CHAPTER 17. REGULATORY IMPACT AN ALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION

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- 1 17.2 METHODOLOGY

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LIST OF TABLES

Table 17.1.1 Non

- Regulatory Alternatives to Standards

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- iCHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

Under a ppendix A to subpart C of Title 10 of the Code of Federal Regulations, Part 430, Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products (Process Rule) the U.S. Department of Energy (DOE) is commi tted to explore non

regulatory alternatives to energy conservation standards. Accordingly, DOE will prepare a draft regulatory impact ana lysis pursuant to Executive Order 12866, “Regulatory Planning and Review,” which will be subject to review by the Office of Management and Budget’s Office of Information and Regulatory Affairs for the notice of proposed rulemaking (NOPR). Pursuant to the P rocess Rule, DOE has identified six major alternatives to standards that represent feasible policy options to reduce the energy consumption of products . It will evaluate each alternative in terms of its ability to achieve significant energy savings at a reasonable cost, and will compare the effectiveness of each alternative to the effectiveness of each candidate standard

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Table 17.1.1 lists th e non

- regulatory mean s of achieving energy savings that DOE proposes to analyze. The technical support document (TSD) prepared in support of DOE’s notice of proposed rulemaking will include a complete quantitative analysis of each alternative, the methodology for which is brie fly addressed below.

Table 17.1.1 Non

- R egulatory Alternatives to Standards

No New Regulatory A ction Consumer Rebates Consumer Tax C redits Manufacturer Tax C redits Voluntary Energy E fficiency Targets Early R eplacement Bulk Government P urchases

17.2 METHODOLOGY

DOE will use the n ational i mpact a nalysis (NIA) s preadsheet m odel to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to proposed standards. The NIA m odel is discussed in c hapter 10 of the TSD. To compare each alternative quantitatively to the proposed energy conservation standards, DOE will need to quantify the effect of each alternative on the purchase and use of energy efficient products . DOE will create an integrated NIA

- RIA model, built on the NIA model, in which to make the appropriate revisions to the inputs in the NIA m odels. Key inputs that DOE may revise in the NIA

- RIA model are:

• M arket shares of products meeting target efficiency levels (identical to the trial stan dard levels for the mandatory standards)

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- 1• Replacement rates of equipment in the stock

The following a re the key measures of the imp act of each alternative.

• Energy use : Cumu lative energy use of products from the compliance date of the new standar d to 20 49 . DOE will report electricity consumption as primary energy.

• National energy savings : Cumulative national energy use from the base

- case projection minus the alternative

- policy

- case projection.

• Net present value : The value of future operatin g cost savings from the equipment bought during the period from the required compliance date of the ne w standard ( 2019 ) to 20 49

. DOE will calculate the NPV as the difference between the present value of equipment and operating expenditures (including energ y) in the base case, and the present value of expenditures under each alternative

- policy case. DO E will discount future operating and equipment expenditures to 201 3 using a 7

- percent and 3

- percent real discount rate. It will calculate operating expenses (i ncluding energy costs) for the life of the equipment

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