

preliminary analysis, DOE used only the energy price forecasts from the Annual Energy Outlook

(AEO) reference case.

2.7.2.5 Repair and Maintenance Costs

Small electric motors are not usually repaired, because they usually outlast equipment

where they are an essential component and the cost of repair would generally exceed the cost of

a new replacement motor. DOE found no evidence that repair or maintenance costs would

increase with higher motor energy efficiency. Thus, DOE did not include changes in repair and

maintenance costs for motors that are more efficient than baseline products.

2.7.2.6 Lifetime

For the preliminary analysis, DOE used the information it gathered for the determination

analysis for small electric motors. DOE elected to use a mean lifetime of 7 years for capacitorstart motors and 9 years for polyphase motors as the values that are most consistent with

available information. DOE then characterized each product lifetime with a Weibull probability

distribution that ranged from the minimum to maximum lifetime estimates shown in Table 2.7.3.

Table 2.7.3 Motor Lifetimes Used in the Life-Cycle Cost Analysis

Equipment Class Group Minimum

Years

Average

Years

Maximum

Years

Polyphase 7 9 11

CSIR and CSCR 5 7 9

DOE will conduct the NOPR analysis using the latest available version of the AEO.

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v

EERE-2007-BT-STD-0007 COMMENT 07.2
NEMA stated that motor lifetimes depend on their annual hours of use in addition to the

variances of motor loading for various applications. NEMA added that end users may decide to

prematurely dispose of the equipment containing a motor, and that the motors often outlast the

end-use equipment. Thus, DOE should take into account the life of the end-use equipment and

not only the potential life of the motor alone. (NEMA, No. 5.1 at p. 7) DOE believes that the

range of lifetimes it used for small electric motors accounts for a variety of applications,

including those in which the end-use equipment fails or is discarded while the motor is still

functional.

NEMA also stated that life expectancy does not change dramatically with a premium

efficient product compared to a standard product. (NEMA, No. 5.1 at pp. 6-7) DOE

acknowledges this information and used the same lifetime range for all energy efficiency levels.

2.7.2.7 Discount Rate

The discount rate is the rate at which future expenditures are discounted to estimate their

present value. DOE used the classic economic definition that discount rates are equal to the cost

of capital. The cost of capital is a combination of debt interest rates and the cost of equity capital

to the affected firms and industries. For each end-use sector, DOE developed a distribution of

discount rates from which the Monte Carlo simulations sample.

For the industrial and commercial sectors, DOE assembled data on debt interest rates and

the cost of equity capital for representative firms that use the applications listed in Table 2.7.1.

DOE determined a distribution of discount rates (the weighted-average cost of capital) for each

class of potential owners using data from the Damodaran online investment survey.w The

discount rate distribution for each equipment class DOE analyzed in the LCC analysis is a

weighted sample that combines estimated ownership percentages (Table 2.7.1) with their

respective discount rates. DOE used the same distribution of discount rates for the industrial and

agricultural sectors. The average discount rates in DOE’s analysis, weighted by the shares of

each rate value in the sectoral distributions, are 5.86 percent for commercial end users and 5.92

percent for industrial and agricultural end users.

For the residential sector, DOE assembled a distribution of interest or return rates on

various equity investments and debt types from a variety of financial sources, including the

Federal Reserve Board’s “Survey of Consumer Finances” (SCF) in 1989, 1992, 1995, 1998,

2001, and 2004. DOE assigned weights in the distribution based on the shares of each financial

instrument in household financial holdings according to SCF data. The weighted-average

discount rate for residential product owners is 5.5 percent.

The effective date is the future date when a new standard becomes operative. Based on

DOE’s implementation report for energy conservation standards activities submitted pursuant to

section 141 of the Energy Policy Act of 2005, a final rule for the small electric motors being

considered for the preliminary TSD analyses will be completed in February 2010. The statute

says, in relevant part, that “[a]ny standard prescribed under paragraph (2) [that affect small

electric motors for which DOE prescribed test procedures] shall apply to small electric motors

w The survey is available at http://pages.stern.nyu.edu/adamodar.

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EERE-2007-BT-STD-0007 COMMENT 07.2
manufactured 60 months after the date such rule is published”. (42 USC 6317(b)(3)) Therefore,

the effective date of any new energy conservation standards for these products would be

February 2015. DOE calculated the LCC for all end users as if each one would purchase a new

piece of equipment in the year the standard takes effect.

2.7.2.8 Product Energy Efficiency in the Base Case

For purposes of conducting the LCC analysis, DOE analyzed candidate standard levels

relative to a base case (i.e., a case without new energy conservation standards). This requires an

estimate of the distribution of product efficiencies in the base case (i.e., what consumers would

have purchased in 2015 in the absence of new standards). In the market and technology

assessment, DOE estimated the baseline efficiency for each equipment category from available

market data, which provided the rated efficiency for selected models and manufacturers. DOE

calculated a market-weighted average efficiency for each equipment category, shown in Table

2.7.4. Chapter 3 of the preliminary TSD provides details of the calculation of market-weighted

baseline efficiency. Since there is no evidence of a change in market-average efficiency in

recent years, DOE assumed that the current averages are reasonable to use as a base case for

2015.

Table 2.7.4 Small Electric Motor Energy Efficiency in the Base Case

Equipment Class Efficiency (%)

Polyphase 76.4

CSIR 63.3

CSCR 67.9

2.7.2.9 Payback Period

As described above, the PBP is the amount of time it takes the customer to recover the

assumed additional installed cost of more efficient equipment through energy cost savings.

Payback analysis is a common technique used to evaluate investment decisions. This calculation

is known as a simple payback period because it does not account for changes in operating

expense over time or the time value of money.

The inputs to the PBP calculation are the total installed cost of the equipment to the end

user for each efficiency level and the annual (first-year) operating expenditures for each

efficiency level. The PBP calculation uses the same inputs as the LCC analysis, except that

energy price trends and discount rates are not needed. The calculation needs energy prices only

for the year in which a new standard is expected to take effect, in this case 2015.

2.8 NATIONAL IMPACT ANALYSIS

The national impact analysis estimates future national energy savings of candidate

standards levels and the economic impacts on end users. The analysis measures economic

impacts using the net present value (i.e., future amounts discounted to the present) of total enduser costs and savings expected to result from new standards at specific efficiency levels. The

analysis begins with a shipments analysis that estimates future sales of new equipment and the

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EERE-2007-BT-STD-0007 COMMENT 07.2
rate at which existing equipment is replaced. The national impact analysis then calculates the

energy savings impacts of candidate standard levels with the NES, and the economic impacts of

candidate standards with the NPV. Both the NES and the NPV calculate impacts as the

difference between a base case forecast and the standards case. NES is estimated in terms of

savings in source energy (primary fuel inputs to electricity production and delivery).

2.8.1 Shipments Analysis

DOE’s shipments analysis is a key input into the national impact analysis (preliminary

TSD chapter 10). DOE also will use shipment estimates as an input to the MIA, discussed in

preliminary TSD chapter 12. As noted above, DOE has performed a preliminary MIA for this

preliminary TSD. DOE will complete this analysis after the preliminary TSD is published, and

will report the MIA findings in the NOPR.

DOE developed a set of shipment forecasts for each small electric motor equipment

category. Within each category, small electric motor shipments are comprised of products in a

number of horsepower ratings and three rotation speeds (3,600 rpm or two-pole, 1,800 rpm or

four-pole, and 1,200 rpm or six-pole). DOE conducted its analysis using representative motors

in each equipment category. To calculate national impacts, DOE used the total shipments for all

speeds and horsepower ratings. This amounts to an assumption that the four-pole motors are

representative of the entire market.

DOE’s shipment forecast assumes that motors sales are driven by macroeconomic

activity of the sector within which they are used. Small electric motors are mainly used in the

industrial, agricultural, and commercial sectors. DOE estimates that less than one percent of the

motors covered in this rule are used in the residential sector. DOE assumed that shipment

growth rates for each sector are equal to growth rates in the following economic drivers,

provided by AEO 2008 until 2030:

• industrial and agricultural - manufacturing activity (total shipments – manufacturing

only, in dollars);

• commercial - commercial floor space; and

• residential - number of households.

The resulting average annual growth rates for shipments from 2015 to 2030 are 1.4

percent for polyphase motors and 1.1 percent for CSIR and CSCR motors. In each case, motor

sales follow the sector trend year by year, according to the time series provided by AEO 2008.

Therefore, the growth rate is not constant. After 2030, DOE forecasted shipments using the

average growth rates for 2020−2030.

Sales of small electric motors may be sensitive to increases in the installed cost. Totally

enclosed motors are potential substitutes for the open-construction motors covered in the

preliminary TSD analyses. Totally enclosed motors come in the same frame sizes and

horsepower ratings and have similar performance characteristics. Today, the incremental cost of

using a totally enclosed motor instead of an open-construction motor is approximately 18

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EERE-2007-BT-STD-0007 COMMENT 07.2
percent. If the installed cost of open-construction motors were to increase much beyond 18

percent due to energy conservation standards, there might be some migration to totally enclosed

motors. In its comments on the Framework Document, NEMA stated that price tends to have a

greater impact than operating cost on the purchase of equipment containing small electric

motors. Thus, the higher cost of more efficient motors could reduce the sales of some equipment

and affect motor purchases by OEMs. (NEMA, No. 5.1 at p. 7)

DOE agrees that increases in the installed cost of small electric motors could reduce their

purchase due to migration by OEMs to totally enclosed motors or other factors. However, DOE

has not found any data that would allow it to estimate the elasticity of small electric motor

shipments with respect to purchase price or other factors. Therefore, DOE requests information

on the level of price change for the small electric motors covered in the preliminary analyses that

would be likely to induce migration to totally enclosed motors, as well as data on what would be

an appropriate value to use for purchase price elasticity.

Table 2.8.1 shows DOE’s forecast of small electric motor shipments. Additional detail

on the shipments analyses can be found in chapter 9 of the preliminary TSD.

Table 2.8.1 Annual and Cumulative Shipments Forecast for Small Electric Motors

Equipment Class

Annual Shipments (millions)

2015 2025 2035 2045

Cumulative

2015–2045

Polyphase 0.638 0.732 0.831 0.944 24.3

CSIR 6.001 6.640 7.423 8.431 219.6

CSCR 0.316 0.349 0.385 0.423 11.4

The base case shipments forecast also provides information on efficiency trends for small

electric motors, if any. In the determination analysis, DOE estimated that the base case

efficiency during the 2010 to 2030 period would average from 1⁄4 percent to one percent higher

than current base case motors. At the Framework Document public meeting, DOE received

comments on the tendency of the small electric motors market to value efficiency without

regulation. Emerson commented that voluntary programs that try to convince customers to buy a

more efficient product at the point of sale are not “particularly effective.” (Emerson, Public

Meeting Transcript, No. 3.6 at p. 175) Given the lack of data indicating effective voluntary

efficiency programs or trends of efficiency improvement and the very small size of the efficiency

trend analyzed in the determination analysis, DOE assumed that there is no significant increase

in efficiency for the base case forecast for this equipment in the national impact analysis for the

preliminary TSD. DOE invites comment on this assumption.

2.8.2 National Energy Savings and Net Present Value Analyses

The national impact analysis estimates future national energy savings of candidate

standards levels and the economic impacts on end users. The analysis measures economic

impacts using the net present value (i.e., future amounts discounted to the present) of total enduser costs and savings expected to result from new standards at specific efficiency levels. For a

given candidate standard level, DOE calculated the NPV, as well as the NES, as the difference

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between a base case forecast and the standards case. NES is estimated in terms of savings in

source energy (primary fuel inputs to electricity production and delivery).

At the Framework Document public meeting, DOE received comments on the tendency

of the small electric motors market to value efficiency without regulation. Emerson commented

that voluntary programs that try to convince customers to buy a more efficient product at the

point of sale are not “particularly effective.” (Emerson, Public Meeting Transcript, No. 3.6 at p.

175) Given the lack of data indicating effective voluntary efficiency programs or trends of

efficiency improvement, DOE assumed a constant efficiency for the base case forecast for this

equipment in the national impact analysis.

DOE determined national annual energy savings by combining unit level savings relative

to the base case with national stock estimates based on the shipments forecast. Cumulative

energy savings are the sum of the annual NES determined over a specific time period. DOE

calculated net economic savings each year as the difference between total operating cost savings

and increases in total installed costs. Cumulative savings are the sum of the annual NPV

determined over the forecast period.

Chapter 10 of the preliminary TSD provides additional detail on the national impact

analysis for small electric motors.

In the NES and NPV analyses, more-efficient equipment gradually replaces less-efficient

equipment in the standards case over time, making both NES and NPV a function of the total

number of units in use and their efficiencies, and dependent on annual shipments and equipment

lifetimes. Both calculations start by using the estimate of shipments and the quantity of units in

service that are derived from the shipments model.

Because more-efficient motors gradually replace less-efficient ones, the energy per unit

of capacity used by motors in service gradually decreases in the standards case relative to the

base case. To estimate the resulting total energy savings for each candidate efficiency level,

DOE first calculated the national site-energy consumption for small electric motors for each

year, beginning with the expected effective date of the standards (2015). Then, DOE converted

the annual site-energy savings into the annual amount of energy saved at the source of electricity

generation (the source energy), using a site-to-source conversion factor to account for losses in

electricity generation, transmission, and distribution. DOE used annual site-to-source conversion

factors based on the version of the National Energy Modeling System (NEMS) that corresponds

to EIA’s AEO 2008 through 2030. DOE assumed that conversion factors remain constant at

2030 values throughout the remainder of the forecast. Finally, DOE summed the annual sourceenergy savings from 2015 to 2045 to calculate the total NES for that period. DOE performed

these calculations for each candidate standard level.

To estimate NPV, DOE calculated the net financial impact each year as the difference

between total operating cost (electricity) and increases in total installed costs (which consist of

MSP, distribution chain markups, sales taxes, and installation cost). DOE calculated the NPV of

each candidate standard level over the life of the equipment using the following three steps.

First, DOE calculated the difference between the equipment costs under the candidate standard

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level case and the base case to determine the net equipment cost increase resulting from the

candidate standard level. Second, DOE calculated the difference between the base case

operating costs and the candidate standard level operating costs to determine the net operating

cost savings from the candidate standard level. Third, DOE calculated the difference between

the net operating cost savings and the net equipment cost increase to determine the net savings

(or expense) for each year. DOE then discounted the annual net savings (or expenses) to 2008

for small electric motors bought on or before 2045, and summed the discounted values to provide

the NPV of a candidate standard level.

2.8.3 Rebound Effect

For some types of equipment, a significant “rebound effect” can occur when more

efficient equipment is used more intensely in response to the economic savings from energy

efficiency. Accounting for a significant rebound effect will decrease energy savings compared to

a scenario with no rebound effect. Small electric motors are predominantly components of larger

pieces of equipment or an integrated production process. Typically, energy losses from

inefficient operation of the larger equipment or process that contains a small electric motor are

much greater than losses due to inefficiencies of the individual motor. In addition, consumers

rarely have direct control over the intensity of motor operation. Given these considerations and a

lack of data indicating a rebound effect for small electric motors, DOE assumed that there is no

significant rebound effect for this equipment.

2.8.4 Electricity Prices and Discount Rate

Electricity prices paid by users of small electric motors depend on customer type (sector)

and use patterns. For each equipment class, DOE estimated average prices in 2006 weighted by

the sectoral distribution of motors for that class (see preliminary TSD chapter 8). To determine

the trend in prices over the forecast period, DOE scaled current price estimates by the trend in

electricity prices provided by AEO 2008 by sector until 2030. DOE extrapolated electricity

prices after 2030 according to average annual price trend from 2020 to 2030.

DOE estimated national impacts with both a three percent and seven percent real discount

rate. DOE used these discount rates in accordance with OMB’s guidance to Federal agencies on

the development of regulatory analysis (OMB Circular A-4, September 17, 2003), and section E,

“Identifying and Measuring Benefits and Costs,” therein. The seven percent discount rate is an

estimate of the average before-tax return on private capital in the U.S. economy, while three

percent approximates the “social rate of time preference,” which is the rate at which society

discounts future consumption flows to their present value. DOE defines the present year as

2008.

2.9 LIFE-CYCLE COST SUBGROUP ANALYSIS

The LCC subgroup analysis evaluates impacts of standards on identifiable groups of

customers, such as customers of different business types, which may be disproportionately

affected by an energy conservation standard. For the NOPR, DOE will analyze the LCCs and

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PBPs for motor users that fall into such groups. The analysis will determine whether any

particular group of end users would be adversely affected by any of the candidate standard

levels.

DOE will determine the effect on customer subgroups using the LCC spreadsheet model.

The spreadsheet model used for the LCC analysis can be used with different data inputs. The

standard LCC analysis includes various customer types that use small electric motors. DOE can

analyze the LCC for any subgroup, such as small manufacturers or agricultural motor owners, by

using the LCC spreadsheet model and sampling only that subgroup. Details of this model are

explained in preliminary TSD chapter 8, which describes the LCC and PBP analyses. DOE will

be especially sensitive to potential negative economic impacts on identifiable population groups

such as small businesses (i.e., those with low annual revenues) or farmers, which may not be able

to afford a substantial increase in the price of small electric motors.

NEMA stated that there is no significant consumer subgroup impact using the EPCA

definition. (NEMA, No. 5.1 at p. 8) DOE acknowledges NEMA’s comment and will revisit the

matter in the NOPR.

2.10 MANUFACTURER IMPACT ANALYSIS

The purpose of the MIA is to identify the likely impacts of higher energy conservation

standards on manufacturers. The Process Rule provides guidance for conducting this analysis

with input from manufacturers and other interested parties. DOE will apply this methodology to

its evaluation of standards for small electric motors. The Process Rule gives guidelines for the

consideration of financial impacts and a wide range of quantitative and qualitative industry

impacts that might occur following the adoption of a standard. For example, a particular

standard level could require changes to manufacturing practices of small electric motors. DOE

will identify and discuss these impacts at interviews with manufacturers and other interested

parties during the NOPR stage of its analysis.

DOE will conduct the MIA in three phases, and will further tailor the analytical

framework based on comments by interested parties. In Phase I, DOE creates an industry profile

to characterize the industry and identify important issues that require consideration. In Phase II,

DOE prepares an industry cash-flow model and an interview questionnaire to guide subsequent

discussions. In Phase III, DOE interviews manufacturers, and assesses the impacts of standards

both quantitatively and qualitatively. DOE assesses industry and subgroup cash flow and NPV

using the Government Regulatory Impact Model (GRIM). DOE then assesses impacts on

competition, manufacturing capacity, employment, and regulatory burden based on manufacturer

interview feedback and discussions.

Until recently, DOE reported MIA results in its standards rulemakings only in the NOPR

phase of the rulemaking. However, DOE is now evaluating and reporting preliminary MIA

information at this preliminary analytical phase. DOE gathered the information for the analysis

during the manufacturer interviews conducted after the engineering analysis. For more detail on

the MIA, see chapter 12 of the preliminary TSD.

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2.10.1 Sources of Information for the Manufacturer Impact Analysis

Many of the analyses described above provide important information applicable to the

MIA. Such information includes manufacturing costs and prices from the engineering analysis,

retail price forecasts, and shipment forecasts. DOE will supplement this information with

company financial data and other information gathered during interviews with manufacturers.

This interview process plays a key role in the MIA because it allows interested parties to

privately express their views on important issues. To preserve confidentiality, DOE’s contractor

aggregates these perspectives across manufacturers, creating a combined opinion or estimate for

DOE. This process enables DOE to incorporate sensitive information from manufacturers in the

rulemaking process.

DOE conducts detailed interviews with manufacturers to gain insight into the range of

potential impacts of standards. Typically, DOE solicits both quantitative and qualitative

information during the interviews on the potential impacts of efficiency levels on sales, direct

employment, capital assets, and industrial competitiveness. DOE prefers an interactive interview

process, rather than a written response to a questionnaire, because it helps clarify responses and

identify additional issues. Before the interviews, DOE will circulate a draft document showing

estimates of the financial parameters based on publicly available information. DOE will solicit

comments on these estimates during the interviews.

DOE will ask interview participants to identify any confidential information that they

have provided, either orally or in writing. DOE will consider all information collected, as

appropriate, in its decision-making process. However, DOE will not make confidential

information available in the public record. DOE also will ask participants to identify all

information they wish to have included in the public record, but do not want to have associated

with their interview. DOE will incorporate this information into the public record, but will

report it without attribution.

DOE will collate the completed interview questionnaires and prepare a summary of the

major issues. For more detail on the methodology used in the MIA, see chapter 12 of the

preliminary TSD.

2.10.2 Industry Cash-Flow Analysis

The industry cash-flow analysis relies primarily on the GRIM. DOE uses the GRIM to

analyze the financial impacts of more stringent energy conservation standards on the industry.

The GRIM analysis uses several factors to determine annual cash flows from a new

standard: annual expected revenues; manufacturer costs, including cost of goods sold,

depreciation, research and development, selling, and general and administrative expenses; taxes;

and conversion capital expenditures. DOE compares the results against base case projections

that involve no new standards. The financial impact of new standards is the difference between

the two sets of discounted annual cash flows. Other performance metrics, such as return on

invested capital, also are available from the GRIM. For more information on the industry cashflow analysis, see chapter 12 of the preliminary TSD.

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2.10.3 Manufacturer Subgroup Analysis

Industry cost estimates are inadequate to assess differential impacts among subgroups of

manufacturers because these subgroups may have different cost structures or regulatory

frameworks that impact their respective business models. For example, small and niche

manufacturers, or manufacturers whose cost structure differs significantly from the industry

average, could experience a more negative impact. Ideally, DOE would consider the impact on

every firm individually; however, since this usually is not possible, DOE typically uses the

results of the industry characterization to group manufacturers exhibiting similar characteristics.

During the interview process, DOE will discuss the potential subgroups and subgroup

members it has identified for the analysis. DOE will encourage manufacturers to recommend

subgroups or characteristics that are appropriate for the subgroup analysis. For more detail on

the manufacturer subgroup analysis, see chapter 12 of the preliminary TSD.

2.10.4 Competitive Impacts Assessment

DOE also considers whether a new standard is likely to reduce industry competition and

will ask the Attorney General to determine the impacts, if any, of reduced competition. DOE

will make a determined effort to gather and report firm-specific financial information and

impacts.

2.10.5 Cumulative Regulatory Burden

DOE recognizes and seeks to mitigate the overlapping effects on manufacturers of new or

revised DOE standards and other regulatory actions affecting the same equipment. DOE will

analyze and consider the impact on manufacturers of multiple, equipment-specific regulatory

actions. While DOE has not found any efficiency regulations that apply to small electric motors,

other motors produced by the same manufacturers are or will be affected by regulations. DOE

identified several regulations relevant to small electric motors, including: existing energy

conservation standards DOE established for 1–200 horsepower electric motors on October 5,

1999 (64 FR 54114); new energy conservation standards in EISA 2007 established for 201−500

horsepower and other motor categories; and standards applicable to already-regulated products

that incorporate small electric motors, such as residential air conditioners and heat pumps,

furnaces, refrigerators and freezers, clothes washers and dryers, commercial packaged airconditioning and heating equipment, and commercial refrigeration equipment; and safety or

other requirements associated with covered equipment. DOE will study the potential impacts of

these cumulative burdens in greater detail during the MIA conducted during the NOPR phase.

2.10.6 Preliminary Results for the Manufacturer Impact Analysis

DOE conducted a series of preliminary interviews with manufacturers to discuss impacts

that may result from a regulatory standard for small electric motors. In general, manufacturers

and other parties identified three areas of concern: (a) capital investment to retool production

lines in response to the standards; (b) maintaining product availability and features that

consumers use; and (c) enforcement of the new standards.

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2.10.7 Production Line Capital Investment

In general, manufacturers expressed concern over the investment that may become

necessary to re-tool existing production lines in order to produce standards-compliant small

electric motors. Emerson and Regal Beloit asserted that each manufacturer has unique designs

and processes for producing these motors, so the level of investment to reach the pending

standards will be different for each. As the standard levels increase in stringency, manufacturers

will be forced to increase the amount of capital expenditure, potentially forcing an investment in

new lamination dies, winding tooling, testing equipment, or even re-allotting factory floor space.

(Regal Beloit, Public Meeting Transcript, No. 3.5 at p. 83; Emerson, Public Meeting Transcript,

No. 3.5 at pp. 94–95 and 166)

DOE recognizes this concern, and will take it into consideration when conducting the

manufacturer impact analysis in the NOPR phase of the rulemaking. DOE is also interested in

understanding how production line capital investment could disproportionately affect small

businesses, which tend to amortize business costs over smaller shipment volumes.

2.10.8 Maintaining Product Availability and Features

Manufacturers indicated that if DOE adopts a standard level that would require a

substantial overhaul of the production tools and processes, they are likely to seriously consider

discontinuing the production of small electric motors. If many manufacturers decide to exit the

market, there could be an impact on the availability of small electric motors to meet consumer

needs in the market.

Manufacturers also expressed concern about a final efficiency level chosen by the

Secretary and its impact on the availability of certain designs and features. Emerson stated that

if standards for certain horsepower levels are pushed too high, manufacturers may need to

increase motor frame size, which could eliminate certain horsepower ratings. (Emerson, Public

Meeting Transcript, No. 3.6 at pp. 134) If a particular horsepower rating is not eliminated, the

newer, larger motor could cause installation problems for end users. The new motor may be

difficult or even impossible to fit into dimensionally constrained applications, forcing end users

to migrate to another horsepower or motor category, or change their application to permit the

installation of new, more-efficient motors. Regal Beloit added that by changing the enclosure

configuration of, for example, a small capacitor-start motor by adding another capacitor to

increase efficiency, it might preclude the motor from fitting as an established component in a

larger piece of equipment. (Regal Beloit, Public Meeting Transcript, No. 3.6 at pp. 134-35)

2.10.9 Enforcement of Standards

Commenters also expressed concern about the ability to enforce a small electric motor

regulation should DOE adopt standards. ACEEE, Emerson, Regal Beloit, and NEMA expressed

concern about the feasibility of enforcing any pending standards. (ACEEE, Public Meeting

Transcript, No. 3.5 at pp. 46–47; Emerson, Public Meeting Transcript, No. 3.5 at pp. 9, 56, 87,

and 160; Regal Beloit, Public Meeting Transcript, No. 3.5 at pp. 83–84; NEMA, No. 5.1 at p. 3)

In particular, manufacturers are concerned that they will lose market share and be put at a

competitive disadvantage because of poor enforcement. This situation would be particularly true

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of imported equipment incorporating small electric motors. DOE invites comments on the

degree to which standards for small electric motors may affect manufacturing and imports of

OEM equipment, and how DOE may enforce standards for motors contained within such

equipment. This is identified as Issue 9 in section IV.E

2.11 UTILITY IMPACT ANALYSIS

The utility impact analysis estimates the effects on the utility industry of reduced energy

consumption due to improved equipment efficiency. The analysis compares modeling results for

the base case with results for each candidate standards case. The analysis for small electric

motors will consist of forecasted differences between the base and standards cases for electricity

generation, installed capacity, sales, and prices.

To estimate these effects of proposed small electric motor standards on the electric utility

industry, DOE intends to use a variant of the EIA’s NEMS.x EIA uses NEMS to produce its

Annual Energy Outlook. NEMS produces a widely recognized reference case forecast for the

United States and is available in the public domain. DOE will use a variant known as NEMSBuilding Technologies (NEMS-BT) to provide key inputs to the analysis.y

The use of NEMS for the utility impact analysis offers several advantages. As the

official DOE energy forecasting model, it relies on a set of assumptions that are transparent and

have received wide exposure and commentary. NEMS allows an estimate of the interactions

between the various energy supply and demand sectors and the economy as a whole. The utility

impact analysis will determine the changes for electric utilities in installed capacity and in

generation by fuel type produced by each candidate standard level, as well as changes in

electricity sales to the economic sectors affected by the standards.

DOE conducts the utility impact analysis as a variant of AEO 2008, applying the same

basic set of assumptions. For example, the utility impact analysis uses the operating

characteristics (e.g., energy conversion efficiency, emissions rates) of future electricity

generating plants and the prospects for natural gas supply as specified in the AEO reference case.

DOE will also explore deviations from some of the reference case assumptions to

represent alternative futures. Two alternative scenarios use the high- and low-economic-growth

cases of AEO 2008. (The reference case corresponds to medium growth.) The high-economicgrowth case assumes higher projected growth rates for population, labor force, and labor

productivity, resulting in lower predicted inflation and interest rates relative to the reference case

x For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information

Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000,

DOE/EIA-0581(2000), March 2000. y DOE/EIA approves use of the name NEMS to describe only an official version of the model without any

modification to code or data. Because this analysis entails some minor code modifications and the model is run

under various policy scenarios that are variations on DOE/EIA assumptions, in this analysis, DOE refers to it by the

name NEMS-BT.

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and higher overall aggregate economic growth. The opposite is true for the low-growth case.

Different economic growth cases affect the rate of growth of electricity demand.

Since the AEO 2008 version of NEMS forecasts only to the year 2030, DOE must

extrapolate results to 2045. DOE will use EIA’s approach for forecasting fuel prices for FEMP

for Federal sector energy prices. FEMP uses these prices to estimate life-cycle costs of Federal

equipment procurements. DOE will also use NEMS-BT to estimate the size of the impact that

energy conservation standards may have on electricity and energy prices in general. DOE will

examine general energy price impacts by evaluating forecasts with different levels of electricity

demand to determine if there are utility sector costs that are not reflected in consumer electricity

prices. Results of the utility impact analysis will include changes in electricity sales, and

installed capacity and generation by fuel type, for each trial standard level, in five-year

forecasted increments extrapolated to the year 2045.

2.12 EMPLOYMENT IMPACT ANALYSIS

DOE includes employment impacts among the factors to be considered in selecting a

proposed standard, and provides guidance for consideration of the impact of candidate standard

levels on employment, both direct and indirect.

DOE estimates the impacts of standards on employment for equipment manufacturers,

relevant service industries, energy suppliers, and the economy in general. Both indirect and

direct employment impacts are covered. Direct employment impacts would result if standards

led to a change in the number of employees at manufacturing plants and related supply and

service firms. Direct impact estimates are covered in the manufacturer impact analysis.

Indirect employment impacts are impacts on the national economy other than in the

manufacturing sector being regulated. Indirect impacts may result both from expenditures

shifting among goods (substitution effect) and changes in income that lead to a change in overall

expenditure levels (income effect). DOE defines indirect employment impacts from standards as

net jobs eliminated or created in the general economy as a result of increased spending driven by

the increased equipment prices and reduced spending on energy.

DOE expects standards for small electric motors to increase the total installed cost of

equipment and to decrease energy consumption, and thus expenditures on energy. Over time,

increased total installed cost is paid back through energy savings. The savings in energy

expenditures may be spent on new investment and other items.

Using an input/output model of the U.S. economy, this analysis seeks to estimate the

effects on different sectors and the net impact on jobs. DOE will estimate national employment

impacts for major sectors of the U.S. economy in the NOPR, using public and commercially

available data sources and software. DOE will make all methods and documentation available

for review.

To investigate the combined direct and indirect employment impacts, DOE will use the

Pacific Northwest National Laboratory (PNNL)’s ‘Impact of Sector Energy Technologies’

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(ImSET) model. PNNL developed ImSET, a spreadsheet model of the U.S. economy that

focuses on 188 sectors most relevant to industrial, commercial, and residential building energy

use, for DOE’s Office of Energy Efficiency and Renewable Energy. ImSET is a special-purpose

version of the U.S. Benchmark National Input-Output (I-O) model, which has been designed to

estimate the national employment and income effects of energy saving technologies that are

deployed by DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the

previous versions of the model used in earlier rulemakings, this version allows for more

complete and automated analysis of the essential features of energy efficiency investments in

buildings, industry, transportation, and the electric power sectors.

The ImSET software includes a computer-based I-O model with structural coefficients to

characterize economic flows among the 188 sectors. ImSET’s national economic I-O structure is

based on the 1997 Benchmark U.S. table, specially aggregated to 188 sectors.

DOE intends to use the ImSet model to estimate changes in employment, industry output, and

wage income in the overall U.S. economy resulting from changes in expenditures in the various

sectors of the economy due to an energy conservation standard. For example, small electric

motor standards may reduce energy expenditures and increase equipment prices in primarily the

commercial and industrial sectors. These expenditure changes are likely to cause some nearterm reduction in commercial, industrial and energy sector employment. At the same time, over

the longer-term these equipment standards may increase commercial and industrial sector

investment, and increase employment in other sectors of the economy. DOE designed the

employment impact analysis to estimate the year-to-year net national employment effect of these

different expenditure flows.

Although DOE intends to use ImSET for its analysis of employment impacts, it

welcomes input on other tools and factors it might consider. For more information on the net

national employment impacts analysis, refer to chapter 14 of the preliminary TSD.

2.13 ENVIRONMENTAL ASSESSMENT

The primary environmental effects of energy conservation standards for small electric

motors would be reduced power plant emissions resulting from reduced consumption of

electricity. DOE will assess these environmental effects by using NEMS-BT to provide key

inputs to its analysis. The environmental assessment produces results in a manner similar to

those provided in the AEO.

The intent of the environmental assessment is to provide emissions results estimates, and

to fulfill requirements to properly quantify and consider the environmental effects of all new

Federal rules. The portion of the environmental assessment that will be produced by NEMS-BT

considers three pollutants, sulfur dioxide (SO2), nitrogen oxides (NOX), and mercury (Hg), and

one other emission (carbon, as carbon dioxide). For each of the candidate standard levels, DOE

will calculate total undiscounted and discounted power plant emissions using NEMS-BT, and

will use external analysis as needed.

DOE will conduct the environmental assessment as an incremental policy impact (i.e., a

small electric motors standard) of the AEO 2008 forecast, applying the same basic set of

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assumptions used in AEO 2008. For example, the emissions characteristics of an electricity

generating plant will be exactly those used in AEO 2008. Also, forecasts conducted with NEMSBT consider the supply-side and demand-side effects on the electric utility industry. Thus,

DOE’s analysis will account for any factors affecting the type of electricity generation and, in

turn, the type and amount of airborne emissions generated by the utility industry.

The NEMS-BT model tracks carbon dioxide emissions with a specialized carbon

emissions estimation subroutine, producing reasonably accurate results due to the broad coverage

of all sectors and inclusion of interactive effects. Past experience with carbon results from

NEMS suggests that emissions estimates are somewhat lower than emissions based on simple

average factors. One of the reasons for this divergence is that NEMS tends to predict that

conservation displaces generating capacity in future years. On the whole, NEMS-BT provides

carbon emissions results of reasonable accuracy, at a level consistent with other Federal

published results. In addition to providing estimates of quantitative impacts of small electric

motor standards on carbon dioxide emissions, DOE will consider the use of monetary values to

represent the potential value of such emissions reductions. DOE expects to base its estimates of

the monetary value of emissions reductions on the economic benefits likely to result from such

reductions.l DOE will also examine a range of monetary values.

NEMS-BT also reports SO2 and NOX, which DOE has reported in past analyses, as well

as Hg. The Clean Air Act Amendments of 1990 set an SO2 emissions cap on all power

generation. The attainment of this target, however, is flexible among generators through the use

of emissions allowances and tradable permits. Although NEMS includes a module for SO2

allowance trading and delivers a forecast of SO2 allowance prices, accurate simulation of SO2

trading implies that the effect of energy conservation standards on physical emissions will be

zero because emissions will always be at or near the ceiling. However, there is an SO2 benefit

from energy conservation, in the form of a lower SO2 allowance expenditure. DOE will examine

the potential monetary impact or value of an SO2 benefit that may arise from a standard.

NOX and Hg emissions are not currently subject to regulatory emissions caps. The U.S.

Environmental Protection Agency (EPA) issued the Clean Air Interstate Rule (CAIR) on March

10, 2005. 70 FR 25162 (May 12, 2005). On July 11, 2008, the U.S. Court of Appeals for the

District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v.

Environmental Protection Agency, in which the court vacated the CAIR and remanded to EPA to

promulgate a rule consistent with the court’s opinion. 531 F.3d 896 (D.C. Cir. 2008). If left in

place, the CAIR would have permanently capped emissions of NOX in 28 eastern States and the

District of Columbia. However, upon consideration of petitions for review, the D.C. Circuit

decided on December 23, 2008 to allow CAIR to remain in effect until it is replaced by a rule

consistent with the court's earlier opinion. North Carolina v. EPA, No. 05-1244, 2008 WL

5335481 (D.C. Cir. Dec. 23, 2008). Therefore, DOE’s Environmental Analysis is based on

CAIR, pending revision by EPA. See www.epa.gov/cleanairinterstaterule. Similarly, the EPA

issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have

permanently capped emissions of mercury for new and existing coal-fired power plants in all

States by 2010. On February 8, 2008, the D.C. Circuit issued its decision in New Jersey v.

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Environmental Protection Agency,

z in which the D.C. Circuit, among other actions, vacated the

CAMR.

Both with and without emissions caps, decreased power production at emitting power

plants can have environmental-related economic benefits. When NOX and Hg emissions are

subject to emissions caps, electricity demand reductions may result in incremental changes in the

prices of emissions allowances in cap-and-trade emissions markets rather than physical

emissions reductions. When there are physical emissions reductions, economic benefits can

accrue from the decreased environmental damage from lower emissions, which means that, both

with and without emissions caps, standards can produce an environmental-related economic

benefit in the form of lower prices for emissions allowance credits or a monetary value of the

economic benefits of lower emissions. Therefore, in addition to potential physical emissions

reductions, DOE will examine the potential monetary value of NOX and Hg benefits that may

arise from a standard.

The results for the environmental assessment are similar to a complete NEMS run as

published in the AEO 2008. These results include power sector emissions for SO2, NOX, Hg, and

carbon in five-year forecasted increments. The outcome of the analysis for each candidate

standard level is reported as a deviation from the AEO 2008 reference (base) case.

NEMA stated that it will require energy use to produce the additional components and/or

materials needed to make higher-efficiency motors, and such additional energy use should be

considered in the environmental assessment. (NEMA, No. 5.1 at p. 9) In its analysis, DOE

quantifies the direct energy consumption of the appliance by defining “energy use” as the

“quantity of energy directly consumed by a consumer product at point of use ....” 42 U.S.C.

6291(4). DOE does not include the embedded energy associated with the materials used in

construction. Even if DOE were allowed by law to include this embedded energy, for

completeness, it would have to also account for the energy embedded in other quantities

impacted by the standard, such as the energy embedded in the manufacture, installation, and

repair of the product. Because energy use is defined as that energy directly consumed by the

product, DOE does not account for the energy embedded in any other quantities that are

impacted by standards.

For more detail on the environmental assessment, refer to the environmental assessment

report in the preliminary TSD.

2.14 REGULATORY IMPACT ANALYSIS

For the NOPR, DOE expects to prepare a draft regulatory impact analysis in compliance

with Executive Order 12866, “Regulatory Planning and Review,” which would be subject to

review by the Office of Management and Budget’s Office of Information and Regulatory Affairs.

58 FR 51735 (October 4, 1993).

z Case No. 05-1097, 2008 WL 341338 at * (DC Cir. Feb. 9,2008)

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As part of the regulatory impact analysis, and as discussed in the preliminary TSD

chapter 12, “Manufacturer Impact Analysis,” DOE will identify and seek to mitigate the

overlapping effects on manufacturers of new or revised 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

small electric motors. DOE also seeks input from interested parties about regulations it should

consider.

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

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

small electric motors. The NOPR will include a complete quantitative analysis of alternatives to

the proposed energy conservation standards. DOE would use the NES spreadsheet model (as

discussed in the preliminary TSD chapter 10, “National Impact Analysis”) to calculate the NES

and NPV for the alternatives to the proposed energy conservation standards. The following list

includes non-regulatory means of achieving energy savings that DOE may consider:

• No new regulatory action;

• Consumer tax credits;

• Manufacturer tax credits;

• Performance standards;

• Rebates;

• Voluntary energy efficiency targets;

• Early replacement; and

• Bulk government purchases.

In support of DOE’s NOPR, the NOPR TSD will include a quantitative analysis of each

alternative to the proposed conservation standard. DOE will use the NES spreadsheet model (see

preliminary TSD chapter 10) to calculate the NES and the NPV corresponding to each alternative

to the proposed conservation standards.

For more information on the regulatory impact analysis, refer to the regulatory impact

analysis report in the preliminary TSD.

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