Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

Federal RegisterApr 16, 2010

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EE-2006-BT-STD-0129]

RIN 1904-AA90

Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Energy (DOE) is amending the existing energy conservation standards for residential water heaters (other than tabletop and electric instantaneous models), gas-fired direct heating equipment, and gas-fired pool heaters. It has determined that the amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.

DATES:

The effective date of this rule is June 15, 2010. Compliance with the amended standards established for residential water heaters in today's final rule is required starting on April 16, 2015, and compliance with the standards established for DHE and pool heaters is required starting on April 16, 2013.

ADDRESSES:

For access to the docket to read background documents, the technical support document, transcripts of the public meetings in this proceeding, or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards at the above telephone number for additional information regarding visiting the Resource Room. You may also obtain copies of certain previous rulemaking documents in this proceeding (

i.e.,

framework document, notice of public meeting and announcement of a preliminary technical support document (TSD), notice of proposed rulemaking), draft analyses, public meeting materials, and related test procedure documents from the Office of Energy Efficiency and Renewable Energy's Web site at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/waterheaters.html.

FOR FURTHER INFORMATION CONTACT:

Mr. Mohammed Khan, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-7892.

E-mail: Mohammed.Khan@ee.doe.gov

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue, SW., Washington, DC 20585-0121.

Telephone:

(202) 586-9507. E-mail:

Eric.Stas@hq.doe.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits

A. The Energy Conservation Standard Levels

B. Benefits and Costs to Purchasers of the Three Heating Products

1. Water Heaters

2. Direct Heating Equipment

3. Pool Heaters

C. Impact on Manufacturers

1. Water Heaters

2. Direct Heating Equipment

3. Pool Heaters

D. National Benefits

E. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for the Three Heating Products

III. General Discussion

A. Test Procedures

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

D. Economic Justification

1. Specific Criteria

a. Economic Impact on Consumers and Manufacturers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need of the Nation To Conserve Energy

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Comments on Methodology

A. Market and Technology Assessment

1. DOE's Determinations as to the Inclusion of Products in This Rulemaking

a. Whether Certain Products Are Covered Under the Act

b. Covered Products Not Included in This Rulemaking

2. Product Classes

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

B. Screening Analysis

1. Comments on the Screening Analysis

2. Heat Pump Water Heater and Condensing Gas-Fired Storage Water Heater Discussion

a. Condensing Gas-Fired Water Heaters

b. Heat Pump Water Heaters

C. Engineering Analysis

1. Representative Products for Analysis

2. Efficiency Levels Analyzed

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

3. Cost Assessment Methodology

a. Manufacturer Production Cost

b. Manufacturer Selling Price

4. Engineering Analysis Results

5. Scaling to Additional Rated Storage Capacities

6. Water Heater Energy Efficiency Equations

D. Markups To Determine Product Price

E. Energy Use Characterization

1. Water Heaters

2. Direct Heating Equipment

3. Pool Heaters

F. Life-Cycle Cost and Payback Period Analyses

1. Product Price

2. Installation Cost

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

3. Annual Energy Use

4. Energy Prices

5. Energy Price Trend

6. Repair and Maintenance Costs

7. Product Lifetime

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

8. Discount Rates

9. Compliance Date

10. Product Energy Efficiency in the Base Case

11. Inputs to Payback Period Analysis

G. National Impact Analysis—National Energy Savings and Net Present Value Analysis

1. General

2. Shipments

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

d. Impact of Standards on Shipments

3. Base-Case and Standards-Case Efficiency Distributions

4. National Energy Savings

a. Annual Unit Energy Consumption

b. Site-to-Source Energy Conversion

5. Consumer Net Present Value

a. Increased Total Installed Costs and Operating Cost Savings

b. Discount Rates

H. Consumer Subgroup Analysis

I. Manufacturer Impact Analysis

1. Water Heater Conversion Costs

2. Manufacturer Markups and Markup Scenarios

3. Pool Heater Conversion Costs

4. Employment

5. Access to Capital

J. Employment Impact Analysis

K. Utility Impact Analysis

1. Effects of Standards on Energy Prices and Associated Benefits

L. Environmental Assessment

M. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Social Cost of Carbon Values Used in Past Regulatory Analyses

c. Approach and Key Assumptions

2. Monetary Values of Non-Carbon Emissions

V. Discussion of Other Comments

A. Trial Standard Levels and Proposed Standards

1. Water Heaters

2. Direct Heating Equipment

3. Pool Heaters

B. Compliance Date of Amended Standards

VI. Analytical Results and Conclusions

A. Trial Standard Levels

1. Water Heaters

2. Direct Heating Equipment

3. Gas-Fired Pool Heaters

B. Significance of Energy Savings

C. Economic Justification

1. Economic Impact on Consumers

a. Life-Cycle Costs and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impact on Manufacturers

a. Cash-Flow Analysis Results for Water Heaters

b. Cash-Flow Analysis Results for Direct Heating Equipment

c. Cash-Flow Analysis Results for Pool Heaters

d. Impacts on Employment

e. Impacts on Manufacturing Capacity

f. Cumulative Regulatory Burden

g. Impacts on Manufacturers That Are Small Businesses

3. National Net Present Value of Consumer Costs and Benefits and National Employment Impacts

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

D. Conclusion

1. Overview

2. Water Heaters

3. Direct Heating Equipment

4. Pool Heaters

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Energy Conservation Standard Levels

The Energy Policy and Conservation Act, as amended (42 U.S.C. 6291

et seq.;

EPCA or the Act), provides that any new or amended energy conservation standard the Department of Energy (DOE) prescribes for covered consumer products, including residential water heaters, direct heating equipment (DHE), and pool heaters (collectively referred to in this document as the “three heating products”) must be designed to “achieve the maximum improvement in energy efficiency * * * which the Secretary [of Energy] determines is technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B)) The standards in today's final rule, which apply to certain types of the three heating products, satisfy these requirements.

Table I.1 shows the standard levels DOE is adopting today. These standards will apply to the types of the three heating products listed in the table and manufactured for sale in the United States, or imported into the United States, on or after April 16, 2015 in the case of water heaters, or on or after April 15, 2013 in the case of direct heating equipment and pool heaters.

Table I.1—Amended Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

Product class

Standard level

Residential water heaters*

Gas-fired Storage

For tanks with a Rated Storage Volume at or below 55 gallons:

EF = 0.675−(0.0015 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 55 gallons:

EF = 0.8012−(0.00078 × Rated Storage Volume in gallons).

Electric Storage

For tanks with a Rated Storage Volume at or below 55 gallons:

EF = 0.960−(0.0003 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 55 gallons:

EF = 2.057−(0.00113 × Rated Storage Volume in gallons) .

Oil-fired Storage

EF = 0.68−(0.0019 × Rated Storage Volume in gallons).

Gas-fired Instantaneous

EF = 0.82−(0.0019 × Rated Storage Volume in gallons).

Product class

Standard level

Direct heating equipment**

Gas wall fan type up to 42,000 Btu/h

AFUE = 75%

Gas wall fan type over 42,000 Btu/h

AFUE = 76%

Gas wall gravity type up to 27,000 Btu/h

AFUE = 65%

Gas wall gravity type over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 66%

Gas wall gravity type over 46,000 Btu/h

AFUE = 67%

Gas floor up to 37,000 Btu/h

AFUE = 57%

Gas floor over 37,000 Btu/h

AFUE = 58%

Gas room up to 20,000 Btu/h

AFUE = 61%

Gas room over 20,000 Btu/h up to 27,000 Btu/h

AFUE = 66%

Gas room over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 67%

Gas room over 46,000 Btu/h

AFUE = 68%

Gas hearth up to 20,000 Btu/h

AFUE = 61%

Gas hearth over 20,000 Btu/h and up to 27,000 Btu/h

AFUE = 66%

Gas hearth over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 67%

Gas hearth over 46,000 Btu/h

AFUE = 68%

Pool heaters

Gas-fired

Thermal Efficiency = 82%

* EF is the “energy factor,” and the “Rated Storage Volume” equals the water storage capacity of a water heater (in gallons), as specified by the manufacturer.

** Btu/h is “British thermal units per hour,” and AFUE is “Annual Fuel Utilization Efficiency.”

B. Benefits and Costs to Purchasers of the Three Heating Products

1. Water Heaters

Table I.2 presents the implications of today's standards for consumers of residential water heaters. The economic impacts of the standards on consumers, as measured by the average life-cycle cost (LCC) savings, are positive, even though the standards may increase some initial costs. For example, a typical gas storage water heater has an average installed price of $1,079 and average lifetime operating costs (discounted) of $2,473. To meet the amended standards, DOE estimates that the average installed price of such equipment will increase by $120, which will be offset by savings of $143 in average lifetime operating costs (discounted).

Table I.2—Implications of Standards for Purchasers of Residential Water Heaters

Product class

Energy conservation standard

Average baseline installed price**

Average installed price increase

Average life-cycle cost savings***

Median payback period

years

Gas-Fired Storage Water Heater

0.62 (40 gallons)

$1,072

$92

2.0

0.76 (56 gallons)

1,261

805

9.8

Weighted

1,079

120

2.3

Electric Storage Water Heater

0.95 (50 gallons)

554

140

6.9

2.0 (56 gallons)

729

974

626

6.0

Weighted

569

213

6.8

Oil-Fired Storage Water Heater

0.62 (32 gallons)

1,974

295

0.5

Gas-Fired Instantaneous Water Heater

0.82 (0 gallons)

1,779

601

14.8

* The values are for the representative storage volumes (40 gallons for gas-fired storage water heaters, 50 gallons for electric storage water heaters, 32 gallons for oil-fired storage water heaters, and 0 gallons for gas-fired instantaneous water heaters). The standard level is represented by an energy-efficiency equation, which specifies an EF level over the entire storage volume range.

** For a baseline model.

*** The average life-cycle cost savings refers to the average savings in the discounted life-cycle costs of owning and operating the product due to the standard. This value represents the net benefit (or cost) of a more-efficient product after considering both the increased installed price and the lifetime operating cost savings.

2. Direct Heating Equipment

Table I.3 presents the implications of today's standards for consumers of direct heating equipment. The economic impacts of the standards on consumers, as measured by the average LCC savings, are positive, even though the standards may increase some initial costs. For example, a typical gas wall fan DHE has an average installed price of $1,832 and average lifetime operating costs (discounted) of $5,544. To meet the amended standards, DOE estimates that the average installed price of such equipment will increase by $81, which will be more than offset by savings of $249 in average lifetime operating costs (discounted).

Table I.3—Implications of Standards for Purchasers of Direct Heating Equipment at the Representative Rated Input Capacity Range

Product class

Energy conservation standard*

AFUE (%)

Average baseline installed price**

Average installed price increase

Average life-cycle cost savings***

Median payback period

Years

Gas Wall Fan

$1,832

$81

$102

3.2

Gas Wall Gravity

1,433

7.5

Gas Floor

2,209

10.7

Gas Room

1,208

4.5

Gas Hearth

1,603

112

0.0

* The values are for the representative input capacity ranges (>42,000 Btu/h for wall fan, >27,000 Btu/h and ≤46,000 Btu/h for wall gravity, >37,000 Btu/h for floor, >27,000 Btu/h and ≤46,000 Btu/h for room, and >27,000 Btu/h and ≤46,000 Btu/h for hearth). The standard levels vary by input capacity range.

** For a baseline model.

3. Pool Heaters

Table I.4 presents the implications of today's standards for consumers of pool heaters. The economic impacts of the standards on consumers, as measured by the average LCC savings, are positive, even though the standards may increase some initial costs. For example, a typical pool heater has an average installed price of $3,240 and average lifetime operating costs (discounted) of $5,099. To meet the amended standards, DOE estimates that the average installed price of such equipment will increase by $103, which will be offset by savings of $226 in average lifetime operating costs (discounted).

Table I.4—Implications of Standards for Purchasers of Pool Heaters at 250,000 B

tu/h

Product class

Energy conservation standard*

Thermal Efficiency (%)

Average baseline installed price**

Average installed price increase

Average life-cycle cost savings***

Median payback period

Years

Gas-fired

$3,240

$103

$22

8.6

* The values are for the representative input capacity of 250,000 Btu/h.

** For a baseline model.

C. Impact on Manufacturers

1. Water Heaters

Using a real corporate discount rate of 8.9 percent for gas-fired and electric storage water heaters, 7.6 percent for oil-fired storage water heaters, and 9.5 percent for gas-fired instantaneous water heaters, which DOE calculated by examining the financial statements of residential water heater manufacturers, DOE estimates the industry net present value (INPV) of the manufacturing industry to be $880 million for gas-fired and electric storage water heaters, $9 million for oil-fired storage water heaters, and $648 million for gas-fired instantaneous water heaters (all figures in 2009$). DOE expects the impact of the standards on the INPV of manufacturers of gas-fired and electric storage water heaters to range from a loss of 2.9 percent to a loss of 13.9 percent (a loss of $25.9 million to a loss of $122.6 million). DOE expects the impact of the standards on the INPV of manufacturers of oil-fired storage water heaters to range from a loss of 2.0 percent to a loss of 4.2 percent (a loss of $0.2 million to a loss of $0.4 million). DOE expects the impact of the standards on the INPV of manufacturers of gas-fired instantaneous water heaters to range from an increase of 0.4 percent to a loss of 0.2 percent (an increase of $2.3 million to a loss of $1.2 million). Based on DOE's interviews with the major manufacturers of residential water heaters, DOE expects minimal plant closings or loss of employment as a result of the standards. At the amended standard level, DOE does not expect significant impacts on competition in the overall water heater market. For gas-fired and electric storage water heaters, DOE believes there are primarily three major manufacturers who have established market positions. In addition, DOE believes there is another major appliance manufacturer with significant resources that has recently announced intentions to scale its efforts in the water heating market. For oil-fired storage water heaters and gas-fired instantaneous water heaters, DOE believes the standards-case market can at least sustain the base-case level of competition.

2. Direct Heating Equipment

Using a real corporate discount rate of 8.5 percent, which DOE calculated by examining the financial statements of direct heating equipment manufacturers, DOE estimates the INPV of the manufacturing industry to be $17 million for traditional direct heating equipment and $77 million for hearth direct heating equipment (both figures in 2009$). DOE expects the impact of the standards on the INPV of manufacturers of traditional direct heating equipment to range from a loss of 7.2 percent to a loss of 23.6 percent (a loss of $1.2 million to a loss of $3.9 million). DOE expects the impact of the standards on the INPV of manufacturers of hearth direct heating equipment to range from a loss of 0.3 percent to a loss of 1.2 percent (a loss of $0.2 million to a loss of $0.9 million). Based on DOE's interviews with the major manufacturers of both traditional and hearth direct heating equipment, DOE expects minimal plant closings or loss of employment as a result of the standards. DOE believes the impact of the amended standards on competition in the traditional and hearth DHE market will not be significant because small manufacturers will be able to upgrade enough product lines to meet the standard, which in combination with product lines that currently meet the standard, will enable them to remain viable competitors.

3. Pool Heaters

Using a real corporate discount rate of 7.4 percent, which DOE calculated by examining the financial statements of pool heater manufacturers, DOE estimates the INPV of the manufacturing industry to be $49 million for gas-fired pool heaters (figures in 2009$). DOE expects the impact of the standards on the INPV of manufacturers of gas-fired pool heaters to range from an increase of 0.5 percent to a loss of 1.7 percent (an increase of $0.3 million to a loss of $0.8 million). Based on DOE's interviews with the major manufacturers of pool heaters, DOE expects minimal plant closings or loss of employment as a result of the standards. DOE does not believe there will be any lessening of competition in the pool heater market as a result of the standards established by today's final rule, because all of the manufacturers already offer at least one product line that meets or exceeds the standard level promulgated by today's final rule.

D. National Benefits

DOE estimates the standards will save approximately 2.81 quads (quadrillion or 10

) British thermal units (Btu) of energy over a 30-year period: 2.58 quads for residential water heaters during 2015-2045, and 0.21 and 0.02 quads for DHE and pool heaters, respectively, during 2013-2043. The total of 2.81 quads is equivalent to all the energy consumed by nearly 15 million American households in a single year. By 2045, DOE expects the energy savings from today's standards to eliminate the need for approximately three new 250 MW power plants.

These energy savings will result in cumulative greenhouse gas emission

reductions of approximately 164 million tons (Mt) of carbon dioxide (CO

), or an amount equal to that produced by approximately 46 million cars every year. Additionally, the standards will help alleviate air pollution by resulting in cumulative emissions reductions of approximately 125 kilotons (kt) for nitrogen oxides (NO

) and 0.54 tons for power plant mercury (Hg).

The estimated monetary value of the cumulative CO

emissions reductions, based on a range of values from a recent interagency process, is $560 to $8,725 million. The estimated monetary value of the cumulative CO

emissions reductions, based on the central value from the interagency process, is $2,861 million. The estimated net present monetary value of the other emissions reductions (discounted to 2010 using a 7-percent discount rate and expressed in 2009$) is $12.2 to 125 million for NO

. At a 3-percent discount rate, the estimated net present value of these emissions reductions is $27.2 to 284 million for NO

The national NPV of consumer benefit of today's standards is $1.98 billion using a 7-percent discount rate and $10.11 billion using a 3-percent discount rate, cumulative from 2013 to 2043 for DHE and pool heaters, and from 2015 to 2045 for water heaters, in 2009$. This is the estimated present value of future operating cost savings minus the estimated increased costs of purchasing and installing the three types of heating products, discounted to 2010.

The benefits and costs of today's rule can also be expressed in terms of annualized values from 2013 to 2043 for DHE and pool heaters, and from 2015 to 2045 for water heaters. Estimates of annualized values for the three types of heating products are shown in Table I.5, Table I.6, and Table I.7. The annualized monetary benefits are the sum of the annualized national economic value of operating cost savings (energy, maintenance, and repair), expressed in 2009$, plus the monetary value of the benefits of CO

and NO

emission reductions. For the value of CO

emission reductions, DOE uses the global Social Cost of Carbon (SCC) calculated using the average value derived using a 3-percent discount rate (equivalent to $21.40 per metric ton of CO

emitted in 2010, in 2007$). This value is a central value from a recent interagency process. The derivation of this value is discussed in section IV.M. The monetary benefits of cumulative emissions reductions are reported in 2009$ so that they can be compared with the other costs and benefits in the same dollar units.

Although the above consideration of benefits provides a valuable perspective, please note the following: (1) The national operating cost savings are domestic U.S. consumer monetary savings found in market transactions, while the value of CO

reductions is based on a global value. Also, note that the central value is only one of four SCC developed by the interagency workgroup. Other marginal SCC values for 2010 are $4.70, $35.10, and $64.90 per metric ton (2007$ for emissions in 2010), which reflect different discount rates and, for the highest value, the possibility of higher-than-expected impacts further out in the tails of the SCC distribution. (2) The assessments of operating cost savings and CO

savings are performed with different computer models, leading to different time frames for analysis. The national operating cost savings is measured for the lifetime of heating products shipped in the period 2013-2043 (for DHE and pool heaters) or 2015-2045 (for water heaters). The value of CO

, on the other hand, reflects the present value of all future climate-related impacts (out to 2300) due to emitting a ton of carbon dioxide in each year of the forecast period.

Using a 7-percent discount rate and the central SCC value, the combined cost of the standards adopted in today's final rule for heating products is $1,285 million per year in increased equipment and installation costs, while the annualized benefits are $1,500 million per year in reduced equipment operating costs, $169 million in CO

reductions, and $7.7 million in reduced NO

emissions. At a 7-percent discount rate, the net benefit amounts to $391 million per year. Using a 3-percent discount rate and the central SCC value, the cost of the standards adopted in today's rule is $1,249 million per year in increased equipment and installation costs, while the benefits of today's standards are $1,843 million per year in reduced operating costs, $169 million in CO

reductions, and $9.2 million in reduced NO

emissions. At a 3-percent discount rate, the net benefit amounts to $771 million per year.

Table I.5—Annualized Benefits and Costs for Water Heaters (TSL 5)

Category

Primary estimate

(AEO reference case)

Low estimate

(low energy price case)

High estimate

(high energy price case)

Units

Year dollars

Disc. rate

Period covered (2015-2045)

Benefits

Energy Annualized Monetized (millions$/year)

1407.0

1275.5

1537.5

2009

1729.6

1556.1

1902.9

2009

Monetized Value (at $4.7/Metric Ton, millions$/year)*

43.5

2009

Monetized Value (at $21.4/Metric Ton, millions$/year)*

158.6

2009

Monetized Value (at $35.1/Metric Ton, millions$/year)*

245.7

2009

2.5%

Monetized Value (at $64.9/Metric Ton, millions$/year)*

483.8

2009

Monetized Value (at $2,437/Metric Ton, millions$/year)

7.0

2009

8.5

2009

Total Monetary Benefits (millions$/year)**

1457.5-1897.8

1326-1766.3

1588-2028.3

2009

7% range

1572.7

1441.1

1703.2

2009

1896.7

1723.2

2070.0

2009

1781.5-2221.8

1608-2048.3

1954.9-2395.2

2009

3% range

Costs

Annualized Monetized (millions$/year)

1250.3

1184.5

1321.6

2009

1216.6

1145.7

1295.6

2009

Net Benefits/Costs

Annualized Monetized, including CO

Benefits (million$/year)**

207.2-647.5

141.5-581.8

266.4-706.7

2009

7% range

322.4

256.6

381.5

2009

680.1

577.5

774.4

2009

565-1005.3

462.3-902.6

659.3-1099.6

2009

3% range

* These values represent global values (in 2009$) of the social cost of CO

emissions in 2010 under several scenarios. The values of $4.7, $21.4, and $35.1 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $64.9 per ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate.

See

section IV.M for details.

** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO

emissions calculated at a 3% discount rate (averaged across three Integrated Assessment Models (IAMs)), which is equal to $21.4/ton in 2010 (in 2009$). The rows labeled as “7% Range” and “3% Range” calculate consumer and NO

cases with the labeled discount rate but add these values to the full range of CO

values with the $4.7/ton value at the low end, and the $64.9/ton value at the high end.

Table I.6—Annualized Benefits and Costs for Direct Heating Equipment

[TSL 2]

Category

Primary estimate (AEO reference case)

Low estimate (low energy price case)

High estimate (high energy price case)

Units

Year dollars

Disc. rate

Period

covered

(2013-2043)

Benefits

Energy Annualized Monetized (millions$/year)

82.2

78.8

84.6

2009

100.6

96.3

103.6

2009

Monetized Value (at $4.7/Metric Ton, millions$/year)*

2.5

2009

Monetized Value (at $21.4/Metric Ton, millions$/year)*

9.2

2009

Monetized Value (at $35.1/Metric Ton, millions$/year)*

14.3

2009

2.5%

Monetized Value (at $64.9/Metric Ton, millions$/year)*

28.1

2009

Monetized Value (at $2,437/Metric Ton, millions$/year)

0.6

2009

0.6

2009

Total Monetary Benefits (millions$/year)**

85.2-110.8

81.8-107.4

87.7-113.2

2009

7% range

91.9

88.5

94.4

2009

110.4

106.2

113.4

2009

103.7-129.3

99.5-125

106.7-132.3

2009

3% range

Costs

Annualized Monetized (millions$/year)

27.7

2009

26.0

2009

Net Benefits/Costs

Annualized Monetized, including CO

Benefits (millions$/year)**

57.6-83.1

54.1-79.7

60-85.6

2009

7% range

64.3

60.8

66.7

2009

84.4

80.1

87.4

2009

77.7-103.2

73.4-99

80.7-106.3

2009

3% range

* These values represent global values (in 2009$) of the social cost of CO

See

section IV.M for details.

** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO

emissions calculated at a 3% discount rate (averaged across three IAMs), which is equal to $21.4/ton in 2010 (in 2009$). The rows labeled as “7% Range” and “3% Range” calculate consumer and NO

cases with the labeled discount rate but add these values to the full range of CO

values with the $4.7/ton value at the low end, and the $64.9/ton value at the high end.

Table I.7—Annualized Benefits and Costs for Pool Heaters

[TSL 2]

Category

Primary

estimate (AEO reference case)

Low estimate (low energy price case)

High estimate (high energy price case)

Units

Year dollars

Disc. rate

Period

covered

(2013-2043)

Benefits

Energy Annualized Monetized (millions$/year)

10.6

10.1

10.9

2009

12.5

12.0

12.9

2009

Monetized Value (at $4.7/Metric Ton, millions$/year)*

0.2

2009

Monetized Value (at $21.4/Metric Ton, millions$/year)*

0.8

2009

Monetized Value (at $35.1/Metric Ton, millions$/year)*

1.3

2009

2.5%

Monetized Value (at $64.9/Metric Ton, millions$/year)*

2.4

2009

Monetized Value (at $2,437/Metric Ton, millions$/year)

0.1

2009

0.1

2009

Total Monetary Benefits (millions$/year)**

10.8-13

10.4-12.6

11.1-13.3

2009

7% range

11.4

11.0

11.7

2009

13.4

12.8

13.7

2009

12.8-15

12.3-14.4

13.2-15.3

2009

3% range

Costs

Annualized Monetized (millions$/year)

6.9

2009

6.7

2009

Net Benefits/Costs

Annualized Monetized, including CO

Benefits (millions$/year)**

3.9-6.1

3.4-5.6

4.2-6.4

2009

7% range

4.5

4.0

4.8

2009

6.7

6.2

7.1

2009

6.1-8.3

5.6-7.8

6.5-8.7

2009

3% range

* These values represent global values (in 2009$) of the social cost of CO

See

section IV.M for details.

** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO

cases with the labeled discount rate but add these values to the full range of CO

values with the $4.7/ton value at the low end, and the $64.9/ton value at the high end.

Table I.8—Sum of Annualized Benefits and Costs for Heating Products Standards

Category

Primary estimate

(AEO reference case)

Low estimate

(low energy price case)

High estimate

(high energy price case)

Units

Year dollars

Disc.

rate

Period covered

Benefits

Energy Annualized Monetized (millions$/year)

1499.8

1364.4

1633.0

2009

1842.7

1664.4

2019.4

2009

Monetized Value (at $4.7/Metric Ton, millions$/year)*

46.2

2009

Monetized Value (at $21.4/Metric Ton, millions$/year)*

168.6

2009

Monetized Value (at $35.1/Metric Ton, millions$/year)*

261.3

2009

2.5%

Monetized Value (at $64.9/Metric Ton, millions$/year)*

514.2

2009

Monetized Value (at $2,437/Metric Ton, millions$/year)

7.6

2009

9.2

2009

Total Monetary Benefits (millions$/year)**

1553.5-2021.6

1418.2-1886.3

1686.8-2154.8

2009

7% range

1676.0

1540.6

1809.2

2009

2020.5

1842.2

2197.2

2009

1898-2366.1

1719.8-2187.7

2074.8-2542.8

2009

3% range

Costs

Annualized Monetized

(millions$/year)

1284.9

1219.1

1356.3

2009

1249.3

1178.4

1328.3

2009

Annualized Monetized, including CO

Benefits (millions$/year)**

268.7-736.7

199-667.1

330.6-798.7

2009

7% range

391.1

321.5

453.0

2009

771.2

663.8

868.9

2009

648.8-1116.8

541.3-1009.4

746.5-1214.6

2009

3% range

* These values represent global values (in 2009$) of the social cost of CO

See

section IV.M for details.

** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO

cases with the labeled discount rate but add these values to the full range of CO

values with the $4.7/ton value at the low end, and the $64.9/ton value at the high end.

E. Conclusion

Based upon the analysis culminating in this final rule, DOE has concluded that the benefits (energy savings, consumer LCC savings, positive national NPV, and emissions reductions) to the Nation of today's amended standards outweigh their costs (a potential loss of manufacturer INPV and consumer LCC increases for some users of the three heating products). Table 1.9 below summarizes total annualized monetized benefits and costs for these energy conservation standards. Today's standards also represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and will result in significant energy savings for all three types of the heating products. At present, residential water heaters, DHE, and pool heaters that meet the new standard levels are either commercially available or available as prototypes.

Table I.9—Summary Annualized Monetized Benefits and Costs

Category

($million/year)

Discount rate

Benefits*

1676.0

2020.5

Costs

1284.9

1249.3

Net Benefits/Costs*

391.1

771.2

*Annualized Monetized, including monetized CO

and NO

benefits.

II. Introduction

A. Authority

Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A

of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other Than Automobiles. The program covers consumer products and certain commercial products (all of which are referred to hereafter as “covered products”), including the three heating products that are the subject of this rulemaking. (42 U.S.C. 6292(a)(4), (9), (11)) DOE publishes today's final rule pursuant to Part A of Title III, which also provides for test procedures, labeling, and energy conservation standards for the three heating products and certain other types of products, and authorizes DOE to require information and reports from manufacturers. The test procedures for water heaters, vented DHE, and pool heaters appear at Title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendices E, O, and P, respectively.

This part was originally titled Part B. It was redesignated Part A in the United States Code for editorial reasons.

EPCA prescribes specific energy conservation standards for the three heating products. (42 U.S.C. 6295(e)(1)-(3)) The statute further directs DOE to conduct two cycles of rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(e)(4)) This rulemaking represents the second round of amendments to the water heater standards, and the first round of amendments to the DHE and pool heater standards. The notice of proposed rulemaking (NOPR) in this proceeding (the December 2009 NOPR; 74 FR 65852, 65858-59, 65866 (Dec. 11, 2009), and section II.B.2 below, provide additional detail on the nature and statutory history of the requirements for the three types of heating products.

EPCA also provides criteria for prescribing amended standards for covered products generally, including the three heating products. As indicated above, any such amended standard must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Additionally, EPCA provides specific prohibitions on prescribing such standards. DOE may not prescribe an amended standard for any of the three heating products for which it has not established a test procedure. (42 U.S.C. 6295(o)(3)(A)) Further, DOE may not prescribe a standard if DOE determines by rule that such standard would not result in “significant conservation of energy,” or “is not technologically feasible or economically justified.” (42 U.S.C. 6295(o)(3)(B))

EPCA also provides that in deciding whether a standard is economically justified for covered products, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following seven factors:

1. The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard;

3. The total projected amount of energy (or, as applicable, water) savings likely to result directly from the imposition of the standard;

4. Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6. The need for national energy and water conservation; and

7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

In addition, EPCA, as amended, establishes a rebuttable presumption that any standard for covered products is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as applicable, water) savings during the first year that the consumer will receive as a result of the standard,” as calculated under the test procedure in place for that standard. (42 U.S.C. 6295(o)(2)(B)(iii))

EPCA also contains what is commonly known as an “anti-backsliding” provision. (42 U.S.C. 6295(o)(1)) This provision mandates that the Secretary not prescribe any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. EPCA further provides that the Secretary may not prescribe an amended standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any product type (or class) with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4))

Under 42 U.S.C. 6295(q)(1), EPCA specifies requirements applicable to promulgating standards for any type or class of covered product that has two or more subcategories. Under this provision, DOE must specify a different standard level than that which applies generally to such type or class of product for any group of products “which have the same function or intended use, if * * * products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies such a different standard for a group of products, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate.

Id.

Any rule prescribing such a standard must include an explanation of the basis on which DOE established such higher or lower level. (42 U.S.C. 6295(q)(2))

Section 310(3) of the Energy Independence and Security Act of 2007 (EISA 2007; Pub. L. 110-140) amended EPCA to prospectively require that energy conservation standards address standby mode and off mode energy use. Specifically, when DOE adopts new or amended standards for a covered product after July 1, 2010, the final rule must, if justified by the criteria for adoption of standards in section 325(o) of EPCA, incorporate standby mode and off mode energy use into a single standard if feasible, or otherwise adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)) Because DOE is adopting today's final rule before July 2010, this requirement does not apply in this rulemaking, and DOE has not specifically addressed standby mode or off mode energy use here. DOE is currently working on a test procedure rulemaking to address the measurement of standby mode and off

mode energy consumption for the three types of heating products that are the subject of this rulemaking.

Finally, Federal energy conservation requirements for covered products generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d))

B. Background

1. Current Standards

On January 17, 2001, DOE published a final rule prescribing the current Federal energy conservation standards for residential water heaters manufactured on or after January 20, 2004, which set minimum energy factors (EFs) that vary based on the storage volume of the water heater, the type of energy it uses (

i.e.,

gas, oil, or electricity), and whether it is a storage, instantaneous, or tabletop model. 66 FR 4474; 10 CFR 430.32(d). EPCA prescribes the Federal energy conservation standards for DHE and pool heaters. For DHE, these consist of minimum annual fuel utilization efficiency (AFUE) levels, each of which applies to a type of unit (

i.e.,

wall fan, wall gravity, floor, or room) and heating capacity range. (42 U.S.C. 6295(e)(3)); 10 CFR 430.32(i). For pool heaters, the Federal energy conservation standard prescribed by EPCA includes a single minimum thermal efficiency level. (42 U.S.C. 6295(e)(2)); 10 CFR 430.32(k).

Table II.1, Table II.2, and Table II.3 present the current Federal energy conservation standards for residential water heaters, DHE, and pool heaters, respectively. The water heater standards, set forth in 10 CFR 430.32(d), consist of minimum energy factors (EF) that vary based on the rated storage volume of the water heater, the type of energy it uses (

i.e.,

gas, oil, or electricity), and whether it is a storage, instantaneous, or tabletop model. The DHE standards, set forth in 42 U.S.C. 6295(e)(3) and 10 CFR 430.32(i), consist of minimum annual fuel utilization efficiency (AFUE) levels, each of which applies to a particular type of gas-fired product (

i.e.,

wall fan, wall gravity, floor, room) and input heating capacity range. (Although electric DHE are available, no Federal energy conservation standards exist for these products, and today's final rule contains no such standards. For a more detailed discussion of DHE coverage under EPCA,

see

74 FR 65852, 65866 (Dec. 11, 2009) (the December 2009 NOPR)). The pool heater standards, set forth at 42 U.S.C. 6295(e)(2) and 10 CFR 430.32(k), consist of a thermal efficiency level. (Similar to the situation with DHE, this standard applies only to gas-fired products. Although electric pool heaters are available, no Federal energy conservation standards currently exist for other pool heaters, and today's final rule contains no such standard. For a more detailed discussion of pool heater coverage,

see

74 FR 65852, 65866-67 (Dec. 11, 2009).)

Table II.1—Current Federal Energy Conservation Standards for Residential Water Heaters

Product class

Energy factor as of January 20, 2004

Gas-Fired Storage Water Heater

EF = 0.67—(0.0019 × Rated Storage Volume in gallons)

Oil-Fired Storage Water Heater

EF = 0.59—(0.0019 × Rated Storage Volume in gallons)

Electric Storage Water Heater

EF = 0.97—(0.00132 × Rated Storage Volume in gallons)

Tabletop Water Heater

EF = 0.93—(0.00132 × Rated Storage Volume in gallons)

Gas-Fired Instantaneous Water Heater

EF = 0.62—(0.0019 × Rated Storage Volume in gallons)

Instantaneous Electric Water Heater

EF = 0.93—(0.00132 × Rated Storage Volume in gallons)

Table II.2—Current Federal Energy Conservation Standards for Direct Heating Equipment

Direct heating equipment design type

Product class

Btu/h

Annual fuel utilization efficiency, as of Jan. 1, 1990

Gas Wall Fan

Up to 42,000

Over 42,000

Gas Wall Gravity

Up to 10,000

Over 10,000 and up to 12,000

Over 12,000 and up to 15,000

Over 15,000 and up to 19,000

Over 19,000 and up to 27,000

Over 27,000 and up to 46,000

Over 46,000

Gas Floor

Up to 37,000

Over 37,000

Gas Room

Up to 18,000

Over 18,000 and up to 20,000

Over 20,000 and up to 27,000

Over 27,000 and up to 46,000

Over 46,000

Table II.3—Current Federal Energy Conservation Standards for Pool Heaters

Product class

Thermal efficiency as of January 1, 1990

Gas-Fired Pool Heater

Thermal Efficiency = 78%

2. History of Standards Rulemaking for the Three Heating Products

Prior to being amended in 1987, EPCA included water heaters and home heating equipment as covered products. The amendments to EPCA effected by the National Appliance Energy Conservation Act of 1987 (NAECA; Pub. L. 100-12) included replacing the term “home heating equipment” with “direct heating equipment,” adding pool heaters as a covered product, establishing standards for the three heating products, and requiring that DOE determine whether these standards should be amended. (42 U.S.C. 6295(e)(1)-(4)) As indicated above, DOE amended the statutorily-prescribed standards for water heaters in 2001 (66 FR 4474 (Jan. 17, 2001)), but has not amended the statutory standards for DHE or pool heaters.

DOE commenced this rulemaking on September 27, 2006, by publishing on its Web site its “Rulemaking Framework for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters.” (A PDF of the framework document is available at

http://www.eere.energy.gov/buildings/appliance_standards/residential/pdfs/heating_equipment framework_092706.pdf.

) DOE also published a notice announcing the availability of the framework document and a public meeting and requesting comments on the matters raised in the document. 71 FR 67825 (Nov. 24, 2006). The framework document described the procedural and analytical approaches that DOE anticipated using to evaluate potential energy conservation standards for the three heating products and identified various issues to be resolved in conducting the rulemaking. DOE held the framework document public meeting on January 16, 2009.

On January 5, 2009, having considered these comments, gathered additional information, and performed preliminary analyses as to standards for the three heating products, DOE announced an informal public meeting and the availability on its Web site of a preliminary technical support document (preliminary TSD). 74 FR 1643 (Jan. 13, 2009). The preliminary TSD is available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/water_pool_heaters_prelim_tsd.html.

The preliminary TSD discussed the comments DOE had received at the framework stage of this rulemaking and described the actions DOE had taken, the analytical framework DOE was using, and the content and results of DOE's preliminary analyses.

Id.

at 1644, 1645. DOE convened the public meeting to discuss and receive comments on: (1) These subjects, (2) DOE's proposed product classes, (3) potential standard levels that DOE might consider, and (4) other issues participants believed were relevant to the rulemaking.

Id.

at 1643, 1646. DOE also invited written comments on these matters. The public meeting took place on February 9, 2009. Many interested parties participated, and submitted written comments during the comment period.

On December 11, 2009, DOE published a NOPR to consider amending the existing residential water heater, direct heating equipment, and pool heater energy conservation standards. 74 FR 65852. Shortly after, DOE also published on its Web site the complete TSD for the proposed rule, which incorporated the completed analyses DOE conducted and technical documentation for each analysis. The TSD included the LCC spreadsheet, the national impact analysis spreadsheet, and the manufacturer impact analysis (MIA) spreadsheet—all of which are available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/water_pool_heaters_nopr.html.

In the December 2009 NOPR, DOE proposed amended energy conservation standards for the three heating products as follows:

Table II.4—Proposed Amended Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

Product Class

Proposed Standard Level

Residential Water Heaters*

Gas-fired Storage

For tanks with a Rated Storage Volume at or below 60 gallons:

EF = 0.675 − (0.0012 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 60 gallons:

EF = 0.717 − (0.0019 × Rated Storage Volume in gallons).

Electric Storage

For tanks with a Rated Storage Volume at or below 80 gallons:

EF = 0.96 − (0.0003 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 80 gallons:

EF = 1.088 − (0.0019 × Rated Storage Volume in gallons).

Oil-fired Storage

EF = 0.68 − (0.0019 × Rated Storage Volume in gallons).

Gas-fired Instantaneous

EF = 0.82 − (0.0019 × Rated Storage Volume in gallons).

Direct Heating Equipment **

Product Class

Proposed Standard Level

Gas wall fan type up to 42,000 Btu/h

AFUE = 76%.

Gas wall fan type over 42,000 Btu/h

AFUE = 77%.

Gas wall gravity type up to 27,000 Btu/h

AFUE = 70%.

Gas wall gravity type over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 71%.

Gas wall gravity type over 46,000 Btu/h

AFUE = 72%.

Gas floor up to 37,000 Btu/h

AFUE = 57%.

Gas floor over 37,000 Btu/h

AFUE = 58%.

Gas room up to 20,000 Btu/h

AFUE = 62%.

Gas room over 20,000 Btu/h up to 27,000 Btu/h

AFUE = 67%.

Gas room over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 68%.

Gas room over 46,000 Btu/h

AFUE = 69%.

Gas hearth up to 20,000 Btu/h

AFUE = 61%.

Gas hearth over 20,000 Btu/h and up to 27,000 Btu/h

AFUE = 66%.

Gas hearth over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 67%.

Gas hearth over 46,000 Btu/h

AFUE = 68%.

Pool Heaters

Product Class

Proposed Standard Level

Gas-fired

Thermal Efficiency = 84%.

* EF is the “energy factor,” and the “Rated Storage Volume” equals the water storage capacity of a water heater (in gallons), as specified by the manufacturer.

** Btu/h is “British thermal units per hour,” and AFUE is “Annual Fuel Utilization Efficiency.”

In the December 2009 NOPR, DOE identified 24 specific issues on which it was particularly interested in receiving the comments and views of interested parties. 74 FR 65852, 65994-95 (Dec. 11, 2009). In addition, DOE also specifically requested comments and data that would allow DOE to further bring clarity to the issues surrounding heat pump water heaters and condensing water heaters, and determine how the issues discussed in the December 2009 NOPR could be adequately addressed prior to the compliance date of an amended national energy conservation standard for water heaters that would effectively require the use of such technology. 74 FR 65852, 65966-67 (Dec. 11, 2009). DOE also held a public meeting in Washington, DC, on January 7, 2010, to hear oral comments on and solicit information on the issues just mentioned and any other matters relevant to the proposed rule. Finally, DOE received many written comments on these and other issues in response to the December 2009 NOPR, which are further presented and addressed throughout today's notice. The December 2009 NOPR included additional, detailed background information on the history of this rulemaking.

See

74 FR at 65852, 65859-60 (Dec. 11, 2009).

III. General Discussion

A. Test Procedures

As noted above, DOE's test procedures for residential water heaters, vented DHE, and pool heaters are set forth at 10 CFR part 430, subpart B, appendices E, O, and P, respectively. These test procedures are currently used to determine whether the three heating products comply with applicable energy conservation standards and as a basis for manufacturers' representations as to the energy efficiency of these products.

During this rulemaking, interested parties have asserted that the residential water heater test procedure does not: (1) Reflect actual use of these water heaters by consumers; (2) permit accurate (

i.e.,

consistent and repeatable) measurement of the efficiencies of electric resistance water heaters that have an EF of 0.95 EF and above; or (3) include all of the cost-effective efficiency measures available for water heaters. 74 FR 65852, 65860-61 (Dec. 11, 2009).

As to the first point, DOE believes the test procedure does reflect actual use of water heaters. It employs a hot water draw model, and data that incorporate correction factors that account for actual use of water heaters in U.S. homes. 74 FR 65852, 65860 (Dec. 11, 2009). As to the second point, concerning accuracy of the test procedure, DOE explains in the December 2009 NOPR that manufacturer certification of several electric resistance water heaters with EFs of 0.95, as well as DOE testing of such models, demonstrate that the DOE test procedure can accurately measure the efficiencies of units at that level that use conventional, electric resistance technologies. 74 FR 65852, 65680-81 (Dec. 11, 2009). As the December 2009 NOPR also indicates, units with efficiencies significantly above that level must use advanced technologies, for which the test procedure also permits accurate measurement of EF levels. 74 FR 65852, 65681 (Dec. 11, 2009). Thus, because today's standards for electric water heaters have two substantially different tiers—for capacities at or below 55 gallons, minimum EF levels equivalent to 0.95 at the representative storage capacity, and for larger capacities substantially higher minimum EF levels—DOE confirms that the existing test procedure will accurately determine the efficiencies of both models using conventional technologies to meet the lower tier and models that will have to use advanced technologies to meet the higher tier. Finally, the only specific cost-effective efficiency measure that commenters cited as being absent from DOE's water heater test procedure is insulation on the tank bottom. 74 FR 65852, 65861 (Dec. 11, 2009). To the contrary, however, the test procedure addresses and gives credit for inclusion of such insulation in water heaters. 10 CFR part 430, subpart B, appendix E, section 5. Although DOE recognizes that the test procedure does not reflect certain recent advances in energy saving technology, it is aware of no evidence that such technologies actually do or would result in significant, cost-effective energy savings under normal operating conditions for water heaters. Hence, omission of these technologies from the test procedure does not affect the efficiency levels considered in this rulemaking. DOE received no comments on this issue at the NOPR stage. Thus, DOE continues to believe, as stated in the December 2009 NOPR, that the appropriate time to address such omission is during the next revision of the test procedure.

As to the DHE and pool heater test procedures, in the December 2009 NOPR, DOE proposed that its test procedures for vented DHE be applied to establish the efficiencies of vented gas hearth DHE. 74 FR 65852, 65861 (Dec. 11, 2009). DOE received no comments from interested parties raising any concern in this rulemaking about application of the DOE test procedures for vented DHE to other types of this product. In addition, DOE received no comments regarding application of its test procedures for pool heaters.

EPCA, as amended by EISA 2007, requires DOE to amend the test procedures for the three types of heating products to include provisions for measurement of the products' standby mode and off mode energy consumption. (42 U.S.C. 6295(gg)(2)(B)(v)) DOE is actively working on a separate rulemaking to amend its test procedures for the three types of heating products to incorporate these measurements of standby mode and off mode energy consumption in the future.

B. Technological Feasibility

1. General

As stated above, any standard that DOE establishes for any of the three heating products must be technologically feasible. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) DOE considers a design or technology option to be technologically feasible if it is in use by the respective industry or if research has progressed to the development of a

working prototype. “Technologies incorporated in commercial products or in working prototypes will be considered technologically feasible.” 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i). Once DOE has determined that particular technology options are technologically feasible, it evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, or service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety.

This final rule considers the same technology options as those evaluated in the December 2009 NOPR. (

See

chapter 3 and 4 of the TSD accompanying this notice.) All of these technologies have been used or are in use in commercially-available products, or exist in working prototypes. Also, these technologies all incorporate materials and components that are commercially available in today's supply markets for the products covered by this final rule. DOE received several comments on the technology options considered in the rulemaking and the preliminary conclusions drawn by applying the four screening criteria to them. A detailed discussion of the comment and response can be found in section IV.B. Therefore, DOE determined that all of the efficiency levels evaluated in this notice are technologically feasible.

2. Maximum Technologically Feasible Levels

As required by 42 U.S.C. 6295(p)(1), in developing the December 2009 NOPR, DOE identified the efficiency levels that would achieve the maximum improvements in energy efficiency that are technologically feasible (max-tech levels) for the three heating products. 74 FR 65852, 65861-62 (Dec. 11, 2009). (

See

chapter 5 of the TSD.) Except for the levels for electric and gas-fired storage water heaters and gas wall gravity DHE, DOE received no comments on the December 2009 proposed rule to lead DOE to consider changes to these levels. Therefore, for today's final rule, the max-tech levels for all classes of the three heating products, except for the electric and gas-fired water heaters and gas wall gravity DHE, are the max-tech levels identified in the December 2009 NOPR.

The max-tech levels considered for today's rule are provided in Table III.1.

See

section IV.C.2 for additional details of the max-tech efficiency levels and discussion of related comments from interested parties on the December 2009 NOPR.

Table III.1—Max-Tech Efficiency Levels for the Residential Heating Products Rulemaking for the Representative Products

Product class

Representative product

Max-Tech efficiency level

Residential Water Heaters

Gas-Fired Storage Water Heater

Rated Storage Volume = 40 Gallons

EF = 0.77.

Electric Storage Water Heater

Rated Storage Volume = 50 Gallons

EF = 2.35.

Oil-Fired Storage Water Heater

Rated Storage Volume = 32 Gallons

EF = 0.68.

Gas-Fired Instantaneous Water Heater

Rated Storage Volume = 0 Gallons, Rated Input Capacity = 199,999 Btu/h

EF = 0.95.

Direct Heating Equipment

Gas Wall Fan Type

Rated Input Capacity = Over 42,000 Btu/h

AFUE = 80%.

Gas Wall Gravity Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 70%.

Gas Floor Type

Rated Input Capacity = Over 37,000 Btu/h

AFUE = 58%.

Gas Room Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 83%.

Gas Hearth Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 93%.

Pool Heaters

Gas-Fired

Rated Input Capacity = 250,000 Btu/h

Thermal Efficiency = 95%.

C. Energy Savings

DOE forecasted energy savings over a 30-year analysis period in its national impact analysis (NIA) through the use of an NIA spreadsheet tool, as discussed in the December 2009 NOPR. 74 FR 65862, 65908-14, 65954 (Dec. 11, 2009).

One of the criteria that governs DOE's adoption of standards for covered products is that the standard must result in “significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B)) While EPCA does not define the term “significant,” the U.S. Court of Appeals for the District of Columbia Circuit, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (DC Cir. 1985), indicated that Congress intended “significant” energy savings in this context to be savings that were not “genuinely trivial.” DOE's estimates of the energy savings for energy conservation standards at each of the TSLs considered for today's rule indicate that the energy savings each would achieve are nontrivial. Therefore, DOE considers these savings “significant” within the meaning of Section 325 of EPCA.

D. Economic Justification

The following section discusses how DOE has addressed each of the seven factors that it uses to determine if energy conservation standards are economically justified. The comments DOE received on specific analyses and DOE's response to those comments are summarized and presented throughout section IV.

1. Specific Criteria

As noted earlier, EPCA provides seven factors to evaluate in determining whether an energy conservation standard for covered products is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following sections summarize how DOE has addressed each of those seven factors in evaluating efficiency standards for the three heating products.

a. Economic Impact on Consumers and Manufacturers

As required by EPCA, DOE considered the economic impact of potential standards on consumers and manufacturers of the three heating products. (42 U.S.C. 6295(o)(2)(B)(i)(I)) For consumers, DOE measured the economic impact as the change in installed cost and life-cycle operating costs (

i.e.,

the change in LCC). (

See

section IV.F and VI.C.1.a, and chapter 8 of the final rule TSD.) DOE investigated the impacts on manufacturers through the manufacturer impact analysis (MIA). (

See

sections IV.I and VI.C.2 of today's final rule, and chapter 12 of the final rule TSD.) The economic impact on consumers and manufacturers is discussed in detail in the December 2009 NOPR. 74 FR 65852, 65862-63, 65897-908, 65915-22, 65932-54, 65984-92 (Dec. 11, 2009).

b. Life-Cycle Costs

As required by EPCA, DOE considered the life-cycle costs of the three heating products. (42 U.S.C. 6295(o)(2)(B)(i)(II)) LCC is discussed at length in the December 2009 NOPR. 74 FR 65852, 65863, 65897-908, 65915, 65932-35 (Dec. 11, 2009). DOE calculated the sum of the purchase price (including associated installation costs) and the operating expense (including energy, maintenance, and repair expenditures), discounted over the lifetime of the equipment, to estimate the range in LCC benefits that consumers would expect to achieve due to standards.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA also requires DOE, in determining the economic justification of a proposed standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As in the December 2009 NOPR, for today's final rule, DOE used the NIA spreadsheet results in its consideration of total projected savings that are directly attributable to the standard levels DOE considered. 74 FR 65852, 65862, 65908-14, 65954 (Dec. 11, 2009).

d. Lessening of Utility or Performance of Products

In selecting today's standard levels, DOE did not consider trial standard levels for the three heating products that would lessen the utility or performance of such products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)). As explained in the December 2009 NOPR, DOE determined that none of the trial standard levels under considerations would reduce the utility or performance of the products subject to this rulemaking. 74 FR 65852, 65863, 65956 (Dec. 11, 2009).

e. Impact of Any Lessening of Competition

DOE considers any lessening of competition that is likely to result from standards. Accordingly, as discussed in the December 2009 NOPR (74 FR 65852, 65863, 65956 (Dec. 11, 2009)), DOE requested that the Attorney General transmit to the Secretary, not later than 60 days after publication of the proposed rule, a written determination of the impact, if any, of any lessening of competition likely to result from the standards proposed in the December 2009 NOPR, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))

To assist the Attorney General in making such a determination, DOE provided the U.S. Department of Justice (DOJ) with copies of the December 2009 proposed rule and the NOPR TSD for review. The Attorney General's determination is discussed in section VI.C.5 below, and is reprinted at the end of this rule. DOJ did not believe the standards proposed in the December 2009 NOPR for water heaters and pool heaters would likely lead to a lessening of competition. However, DOJ was concerned about the potential of the proposed standards to impact competition in the traditional DHE categories if no more than one or two DHE manufacturers chose to continue to produce products in any one of the categories. DOJ requested that DOE consider the potential impact on competition in determining the final standards for these categories. (DOJ, No. 99 at pp. 1-2)

DOJ's comment and DOE's response are further described in section VI.C.5.

“DOJ, No. 99 at pp. 1-2” refers to: (1) To a statement that was submitted by the U.S. Department of Justice. It was recorded in the Resource Room of the Building Technologies Program in the docket under “Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters,” Docket Number EERE-2006-BT-STD-0129, as comment number 99; and (2) a passage that appears on pages 1 through 2 of that statement.

f. Need of the Nation To Conserve Energy

In considering standards for the three heating products, the Secretary must consider the need of the Nation to conserve energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary benefits of standards are likely to be reflected in improvements to the security and reliability of the Nation's energy system. Today's standards will also result in environmental benefits. As discussed in detail in the December 2009 NOPR (74 FR 65852, 65863, 65923-29, 65956-61 (Dec. 11, 2009)) and in sections IV.K, IV.L, and IV.M, DOE has considered these factors in considering whether to adopt standards for the three heating products, primarily through its utility impact analysis, environmental assessment, and monetization of anticipated emissions reductions.

g. Other Factors

EPCA directs the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In adopting today's standards, the Secretary considered the potential impact of standards on certain identifiable groups of consumers who might be disproportionately impacted by any national energy conservation standard level. For certain water heaters and DHE, DOE considered the impacts of standards on low-income households and senior-only households, and of these water heaters, DOE also considered the impacts of standards on households in multi-family housing and in manufactured homes. 74 FR 65852, 65863, 65934-35, 65961-62 (Dec. 11, 2009).

In addition, DOE considered the uncertainties associated with whether, in order to adequately serve the water heater market: (1) Manufacturers could ramp up production of heat pump water heaters; (2) heat pump component manufacturers could increase production; and (3) enough servicers and installers of water heaters could be retrained. 74 FR 65852, 65863-64, 65877-78, 65962, 65965-66 (Dec. 11, 2009). Lastly, DOE considered the issues identified in the December 2009 NOPR surrounding the product division used in the two-slope energy-efficiency equations, promulgation of different standards for a subset of products, the heat pump water heater market, as well as the condensing water heater market. 74 FR 65852, 65966-67 (Dec. 11, 2009). These issues are addressed as presented below in section VI.D.2.

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA states that there is a rebuttable presumption that an energy conservation standard is economically justified if the increased

installed cost for a product that meets the standard is less than three times the value of the first-year energy (and, as applicable, water) savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and payback period (PBP) analyses generate values that calculate the payback period for consumers of potential energy conservation standards, which include, but are not limited to, the payback period contemplated under the rebuttable presumption test described above. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The results of DOE's PBP analysis can be found in sections VI.C.1.a and VI.C.1.c.

IV. Methodology and Discussion of Comments on Methodology

DOE used several analytical tools that it developed previously and adapted for use in this rulemaking. One is a spreadsheet that calculates LCC and PBP. Another tool calculates national energy savings and national NPV that would result from the adoption of energy conservation standards. DOE also used the Government Regulatory Impact Model (GRIM), along with other methods, in its MIA to determine the impacts on manufacturers of standards for the three heating products. Finally, DOE developed an approach using the Energy Information Administration's (EIA) National Energy Modeling System

(NEMS) to estimate the impacts of such standards on utilities and the environment. Chapters 3 through 16 of the TSD and the December 2009 NOPR discuss each of these analytical tools in detail. 74 FR 65852, 65897-919, 65923-29 (Dec. 11, 2009).

The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare its

AEO,

a widely-known energy forecast for the United States. The EIA approves the use of the name NEMS to describe only an

AEO

version of the model without any modification to code or data. For more information on NEMS, refer to The National Energy Modeling System: An Overview 1998. DOE/EIA-0581 (98) (Feb. 1998) (available at:

http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf).

The version of NEMS used for appliance standards analysis is called NEMS-BT. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from

AEO

assumptions, the name “NEMS-BT” refers to the model as used here. (“BT” stands for DOE's Building Technologies Program.) NEMS-BT offers a sophisticated picture of the effect of standards because it accounts for the interactions between the various energy supply and demand sectors and the economy as a whole.

As a basis for this final rule, DOE has continued to use the spreadsheets and approaches explained in the December 2009 NOPR. DOE used the same general methodology as applied in the December 2009 NOPR, but revised some of the assumptions and inputs for the final rule in response to stakeholder comments. The following sections discuss these comments and revisions.

A. Market and Technology Assessment

When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly-available information. DOE presented its market and technology assessment for this rulemaking in the December 2009 NOPR and chapter 3 of the NOPR TSD. 74 FR 65852, 65864-72 (Dec. 11, 2009). The assessment included product definitions, delineation of the products included in the rulemaking, product classes, manufacturers, quantities and types of products offered for sale, retail market trends, and regulatory and non-regulatory initiative programs. As discussed below, commenters raised a variety of issues related to the market and technology assessment, to which DOE responds in the following sections.

1. DOE's Determinations as to the Inclusion of Products in This Rulemaking

a. Whether Certain Products Are Covered Under the Act

i. Solar-Powered Water Heaters and Pool Heaters

As fully explained in the December 2009 NOPR, DOE has concluded that it presently lacks authority to prescribe standards for these products because EPCA currently covers only water heaters and pool heaters that use electricity or fossil fuels, and because any energy conservation standard currently adopted under EPCA for these two products must address or be based on the quantity of these fuels, but not solar power, that the product consumes. 74 FR 65852, 65864 (Dec. 11, 2009). In addition, DOE currently lacks authority to adopt standards for solar-powered water heaters because EPCA's definition of “water heater” includes only products that use “oil, gas, or electricity to heat potable water.” (42 U.S.C. 6291(27); 10 CFR 430.2) Because DOE did not receive additional feedback from interested parties, DOE did not change its position on solar-powered water heaters and pool heaters as presented in the December 2009 NOPR and summarized above.

ii. Add-On Heat Pump Water Heaters

DOE did not propose in the December 2009 NOPR to adopt standards for a residential product that is commonly known as an add-on heat pump water heater. This product typically is marketed and used as an add-on component to a separately manufactured, fully-functioning electric storage water heater. The add-on device, by itself, is not capable of heating water and lacks much of the equipment necessary to operate as a water heater. DOE has concluded, therefore, that the device does not meet EPCA's definition of a “water heater” and currently is not a covered product. 74 FR 65852, 65865 (Dec. 11, 2009).

In response to DOE's preliminary conclusions set forth in the December 2009 NOPR regarding add-on heat pump water heaters, the American Council for an Energy Efficient Economy (ACEEE) stated that add-on heat pump water heaters should not have been excluded from the rulemaking. (ACEEE, No. 79 at p. 5) According to the commenter, the December 2009 NOPR language used to exclude them could as readily be used to exclude split system air conditioners as add-ins to furnace systems, since they are not fully functional without the furnace's air handler. ACEEE argued that add-on heat pump water heaters could provide an important opportunity for cost-effective resistive unit retrofits, and standards are required to help exclude low-performance units that will not meet consumer needs. Otherwise, ACEEE asserted that there is danger that failures of low-performance add-on units will damage the reputation of the integral heat pump water heater product class, as it is not clear that consumers will easily differentiate the two product subclasses.

In response, DOE does not agree with ACEEE's comparison of add-on heat pump water heaters to central air conditioning and heating systems. Unlike components in a split air-conditioning system, add-on heat pump water heaters are paired to an electric storage water heater which is fully functional when it leaves the manufacturing facility. Components in a split air-conditioning system do not work independently until paired

together in the field. As DOE previously stated, the add-on device, by itself, is not capable of heating water and lacks much of the equipment necessary to operate as a water heater. DOE is not swayed by the commenter's speculative assertions regarding the future performance of add-on heat pump water heaters. Accordingly, DOE has concluded that an add-on heat pump water heater does not meet EPCA's definition of a “water heater” and currently is not a covered product.

iii. Gas-Fired Instantaneous Water Heaters With Inputs Above and Below Certain Levels

During this rulemaking, DOE considered whether to evaluate for standards gas-fired instantaneous water heaters with inputs greater than 200,000 Btu/h or less than 50,000 Btu/h. DOE determined that the former do not meet EPCA's definition of a “water heater,” given the specific portions of the definition pertaining to “instantaneous type units.” (42 U.S.C. 6291(27)(B)) As to the latter, DOE determined that manufacturers are not currently producing any gas-fired instantaneous water heaters with an input capacity less than 50,000 Btu/h. Therefore, DOE did not propose standards for products with an input capacity above 200,000 Btu/h or below 50,000 Btu/h. 74 FR 65852, 65865 (Dec. 11, 2009). DOE did not receive any comments on this issue at the NOPR stage, so the above approach has been retained for this final rule, and accordingly, no standards are being adopted for gas-fired instantaneous water heaters with inputs greater than 200,000 Btu/h or less than 50,000 Btu/h.

iv. Residential Pool Heaters With Input Capacities Above Certain Levels and Coverage of Spa Heaters

At the framework stage of this rulemaking, DOE considered excluding pool heaters with an input capacity greater than 1 million Btu/h, and commenters suggested that DOE should exclude products with an input capacity greater than 400,000 Btu/h. The rulemaking covers pool heaters that meet EPCA's definitions of “pool heater” (which provides no capacity limitation) and of “consumer product.” (42 U.S.C. 6291(25); 42 U.S.C. 6291(1)). DOE tentatively concluded that these provisions, and standards adopted under them, would apply to any pool heater distributed to any significant extent as a consumer product for residential use, regardless of input capacity. In addition, DOE tentatively concluded that pool heaters marketed as commercial equipment, which contain additional design modifications related to safety requirements for commercial installation, would not be covered by such standards. Therefore, DOE did not propose to limit application of the standards developed in this rulemaking to pool heaters with an input capacity below a specified level. 74 FR 65852, 65865 (Dec. 11, 2009).

In response to this position in the December 2009 NOPR, DOE received three comments urging DOE to establish an input capacity limit for residential pool heaters.

Zodiac Pool Systems (Zodiac) asserted that DOE should consider setting different minimum efficiency levels for pool heaters with input ratings of up to 400,000 British thermal units per hour (Btu/h) and for those with input ratings above 400,000 Btu/h. Zodiac stated its belief that there may be some benefits to be gained if what Zodiac referred to as “commercial” pool heaters (

i.e.,

those units rated above 400,000 Btu/h input) required a higher minimum efficiency level than that for “residential” pool heaters (

i.e.,

those units rated up to 400,000 Btu/h input). According to the commenter, commercial-type units are operated longer and in general, continuously, thereby increasing the potential payback in efficiency and energy savings over the life of the product. (Zodiac, No. 68 at p. 2)

Lochinvar asserted that DOE should limit the input capacity for residential pool heaters to 400,000 Btu/h and that DOE should add an additional classification for commercial pool heaters above 400,000 Btu/h. According to the commenter, practically all of the residential pool heaters sold today have pool heater inputs of 400,000 Btu/h and below. Lochinvar stated that residential pool heater sales by pool heater manufacturers do not include pumps. Residential pool heaters are designed to accept a wide range of water flows to meet the customers' demands because the residential market is mature with a wide variety of pool distribution accessories (

e.g.,

pumps that mate with water filtration systems, water temperature controls, and valving components). Therefore, pumps are not supplied because this is a variable that cannot be anticipated by the pool heater manufacturer. Thus, for efficiency rating purposes, pool heater thermal efficiency, as calculated by DOE's test procedure, does not include the pump energy. In contrast, Lochinvar pointed out that commercial pool heater applications require much higher volumes of water to be circulated in a primary pool loop that incorporates large filtration systems and pool water conditioning and monitoring equipment. Commercial pool heaters are designed to tap off of the primary pool loop and, via means of a separate pump, circulate pool water through the commercial pool heater to be heated and then delivered back to the pool loop. The ratio of water flow through commercial pool loop systems to that flowing through the pool heater is anywhere from 5 to 15 times. In these applications, commercial pool heater sales always provide or specify matching pumps to ensure sufficient water flow through the heat exchanger. Accordingly, the contribution of pump energy is included in the industry commercial pool heater test procedure and combustion efficiency metric. (Lochinvar, No. 56.6 at p. 2)

AHRI recommended that consideration be given in the future to creating separate subclasses to distinguish between commercial and residential pool heaters from a market perspective. Comments have previously been provided noting the major differences between pool heaters for commercial applications versus residential applications, specifically in terms of construction, control schemes, and how they go to market. (AHRI, No. 91 at p. 10)

As DOE discussed in the December 2009 NOPR, EPCA places no capacity limit on the pool heaters it covers in terms of its definition of “pool heater.” (42 U.S.C. 6291(25)) Furthermore, EPCA covers pool heaters as a “consumer product,” (42 U.S.C. 6291(2), 6292(a)(11)) and defines “consumer product,” in part, as an article that “to any significant extent, is distributed in commerce for personal use or consumption by individuals.” (42 U.S.C. 6291(1)) These provisions establish that EPCA, and standards adopted under it, apply to any pool heater distributed to any significant extent as a consumer product for residential use, regardless of input capacity. In light of the above and based upon the distinct differences articulated by commenters between the residential and commercial pool heater markets and products, DOE has concluded that further delineation by adding an input capacity limit is not necessary. Specifically, pool heaters marketed as commercial equipment, which contain additional design modifications related to safety requirements for installation in commercial buildings, are not covered by this standard. This would include pool heating systems that are designed to meet a high volume flow and are matched with a pump from the point of manufacture to accommodate the needs of commercial facilities. DOE believes manufacturers can distinguish those

units from pool heaters distributed to any significant extent as a consumer product for residential use, regardless of input capacity.

As to spa heaters, the EPCA definition for “pool heater” clearly encompasses them. (42 U.S.C. 6291(25)) Therefore, in the December 2009 NOPR, DOE tentatively concluded that they are covered by EPCA, and included them in this rulemaking. Furthermore, DOE tentatively concluded that because spa heaters and pool heaters perform similar functions, include similar features, and lack performance or operating features that would cause them to have inherently different energy efficiencies, a separate product class for such units is not warranted. 74 FR 65852, 65865-66 (Dec. 11, 2009). DOE did not receive any comments in response to its proposed treatment of spa heaters in the December 2009 NOPR. Consequently, DOE has concluded that spa heaters are included within EPCA under the definition of “pool heater” and do not warrant a separate product class.

v. Vented Hearth Products

The following two paragraphs summarize DOE's reasons, explained in greater detail in the December 2009 NOPR for concluding that EPCA covers vented hearth products and for including them in this rulemaking. 74 FR 65852, 65866 (Dec. 11, 2009).

When EPCA was amended to include energy conservation standards for “direct heating equipment,” that term replaced the term “home heating equipment” in the Act. However, EPCA has never defined either of these terms. Instead, DOE regulations define “home heating equipment,” stating that the term includes “vented home heating equipment.” 10 CFR 430.2. These definitions inform the meaning of “direct heating equipment,” but, to provide clarity in the future, in today's rule DOE is incorporating into its regulations a definition of this term that is identical to the existing definition of “home heating equipment.”

Vented hearth products include gas-fired products such as fireplaces, fireplace inserts, stoves, and log sets that typically include aesthetic features and that provide space heating. DOE has concluded that such products meet its definition of “vented home heating equipment,” because they are designed to furnish warmed air to the living space of a residence. DOE has also concluded, therefore, that they are covered products under EPCA and are properly classified as DHE. Accordingly, DOE proposed and today is adopting standards for vented hearth products.

In the December 2009 NOPR, DOE also pointed out that vented hearth products would be subject to the same product testing and certification requirements that currently apply to DHE. 74 FR 65852, 65866 (Dec. 11, 2009). In order to help manufacturers determine more easily whether their vented hearth direct heating equipment is covered under DOE's regulations, DOE proposed to adopt the following definition of “vented hearth heater”:

Vented hearth heater

means a vented, freestanding, recessed, zero clearance fireplace heater, a gas fireplace insert or a gas-stove, which simulates a solid fuel fireplace and is designed to furnish warm air, without ducts to the space in which it is installed.

74 FR 65852, 65867-68 (Dec. 11, 2009).

The Air-Conditioning, Heating, and Refrigerating Institute (AHRI), the Hearth, Patio, and Barbeque Association (HPBA), and Empire Comfort Systems (Empire) do not support DOE's proposed definition “vented hearth heater” as presented above and in the December 2009 NOPR. However, these three interested parties do support DOE's decision to establish vented gas fireplace heaters as a separate type of direct heating equipment. AHRI, HPBA, and Empire urged DOE to use the definition of “vented gas fireplace heater” as presented in the American National Standards Institute (ANSI) Standard Z21.88,

Vented Gas Fireplace Heaters,

so as to directly connect it to this safety standard. By law, manufacturers are required to list and label these types of appliances to approved safety standards such as ANSI Z21.88. By using this safety standard reference, the interested parties argued that DOE and others would be able to distinguish vented gas fireplace heaters from decorative gas appliances certified to ANSI Z21.50,

Vented Gas Fireplaces,

and ANSI Z21.60,

Decorative Gas Appliances for Installation in Solid-Fuel Burning Fireplaces,

thereby eliminating a significant opportunity for confusion in the marketplace after the new energy conservation standards take effect. The interested parties argued that when the National Appliance Energy Conservation Act was being developed, it was recognized that there were decorative gas appliances that were marketed based on the aesthetic appeal of a simulated solid fuel fireplace or stove. The interested parties asserted that those same products are available in the marketplace today and need to be excluded from inclusion in this rulemaking in a proactive manner, preferably by using the consensus safety standard designation in the definition and adding an explanatory note to the definition stating that ANSI Z21.50 and ANSI Z21.60 appliances are not vented gas fireplace heaters. The interested parties suggested the following definition of “vented gas fireplace heater”:

Vented Gas Fireplace Heater.

A vented appliance which simulates a solid fuel fireplace and furnishes warm air, with or without duct connections, to the space in which it is installed. A vented gas fireplace heater is such that it may be controlled by an automatic thermostat. The circulation of heated room air may be by gravity or mechanical means. A vented gas fireplace heater may be freestanding, recessed, zero clearance, or a gas fireplace insert.

(AHRI, No. 91 at pp. 13-14; HPBA, No. 75 at p. 1; Empire, No. 100 at p. 3; AHRI, Public Meeting Transcript, No. 57.4 at pp. 48-49; HPBA, Public Meeting Transcript, No. 57.4 at pp. 42 and 51; and Empire, Public Meeting Transcript, No. 57.4 at pp. 50)

ACEEE also suggested that it would be reasonable for DOE to not set efficiency regulations for purely decorative products with an output capacity less than or equal to 6,000 Btu/h. However, ACEEE asserted that an upper limit is necessary to prevent subterfuge and confusion with actual heating appliances. (ACEEE, No. 79 at p. 6)

DOE agrees with the interested parties that further modification to the definition of “vented hearth heater” is necessary to provide clear guidance to the industry regarding which products are covered under DOE's regulations. DOE's definition of “vented home heating equipment” limits the coverage of vented home heating equipment to include only those units “designed to furnish warmed air to the living space of a residence.” 10 CFR 430.2. DOE notes that it is often difficult to determine the intended purpose of fireplace product currently sold. Units designed to furnish warmed air to the living space and purely decorative units often share very similar external appearances, unit construction, and input capacities. Some interested parties suggested DOE use the ANSI safety standards to distinguish coverage in the marketplace. DOE does not believe that using ANSI safety standards would be a suitable solution to this problem since many of those products classified as “decorative fireplaces” under the ANSI safety standards are very similar in construction to fireplace heaters and provide warm air to the residence.

DOE notes that the primary difference between the two types of hearth products is that decorative units are intended only to provide the ambiance and aesthetic utility associated with a

solid fuel (

e.g.,

wood-burning) fireplace with little or no heat output to the living space, while heating hearth products are intended to provide heat to the living space along with the aesthetic utility. Heating-type products are often shipped with additional accessories that decorative products do not have, such as thermostats to control the heat output and blowers that distribute hot air to the room. DOE research suggests that this additional equipment is typically optional and hence not very useful to distinguish between heaters and decorative units.

After carefully considering the public comments and conducting additional research, DOE believes implementing a maximum input capacity limit will likely result in a clear distinguishable way for DOE, manufacturers, and consumers to identify which products provide “warmed air to the residence,” as compared with those designed purely for aesthetic purposes. Because of the nature of hearth products (

i.e.,

the presence of a flame), all hearth products create heat and nearly all of the hearth products provide some amount of that heat, however small that may be, to the surrounding living space.

Unlike fireplace heaters, decorative hearth products provide a unique utility, specifically offering the ambiance and aesthetic appeal provided by the flame without adding significant heat to the conditioned space. By way of explanation, some consumers that wish to purchase purely decorative hearth products live in warmer climates where any additional heat provided to the residence would be undesirable. However, these consumers still want the aesthetic appeal provided by the flame. As the efficiency of the vented hearth product is increased, the more useful heat is provided to the space. So in response to comments, DOE is adopting an approach that would maintain the utility and availability of decorative hearth products.

In order to determine whether a maximum input capacity limit is a good indicator of intended use, DOE reviewed the market for vented hearth products, including those products marketed as heaters and decorative appliances. DOE research identified products marketed for heating and decorative purposes offered across the entire range of input capacities. Many of the units produced solely for decorative purposes come with the capability to vary the input capacity in order to change the magnitude of the flame. Since manufacturers provide consumers, installers, and contractor with a means to change the input capacity of the unit to better match consumers' aesthetic desires and heating needs, DOE believes input capacity is indicative of the type of intended use of the vented hearth heater.

DOE believes that consumers desiring a purely decorative unit will chose to buy units which minimize the heat furnished to their living space, thereby reducing the impacts on the cooling loads of their house for those living in warmer climates. DOE contacted several contractors in warmer climates, where decorative appeal is presumably the consumers' top priority. From these discussions and further review of the product literature, DOE found that many hearth products allow the input capacity to be modulated via the gas valve. In warmer climates, contractors frequently suggest to their customer to turn down the gas supply to minimize the amount of heat radiated and convected to the air within the residence. Some installation companies even offer optional venting products and dampers, which attempt to direct the heat to other parts of the residence or outdoors. Even though decorative hearth products are offered with a large range of input capacities, DOE research hence suggests that the input rating is typically significantly reduced for applications in conditions in which the flames are purely ornamental to minimize heat provided to the residence. This is shown by the variability in the input ratings offered for a given model as described in manufacturer catalog data, which can be field-adjusted based on the amount of heat desired within the residence.

DOE believes that hearth products intended for decorative purposes provide a specific aesthetic utility that consumers value. In its analysis, DOE considered the value of this aesthetic quality and the additional heat load that such systems produce. DOE believes that a maximum input capacity of 9,000 Btu/h is an appropriate cut-off for decorative appliances since existing hearth-type DHE units featuring adjustable input capacities operate at or below this input capacity limit. DOE chose 9,000 Btu/h because other gas appliances found in a house, which may have unintended heating loads, such as a burner on a gas-cook top, are also found at this input capacity. By allowing manufacturers the option of producing vented hearth heaters that are excluded from the standards amended in today's final rule, DOE is preserving the ability of manufacturers to continue selling decorative units, consumers can continue to enjoy them, and unintended heat loads are limited to no more than

1/2

of a ton of heating capacity per decorative unit. DOE research suggests that manufacturers can comply relatively inexpensively with the coverage established by the “vented hearth heater” definition by reducing the maximum input capacity of the gas delivery system through the use of a restrictor plate, modifying the gas valve, or altering the flame orifice. All of these options are currently available or utilized within the industry today. DOE believes the most likely solution that will be used by hearth manufacturers to meet DOE's restriction on input capacity would be to use a restrictor plate because it is the most inexpensive. A restrictor plate would ensure that limitations were placed upon the gas line such that the maximum input capacity of the fireplace is less than 9,000 Btu/h. DOE notes that all vented hearth heaters which manufacturers produce to be purely decorative units must be designed so that the consumer cannot override this 9,000 Btu/h maximum input capacity limit in the field.

DOE chose to include a maximum input capacity limitation, instead of an output capacity limit as ACEEE suggested, because a very inefficient unit could have a very high input capacity and use a lot of energy, while meeting DOE's limitation on output capacity.

DOE realizes its amended definition of “vented hearth heater” will include all types of hearth units with maximum input capacities above the specified limit, including all products that are currently referred to as fireplace heaters and some products that are currently deemed as decorative within the marketplace. DOE also notes that this maximum input capacity corresponds to the output capacity suggested by ACEEE, assuming the unit is about two-thirds efficient, which is an efficiency that is comparable to the standard level being adopted today for vented gas hearth heaters. Therefore, DOE is modifying the “vented hearth heater” definition to include a maximum input capacity limit of 9,000 Btu/h for purely decorative units.

AHRI, HBPA, and Empire asserted that DOE should amend its definition of “vented hearth heater” to include duct connections. While duct connections were excluded from the original “direct heating equipment” definition, the interested parties stated that this exclusion is unnecessary for vented gas fireplace heaters because they are allowed to have duct connections by design. The interested parties argued that there is no reason for DOE to exclude these currently-available appliances merely based upon the

presence of ducting, particularly given that the limiting definition of “vented home heating equipment” was written before the products were introduced. (AHRI, No. 91 at pp. 13-14; HPBA, No. 75 at pp. 1-2; Empire, No. 100 at p. 3)

DOE agrees with these interested parties and is extending coverage to both ducted and ductless vented hearth heater products. DOE believes this modification will provide equal treatment to similar products offered on the market today. DOE's research confirmed that some vented hearth heater models have the ability to connect to ducts and distribute the heat furnished to the space throughout the house. In order to include both ducted and ductless vented hearth products, DOE is amending the definitions of “vented hearth heater” and “vented home heating equipment” for inclusion at 10 CFR 430.2. Lastly, DOE is making a number of editorial changes to the definition of “vented hearth heater” proposed in the December 2009 NOPR, in order to make the definition easier to read. As adopted, these definitions read as follows:

Vented hearth heater

means a vented appliance which simulates a solid fuel fireplace and is designed to furnish warm air, with or without duct connections, to the space in which it is installed. The circulation of heated room air may be by gravity or mechanical means. A vented hearth heater may be freestanding, recessed, zero clearance, or a gas fireplace insert or stove. Those heaters with a maximum input capacity less than or equal to 9,000 British thermal units per hour (Btu/h), as measured using DOE's test procedure for vented home heating equipment (10 CFR part 430, subpart B, appendix O), are considered purely decorative and are excluded from DOE's regulations.

DOE is also amending its definition of “

vented home heating equipment

vented heater”

in 10 CFR 430.2 to include vented hearth heaters with duct connections. This modification is necessary in order for the definition of “vented home heating equipment or vented heater” to be consistent with the definition of “vented hearth heater.” DOE is also amending this definition to add “vented hearth heater” to the list of products—“vented wall furnace, vented floor furnace, and vented room heater”—that the definition currently states are included as vented home heating equipment. As stated in the December 2009 NOPR and above, vented hearth products already meet DOE's definition for “vented home heating equipment.” This is true regardless of whether the term “vented hearth heater” is added to that definition. Thus, the addition of that term merely clarifies the existing definition, and is a technical correction that does not alter the substance of the definition. As amended, the definition reads as follows:

Vented home heating equipment

vented heater

means a class of home heating equipment, not including furnaces, designed to furnish warmed air to the living space of a residence, directly from the device, without duct connections (except that boots not to exceed 10 inches beyond the casing may be permitted and except for vented hearth heaters, which may be with or without duct connections) and includes: vented wall furnace, vented floor furnace, vented room heater, and vented hearth heater.

b. Covered Products Not Included in This Rulemaking

As the December 2009 NOPR explains in detail, unvented direct heating equipment, electric pool heaters, and combination water heating/space heating products all are covered products under EPCA, but no Federal energy conservation standards exist for them. 74 FR 65852, 65866-76 (Dec. 11, 2009). DOE did not propose standards for them in this rulemaking, because, in the case of unvented DHE, a standard could produce little energy savings (largely due to the fact that any heat losses are dissipated directly into the conditioned space) and because of limitations in the applicable DOE test procedure, and in the case of the other two products, because of the lack of an appropriate DOE test procedure.

Id.

By contrast, standards currently apply to tabletop and electric instantaneous water heaters. (10 CFR 430.32(d)) But, as explained in the December 2009 NOPR, an increase in the current standard levels for tabletop products is not feasible, and would force them off the market, and an increase in the levels for electric instantaneous products would, at best, save little energy. 74 FR 65852, 65867 (Dec. 11, 2009). Therefore, DOE also did not propose amended standards for these products.

With regard to these five covered products, DOE sees no reason to change the conclusions expressed in the December 2009 NOPR, and takes no further action in today's final rule. DOE did not receive any comments in response to its proposed treatment of these five covered products in the December 2009 NOPR. Consequently, DOE is not adopting standards for these products in today's final rule.

2. Product Classes

In evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used or by capacity or other performance-related feature that justifies a different standard for products having such feature. (

See

42 U.S.C. 6295(q)) In deciding whether a feature justifies a different standard, DOE must consider factors such as the utility of the feature to users.

Id.

DOE normally establishes different energy conservation standards for different product classes based on these criteria.

Table IV.1 presents the product classes for the three types of heating products under consideration in this rulemaking. The subsections below provide additional details and a discussion of comments relating to the product classes for the three heating products in response to the December 2009 NOPR proposals.

Table IV.1—Product Classes for the Three Heating Products

Residential water heater type

Characteristics

Gas-Fired Storage Type

Nominal input of 75,000 Btu/h or less; rated storage volume from 20 to 100 gallons.

Oil-Fired Storage Type

Nominal input of 105,000 Btu/h or less; rated storage volume of 50 gallons or less.

Electric Storage Type

Nominal input of 12 kW (40,956 Btu/h) or less; rated storage volume from 20 to 120 gallons.

Gas-Fired Instantaneous

Nominal input of over 50,000 Btu/h up to 200,000 Btu/h; rated storage volume of 2 gallons or less.

Direct heating equipment type

Heating capacity (Btu/h)

Gas Wall Fan Type

Up to 42,000.

Over 42,000.

Gas Wall Gravity Type

Up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Floor

Up to 37,000.

Over 37,000.

Gas Room

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Hearth

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Pool heater type

Characteristics

Residential Pool Heaters

Gas-fired.

a. Water Heaters

As presented in the December 2009 NOPR, residential water heaters can be divided into various product classes categorized by physical characteristics that affect product efficiency. Key characteristics affecting the energy efficiency of the residential water heater are the type of energy used and the volume of the storage tank. 74 FR 65852, 65868-71 (Dec. 11, 2009). These product classes are differentiated by the type of energy used (

i.e.,

electric, gas, or oil) and the type of storage for the water heater (

i.e.,

storage, tabletop, or instantaneous). In this rulemaking, DOE has excluded tabletop water heaters and electric instantaneous water heaters from consideration for the reasons discussed above. 74 FR 65852, 65868 (Dec. 11, 2009).

In response to the December 2009 NOPR analysis and the issues for which DOE specifically sought comment, DOE received several comments from interested parties about DOE's proposed product classes and their organization for residential water heaters. These comments are summarized and addressed immediately below.

i. Low-Boy Water Heaters

General Electric (GE), A.O. Smith Corporation (A.O. Smith), Bradford White Corporation (BWC), and AHRI supported the need for a separate product class for low-boy water heaters, which are electric storage water heaters that are shorter in height and wider in diameter than traditional water heaters. (GE, No. 84 at p. 1; A.O. Smith, No. 76 at p. 2; BWC, No. 61 at p. 3; AHRI, No. 91 at p. 3; Rheem, No. 89 at p. 11; and A. O. Smith, Public Meeting Transcript, No. 57.4 at pp. 55-56) ACEEE, EarthJustice, and ASAP disagreed and supported DOE's position in the December 2009 NOPR, which did not establish a separate product class for low-boy electric storage water heaters. (ACEEE, No. 79 at p. 8; EarthJustice, No. 83 at p. 1; and ASAP, Public Meeting Transcript, No. 57.4 at p. 60) The individual commenters' rationales and further justification are presented below.

GE asserted the low-boy water heaters should be separated into their own product class, because in some categories, the benefits of unique size, configuration, and functionality are very important to consumers. In this product category, the unique functionality of a low-boy water heater happens to focus on the physical dimensions of the product. GE asserted that some consumers prefer or require the lower overall product height, as they do not have the space available for a standard-sized water heater. (GE, No. 84 at p. 1)

A.O. Smith strongly asserted that a separate class for low-boy water heaters is justified, for many of the same reasons that a separate class is already established for table-top water heaters. According to the commenter, low-boy water heaters are predominately used in installations where height is a constraint, such as where a furnace or air-handler is mounted on a rack above the low-boy water heater in an equipment closet. Because low-boy water heaters are already a larger diameter unit than the baseline design, increasing the diameter even more by requiring additional insulation thickness would make the heater too large to fit into the space available in most replacement situations (again, such as the closet/rack example above). A.O. Smith stated its belief that there will be a loss of utility for low-boy heaters if they are not put into a separate class with an EF less than proposed for the “standard” heater. (A.O. Smith, No. 76 at p. 2)

BWC supports a separate product class for low-boy water heaters because they have very specific applications. Low-boy water heaters are frequently used in condominiums where additional space is unavailable and a gas water heater cannot be used due to venting limitations. When used in these applications, BWC claimed that low-boys use less water than typical standard electric water heaters. Therefore, BWC asserted low-boy water heaters have a different utility than standard electric water heaters. (BWC, No. 61 at p. 3)

AHRI asserted that low-boy water heaters use electricity, but are not offered in the same range of volumes as standard electric storage water heaters. Most low-boys are offered in 30-gallon and 40-gallon sizes. AHRI asserted that the December 2009 NOPR mischaracterizes the functionality or utility of these products. Low-boy models have the unique feature of being able to be installed in short, confined spaces in a dwelling. But, as is the case with countertop electric water heaters, the constraints dictated by the spaces in which these products are installed affect the options for increasing the efficiency of low-boy electric models. Many low-boy models today may have efficiencies comparable to standard size electric water heaters, but they do not have the same potential for further increasing their efficiency. Accordingly, AHRI argued that this separate product class should have a minimum EF standard that is 0.01 less than that proposed for electric storage water heaters. (AHRI, No. 91 at p. 3)

Rheem asserted that low-boy electric water heaters (

i.e.,

electric storage water heaters ranging from 20 to 50 gallons) are typically installed under a counter or stacked (air handler) in high-density housing, such as apartment and condominium communities. According to Rheem, any size increase driven by a significant change in the EF

requirements would affect the product geometry (diameter and height) and drive the potential use of multiple, smaller, point-of-use electric or instantaneous electric water heaters. (Rheem, No. 89 at p. 11)

ACEEE asserted that low-boy water heaters designed to fit beneath conventional cabinets are similar to “table-top” units, with similar trade-offs in terms of capacity and improved efficiency (through thicker insulation). ACEEE agrees with DOE's reasoning in the December 2009 NOPR that low-boys can be designed to meet the proposed standards by using thicker insulation, higher set-point settings, and a tempering valve, and, therefore, ACEEE opined that, in general, no special product class is needed. However, as a compromise, ACEEE stated that it could support a special class for low-boys designed for small living units, but with an upper capacity limit of 30 gallons, in order to prevent “leakage” of lower-efficiency units into the general water heater applications. If larger units are also included, ACEEE expressed concern that significant growth in low-boy sales would be expected, leading to a significant loss in energy savings relative to use of higher-efficiency conventional units. (ACEEE, No. 79 at pp. 8-9)

EarthJustice stated that a separate product class for low-boy water heaters is not justified. According to the commenter, DOE's analyses demonstrate that water heaters in these configurations can meet the efficiency standards under consideration for electric-storage and gas-storage water heaters, respectively (

see

74 FR 65852, 65869 (Dec. 11, 2009)). (EarthJustice, No. 83 at p. 1)

NRDC also stated that “low-boy” water heaters do not warrant a separate product class, because these products could become a low-cost loophole to the standard if allowed to be less efficient than traditional tank-type water heaters. (NRDC, No. 85 at p. 6)

ASAP agreed with DOE's position not to establish a separate product class for low-boy water heaters, as presented in the December 2009 NOPR. ASAP warned DOE to keep a close eye on lower standards for particular product classes, which can result in market shares for those products increasing and reduction of the overall energy savings associated with the energy conservation standards. (ASAP, Public Meeting Transcript, No. 57.4 at p. 60)

After careful consideration, DOE does not agree with certain commenters that a separate product class needs to be established for low-boy water heaters. As noted above, in evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used, or by capacity or another performance-related feature that justifies a different standard. (

See

42 U.S.C. 6295(q)) DOE notes that low-boy water heaters use the same type of energy as other water heaters (

i.e.,

gas or electricity) and are offered in a range of storage volumes. Thus, the type of energy used and the functionality of low-boy units are similar to other types of water heaters. DOE acknowledges that low-boy water heaters are only offered in certain volume sizes, which tend to be at the lower end of the range (

i.e.,

below 50 gallons). While many of the commenters pointed to specific size-constrained applications where low-boy water heaters are installed, DOE reviewed the market and found that low-boy water heaters are generally classified as water heaters that have a shorter height and wider diameter. However, unlike tabletop water heaters, low-boy water heaters did not seem to have a uniform or common platform size. Instead, the physical dimensions of low-boy water heaters varied by manufacturer, model, and efficiency, but this is also true of the entire electric storage water heating market. Water heater manufacturers offer a range of options to consumers, including various physical dimensions that are not unique to low-boy units. (

See

chapter 3 of the TSD.) Furthermore, DOE does not believe each different combination of physical dimensions currently available on the market warrants a separate product class. DOE reaffirmed its position in the December 2009 NOPR that the size constraints of these units do not appear to impact energy efficiency, since many “low-boy” models have efficiencies that are comparable to standard-size water heaters currently available on the market. DOE's research suggests that there are currently multiple low-boy units offered that will meet the standards being adopted in today's final rule for electric storage water heater less than 55 gallons. Specifically, DOE found multiple low-boy models at 0.95 EF with a rated storage volume of 50 gallons. Consequently, for the reasons above, DOE is not establishing a separate product class for low-boy water heaters.

ii. Ultra-Low NO

Water Heaters

In the December 2009 NOPR analysis, DOE did not propose to establish a separate product class for ultra-low NO

gas-fired storage water heaters. 74 FR 65852, 65869-70 (Dec. 11, 2009). However, DOE did specifically analyze these water heaters as compared to traditional gas-fired storage water heaters with standard burners. 74 FR 65852, 65882-83 (Dec. 11, 2009). In response to the treatment of ultra-low NO

gas-fired storage water heaters in the December 2009 NOPR, DOE received a number of different comments. A.O. Smith, BWC, AHRI, and Rheem urged DOE to establish a separate product class for ultra-low NO

gas-fired water heaters. (A.O. Smith, No. 76 at p. 2; BWC, 61 at p. 3; AHRI, No. 91 at p. 3; A.O. Smith, Public Meeting Transcript, No. 57.4 at pp. 56-57; and AHRI, Public Meeting Transcript, No. 57.4 at pp. 57-58) On the other hand, ACEEE, EarthJustice, and NRDC agreed with DOE's position in the December 2009 NOPR that ultra-low NO

gas-fired water heaters should not have their own product class. Further details provided by each commenter are presented below.

A.O. Smith asserted that the burner technology needed to comply with the South Coast Air Quality Management District's (SCAQMD) ultra-low NO

requirements and the changes to the water heater technology that are needed to meet increased efficiency requirement are “operationally contradictory” with each other. The types of burners currently used to comply with the ultra-low NO

requirement in atmospheric heaters are much more restrictive (higher pressure drop) than conventional burners. Since these ultra-low NO

heaters also must comply with the flammable vapor ignition resistance requirements, they also have flame arrestors on the air inlet, which add more restriction (pressure drop) to the system. In order to boost the efficiency, the flue baffle must be made more effective, which means making it more restrictive. The increased pressure drops due to all three components taken together is enough to offset the thermal buoyancy of the atmospheric venting design, and cause the heater to no longer work. The only way to overcome the additional restriction would be to add a blower and/or power-burner to the heater, which would greatly increase the manufacturing and installation costs of the heater. (A.O. Smith, No. 76 at p. 2)

BWC asserted that ultra-low NO

gas-fired water heaters should be a separate product class because they have distinct design differences compared to standard atmospheric gas water heaters. The unique design requirements for ultra-low NO

gas-fired water heaters greatly limit their capacity to increase the efficiency while maintaining a lower level of emissions. (BWC, 61 at p. 3)

AHRI challenged the December 2009 NOPR's tentative conclusions that ultra-low NO

gas-fired models provide the same utility as standard gas-fired storage water heaters, while simply using a distinct burner to achieve the ultra-low NO

emissions. AHRI argued that standard gas-fired water heaters do not offer the same utility as the ultra-low NO

models because the standard gas-fired water heater cannot heat water efficiently while also emitting NO

at a very low rate. Regardless of its efficiency, a standard residential gas-fired water heater cannot be sold or installed in many areas in California. According to AHRI, the feature of ultra-low NO

emissions is a unique performance characteristic that imposes different conditions on how, and at what expense, the efficiency of these models can be increased. As is the case with low-boy electric models, AHRI asserted that ultra-low NO

water heaters should have a separate product class with a minimum EF standard that is 0.01 less than that proposed for gas-fired storage water heaters. (AHRI, No. 91 at p. 4)

ACEEE stated that there is no reason for a separate product class with separate standards for ultra-low NO

water heaters. According to ACEEE, these units can meet the same standards as conventional equipment, if they incorporate induced draft (power vent) to compensate for the combined pressure drop of the better baffle, FVIR, and ultra-low NO

burner. If stakeholders want an exception, the commenter suggested that this should be dealt with by the waiver process rather than by establishing another dead-end class of atmospherically vented equipment. (ACEEE, No. 79 at p. 9)

EarthJustice stated that a separate product class for ultra-low NO

gas-fired water heaters is not justified. The commenter pointed to DOE's own analysis, which arguably demonstrates that water heaters in these configurations can meet the efficiency standards under consideration for electric storage and gas storage water heaters, respectively (

see

74 FR 65852, 65869, 65881 (Dec. 11, 2009)). (EarthJustice, No. 83 at p. 1)

NRDC likewise argued that there should not be a separate product class for ultra-low NO

gas-fired water heaters. NRDC stated that the efficiency requirements considered in the rulemaking can be met in ultra-low NO

gas-fired units by moving to power vent technology and probably with other routes. Therefore, the commenter concluded that there is no need to allow a less-stringent standard for these products when the proposed requirements can be met. (NRDC, No. 85 at p. 6)

After considering public comments on this issue, DOE has decided not to change its position from the December 2009 NOPR and continues to believe that a separate product class does not need to be established for ultra-low NO

gas-fired storage water heaters. As noted above, in evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used, or by capacity or other performance-related feature that justifies a different standard for products having such feature. (

See

42 U.S.C. 6295(q)) Ultra-low NO

gas-fired storage water heaters use the same type of energy (

i.e.,

gas) and are offered in comparable storage volumes to traditional gas-fired storage water heaters using standard burners. In deciding whether the product incorporates a performance feature that justifies a different standard, DOE must consider factors such as the utility of the feature to users.

Id.

In terms of water heating, DOE believes ultra-low NO

water heaters provide the same utility to the consumer. However, DOE also notes that ultra-low NO

water heaters do incorporate a specific burner technology allowing these units to meet the strict emissions requirements of local air quality management districts. Some of the commenters pointed out that the increased pressure drops could adversely impact the efficiency levels. DOE agreed with this assertion and maintained its methodology for handling ultra-low NO

gas-fired storage water heaters, which included development of a separate analysis for these products, as detailed in the December 2009 NOPR. 74 FR 65852, 65881-82 (Dec. 11, 2009).

See

section IV.C.2.a for additional details. This analysis showed that implementing power venting and the same insulation increases as those for standard gas-fired water heaters would result in slightly lower efficiencies due to the additional pressure restrictions resulting from the addition of the ultra-low NO

burner. Therefore, DOE implemented technologies at lower efficiency levels for ultra-low NO

gas-fired storage water heaters in order to achieve the same efficiencies as those identified for standard gas-fired storage water heaters. Based on the teardown analysis of ultra-low NO

water heaters, DOE believes that ultra-low NO

gas-fired storage water heaters will be able to meet the standards that are being adopted in today's final rule using available technologies currently on the market. Therefore, for the above reasons, DOE has decided not to establish a separate product class for ultra-low NO

gas-fired storage water heaters in this final rule.

iii. Heat Pump Water Heaters

Throughout the rulemaking, DOE has treated heat pump water heaters as a design option for electric storage water heaters rather than a separate product class, as further explained and detailed in the preliminary analysis. (

See

Chapter 2 of the preliminary analysis TSD and the discussion in the December 2009 NOPR (74 FR 65852, 65870-81 (Dec. 11, 2009).) A heat pump water heater represents a merging of two technologies: (1) An electric resistance storage water heater with tank and controls; and (2) a refrigeration circuit similar to that found in a residential air-conditioner. Heat pump water heaters use existing heat pump technology to extract heat from the surrounding air (typically at room temperature) for heating stored water. For electric water heaters, this is an alternative to resistive heating, which transfers heat from the electric resistance element to the water. DOE received several comments from interested parties in response to its treatment of heat pump water heaters and its request for comment on some of the issues identified surrounding heat pump water heaters. Some commenters urged DOE to establish separate product classes for traditional electric resistance storage water heaters and heat pump water heaters, while others agreed with DOE's classification of heat pump water heaters. Their specific comments and DOE's response are presented below.

General Electric stated support for DOE's proposal to not create a separate product class for heat pump water heaters, as they are designed to replace traditional electric water heaters in most residences, and have similar consumer functionalities. (GE, No. 84 at p. 1)

Daikin asserted that electric resistance water heaters should be placed in the same product class as heat pump water heaters. Anecdotally, Daikin stated that in the European Union, the European Parliament has classified both of these products in the same category for energy efficiency regulatory purposes, and the commenter further stated that in Japan, electric resistance water heaters have practically disappeared from the market as of 2010. In addition, Daikin stated that heat pump water heaters usually have a back-up electric heater. If heat pump water heaters are classified separately, there will be a difficult question about whether the back-up electric heater requires heat pump water heating systems to remain in the other

category for some purposes. However, Daikin suggested that if DOE decides to establish a heat pump water heater product class, then it should be subdivided based on the following three criteria: (1) Refrigerant type; (2) heat source (

i.e.,

air to water heat pump); and (3) add-on or integrated type system (

i.e.,

heat pump system and a tank). (Daikin, No. 82 at pp. 1-2)

Northwest Energy Efficiency Alliance (NEEA) stated there is not a need for a separate class of water heaters based on heat pump versus resistance elements. According to NEEA, all of the current product offerings have a first-hour rating that is equivalent to an electric resistance heated product of the same size. From a consumer utility standpoint, the products are equivalent in terms of delivery of hot water for an equivalent tank size. These products are all designed as integrated, “drop-in” replacement units according to product literature that NEAA has reviewed from A.O. Smith, Rheem, and General Electric. (NEEA, No. 88 at p. 2)

In its comments, EarthJustice opposed establishing a separate product class for heat pump water heaters, based on the following rationale. EarthJustice asserted that EPCA provides both mandatory and permissive authority for DOE to establish new product classes for covered products. (

See

42 U.S.C. 6295(o)(4) and (q)(1)) However, aside from the unique situation of a covered product capable of consuming different kinds of energy (42 U.S.C. 6295(q)(1)(A)), EarthJustice argued that EPCA only mandates the creation of multiple product classes when the failure to do so would eliminate certain truly unique product attributes from the market. (42 U.S.C. 6295(o)(4)) In contrast, while DOE does have discretion to create separate classes for products based on the presence of “a capacity or other performance‐related feature,” the Department may exercise this authority only if “such feature justifies a [different] standard.” 42 U.S.C. 6295(q)(1)(B)) For the reasons explained below, EarthJustice argued that the plain language of EPCA forecloses an interpretation that the establishment of separate product classes for electric resistance and heat pump water heaters is warranted or required. First, EarthJustice stated that as DOE notes in the December 2009 NOPR, there is no distinction between heat pump and electric resistance water heaters with regard to operational utility. Accordingly, EarthJustice argued that because heat pump and electric resistance water heaters provide identical service, there is no basis for DOE to conclude that separate product classes for these technologies are necessary to preserve the availability in the market of a distinct “feature” with utility to the user of the product (

see

42 U.S.C. 6295(o)(4)).

At the public hearing on the December 2009 NOPR, representatives from some manufacturers asserted that a separate product class for heat pump water heaters was needed to address the fraction of households that would otherwise experience higher-than-normal installation costs to replace a water heater using electric resistance heating with one using a heat pump. However, EarthJustice stated that even if DOE's analysis confirms that there is a cost penalty to install a heat pump water heater in some applications, this fact, standing alone, would not support the creation of separate product classes for heat pump and electric resistance water heaters. In all standards rulemakings, EarthJustice reasoned that some households will face higher incremental costs to install products meeting revised standards, but the proper approach under EPCA is to consider these impacts in calculating consumers' average lifecycle cost and payback period for the standard levels under consideration (

see

42 U.S.C. 6295(o)(2)(B)(i)(II)). According to EarthJustice, to use an increase in the installed cost for a portion of shipments as the basis for a separate product class would be an end‐run around the other factors Congress required DOE to consider in assessing the economic justification for a standard (

see

42 U.S.C. 6295(o)(2)(B)(i)). The commenter suggested that DOE's recent statements in the commercial clothes washers rulemaking reinforce this point. There, an industry commenter argued that a particular product design merited a separate product class on the basis of its low installed cost. 75 FR 1122, 1130 (Jan. 8, 2010). In response, DOE explained that it “does not consider first cost a `feature' that provides consumer utility for purposes of EPCA. DOE acknowledges that price is an important consideration to consumers, but DOE accounts for such consumer impacts in the [lifecycle cost] and [payback period] analyses conducted in support of this rulemaking.”

Id.

at 1134. EarthJustice stated that DOE's refusal to use installed costs as the basis for a separate product class for commercial clothes washers is faithful to EPCA's text, and there is no justification for adopting a contrary approach for water heaters. (EarthJustice, No. 73 at pp. 1-3)

NRDC also stated that heat pump water heaters do not warrant a separate product class since heat pump water heater and an electric tank type water heater provide the same consumer utility. (NRDC, No. 85 at p. 5)

On the other hand, Southern Company (Southern) stated its belief that there is more of a functional difference between heat pump water heaters and electric resistance water heaters than with other products for which DOE has established separate product classes, including refrigerators (top freezer versus side-by-side), window air conditioners (for location of louvers), and transformers (a multitude of different phases and sizes). Southern Company argued that heat pump water heaters should be treated as a separate product class because the heat pump water heater transfers cold air from the heat pump to the surrounding space and are noisier than electric resistance water heaters. (Southern, No. 90 at p. 5)

BWC recommended a separate product class be established for heat pump water heaters because the primary fuel source is air instead of electricity. Heat pump water heaters can attain greater efficiencies, because while electricity is being converted to heat the water like a typical electric resistance water heaters, heat is also being moved from the surrounding environment to the stored water via the heat pump. In order for heat pump water heaters to maximize efficiency, they must recover slowly, which changes the utility of the water heater. According to BWC, the same size heat pump water heater is not providing the same performance as the equivalent size electric resistance heater. (BWC, No. 61 at p. 4)

AHRI reaffirmed its position that heat pump water heaters should be a separate product class. AHRI argued that DOE's tentative conclusion that heat pump water heaters do not require a separate product class because they provide hot water just like a traditional electric storage water heater is invalid because it fails to recognize how the heat pump water heater produces that hot water and how the heat pump water heater's performance is effected by the environment in which it is installed. AHRI asserted that the following characteristics make heat pump water heaters unique: (1) Water is heated by energy extracted from the air; (2) the heating capacity is variable depending on the temperature of the air provided to the heat pump; (3) the unit cannot heat water above approximately 135 degrees Fahrenheit; (4) the unit must be installed in a space large enough to provide the necessary volume of air for the unit to adequately heat water; (5) the unit cools the air in the household; (6) the unit requires a condensate drain as part of the installation; (7) the unit cannot be adjusted to meet increases in

demand without relying on the electric resistance elements; (8) the unit can heat water as long as there is adequate airflow through the heat pump, and thus, a heat pump with electrical power but with a clogged air filter will not heat water; and (9) the unit needs a back up water heating means that can operate when the heat pump cannot meet the load. (AHRI, No. 91 at pp. 4-6)

In response to these NOPR comments, DOE does not agree that heat pump water heaters meet the requirements for establishing a separate product class. Specifically, DOE does not believe heat pump water heaters provide a different utility from traditional electric resistance water heaters. Heat pump water heaters provide hot water to a residence just as a traditional electric storage water heater does. While AHRI noted that heat pump water heaters utilize heat extracted from the air to heat the water, both heat pump water heaters and traditional electric resistance storage water heaters use electricity as the primary fuel source. AHRI's recitation of operational differences associated with water heaters that utilize heat pump technology does not establish that the mode of heating water is performance-related feature or provides a unique utility. As pointed out by GE, current manufacturers of heat pump water heaters are marketing these products as direct replacements for traditional electric resistance water heaters. The rated storage volumes and first hour ratings of the heat pump water heaters currently on the market are comparable to the traditional electric resistance water heaters. Some of the commenters pointed out that heat pump water heaters require special installation considerations, but to account for this, DOE applied in its analysis specific installation costs, where applicable, to heat pump water heaters. (

See

section IV.F.2 of today's notice for more details on treatment of the installation costs.) Consequently, DOE has concluded that heat pump water heaters can replace traditional electric resistance storage water heaters in most residences, although the installation requirements may be quite costly. For these reasons, DOE has decided not to establish a separate product class for heat pump water heaters.

iv. Unpowered Gas-Fired Water Heaters

The American Gas Association (AGA) asserted that unpowered gas-fired storage water heaters should be an independent product class. An unpowered gas-fired storage water heater is one that does not utilize line electricity in order to provide hot water to the residence. For many customers during a power outage, unpowered gas-fired water heaters are the only utility system that provides a source of heat. AGA believes that this occurrence is sufficiently frequent to justify the treatment of unpowered gas-fired storage water heaters as an independent product class, consistent with DOE's charge to establish product classes based on type of energy used, capacity, and in this case, “other performance-related feature” such as those that provide utility to consumers. (AGA, No. 78 at pp. 6-7)

DOE does not agree with AGA's assertion that unpowered gas-fired storage water heaters meet the criteria for the establishment of a separate product class. Both powered and unpowered gas-fired storage water heaters use gas as the primary fuel source, and both provide the same basic utility to consumers, which is to supply hot water to the residence. DOE does not believe that having the ability to maintain hot water during power outages when the electricity is not working provides enough additional utility to consumers to warrant a separate product class. DOE believes that power outages are infrequent events that can be handled by a number of different market solutions such as back-up power systems.

b. Direct Heating Equipment

DHE can be divided into various product classes categorized by physical characteristics and rated input capacity, both of which affect product efficiency and function. Key characteristics affecting the energy efficiency of DHE are the physical construction (

e.g.,

fan wall units contain circulation blowers), intended installation (

e.g.,

floor furnaces are installed with the majority of the unit outside of the conditioned space), and input capacity.

In the December 2009 NOPR, DOE proposed consolidating the product classes for four types of DHE and adding product classes for one type of DHE. DOE discusses the full details of its proposals in the December 2009 NOPR. 74 FR 65852, 65871-72 (Dec. 11, 2009). In response to the proposed product class consolidation, AHRI took the position that the Federal energy conservation standards should not change for direct heating equipment, which would include not consolidating any of the existing BTU range categories or range levels. (AHRI, Public Meeting Transcript, No. 57.4 at p. 85)

Empire Comfort Products (Empire) stated that if DOE condenses the product classes for direct heating equipment, it will reduce the manufacturers' flexibility to increase efficiency. (Empire, Public Meeting Transcript, No. 57.4 at p. 86)

Neither AHRI nor Empire provided any additional insight to explain why the proposed reduction in product classes would limit a manufacturer's ability to increase the efficiency of direct heating equipment. DOE believes the consolidation of product classes reflects the current models offered by manufacturers. As discussed in the December 2009 NOPR, DOE carefully reviewed product catalogs and performance directories to determine the relationship between AFUE and input rating found among products listed in the AHRI Directory. For each of the five types of DHE, DOE found that manufacturers do not produce products in some of the input capacity ranges or that some of the efficiency characteristics of these products are similar. DOE explained each of these changes in the NOPR along with its proposal to further consolidate the product classes, where applicable. 74 FR 65852, 65871-72 (Dec. 11, 2009). For each product class, DOE characterized this relationship, and the commenters have provided no data or rationale as to why DOE's characterization was incorrect. Consequently, DOE is adopting the consolidated product classes as proposed in the December 2009 NOPR. Table IV.2 presents the product classes for DHE being adopted by this rulemaking.

Table IV.2—Product Classes for Direct Heating Equipment

Direct heating equipment type

Input heating capacity

Btu/h

Gas Wall Fan Type

Up to 42,000.

Over 42,000.

Gas Wall Gravity Type

Up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Floor

Up to 37,000.

Over 37,000.

Gas Room

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Hearth

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

c. Pool Heaters

As discussed in the December 2009 NOPR, the existing Federal energy conservation standards for pool heaters correspond to the efficiency levels specified by EPCA, as amended (42 U.S.C. 6295(e)(2)), and codified in 10 CFR 430.32(k), classifying residential pool heaters with one product class. This product class is distinguished by fuel input type (

i.e.,

gas-fired). 74 FR 65852, 65872 (Dec. 11, 2009).

B. Screening Analysis

The purpose of the screening analysis is to evaluate the technology options identified in the market and technology assessment as having the potential to improve the efficiency of products and to determine which technologies to consider further and which to screen out based on the four screening criteria. DOE consulted with industry, technical experts, and other interested parties to develop a list of technologies for consideration. DOE then applied the following four screening criteria to determine which design options are suitable for further consideration in the standards rulemaking:

Technological feasibility.

DOE considers technologies incorporated in commercial products or in working prototypes to be technologically feasible.

Practicability to manufacture, install, and service.

If mass production and reliable installation and servicing of a technology in commercial products could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE considers that technology practicable to manufacture, install, and service.

Adverse impacts on product utility or product availability.

If DOE determines a technology would have a significant adverse impact on the utility of the product to significant subgroups of consumers, or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not consider this technology further.

Adverse impacts on health or safety.

If DOE determines that a technology will have significant adverse impacts on health or safety, it will not consider this technology further.

See

10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b).

As presented in the December 2009 NOPR, DOE identified a number of technology options that might be used to improve the efficiency of residential heating products during the market and technology assessment. 74 FR 65852, 65872-79 (Dec. 11, 2009).

See

chapter 3 of the December 2009 NOPR and final rule TSDs for more information and the complete list of technologies identified by DOE. DOE then applied the screening criteria listed above to determine which technologies would be carried through the analysis. Table IV.3 through Table IV.5 show the technology options that were screened-in during the December 2009 NOPR screening analysis.

Table IV.3—Technologies DOE Considered for the Water Heater Engineering Analysis

Technology

Water heater type by fuel source

Storage

Gas-fired

Electric

Oil-fired

Instantaneous

Gas-fired

Increased Jacket Insulation

Foam Insulation

Improve/Increased Heat Exchanger Surface Area

Enhanced Flue Baffle

Direct-Vent (Concentric Venting)

Power Vent

Electronic (or Interrupted) Ignition

Heat Pump Water Heater

Condensing

Table IV.4—Technologies DOE Considered for the Direct Heating Equipment Engineering Analysis

Technology

Increased Heat Exchanger Surface Area.

Direct-Vent (Concentric Venting).

Electronic Ignition.

Induced Draft.

Two Stage and Modulating Operation.

Condensing.

Table IV.5—Technologies DOE Considered for the Pool Heater Engineering Analysis

Technology

Increased Heat Exchanger Surface Area.

More Effective Insulation (Combustion Chamber).

Power Venting.

Sealed Combustion.

Condensing.

1. Comments on the Screening Analysis

In response to the screening analysis presented in the December 2009 NOPR, DOE received several comments from interested parties.

In the December 2009 NOPR, CO

heat pump water heaters were a technology option screened out by DOE for electric storage water heaters, because DOE research suggests U.S. manufacturers do not have the necessary infrastructure to support manufacturing, installation, and service of CO

heat pump water heaters on the scale necessary to serve the relevant market by the compliance date of an amended energy conservation standard. 74 FR 65852, 65873 (Dec. 11, 2009). In general, ACEEE stated that it strongly objected to the screening analysis because DOE considered only technologies available in U.S.-manufactured water heaters and screened out technologies used in other domestic products, as well as ones used in the global market. (ACEEE, No. 79 at p. 2) ACEEE stated that DOE's screening out of CO

as a heat pump water heater refrigerant is absurd, given the fact that 1.7 million of them had been sold worldwide through the end of 2008, and that there is a 5-year lead time before the standards compliance date in which manufacturers could design a CO

heat pump water heater. (ACEEE, No. 79 at p. 2)

Conversely, Rheem commented that CO

refrigerants were appropriately screened out. (Rheem, No. 89 at p. 8) AHRI noted that there is a huge heat pump business in the U.S. for air conditioning and space heating, and no significant percentage of those products use CO

as the refrigerant. DOE believes AHRI is using the air conditioning and space heating industry as an example of an industry with significant expertise in working refrigerants, but that still does not use CO

refrigerants in its heating and cooling products. Even though DOE is investigating the use of CO

as a refrigerant in water heating applications, AHRI's example demonstrates that U.S. manufacturers and service industries do not have the expertise in using or handling CO

as a typical refrigerant in cooling applications. Therefore, AHRI stated its belief that CO

heat pumps have been properly screened out because it is not the prevailing technology in North America. Further, AHRI stated that for standards that will apply to U.S. industry, DOE should not unnecessarily expand this rulemaking by looking at what might be happening in other parts of the world. (AHRI, Public Meeting Transcript, No. 57.4 at pp. 133-134) A.O. Smith stated that CO

heat pump water heaters sold and installed in Japan are certified to different levels of standards requirements than those that exist in the U.S., and those heat pump water heaters would not be certifiable in the U.S. (A.O. Smith, Public Meeting Transcript, No. 57.4 at pp. 134-135)

In response, DOE believes that CO

heat pump water heaters were properly screened out during the December 2009 NOPR analysis. DOE notes that technologies are not screened out solely because they are not yet available in the U.S. market. Technologies, such as CO

heat pump water heaters, which are available overseas, are screened out if the U.S. does not have the necessary infrastructure to support such a technology on the scale necessary by the compliance date of the standard. As described in chapter 4 of the final rule TSD (Screening Analysis), CO

heat pump water heaters were screened out because the necessary infrastructure to support manufacturing, installation, and service of CO

heat pump water heaters is not available in the United States, and will not be available on the scale necessary to serve the relevant market at the time of the compliance date of the standard. ACEEE did not provide any new evidence that would cause DOE to change its position on this issue, and, therefore, DOE continued to screen out CO

heat pump water heaters for the final rule analysis. DOE notes that pursuant to Section 612 of the Clean Air Act, the U.S. EPA has found CO

an acceptable refrigerant for use in the U.S. in certain applications (

e.g.,

retail food refrigeration), but has not made such a ruling on the use of CO

in water heating heat pumps. EPA indicates that to date it has not received any submission under the SNAP program for the use of CO

in such devices. For additional information on EPA's Significant New Alternative Policy (SNAP) program (

see http://www.epa.gov/ozone/snap/.

)

ACEEE asserted that DOE fails to differentiate between low-voltage (

i.e.,

24 volt) and line-voltage (

i.e.,

120 volt) power requirements for gas-fired equipment auxiliaries such as igniters, controls, and fans. The commenter stated that line voltage requires a power outlet reachable by a 6 foot power cord on the water heater, which would require a new outlet in some retrofits, while a remote low-voltage plug-in power supply can use much longer supply lines that could support electronic ignition and electro-mechanical flue dampers. ACEEE stated that a recent study of standby losses of atmospheric water heaters shows losses large enough that ACEEE infers that these features would be quite cost-effective, and that such products have been demonstrated in the past (for the SCAQMD) and in gas stoves. (ACEEE, No. 79 at p. 3) ACEEE stated that requiring gas-fired appliances to have an electrical connection does not diminish utility because it is not an issue in the minds of the public, and if the capability of gas-fired products to operate during power outages was important, then local building codes would require backup non-electric heating capabilities for houses with electric water heaters. (ACEEE, Public Meeting Transcript, No. 57.4 at pp. 38-39)

In response, DOE agrees with ACEEE that requiring gas-fired appliances to have an electrical connection does not diminish utility, and DOE notes that this rationale was not provided for screening out any of the technologies that DOE did not consider in the analysis. Further, DOE notes that many of the design options for gas-fired appliances included electronic components, such as electronic ignitions and power venting.

Louisville Tin & Stove (LTS) commented that the proposed standards for DHE would reduce consumer utility because they would lose the ability to heat without electricity and/or lose the ability to retrofit. (LTS, No. 56.7 at p. 2) Empire stated adding components that require electricity would cause the elimination of the gas wall gravity, gas room, gas floor, and gas hearth categories because their main purpose is to provide efficient heating and be able to provide heat during a power outage

or for consumers who do not have electricity. (Empire, No. 100 at p. 2)

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