12-A-i 

APPENDIX 12-A. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES 

TABLE OF CONTENTS 

12-A.1 RESIDENTIAL CLOTHES DRYER MANUFACTURER IMPACT ANALYSIS 

INTERVIEW GUIDE .......................................................................................................................... 1

12-A.2 ROOM AIR CONDITIONER MANUFACTURER IMPACT ANALYSIS 

INTERVIEW GUIDE ........................................................................................................................21
12-A-1

APPENDIX 12-A MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES 

12-A.1 RESIDENTIAL CLOTHES DRYER MANUFACTURER IMPACT ANALYSIS 

INTERVIEW GUIDE 

April 21, 2010 
12-A-2

The Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) as part of 

the rulemaking process for amended energy conservation standards for clothes dryers. In this 

analysis, DOE uses publicly available information and information provided by manufacturers 

during interviews to assess possible impacts on manufacturers due to amended energy 

conservation standards. 

DOE explicitly analyzes the six product classes, with the following baseline efficiencies. 1 

 

Table 1.1 Baseline Efficiencies for Clothes Dryer Product Classes

Product 

Class 

Number

Product Type Product Class Description

Baseline 

EF*

(lb/kWh)

Baseline 

Standby Power

(W)

Baseline 

IEF*

(lb/kWh)

1 Vented Dryers Electric, Standard (4.4 cubic feet 

(ft3) or greater capacity) 3.01 2.0 2.96

2 Vented Dryers Electric, Compact (120 volts (v)) 

(less than 4.4 ft3capacity) 3.13 2.0 3.00

3 Vented Dryers Electric, Compact (240 v) (less than 

4.4 ft3capacity) 2.90 2.0 2.79

4 Vented Dryers Gas 2.67 2.0 2.63

5 Vent-less Dryers Electric, Compact (240 v) (less than 

4.4 ft3capacity) 2.37 2.0 2.29

6 Vent-less Dryers Electric, Combination Washer/Dryer 1.95 2.0 1.90

* The baseline Energy Factors (EFs) for vented product classes are the current minimum energy conservation 

standards for residential clothes dryers measured in pounds (lb) per kilowatt-hour (kWh). Baseline EFs for vent-less 

product classes are estimated by DOE. Integrated Energy Factor (IEF) is calculated as the clothes dryer test load 

weight in lb divided by the sum of “active mode” per-cycle energy use and “inactive mode” per-cycle energy use in 

kWh. 

For each of these product classes, DOE is considering integrated efficiency levels (ELs) which 

also incorporate EF and standby power. DOE is currently considering six ELs for each of the 

electric vented clothes dryer classes and five ELs for the gas vented and both of the vent-less 

clothes dryer classes. In responding to this questionnaire, please refer to the ELs in the tables 

below. 

 

1

Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/preliminary_analysis.html for a 

complete description. 
12-A-3

Table 1.2 Clothes Dryer Integrated Efficiency Levels – Vented Product Classes 

Level Efficiency Level Description

Integrated Efficiency Level (IEF) (lb/kWh)

Electric 

Standard

Electric 

Compact 

(120V)

Electric 

Compact 

(240V)

Gas

Baseline DOE Standard + 2.0 W Standby 2.96 3.00 2.79 2.63

1 Gap Fill + 2.0 W Standby 3.04 3.08 2.86 2.71

2 Gap Fill + 2.0 W Standby 3.10 3.15 2.96 2.80

3 Gap Fill/Maximum Available + 2.0 W Standby 3.33 3.37 3.06 2.97

4 Maximum Available + 1.5 W Standby 3.35 3.41 3.10 2.98

5 Maximum Available + 0.08 W Standby 3.40 3.53 3.19 3.02

6 Heat Pump (Max Tech) + 0.08 W Standby 4.52 4.69 4.34

Table 1.3 Clothes Dryer Integrated Efficiency Levels – Vent-less Electric Compact (240V) 

Level Efficiency Level Description

Integrated Efficiency Level (IEF) 

(lb/kWh)

Electric Compact (240 V)

Baseline Baseline + 2.0 W Standby 2.29

1 Baseline + 1.5 W Standby 2.31

2 Baseline + 0.08 W Standby 2.37

3 Gap Fill + 0.08 W Standby 2.39

4 Gap Fill + 0.08 W Standby 2.59

5 Heat Pump (Max-Tech) + 0.08 W Standby 3.54

Table 1.4 Clothes Dryer Integrated Efficiency Levels – Vent-less Electric Combination 

Washer/Dryers

Level Efficiency Level Description

Integrated Efficiency Level (IEF) 

(lb/kWh)

Electric Combination Washer/Dryer

Baseline Baseline + 2.0 W Standby 1.90

1 Gap Fill + 2.0 W Standby 2.15

2 Gap Fill + 2.0 W Standby 2.34

3 Gap Fill + 1.5 W Standby 2.36

4 Gap Fill + 0.08 W Standby 2.42

5 Heat Pump (Max-Tech) + 0.08 W Standby 3.31

1 KEY ISSUES 

1.1 In general, what are the key issues for your company regarding amended energy 

conservation standards for residential clothes dryers and this rulemaking? 

1.2 Are any of the issues more or less significant for different product classes? 

1.3 Do any of the issues become more significant at higher efficiency levels? 
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1.4 Has DOE effectively incorporated these issues in its analyses? Do have any suggestions 

for incorporating any of these issues into the into DOE’s manufacturing impact model? 

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interested in understanding manufacturer impacts at the plant or profit center level 

directly pertinent to clothes dryer production. However, the context within which this profit 

center operates and the details of plant production are not always readily available from public 

sources. Understanding the organizational setting around the clothes dryer industry profit center 

will help DOE understand the probable future of the manufacturing activity with and without 

amended energy conservation standards. 

2.1 Do you have a parent company, and/or any subsidiaries relevant to the clothes dryer 

industry? 

2.2 Do you manufacture any products other than clothes dryers? If so, what other products do 

you manufacture? What percentage of your total manufacturing revenue corresponds to 

residential clothes dryers? 

2.3 What percentage of your residential clothes dryer manufacturing corresponds to each 

product class, both in terms of revenue and shipments? Please indicate if you do not manufacture 

products in any given product class. 

Table 2.1 Residential Clothes Dryer Revenue and Shipment Volumes by Product Class 

Product 

Class 

Number

Product Type Product Class Description 2009 Revenue 2009 Shipments

1 Vented Dryers Electric, Standard (4.4 ft3

or 

greater capacity)

2 Vented Dryers Electric, Compact (120 v) (less 

than 4.4 ft3capacity)

3 Vented Dryers Electric, Compact (240 v) (less 

than 4.4 ft3capacity)

4 Vented Dryers Gas

5 Vent-less Dryers Electric, Compact (240 v) (less 

than 4.4 ft3capacity)

6 Vent-less Dryers Electric, Combination 

Washer/Dryer

2.4 What is your company’s approximate market share in the residential clothes dryer 

market? 

3 ENGINEERING AND LIFE-CYCLE COST ANALYSIS FOLLOW-UP
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3.1 Are the incremental manufacturing costs at each efficiency level used in the Engineering 

Analysis and described in Chapter 5 of the preliminary TSD representative of costs your 

company incurs at each of these efficiency levels? If not, please provide a quantitative indication 

of the differences. 

3.2 Do you manufacture baseline efficiency residential clothes dryers? If so, what percentage 

of your baseline clothes dryer shipments for each product class use electromechanical versus 

electronic controls? 

3.3 What design changes do you expect to have to make to your baseline residential clothes 

dryers to meet the new UL Fire Containment/Burn Resistant Safety Requirement in UL 2158? 

What would be the manufacturing cost associated with these design changes? Do these costs 

vary by product class? How would the new UL Fire Containment/Burn Resistant Safety 

Requirement in UL 2158 affect the incremental manufacturing costs at higher efficiency levels 

(please provide a quantitative response)? 

3.4 How would repair and maintenance costs be impacted by more stringent energy 

conservation standards? How would the frequency of repair and maintenance be affected? How 

would the nature of the repair and maintenance work needed change with more stringent energy 

conservation standards? In particular would repair and maintenance costs be impacted by energy 

conservation standards that would require heat pump technology? 

3.5 For the automatic cycle termination technologies listed below (and any others that you 

may be aware of that are not listed), what is the manufacturing cost associated with each 

technology? How much efficiency improvement can be achieved with each of the automatic 

cycle termination technologies listed (please provide a quantitative indication in your response)? 

Temperature sensors with electromechanical controls 

Moisture sensors (conductivity bars w/ dedicated PCB) + temperature sensors with 

electromechanical controls 

Moisture sensors (conductivity bars) + temperature sensors/thermistors with electronic 

controls 

Moisture sensor slip ring + temperature sensors/thermistors with electronic controls 

In addition, please comment on DOE’s estimates for electromechanical versus electronic controls 

and wiring harnesses provided in the table below. 
12-A-6

Table 3.1 Control Component Pricing Assumptions 

Component Description Estimated Prices 

(2009$)2 Manufacturer Comment

Electromechanical Control System 

(Timer, Switches, Face Plate) $25.68 - $26.33

Electromechanical Wiring Harness $7.78 (Gas)

$11.16 (Electric)

Electronic Control System (User 

Interface, Fascia, Unit Control Board) $38.60 - $46.88

Electronic Control System Wiring 

Harness

$12.30 (Gas)

$14.90 (Electric)

3.6 Would you consider using outside air for the clothes dryer intake as a means to improve 

efficiency? If so, could you provide an estimate of the efficiency improvement associated with 

such an approach? Can you please explain what design changes and incremental manufacturing 

cost would be required to implement such a design option?

3.7 Could you provide an estimate of the efficiency improvement associated with inlet air 

preheat? A report by Ecos Consulting stated that with an exhaust temperature of about 110°F 

and a 90% efficient air-to-air counter-flow heat exchanger between the intake and exhaust, 

preheating of the intake air would save 1.348 kWh of heater energy, or about 40 percent of the 

energy consumed by the dryer. 3

 Would you agree with these estimates? If not, please explain 

why. Is the estimated heat exchanger efficiency reasonable? If not, what efficiencies can be 

achieved for air-to-air heat exchangers? 

3.8 Can you please comment on the following issues related to the DOE clothes washer test 

procedure: 

3.8.a Test Cloth 

How would changing the DOE clothes dryer test procedure test load from a 50/50 

cotton/polyester mix to 100-percent cotton affect the measured efficiency of a baseline 

clothes dryer? Are these any issues with repeatability of active mode efficiency results if 

a 100-percent cotton load were used instead of the 50/50 cotton polyester mix? How 

would changing to a 100-percent cotton test load affect the measured efficiency of a 

clothes dryer equipped with reverse tumble? If there is an efficiency improvement, what 

would be the incremental manufacturing cost of incorporating reverse tumble? 

3.8.b Test Load Size 

Standard-Size Dryer Load Size 

In comments to the preliminary energy conservation standards rulemaking analyses for 

residential clothes dryers, AHAM stated that the shipment-weighted residential clothes 

 

2 Estimated prices were updated from $2008 to $2009 using the producer price index for household laundry 

equipment manufacturing from the Bureau of Labor Statistics (http://www.bls.gov/ppi/). 

3 The 40 percent dryer energy savings is calculated based on a unit with an EF of 3.417. It is not clear from the 

report whether this EF was determined according to the DOE clothes dryer test procedure. 
12-A-7

washer drum volume for standard-size products in 2008 was 3.24 cubic feet, which 

corresponds to an average load size of 8.15 pounds (lb). For units that you manufacture 

(in particular those units with baseline active mode energy factor (EF)), can you please 

quantify or provide any test data showing the effects on the measured EF of changing the 

standard-size clothes dryer test load weight in the DOE clothes dryer test procedure from 

7 lb to 8.15 lb? Can you provide any test data showing the repeatability of test results 

using an 8.15 lb test load? 

Compact-Size Dryer Load Size 

In comments to the preliminary energy conservation standards rulemaking analyses for 

residential clothes dryers, AHAM stated that the shipment-weighted residential clothes 

washer drum volume for compact-size products in 2008 was 1.5 cubic feet, which 

corresponds to an average load size of 4.70 pounds (lb). For units that you manufacture 

(in particular those units with baseline active mode energy factor (EF)), can you please 

quantify or provide any test data showing the effects on the measured EF of changing the 

compact-size clothes dryer test load weight in the DOE clothes dryer test procedure from 

3 lb to 4.70 lb? Can you provide any test data showing the repeatability of test results 

using an 4.70 lb test load? 

Load Size as a Function of Dryer Capacity 

Do you have, or are you aware of any, consumer usage data showing the pounds of 

clothes load dried per dryer cycle relative to the size of the dryer drum for residential 

clothes dryer use? How would matching the test load size to the drum size, as is done in 

the DOE clothes washer test procedure, affect the measured efficiency of residential 

clothes dryers that you manufacture as compared to the existing DOE clothes dryer test 

procedure (which specifies a 7-lb or 3-lb test load for standard or compact size clothes 

dryers, respectively? 

3.8.c Test Load Preparation 

How would changing the test load preparation in the DOE clothes dryer test procedure to 

specify agitating the test load in water at 60°F ± 5°F affect the measured efficiency as 

compared to the existing test procedure (which specifies 100°F ± 5°F)? Assuming a 7-lb 

test load, which would hold about 4.66 lbs of water, the energy required to heat the water 

from a starting temperature of 60°F to the vaporization temperature would be about 746.6 

kiloJoules (kJ) (or 0.2074 kWh), whereas the energy required to heat the water from a 

starting temperature of 100°F to the vaporization temperature would be about 550.1 kJ 

(or 0.1528 kWh), resulting in a 0.0546 kWh increase in energy consumption using a 

starting temperature of 60°F.4

 Would this be an accurate estimate of the additional 

energy consumed as a result of changing the provisions for the test load preparation? 

3.8.d Initial RMC 

Shipment-weighted RMC data for residential clothes washers submitted by AHAM for 

the years 2000 through 2008 shows that the overall shipment-weighted average RMC in 

 

4 Calculated assuming a specific heat of water, cp, of 4.187 kJ/kg*°C. 
12-A-8

2008 was 47 percent. For units that you manufacture (in particular those units with 

baseline active mode energy factor (EF)), can you please quantify or provide any test data 

showing the effects on the measured EF of changing the initial RMC in the DOE clothes 

dryer test procedure from 70 percent to 47 percent? Can you provide any test data 

showing the repeatability of test results using an initial RMC of 47 percent? 

3.8.e Automatic Cycle Termination 

For residential dryer models that you manufacture with automatic cycle termination 

(noting the type of sensor technology used), if the dryer is set to a normal cycle and 

normal (or medium) dryness level setting and allowed to run until the completion of the 

cycle, how would the energy consumption compare to that measured according to the 

existing DOE clothes dryer test procedure? How would the energy consumption and 

final RMC vary when using “more”, “less”, and “normal” (or medium) dryness level 

settings with a normal cycle? 

4 MARKUPS AND PROFITABILITY 

One of the primary objectives of the MIA is to assess the impact of amended energy 

conservation standards on industry profitability. In this section, DOE would like to understand 

the current markup structure of the industry and how amended energy conservation standards 

would impact your company’s markup structure and profitability. 

DOE estimated the manufacturer production costs for the six product classes of residential 

clothes dryers. DOE defines manufacturer production cost as all direct costs associated with 

manufacturing a product: direct labor, direct materials, and overhead (which includes 

depreciation). The manufacturer markup is a multiplier applied to manufacturer production cost 

to cover non-production costs, such as SG&A and R&D, as well as profit. It does not reflect a 

“profit margin.” 

The manufacturer production cost times the manufacturer markup equals the manufacturer 

selling price. Manufacturer selling price is the price manufacturers charge their first customers, 

but does not include additional costs along the distribution channels. 

DOE estimated a baseline markup of 1.26 for residential clothes dryers. 

4.1 Is the 1.26 baseline markup representative of an average industry markup? 
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4.2 Please comment on the baseline markups DOE calculated as compared to your 

company’s baseline markups for the clothes dryer product classes. 

Table 4.1 Residential Clothes Dryer Baseline Manufacturer Markups by Product Class 

Product 

Class Product Type Product Class Description

Estimated 

Baseline 

Markup

Manufacturer Comments 

or Revised Estimates

1 Vented Dryers Electric, Standard (4.4 ft3

or greater 

capacity) 1.26

2 Vented Dryers Electric, Compact (120 v) (less than 

4.4 ft3capacity) 1.26

3 Vented Dryers Electric, Compact (240 v) (less than 

4.4 ft3capacity) 1.26

4 Vented Dryers Gas 1.26

5 Vent-less Dryers Electric, Compact (240 v) (less than 

4.4 ft3capacity) 1.26

6 Vent-less Dryers Electric, Combination Washer/Dryer 1.26

4.3 Please explain if profit levels vary by product class or product line. If yes, please indicate 

why. 

4.4 One of the possible scenarios DOE uses to model impacts on industry profitability is the 

impact of commoditization of premium products. Because the market disruption caused by 

standards can alter the pricing of premium products, DOE is interested in understanding if 

efficiency is a feature that earns a premium. Within each product class, do markups vary by 

efficiency level? If yes, please provide information about the markups at higher efficiencies. 

4.5 What factors besides efficiency affect the profitability of clothes dryers within a product 

class? 

4.6 Does your markup change with selected design options? Is the markup on incremental 

costs for more efficient designs different than the markup on the baseline models (as is assumed 

for retailer markups used in the analyses)? 

4.7 Would you expect changes in your estimated profitability following an amended energy 

conservation standard? If so, please explain why. Can you suggest any scenarios that would 

model these expected changes? 

4.8 In Chapter 6 of the preliminary TSD, DOE estimated that all of the clothes dryers are 

purchased by consumers from retail outlets. Could you confirm whether the description of the 

distribution channel for clothes dryer is correct?

5 SHIPMENT PROJECTIONS
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An amended energy conservation standard can change overall shipments by altering product 

attributes, marketing approaches, product availability, and prices. The industry revenue 

calculations are based on the shipment projections developed in DOE’s shipments model. The 

shipments model includes forecasts for the base case shipments (i.e., total industry shipments 

absent amended energy conservation standards) and the standards case shipments (i.e., total 

industry shipments with amended energy conservation standards). 

To determine efficiency distributions after the effective date of the standard, DOE used a “rollup + market shift” scenario for 2014 and subsequent years. DOE assumed that product 

efficiencies in the base case that did not meet the standard under consideration would roll up to 

meet the new standard in 2014. DOE further assumed that the ENERGY STAR program would 

continue to promote efficient appliances after revised standards are introduced in 2014, resulting 

in a gradual market shift to higher efficiencies after the compliance date of the standard. 

5.1 How do you think amended energy conservation standards will impact the sales of more 

efficient products? For example, would customers continue to buy products that exceed the 

energy conservation standard level? Would your response change for higher mandated efficiency 

levels? 

5.2 DOE assumed that revised standards that increase purchase price result in reduced 

demand or shipments (price elasticity effect). DOE assumed an elasticity coefficient of -0.34 for 

all product classes, meaning a 10% increase in price would result in a 3.4% decrease in 

shipments. Do you agree with this assumption? How sensitive do you think shipments will be to 

price changes? Does it vary with product class? 

5.3 The preliminary TSD provides shipments and market share by efficiency data until 2006. 

Could you provide updated data on shipments and market share by efficiency for the last three 

years? (2007-2009)

6 FINANCIAL PARAMETERS 

DOE’s contractor has developed a “strawman” model of the residential clothes dryer industry 

financial performance called the Government Regulatory Impact Model (GRIM), using publicly 

available data. However, this public information might not be reflective of manufacturing at the 

clothes dryer profit center. This section attempts to understand the financial parameters for 

clothes dryer manufacturing and how your company’s financial situation could differ from the 

industry aggregate picture. 

6.1 In order to accurately collect information about clothes dryer manufacturing, please 

compare your financial parameters to the GRIM parameters tabulated below. 
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Table 6.1 Financial Parameters for Residential Clothes Dryer Manufacturing 

GRIM Input Definition Industry 

Estimated

Value (%)

Your Actual (If 

Different from 

DOE’s 

Estimate)

Income Tax 

Rate

Corporate effective income tax paid (percentage of 

earnings before taxes, EBT) 33.9

Discount Rate

Weighted average cost of capital (inflationadjusted weighted average of corporate cost of 

debt and return on equity)

7.2

Working 

Capital

Current assets less current liabilities (percentage of 

revenues) 2.9

Net PPE Net plant property and equipment (percentage of 

revenues) 19.9

SG&A Selling, general, and administrative expenses 

(percentage of revenues) 12.5

R&D Research and development expenses (percentage 

of revenues) 2.2

Depreciation Amortization of fixed assets (percentage of 

revenues) 3.4

Capital 

Expenditures

Outlay of cash to acquire or improve capital assets 

(percentage of revenues, not including acquisition 

or sale of business units)

3.5

Cost of Goods 

Sold

Includes material, labor, overhead, and 

depreciation (percentage of revenues) 79.4

6.2 Do any of the financial parameters in Table 6.1 change based on product class? Please 

describe any differences. 

6.3 Do any of the financial parameters in Table 6.1 change for a particular subgroup of 

manufacturers? Please describe any differences. 

6.4 How would you expect an amended energy conservation standard to impact any of the 

financial parameters for the industry? 

7 CONVERSION COSTS 

Amended energy conservation standards may cause your company to incur capital and product 

conversion costs to redesign existing products and make changes to existing production lines to 

be compliant with the amended energy conservation standard. Depending on their magnitude, the 

conversion costs can have a substantial impact on the outputs used by DOE to evaluate the 

industry impacts. Understanding the nature and magnitude of the conversion costs is critical 

portion of the MIA. The MIA considers two types of conversion costs: 

Capital conversion costs are one-time investments in plant, property, and equipment 

(PPE) necessitated by an amended energy conservation standard. These may be 
12-A-12

incremental changes to existing PPE or the replacement of existing PPE. Included are 

expenditures on buildings, equipment, and tooling. 

Product conversion costs are costs related research, product development, testing, 

marketing and other costs for redesigning products necessitated by an amended energy 

conservation standard. 

DOE asks a number of questions to understand the nature and magnitude of your expected 

capital and product conversion costs. 

7.1 Table 7.1 through Table 7.4 shows the integrated efficiency levels analyzed in the 

Engineering Analysis for the product categories covered by this rulemaking. The tables also 

show the design options used in the Engineering Analysis to reach higher efficiencies. Because 

DOE is using an efficiency level approach for the Engineering Analysis, the design options listed 

represent one possible path to reach these efficiency levels. If you would apply different design 

options to reach each active mode efficiency level, please describe those changes in detail. 

Please provide estimates for your capital conversion costs by product class and efficiency level 

in Table 7.1 through Table 7.4. In the description column, DOE is interested in understanding 

the kinds of changes that would need to be implemented to production lines and production 

facilities at each efficiency level. Where applicable, please quantify the number and cost of new 

production equipment, molds, etc. that would be required to implement the specified design 

changes. 
12-A-13

Table 7.1 Expected Capital Conversion Costs for Vented Electric Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Capital 

Conversion 

Costs

Description

1

Switching to Open Cylinder Drum; 

Dedicated Heater Duct; and Change in 

Air Flow Patterns

2

Design options for EL 1 + Inlet Air PreHeating; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 (without Inlet Air 

Pre-Heating) + Modulating Heat

4

Design options for EL 3 + Switching 

Power Supply

5

Design options for EL 3 + 

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

6

Design options for EL 2 (without Change 

in Air Flow Patterns and Inlet Air PreHeating) + Heat Pump System; Electronic 

Controller, Thermal and Moisture 

Sensing; Upgraded Airflow System; 

Booster Heater; and Condensate Removal 

+ Transformerless Drop-Cap Power 

Supply with a Conventional Power 

Supply

Table 7.2 Expected Capital Conversion Costs for Vented Gas Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Capital 

Conversion 

Costs

Description

1

Switching to Open Cylinder Drum; 

Dedicated Heater Duct; and Change in 

Air Flow Patterns

2

Design options for EL 1 + Inlet Air PreHeating; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 (without Inlet Air 

Pre-Heating) + Modulating Gas Valve and 

Controls

4

Design options for EL 3 + Switching 

Power Supply

5

Design options for EL 3 + 

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply
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Table 7.3 Expected Capital Conversion Costs for Vent-less Electric Compact (240V) 

Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Capital 

Conversion 

Costs

Description

1 Switching Power Supply

2

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

3

Design Options for EL2 + Switching to 

Open Cylinder Drum; and Change in Air 

Flow Patterns

4

Design options for EL 3 + Modulating 

Heat; Moisture Sensing; and Variable 

Airflow

5

Design options for EL 3, + Heat Pump 

System; Electronic Controller, Thermal 

and Moisture Sensing; Upgraded Airflow 

System; Booster Heater; and Condensate 

Removal 

Table 7.4 Expected Capital Conversion Costs for Vent-less Combination Washer Dryer 

IEF 

Efficiency 

Level

Design Options Total Capital 

Conversion 

Costs

Description

1 Automatic Cycle Termination

2

Design options for EL 1 + Modulating 

Heat; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 + Switching 

Power Supply

4

Design options for EL 2 + 

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

5

Design options for EL 1+ Heat Pump 

System; Electronic Controller, Thermal 

and Moisture Sensing; Upgraded Airflow 

System; Booster Heater; and Condensate 

Removal + Transformerless Drop-Cap 

Power Supply with a Conventional Power 

Supply

7.2 Would the changes in question 7.1 be similar across all of your production lines and 

factories for each product class? 

7.3 At your manufacturing facilities, would the design options for each efficiency level be 

difficult to implement? If so, would your company modify the existing facility or develop a new 

facility? 
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7.4 Are there certain efficiency levels that would require relatively minor changes to existing 

products? Are there certain efficiency levels where the capital or product conversion costs 

significantly increase over the previous efficiency levels? Would your answer change for 

different product classes? Please describe these changes qualitatively. 

7.5 For each of the product categories shown in Table 7.1 through Table 7.4, which 

efficiency level changes could be made within existing platform designs and which would result 

in major product redesigns? 

7.6 What level of product conversion costs would you expect to incur for each of these 

design changes for each product class? Please provide your estimates in Table 7.5 through Table 

7.8 considering such expenses as product development expenses, prototyping, testing, 

certification, and marketing. In the description column, please describe the assumptions behind 

the estimates provided. 

Table 7.5 Expected Product Conversion Costs for Vented Electric Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Product 

Conversion 

Costs

Description

1

Switching to Open Cylinder Drum; 

Dedicated Heater Duct; and Change in 

Air Flow Patterns

2

Design options for EL 1 + Inlet Air PreHeating; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 (without Inlet Air 

Pre-Heating) + Modulating Heat

4

Design options for EL 3 + Switching 

Power Supply

5

Design options for EL 3 + 

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

6

Design options for EL 2 (without Change 

in Air Flow Patterns and Inlet Air PreHeating) + Heat Pump System; Electronic 

Controller, Thermal and Moisture 

Sensing; Upgraded Airflow System; 

Booster Heater; and Condensate Removal 

+ Transformerless Drop-Cap Power 

Supply with a Conventional Power 

Supply
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Table 7.6 Expected Product Conversion Costs for Vented Gas Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Product 

Conversion 

Costs

Description

1

Switching to Open Cylinder Drum; 

Dedicated Heater Duct; and Change in 

Air Flow Patterns

2

Design options for EL 1 + Inlet Air PreHeating; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 (without Inlet Air 

Pre-Heating) + Modulating Gas Valve and 

Controls

4

Design options for EL 3 + Switching 

Power Supply

5

Design options for EL 3 + 

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

Table 7.7 Expected Product Conversion Costs for Vent-less Electric Compact (240V) 

Clothes Dryers 

IEF 

Efficiency 

Level

Design Options Total Product 

Conversion 

Costs

Description

1 Switching Power Supply

2

Transformerless Drop-Cap Power Supply 

with a Conventional Power Supply

3

Design Options for EL2 + Switching to 

Open Cylinder Drum; and Change in Air 

Flow Patterns

4

Design options for EL 3 + Modulating 

Heat; Moisture Sensing; and Variable 

Airflow

5

Design options for EL 3, + Heat Pump 

System; Electronic Controller, Thermal 

and Moisture Sensing; Upgraded Airflow 

System; Booster Heater; and Condensate 

Removal 
12-A-17

Table 7.8 Expected Product Conversion Costs for Vent-less Combination Washer Dryer 

IEF 

Efficiency 

Level

Design Options Total Capital 

Conversion 

Costs

Description

1 Automatic Cycle Termination

2

Design options for EL 1 + Modulating 

Heat; Moisture Sensing; and Variable 

Airflow

3

Design options for EL 2 + Switching Power 

Supply

4

Design options for EL 2 + Transformerless 

Drop-Cap Power Supply with a 

Conventional Power Supply

5

Design options for EL 1+ Heat Pump 

System; Electronic Controller, Thermal and 

Moisture Sensing; Upgraded Airflow 

System; Booster Heater; and Condensate 

Removal + Transformerless Drop-Cap 

Power Supply with a Conventional Power 

Supply

7.7 Please provide additional qualitative information to help DOE understand the types and 

nature of your investments, including the plant and tooling changes and the product development 

effort required at different efficiency levels. 

8 CUMULATIVE REGULATORY BURDEN 

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of 

new or revised DOE standards and/or other regulatory actions affecting the same product or 

industry. 

8.1 In the preliminary analysis and in written comments, the UL Safety Regulation 2158 was 

highlighted as a major concern for manufacturers. Have you had any r&d expenditures related to 

complying with this regulation? What r&d, product development, and testing expenses will be 

required to make your residential clothes dryer compliant? Do you expect to incur any capital 

expenses to make your products comply? Will any of these changes be coordinated with the 

changes required by this rulemaking? 

8.2 Below is a list of the other relevant regulations that could affect manufacturers of 

residential clothes dryers. Please provide any comments on the listed regulations and provide an 

estimate for your expected compliance cost. 
12-A-18

Table 8.1 Other Regulations Identified by DOE 

Regulation Estimated or Actual 

Effective Date(s) Comments Expected Expense for Compliance

UL Safety Regulation 2158

Residential Clothes Washer 

Energy Conservation Standard

HCFC Phase-Out

8.3 Are there any other recent or impending regulations that residential clothes dryer 

manufacturers face (from DOE or otherwise)? If so, please identify the regulation, the 

corresponding effective dates, and your expected compliance cost. 

8.4 Under what circumstances would you be able to coordinate any expenditure related to 

these other regulations with an amended energy conservation standard? 

9 DIRECT EMPLOYMENT IMPACT ASSESSMENT 

The impact of amended energy conservation standards on employment is an important 

consideration in the rulemaking process. This section of the interview guide seeks to explore 

current trends in residential clothes dryer manufacturer employment and solicit manufacturer 

views on how domestic employment patterns might be affected by amended energy conservation 

standards. 

9.1 Where are your residential clothes dryer facilities that produce products for the United 

States located? What types of products are manufactured at each location? Please provide annual 

shipment figures for your company’s residential clothes dryer manufacturing at each location by 

product class. Please also provide employment levels at each of these facilities. 

Table 9.1 Residential Clothes Dryer Revenue and Shipment Volumes by Product Class 

Facility Location Product Types Manufactured Employees Annual 

Shipments

Example Jackson, TN Vented gas dryers, standard 

electric vented dryers 650

300,000 for 

vented gas; 

100,000 for 

electric vented

1

2

3

4

5

9.2 Would your domestic employment levels be expected to change significantly under 

amended energy conservation standards? If so, please explain how they would change if higher 
12-A-19

efficiency levels are required. 

9.3 Would the workforce skills necessary under amended energy conservation standards 

require extensive retraining or replacement of employees at your manufacturing facilities? 

9.4 Would amended energy conservation standards require extensive retraining of your 

service/field technicians? If so, could you expand on how your service infrastructure would be 

impacted in general as a result of amended energy conservation standards? 

10 MANUFACTURING CAPACITY AND NON-US SALES 

10.1 How would amended energy conservation standards impact your company’s 

manufacturing capacity? 

10.2 For any design changes that would require new production equipment, please describe 

how much downtime would be required. What impact would downtime have on your business? 

Are there any design changes that could not be implemented before the compliance date of the 

final rule for certain product classes? 

10.3 What percentage of your company’s residential clothes dryer sales are made within the 

United States? 

10.4 What percentage of your residential clothes dryers are produced in the United States? 

10.5 What percentage of your U.S. production of residential clothes dryers is exported? 

10.6 Are there any foreign companies with North American production facilities? 

 

10.7 Would amended energy conservation standards impact your domestic vs. foreign 

manufacturing or sourcing decisions? Is there an efficiency level that would cause you to move 

exiting domestic production facilities outside the U.S.? 

11 IMPACT ON COMPETITION 

Amended energy conservation standards can alter the competitive dynamics of the market. This 

can include prompting companies to enter or exit the market, or to merge. DOE and the 

Department of Justice are both interested in any potential reduction in competition that would 

result from an amended energy conservation standard. 

11.1 How would amended energy conservation standards affect your ability to compete in the 

marketplace? Would the effects on your company be different than others in the industry? 

11.2 Would you expect your market share to change if amended energy conservation standards 
12-A-20

become effective? 

11.3 Do any firms hold intellectual property that gives them a competitive advantage 

following amended energy conservation standards? 

11.4 How would industry competition change as a result of amended energy conservation 

standards? 

12 IMPACTS ON SMALL BUSINESS 

12.1 The Small Business Administration (SBA) denotes a small business in the residential 

clothes dryer manufacturing industry as having less than 1,000 total employees, including the 

parent company and all subsidiaries.5

 By this definition, is your company considered a small 

business? 

12.2 Are there any reasons that a small business manufacturer might be at a disadvantage 

relative to a larger business under amended energy conservation standards? Please consider such 

factors as technical expertise, access to capital, bulk purchasing power for materials/components, 

engineering resources, and any other relevant issues. 

12.3 To your knowledge, are there any small businesses for which the adoption of amended 

energy conservation standards would have a particularly severe impact? If so, why? 

12.4 To your knowledge, are there any niche manufacturers or component manufacturers

for which the adoption of amended energy conservation standards would have a particularly 

severe impact? If so, why? 

 

5 DOE uses the small business size standards published on August 22, 2008, as amended, by the SBA to determine 

whether a company is a small business. To be categorized as a small business, a household laundry equipment 

manufacturer (which includes residential clothes dryer manufacturers) and its affiliates may employ a maximum of 

1,000 employees. The 1,000 employee threshold includes all employees in a business’s parent company and any 

other subsidiaries. 
12-A-21

12-A.2 ROOM AIR CONDITIONER MANUFACTURER IMPACT ANALYSIS 

INTERVIEW GUIDE 

April 20, 2010 
12-A-22

The Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) as part of 

the rulemaking process for amended energy conservation standards for room air conditioners. In 

this analysis, DOE uses publicly available information and information provided by 

manufacturers during interviews to assess possible impacts on manufacturers due to amended 

energy conservation standards. 

DOE explicitly analyzes the four product classes in the table below. DOE is currently 

considering between three and five efficiency levels (ELs) for each product class that correspond 

to percentage improvements over the existing standards. In responding to this questionnaire, 

please refer to the efficiency levels in the table below. DOE explains how it intends to determine 

the minimum efficiencies for the remaining product classes in the engineering chapter of the 

technical support document.6 

Baseline Efficiencies for Analyzed Product Classes 

Product Class 

Number Product Type Product Class Description

Baseline EER

(Btu/h – W)

Baseline IEER* 

(Btu/h – W)

1

Without reverse 

cycle and with 

louvered sides

Less than 6,000 

Btu/h 9.70 9.52

3

Without reverse 

cycle and with 

louvered sides

8,000 Btu/h to 

13,999 Btu/h 9.80 9.71

5

Without reverse 

cycle and with 

louvered sides

20,000 Btu/h or 

more

8.50 8.47

8

Without reverse 

cycle and 

without louvered 

sides

8,000 Btu/h to 

13,999 Btu/h 8.50 8.43

Btu/h = British thermal units per hour 

* These definitions are based on testing according to the current energy test procedure for EER plus a baseline 

standby power measurement of 1.4 W to reach the combined IEER measurement. DOE expects to propose revisions 

to the current room air conditioner test procedure to account for this and other changes.

Efficiency Levels Under Consideration 

IEER (EER)*

Product 

Class 

Number

EL 1 EL 2 EL 3 EL 4 EL 5

1 10.1 (10.3) 10.6 (10.7) 11.1 (11.2) 11.6 (11.7) 12.0 (12.1)

3 10.3 (10.4) 10.8 (10.9) 11.3 (11.4) 11.5 (11.6) N/A

5 9.0 (9.0) 9.4 (9.4) 9.8 (9.8) 10.0 (10.0) N/A

8 8.9 (9.0) 9.3 (9.4) 9.8 (9.9) N/A N/A

*EER levels are for reference, efficiency levels are being considered in IEER 

 

6

Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/preliminary_analysis.html for a 

complete description. 
12-A-23

1 KEY ISSUES 

1.5 In general, what are the key issues for your company regarding amended energy 

conservation standards for room air conditioners and this rulemaking? 

1.6 Are any of the issues more or less significant for different product classes? 

1.7 Do any of the issues become more significant at higher efficiency levels, such as Energy 

Star levels? 

1.8 Has DOE effectively incorporated these issues in its analyses? Do you have any 

suggestions for incorporating these issues into DOE’s manufacturing impact model? 

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interested in understanding manufacturer impacts at the plant or profit center level 

directly pertinent to room air conditioner production. However, the context within which the 

plant operates and the details of plant production and costs are not always readily available 

from public sources. Therefore, DOE invites you to provide these details confidentially in your 

own words to the extent possible and practical. Understanding the organizational setting around 

the room air conditioner industry profit center will help DOE understand the probable future of 

the manufacturing activity with and without amended energy conservation standards. 

2.1 Do you have a parent company, and/or any subsidiaries relevant to the room air 

conditioner industry? 

2.2 Do you manufacture any products other than room air conditioners? If so, what other 

products do you manufacture? What percentage of your total manufacturing revenue corresponds 

to room air conditioners? 

2.3 What product classes of room air conditioners do you manufacturer? (See Table 2.1

below for descriptions of certain product classes, and list any additional product classes.) 
12-A-24

2.4 What percentage of your room air conditioner manufacturing corresponds to each product 

class, both in terms of revenue and shipments? Please indicate if you do not manufacturer 

products in any given product class. 

Table 2.1 Room Air Conditioner Revenue and Shipment Volumes by Product Class 

Product 

Class Product Type Product Class Description 2009 Revenue 2009 Shipments

1

Without reverse cycle and 

with louvered sides

Less than 6,000 

Btu/h

2

Without reverse cycle and 

with louvered sides

6,000 Btu/h to 

7,999 Btu/h

3

Without reverse cycle and 

with louvered sides

8,000 Btu/h to 

13,999 Btu/h

4 Without reverse cycle and 

with louvered sides

14,000 Btu/h to 

19,999 Btu/h

5

Without reverse cycle and 

with louvered sides

20,000 Btu/h or 

more

8

Without reverse cycle and 

without louvered sides

8,000 Btu/h to 

13,999 Btu/h

16 Casement-Slider -

All Other Product Classes

2.5 What is your company’s approximate market share by product class in the room air 

conditioners market? 

2.6 In Chapter 6 of the preliminary TSD, DOE estimated that all of the room air conditioners 

are purchased by consumers from retail outlets. Do you agree with this assessment of the 

distribution channel for room air conditioners? 

3 ENGINEERING AND LIFE CYCLE COST ANALYSIS FOLLOW-UP

3.1 For the products directly analyzed for the Engineering Analysis that represent the bulk of 

room air conditioner sales, can you comment on the progressive use of design options for 

achieving the successively higher efficiency levels (compared with the design option information 

presented by efficiency level in Appendix 5D of the preliminary TSD)? 

3.2 Are the incremental design option costs used in the Engineering Analysis and described 

in Chapter 5 of the preliminary TSD representative of costs your company pays for these design 

options? If not, please provide a quantitative indication of the differences. 

3.3 Please comment on the interpolated and extrapolated cost-efficiency curves developed for 

the product classes not directly analyzed. This process is described in the TSD in Chapter 5, but 

summarized as follows:

PC 2 and 4 based on interpolation by capacity based on PC 1, 3, and 5. 
12-A-25

PC 6 and 7 using extrapolation of PC 8 results to lower capacities based on PC 1 and 3 

results. 

PC 9 and 10 using extrapolation of PC 8 results to higher capacity based on PC 3 and 5 

results for design options not requiring package size increase. 

PC 11 and 13 based on interpolation of PC 1, 3, and 5 results, assuming that presence of 

the reversing feature, while impacting efficiency, would not have a greater impact on 

efficiency at higher efficiency levels. 

PC 12 and 14 based on similar interpolation of PC 6 through 10 results. 

PC 15 and 16 based on results for PC3, with limitation to design options such that only 

modest package size increase is allowed. 

3.4 Please comment on the maximum available EER of 12.0. Is this EER the highest EER 

available using R-410A? 

3.5 Please comment on current package sizes for R-410A units and how they compare to 

package sizes for R-22 units. 

3.6 Please comment on the package sizes used to achieve higher efficiency levels in the TSD 

What data or information can you provide that will support arguments regarding limitations of 

maximum package growth, including impacts on consumer utility? 

Design Description

Width

(inches (in))

Height

(in)

Depth

(in)

Weight

(lb)

Product Class 1

 Baseline

 First Size Increase

 Second Size Increase

15.5

18.5

19.69

11.75

12.5

13.63

12

14

17.72

38.6

42.7

46.8

Product Class 3, 8,000 Btu/h

 Baseline

 First Size Increase

 Second Size Increase

18.5

19.3

22.5

12.5

15.63

15.63

15.5

18

23.6

49.4

55.7

63.6

Product Class 3, 12,000 Btu/h

 Baseline

 First Size Increase

 Second Size Increase

23.63

24.63

26.38

15

17.5

17.5

22.25

22.25

26.75

76.5

81.2

87.6

Product Class 5

 Baseline

 First Size Increase

 Second Size Increase

26

27.75

29.81

17.69

17.94

22.38

28.41

30.94

30.94

129.2

136.4

156.5

3.7 Please comment on the current efficiency of R-410A rotary compressors. Is the 

maximum EER of R-410A rotary compressors 10 EER? 

3.8 Please comment on the conversion costs of switching from R-22 refrigerant to R-410 

refrigerant. Do the costs shown below reflect your company’s total incremental costs? 
12-A-26

Product Class Total Costs Due to 

Refrigerant Switch

PC 1 $3.92

PC 3 (8,000 Btu/h Capacity) $5.47

PC 3 (12,000 Btu/h Capacity) $7.49

PC 5 $13.70

PC 8 (8,000 Btu/h Capacity) $5.77

PC 8 (12,000 Btu/h Capacity) $7.95

 

3.9 Please comment on the efficiency impact of switching to R-410A refrigerant. Is there a 

10% drop in overall unit efficiency? How have you addressed this impact (larger units, more 

efficient components)? 

3.10 How would repair and maintenance costs be impacted by more stringent energy 

conservation standards? How would the frequency of repair and maintenance be affected? How 

would the nature of the repair and maintenance work needed change with more stringent energy 

conservation standards? 

4 MARKUPS AND PROFITABILITY 

One of the primary objectives of the MIA is to assess the impact of amended energy conservation 

standards on industry profitability. In this section, DOE would like to understand the current 

markup structure of the industry and how amended energy conservation standards would impact 

your company’s markup structure and profitability. 

DOE estimated the manufacturer production costs for four product classes of room air 

conditioners. DOE defines manufacturer production cost as all direct costs associated with 

manufacturing a product: direct labor, direct materials, and overhead (which includes 

depreciation). The manufacturer markup is a multiplier applied to manufacturer production cost 

to cover non-production costs, such as SG&A and R&D, as well as profit. It does not reflect a 

“profit margin.” 

The manufacturer production cost times the manufacturer markup equals the manufacturer 

selling price. Manufacturer selling price is the price manufacturers charge their first customers, 

but does not include additional costs along the distribution channels. 

DOE estimated a baseline markup of 1.26 for room air conditioners. 

4.1 Is the 1.26 baseline markup representative of an average industry markup? 
12-A-27

4.2 Please comment on the baseline markups DOE calculated as compared to your 

company’s baseline markups for the room air conditioner product classes. 

Table 4.1 Room Air Conditioner Baseline Manufacturer Markups by Product Class 

Product 

Class Product Type Product Class Description

Baseline 

Markup

Manufacturer Comments or Revised 

Estimates

1 Without reverse cycle and 

with louvered sides

Less than 6,000 

Btu/h

1.26

3 Without reverse cycle and 

with louvered sides

8,000 Btu/h to 

13,999 Btu/h

1.26

5 Without reverse cycle and 

with louvered sides

20,000 Btu/h or 

more

1.26

8 Without reverse cycle and 

without louvered sides

8,000 Btu/h to 

13,999 Btu/h

1.26

4.3 Please explain if profit levels vary by product class or product line. If yes, please indicate 

why. 

4.4 Because the market disruption caused by standards can alter the pricing of premium 

products, DOE is interested in understanding how margins currently change with efficiency. 

Within each product class, do markups vary by efficiency level? If yes, please provide 

information about the markups at higher efficiencies, such as Energy Star. 

4.5 What factors besides efficiency affect the profitability of room air conditioners within a 

product class? 

4.6 Does your markup change with selected design options? Is the markup on incremental 

costs for more efficient designs different than the markup on the baseline models (as is assumed 

for retailer markups used in the analyses)?

4.7 Would you expect changes in your estimated profitability following an amended energy 

conservation standard? If so, please explain why. Can you suggest any scenarios that would 

model these expected changes? 

5 SHIPMENT PROJECTIONS

An amended energy conservation standard can change overall shipments by altering product 

attributes, marketing approaches, product availability, and prices. The industry revenue 

calculations are based on the shipment projections developed in DOE’s shipments model. The 

shipments model includes forecasts for the base case shipments (i.e., total industry shipments 

absent amended energy conservation standards) and the standards case shipments (i.e., total 

industry shipments with amended energy conservation standards). 
12-A-28

To determine efficiency distributions after the effective date of the standard, DOE used a “rollup” scenario for 2014 and subsequent years. DOE assumed that product efficiencies in the base 

case that did not meet the standard under consideration would roll up to meet the new standard 

in 2014. 

5.1 How do you think amended energy conservation standards will impact the sales of more 

efficient products? For example, would customers continue to buy products that exceed the 

energy conservation standard level? What would occur to the split of sales of Energy Star vs. 

non-Energy Star units? Would your response change for higher mandated efficiency levels? 

5.2 DOE assumed that revised standards that increase purchase price result in reduced 

demand or shipments (price elasticity effect). DOE assumed an elasticity coefficient of -0.34, 

meaning a 10% increase in price would result in a 3.4% decrease in shipments. Do you agree 

with this assumption? How sensitive do you think shipments will be to price changes? Does it 

vary with product class? 

5.3 The preliminary TSD provides shipments and market share by efficiency data until 2007. 

Could you provide updated data on shipments and market share by efficiency for 2008 and 

2009? 

6 FINANCIAL PARAMETERS 

DOE’s contractor has developed a “strawman” model of the room air conditioners industry 

financial performance called the Government Regulatory Impact Model (GRIM) using publicly 

available data. However, this public information might not be reflective of manufacturing at the 

room air conditioners profit center. This section attempts to understand the financial parameters 

for room air conditioner manufacturing and how your company’s financial situation could differ 

from the industry aggregate picture. 

6.1 In order to accurately collect information about room air conditioner manufacturing, 

please compare your financial parameters to the GRIM parameters tabulated below. 
12-A-29

Table 6.1 Financial Parameters for Room Air Conditioner Manufacturers 

GRIM Input Definition Industry 

Estimated

Value

Your Actual (If 

Significantly 

Different from 

DOE’s 

Estimate)

Income Tax 

Rate

Corporate effective income tax paid (percentage of 

earnings before taxes, EBT) 33.9

Discount Rate

Weighted average cost of capital (inflationadjusted weighted average of corporate cost of 

debt and return on equity)

7.2

Working 

Capital

Current assets less current liabilities (percentage of 

revenues) 2.9

Net PPE Net plant property and equipment (percentage of 

revenues) 19.9

SG&A Selling, general, and administrative expenses 

(percentage of revenues) 12.5

R&D Research and development expenses (percentage 

of revenues) 2.2

Depreciation Amortization of fixed assets (percentage of 

revenues) 3.4

Capital 

Expenditures

Outlay of cash to acquire or improve capital assets 

(percentage of revenues, not including acquisition 

or sale of business units)

3.5

Cost of Goods 

Sold

Includes material, labor, overhead, and 

depreciation (percentage of revenues) 79.4

6.2 Do any of the financial parameters in Table 6.1 change based on product class? Please 

describe any differences. 

6.3 Do any of the financial parameters in Table 6.1 change for a particular subgroup of 

manufacturers? Please describe any differences. 

6.4 How would you expect an amended energy conservation standard to impact any of the 

financial parameters for the industry? 
12-A-30

7 CONVERSION COSTS 

Amended energy conservation standards may cause your company to incur capital and product 

conversion costs to redesign existing products and make changes to existing production lines to 

be compliant with the amended energy conservation standard. Depending on their magnitude, 

the conversion costs can have a substantial impact on the outputs used by DOE to evaluate the 

industry impacts. Understanding the nature and magnitude of the conversion costs is a critical 

portion of the MIA. The MIA considers two types of conversion costs: 

Capital conversion costs are one-time investments in plant, property, and equipment 

(PPE) necessitated by an amended energy conservation standard. These may be 

incremental changes to existing PPE or the replacement of existing PPE. Included are 

expenditures on buildings, equipment, and tooling. 

Product conversion costs are costs related to research, product development, testing, 

marketing and other costs for redesigning products necessitated by an amended energy 

conservation standard. 

Table 7.1 shows the design options used to research higher efficiencies for the major product 

categories covered by this rulemaking. DOE asks a number of questions to understand the 

nature and magnitude of your expected capital and product conversion costs. Please refer to 

Table 7.1 when considering your response to the following questions. 

Table 7.1 Design Options Used to Improve Efficiency for each Analyzed Product Class 

Product Class 

Number

Design Options

1

Add subcooler, increase evaporator circuits, increase evaporator width, increase chassis size, 

stand-by reduction, increase heat exchanger tube ODs, increase PSC efficiency, DC brushless 

motor

3

Increase evaporator width, increase evaporator tube OD, add subcooler, increase chassis size, 

stand-by reduction, increase PSC efficiency, DC brushless motor

5

Add subcooler, increase chassis size, standby increase, increase PSC efficiency, scroll 

compressor, DC brushless motor

8

Increase evaporator width, add subcooler, increase condenser width with coil bend, standby

increase, increase PSC efficiency, increase evaporator tube OD, increase condenser tube OD, 

DC brushless motor

7.1 At your manufacturing facilities, would these design options be difficult to implement? If 

so, would your company modify the existing facility or develop a new facility?

7.2 Are there certain design options that would require relatively minor changes to existing 

products? Are there certain efficiency levels where the capital or product conversion costs 

significantly increase over the previous efficiency levels? Would your answer change for 

different product classes? Please describe these changes qualitatively. 

7.3 For each of the product classes shown in Table 7.1, which design options could be made 
12-A-31

within existing platform designs and which would result in major product redesigns? 

7.4 Please provide estimates for your capital conversion costs by product class in Table 7.2

through Table 7.5 below. In the description column, DOE is interested in understanding the 

kinds of changes that would need to be implemented to production lines and production facilities 

at each efficiency level. Where applicable, please quantify the number and cost of new 

production equipment, molds, foaming fixtures, etc. that would be required to implement the 

specified design changes. 

Table 7.2 Expected Capital Conversion Costs for Product Class 1 

Efficiency 

Level 

(IEER)

Pathway of Design Options You 

Would Take

Total Capital 

Conversion Costs

Description of Expected Capital 

Requirements

EL 1 (10.1)

EL 2 (10.6)

EL 3 (11.1)

EL 4 (11.6)

EL 5 (12.0)

Table 7.3 Expected Capital Conversion Costs for Product Class 3 

Efficiency 

Level 

(IEER)

Pathway of Design Options You 

Would Take

Total Capital 

Conversion Costs

Description of Expected Capital 

Requirements

EL 1 (10.3)

EL 2 (10.8)

EL 3 (11.3)

EL 4 (11.5)

Table 7.4 Expected Capital Conversion Costs for Product Class 5 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Capital 

Conversion Costs

Description of Expected Capital 

Requirements

EL 1 (9.0)

EL 2 (9.4)

EL 3 (9.8)

EL 4 (10.0)

Table 7.5 Expected Capital Conversion Costs for Product Class 8 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Capital 

Conversion Costs

Description of Expected Capital 

Requirements

EL 1 (8.9)

EL 2 (9.3)

EL 3 (9.8)

7.5 Would the changes in 7.4 be similar across all of your production lines and factories for 
12-A-32

each product class? 

7.6 What level of product development and other product conversion costs would you expect 

to incur for each of these design changes for each product class? Please provide your estimates in 

Table 7.6 through Table 7.9 below considering such expenses as product development expenses, 

prototyping, testing, certification, and marketing. In the description column, please describe the 

assumptions behind the estimates provided. 

Table 7.6 Expected Product Conversion Costs for Product Class 1 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Product 

Conversion Costs

Description of Expected 

Development Requirements

EL 1 (10.1)

EL 2 (10.6)

EL 3 (11.1)

EL 4 (11.6)

EL 5 (12.0)

Table 7.7 Expected Product Conversion Costs for Product Class 3 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Product 

Conversion Costs

Description of Expected 

Development Requirements

EL 1 (10.3)

EL 2 (10.8)

EL 3 (11.3)

EL 4 (11.5)

Table 7.8 Expected Product Conversion Costs for Product Class 5 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Product 

Conversion Costs

Description of Expected 

Development Requirements

EL 1 (9.0)

EL 2 (9.4)

EL 3 (9.8)

EL 4 (10.0)

Table 7.9 Expected Product Conversion Costs for Product Class 8 

Efficiency 

Level

(IEER)

Pathway of Design Options You 

Would Take

Total Product 

Conversion Costs

Description of Expected 

Development Requirements

EL 1 (8.9)

EL 2 (9.3)

EL 3 (9.8)

7.7 Please provide additional qualitative information to help DOE understand the types and 

nature of your investments, including the plant and tooling changes and the product development 
12-A-33

effort required at different efficiency levels. 

8 CUMULATIVE REGULATORY BURDEN 

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects 

of new or revised DOE standards and/or other regulatory actions affecting the same product or 

industry. 

8.1 Below is a list of regulations that could affect manufacturers of room air conditioners. 

Please provide any comments on the listed regulations and provide an estimate for your expected 

compliance cost. 

Table 8.1 Other Regulations Identified by DOE 

Regulation Estimated or Actual 

Effective Date(s)

Expected Expense 

for Compliance Comments

DOE’s Energy Conservation 

Standards for Other Products 

and Equipment

International EnergyEfficiency Standards

EPA Phase-Out of HCFC-22 2010

8.2 Are there any other recent or impending regulations that room air conditioner 

manufacturers face (from DOE or otherwise)? If so, please identify the regulation, the 

corresponding effective dates, and your expected compliance cost. 

8.3 Under what circumstances would you be able to coordinate any expenditure related to 

these other regulations with an amended energy conservation standard? 

8.4 DOE research has not identified any production tax credits for manufacturers of room air 

conditioners. Do you know of any current or future tax credits or other benefits available to your 

company for manufacturing more efficient room air conditioners? If so, please describe. 

9 DIRECT EMPLOYMENT IMPACT ASSESSMENT 

The impact of amended energy conservation standards on employment is an important 

consideration in the rulemaking process. This section of the interview guide seeks to explore 

current trends in room air conditioner employment and solicit manufacturer views on how 

domestic employment patterns might be affected by amended energy conservation standards. 

9.1 Where are your room air conditioner facilities that produce products for the United States 
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located? What types of products are manufactured at each location? Please provide annual 

shipment figures for your company’s room air conditioner manufacturing at each location by 

product class. Please also provide employment levels at each of these facilities.

9.2 Would your domestic employment levels be expected to change significantly under 

amended energy conservation standards? If so, please explain how they would change if higher 

efficiency levels are required. 

9.3 Would the workforce skills necessary under amended energy conservation standards 

require extensive retraining or replacement of employees at your manufacturing facilities? 

9.4 Would amended energy conservation standards require extensive retraining of your 

service/field technicians? If so, could you expand on how your service infrastructure would be 

impacted in general as a result of amended energy conservation standards? 

10 MANUFACTURING CAPACITY AND NON-US SALES 

10.1 How would amended energy conservation standards impact your company’s 

manufacturing capacity? 

10.2 For any design changes that would require new production equipment, please describe 

how much downtime would be required. What impact would downtime have on your business? 

Are there any design changes that could not be implemented before the compliance date of the 

final rule for certain product classes? 

10.3 What percentage of your company’s room air conditioner sales are made within the 

United States? 

10.4 What percentage of your room air conditioner sales are produced in the United States? 

10.5 What percentage of your U.S. production of room air conditioners is exported? 

10.6 Are there any foreign companies with North American production facilities? 

 

10.7 Would amended energy conservation standards impact your domestic vs. foreign 

manufacturing or sourcing decisions? Is there an efficiency level that would cause you to move 

exiting domestic production facilities outside the U.S.?
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11 IMPACT ON COMPETITION 

Amended energy conservation standards can alter the competitive dynamics of the market. This 

can include prompting companies to enter or exit the market, or to merge. DOE and the 

Department of Justice are both interested in any potential reduction in competition that would 

result from an amended energy conservation standard. 

11.1 How would amended energy conservation standards affect your ability to compete in the 

marketplace? Would the effects on your company be different than others in the industry? 

11.2 Would you expect your market share to change if amended energy conservation standards 

become effective? 

11.3 Do any firms hold intellectual property that gives them a competitive advantage 

following amended energy conservation standards? 

11.4 How would industry competition change as a result of amended energy conservation 

standards? 

12 IMPACTS ON SMALL BUSINESS 

12.1 The Small Business Administration (SBA) denotes a small business in the room air 

conditioner manufacturing industry as having less than 750 total employees, including the parent 

company and all subsidiaries.7

 By this definition, is your company considered a small business? 

12.2 Are there any reasons that a small business manufacturer might be at a disadvantage 

relative to a larger business under amended energy conservation standards? Please consider such 

factors as technical expertise, access to capital, bulk purchasing power for materials/components, 

engineering resources, and any other relevant issues. 

12.3 To your knowledge, are there any small businesses for which the adoption of amended 

energy conservation standards would have a particularly severe impact? If so, why? 

12.4 To your knowledge, are there any niche manufacturers or component manufacturers

for which the adoption of amended energy conservation standards would have a particularly 

severe impact? If so, why? 

 

7 DOE uses the small business size standards published on August 22, 2008, as amended, by the SBA to determine 

whether a company is a small business. To be categorized as a small business, an air conditioning and warm air 

heating equipment manufacturer or a commercial and industrial refrigeration equipment manufacturer and its 

affiliates may employ a maximum of 750 employees. The 750 employee threshold includes all employees in a 

business’s parent company and any other subsidiaries.