# Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2012-12340

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** May 30, 2012
- **Citation:** 77 FR 31918

## Text

DEPARTMENT OF ENERGY
10 CFR Parts 429 and 430
[Docket Number EERE-2011-BT-STD-0060]
RIN 1904-AC64
Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers

AGENCY:

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

ACTION:

Direct final rule.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential dishwashers. EPCA also requires the U.S. Department of Energy (DOE) to determine whether amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this direct final rule, DOE is adopting amended energy conservation standards for residential dishwashers. DOE 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. A notice of proposed rulemaking that proposes identical energy efficiency standards is published elsewhere in today's
Federal Register
. If DOE receives adverse comment and determines that such comment may provide a reasonable basis for withdrawing the direct final rule, this final rule will be withdrawn and DOE will proceed with the proposed rule.

DATES:

The effective date of this rule is September 27, 2012 unless adverse comment is received by September 17, 2012. If adverse comments are received that DOE determines may provide a reasonable basis for withdrawal of the final rule, a timely withdrawal of this rule will be published in the
Federal Register
. If no such adverse comments are received, compliance with the amended standards established for residential dishwashers in today's final rule will be required on May 30, 2013.

ADDRESSES:

The docket for this rulemaking is available for review at
www.regulations.gov
, including
Federal Register
notices, comments, and other supporting documents/materials. All documents in the docket are listed in the regulations.gov index. Not all documents listed in the index may be publicly available, however, such as information that is exempt from public disclosure.

A link to the docket Web page can be found at:
http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0060
. The regulations.gov Web page contains instructions on how to access all documents, including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email:
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:

Stephen L. Witkowski, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7463. Email:
Stephen.Witkowski@ee.doe.gov
.

Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7796. Email:
Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Direct Final Rule and Its Benefits

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits

D. Conclusion

II. Introduction

A. Authority

B. Background

1. EISA 2007 Standards

2. History of Standards Rulemaking for Residential Dishwashers

3. Issues on Which DOE Seeks Comment

4. Test Procedure History

III. General Discussion

A. Product Classes and Scope of Coverage

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

1. Determination of Savings

2. Significance of Savings

D. Economic Justification

1. Specific Criteria

2. Rebuttable Presumption

IV. Methodology and Discussion

A. Market and Technology Assessment

1. General

2. Products Included in This Rulemaking

3. Product Classes

4. Non-Regulatory Programs

5. Technology Options

B. Screening Analysis

C. Engineering Analysis

1. Baseline Efficiency Levels

2. Higher Efficiency Levels

3. Proprietary Designs

4. Reverse Engineering

D. Markups Analysis

E. Energy and Water Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

3. Annual Energy Consumption

4. Energy Prices

5. Energy Price Projections

6. Water and Wastewater Prices

7. Maintenance and Repair Costs

8. Product Lifetime

9. Discount Rates

10. Compliance Date of Amended Standards

11. Base-Case Efficiency Distribution

12. Inputs to Payback Period Analysis

13. Rebuttable-Presumption Payback Period

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

1. Shipments

2. Forecasted Efficiency in the Base Case and Standards Cases

3. Total Installed Cost per Unit

4. National Energy and Water Savings

5. Net Present Value of Consumer Benefit

H. Consumer Subgroup Analysis

I. Manufacturer Impact Analysis

1. Overview

2. GRIM Analysis

3. Manufacturer Interviews

J. Employment Impact Analysis

K. Utility Impact Analysis

L. Emissions Analysis

M. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

2. Valuation of Other Emissions Reductions

V. Analytical Results

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

2. Economic Impacts on Manufacturers

3. National Impact Analysis

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

C. Conclusion

1. Benefits and Burdens of TSLs Considered for Residential Dishwashers

2. Summary of Benefits and Costs (Annualized) of the Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and Executive Order 13563

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

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

VII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today's direct final rule.

I. Summary of the Direct Final Rule and Its Benefits

Title III, Part B
1

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles. Pursuant to EPCA, any new or amended energy conservation standard that DOE prescribes for certain products, such as residential dishwashers, shall 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)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with these and other statutory provisions discussed in this notice, DOE is adopting amended energy conservation standards for residential dishwashers. The amended standards, which are established in terms of maximum annual energy use and maximum per-cycle water consumption, are shown in Table I.1. These amended standards apply to all products listed in Table I.1 and manufactured in, or imported into, the United States on or after May 30, 2013.

1
For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

Table I.1—Amended Energy Conservation Standards for Residential Dishwashers

Product class
Compliance date: May 30, 2013
Maximum annual energy use *
Maximum per-cycle water consumption

1. Standard (≥8 place settings plus 6 serving pieces)
307 kWh/year
5.0 gallons/cycle.

2. Compact (<8 place settings plus 6 serving pieces)
222 kWh/year
3.5 gallons/cycle.

* Annual energy use, expressed in kilowatt-hours (kWh) per year, is calculated as: The sum of the annual standby electrical energy in kWh and the product of (1) the representative average dishwasher use cycles per year and (2) the sum of machine electrical energy consumption per cycle in kWh, the total water energy consumption per cycle in kWh, and, for dishwashers having a truncated normal cycle, the drying energy consumption divided by 2 in kWh. A truncated normal cycle is defined as the normal cycle interrupted to eliminate the power-dry feature after the termination of the last rinse option.

These standard levels were submitted jointly to DOE by groups representing manufacturers, energy and environmental advocates, and consumer groups. This collective set of comments, titled “Agreement on Minimum Federal Efficiency Standards, Smart Appliances, Federal Incentives and Related Matters for Specified Appliances” (the “Joint Petition”
2

), recommends specific energy conservation standards for residential dishwashers that, in the commenters' view, would satisfy the EPCA requirements in 42 U.S.C. 6295(o).

2
DOE Docket No. EERE-2011-BT-STD-0060, Comment 1.

A. Benefits and Costs to Consumers

Table I.2 presents DOE's evaluation of the economic impacts of today's standards on consumers of residential dishwashers, as measured by the average life-cycle cost (LCC) savings and the median payback period.

Table I.2—Impacts of Today's Standards on Consumers of Residential Dishwashers

Product class

Average LCC savings

(
2010$
)

Median payback period

(
years
)

Standard
3
11.8

Compact
12
0.3

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2012 through 2047). Using a real discount rate of 8.5 percent, DOE estimates that the INPV for manufacturers of dishwashers is $637.5 million in 2010$. Under today's standards, DOE expects that manufacturers may lose up to 13.3 percent of their INPV, which is approximately $84.6 million. Additionally, based on DOE's interviews with the manufacturers of dishwashers, DOE does not expect any plant closings or significant loss of employment as a result of today's standards.

C. National Benefits

DOE's analyses indicate that today's standards would save a significant amount of energy and water in 2013-2047—an estimated 0.07 quads of cumulative energy, and 0.14 trillion gallons of water.

The cumulative national net present value (NPV) of total consumer costs and savings of today's standards in 2010$ ranges from $0.08 billion (at a 7-percent discount rate) to $0.46 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for products purchased in 2013-2047, discounted to 2012.

In addition, today's standards would have significant environmental benefits. The energy savings would result in cumulative greenhouse gas emission reductions of approximately 4.06 million metric tons (Mt) of carbon dioxide (CO
2
) from 2013 through 2047. During this period, the standards would also result in emissions reductions
3

of approximately 3.54 thousand tons of nitrogen oxides (NO
X
) and zero tons of mercury (Hg).
4

3
DOE calculates emissions reductions relative to the most recent version of the
Annual Energy Outlook
(
AEO
) Reference case forecast. As noted in TSD chapter 15, this forecast accounts for regulatory emissions reductions from in-place regulations at the time of preparation of the AEO, including the Clean Air Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not the Clean Air Mercury Rule (CAMR, 70 FR 28606 (May 18, 2005)). Subsequent regulations, including the recently finalized CAIR replacement rule, the Cross-State Air Pollution rule issued on July 6, 2011, will appear in the forecast for future rulemakings.

4
Results for NO
X
and Hg are presented in short tons. One short ton equals 2000 lbs.

The value of the CO
2
reductions is calculated using a range of values per metric ton of CO
2
(otherwise known as the Social Cost of Carbon, or SCC) developed by a recent interagency process. The derivation of the SCC values is discussed in section IV.M. DOE estimates that the present monetary value of the CO
2
emissions reductions is between $16 and $242 million, expressed in 2010$ and discounted to 2012. DOE also estimates that the present monetary value of the NO
X
emissions reductions, expressed in 2010$ and discounted to 2012, is $2.8 million at a 7-percent discount rate, and $5.2 million at a 3-percent discount rate.
5

5
DOE is aware of multiple agency efforts to determine the appropriate range of values to use in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions before it monetizes Hg emissions reductions in its rulemakings.

Table I.3 summarizes the national economic costs and benefits expected to result from today's standards for residential dishwashers.

Table I.3—Summary of National Economic Benefits and Costs of Residential Dishwasher Energy Conservation Standards

Category

Present value

Million 2010$

Discount rate
%

Benefits

Operating Cost Savings
600
7

1341
3

CO
2
Reduction Monetized Value (at $4.9/t) *

16.09
5

CO
2
Reduction Monetized Value (at $22.3/t) *

79.49
3

CO
2
Reduction Monetized Value (at $36.5/t) *

133.5
2.5

CO
2
Reduction Monetized Value (at $67.6/t) *

242.5
3

NO
X
Reduction Monetized Value (at $2,537/ton) **

2.76
7

5.24
3

Total Benefits †
683
7

1426
3

Costs

Incremental Installed Costs
522
7

881
3

Net Benefits

Including CO
2
and NO
X
†

161
7

545
3

* The CO
2
values represent global monetized values of the SCC in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t represents the 95th percentile of the SCC distribution calculated using a 3% discount rate.

** The value represents the average of the low and high NO
X
values used in DOE's analysis.

† Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate.

The benefits and costs of today's standards, for products sold in 2013-2047, can also be expressed in terms of annualized values. The annualized monetary values are the sum of (1) the annualized national economic value, expressed in 2010$, of the benefits from operating the product (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase and installation costs, which is another way of representing consumer NPV, plus (2) the annualized monetary value of the benefits of emission reductions, including CO
2
emission reductions.
6

6
DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2012, the year used for discounting the NPV of total consumer costs and savings, for the

time-series of costs and benefits using discount rates of 3 and 7 percent for all costs and benefits except for the value of CO
2
reductions. For the latter, DOE used a range of discount rates, as shown in Table I.3.From the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in 2013, that yields the same present value. This payment includes benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 to 2047. Costs incurred by manufacturers, some of which may be incurred prior to 2013 in preparation for the rule, are indirectly included as part of incremental equipment costs. The extent of these costs and benefits depends on the projected price trends of dishwashers because consumer demand of dishwashers is a function of dishwasher prices. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

Although adding the value of consumer savings to the values of emission reductions provides a valuable perspective, two issues should be considered. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, while the value of CO
2
reductions is based on a global value. Second, the assessments of operating cost savings and CO
2
savings are performed with different methods that use quite different time frames for analysis. The national operating cost savings is measured for the lifetime of residential dishwashers shipped in 2013-2047. The SCC values, on the other hand, reflect the present value of future climate-related impacts resulting from the emission of one metric ton of carbon dioxide in each year. These impacts continue well beyond 2100.

Estimates of annualized benefits and costs of today's standards are shown in Table I.4. (All monetary values below are expressed in 2010$.) The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO
2
reduction, for which DOE used a 3-percent discount rate along with the SCC series corresponding to a value of $22.3/ton in 2010, the cost of the standards for dishwashers in today's rule is $46 million per year in increased equipment costs, while the benefits are $53 million per year in reduced equipment operating costs, $3.9 million in CO
2
reductions, and $0.24 million in reduced NO
X
emissions. In this case, the net benefit amounts to $11 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series corresponding to a value of $22.3/ton in 2010, the cost of the standards for dishwashers in today's rule is $44 million per year in increased equipment costs, while the benefits are $66 million per year in reduced operating costs, $3.9 million in CO
2
reductions, and $0.26 million in reduced NO
X
emissions. In this case, the net benefit amounts to $27 million per year.

Table I.4—Annualized Benefits and Costs of Amended Standards for Residential Dishwashers Sold in 2013-2047 *

Discount rate

Monetized

(
million 2010$/year
)

Primary estimate *

Low net benefits
estimate *

High net benefits
estimate *

Benefits

Operating Cost Savings
7%
53
48
59.

3%
66
59
75.

CO
2
Reduction at $4.9/t **

5%
1.1
1.0
1.3.

CO
2
Reduction at $22.3/t **

3%
3.9
3.5
4.7.

CO
2
Reduction at $36.5/t **

2.5%
6.1
5.4
7.2.

CO
2
Reduction at $67.6/t **

3%
12.0
10.8
14.2.

NO
X
Reduction at $2,537/ton **

7%
0.24
0.23
0.27.

3%
0.26
0.24
0.30.

Total †

7% plus CO
2
range

54 to 65
49 to 59
60 to 73.

7%
57
52
64.

3% plus CO
2
range

68 to 78
60 to 70
76 to 89.

3%
70
63
80.

Costs

Incremental Product Costs
7%
46
44
43.

3%
44
41
40.

Total Net Benefits

Total †

7% plus CO
2
range

8 to 19
6 to 16
17 to 30.

7%
11
8
20.

3% plus CO
2
range

24 to 35
19 to 29
37 to 49.

3%
27
22
40.

* The results include benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 through 2047. Costs incurred by manufacturers, some of which may be incurred prior to 2013 in preparation for the rule, are indirectly included as part of incremental equipment costs. The extent of the costs and benefits will depend on the projected price trends of dishwashers, because the consumer demand for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the
AEO2011
Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.G.3.

** The CO
2
values represent global values (in 2010$) of the social cost of CO
2
emissions in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per ton are the averages of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The value of $67.6 per ton represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The value for NO
X
(in 2010$) is the average of the low and high values used in DOE's analysis.

† Total Benefits for both the 3-percent and 7-percent cases are derived using the SCC value calculated at a 3-percent discount rate, which is $22.3/t in 2010 (in 2010$). In the rows labeled as “7% plus CO
2
range” and “3% plus CO
2
range,” the operating cost and NO
X
benefits are calculated using the labeled discount rate, and those values are added to the full range of CO
2
values.

D. Conclusion

Based on the analyses culminating in this final rule, DOE found the benefits to the nation of the standards (energy savings, water savings, favorable consumer LCC savings and payback period, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (profit margin impacts that could result in a reduction in INPV and increased operational risk for manufacturers). DOE has concluded that the standards in today's final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy. DOE further notes that residential dishwashers achieving these standard levels are already commercially available.

II. Introduction

The following section briefly discusses the statutory authority underlying today's final rule, as well as some of the relevant historical background related to the establishment of standards for residential dishwashers.

A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles,
7

a program covering most major household appliances (collectively referred to as “covered products”), which includes the residential dishwashers that are the subject of this rulemaking. (42 U.S.C. 6292(a)(6)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(1)), and directed DOE to conduct two cycles of rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(g)(4)) DOE also notes that under 42 U.S.C. 6295(m), DOE must periodically review its energy conservation standards for covered products.

7
For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA.
Id.
The DOE test procedure for residential dishwashers currently appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix C.

DOE must follow specific statutory criteria for prescribing amended standards for covered products. As indicated above, any amended standard for a covered product 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)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) In deciding whether an amended standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard and 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))

EPCA allows DOE to issue a final rule (hereinafter referred to as a “direct final rule”) establishing an energy conservation standard on receipt of a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates) as determined by the Secretary, that contains recommendations with respect to an energy conservation standard that are in accordance with the provisions of 42 U.S.C. 6295(o). A notice of proposed rulemaking (NOPR) that proposes an identical energy efficiency standard must be published simultaneously with the final rule, and DOE must provide a public comment period of at least 110 days. 42 U.S.C. 6295(p)(4). Not later than 120 days after issuance of the direct final rule, if one or more adverse comments or an alternative joint recommendation are received relating to the direct final rule, the Secretary must determine whether the comments or alternative recommendation may provide a reasonable basis for withdrawal under 42 U.S.C. 6295(o) or other applicable law. If the Secretary makes such a determination, DOE must withdraw the direct final rule and proceed with the simultaneously published notice of proposed rulemaking. DOE must publish in the
Federal Register
the reason why the direct final rule was withdrawn.
Id.

Furthermore, EPCA, contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new 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 covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

EPCA also establishes a rebuttable presumption that a standard 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 savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).

Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating a standard for a type or class of covered product that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that 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 within that type or class.
Id.
In determining whether a performance-related feature justifies 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 such higher or lower level was established. (42 U.S.C. 6295(q)(2))

Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).

Any final rule for new or amended energy conservation standards promulgated after July 1, 2010, must address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into the standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) The standards established in today's direct final rule address standby and off mode energy use.

DOE notes that it is also required to amend its test procedures to integrate measures of standby mode and off mode energy consumption into the overall energy efficiency, energy consumption, or other energy descriptor for each covered product unless the current test procedure already fully accounts for and incorporates standby and off mode energy consumption or such integration is technically infeasible. (42 U.S.C. 6295(gg)(2)) DOE is currently considering amendments to the test procedure at appendix C to incorporate measures of off mode energy consumption in addition to the existing measures of standby mode energy use. 75 FR 75290 (Dec. 2, 2010); 76 FR 58346 Sept. 20, 2011)

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that today's direct final rule is consistent with these principles, including that, to the extent permitted by law, agencies adopt a regulation only upon a reasoned determination that its benefits justify its costs and select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits.

Consistent with EO 13563, and the range of impacts analyzed in this rulemaking, the energy conservation standards adopted herein by DOE achieve maximum net benefits.

B. Background

1. EISA 2007 Standards

EPCA, as amended by EISA 2007, prescribed energy conservation standards for residential dishwashers manufactured on or after January 1, 2010. 42 U.S.C. 6295(g)(10) These standards are set forth in Table II.1.

Table II.1—Energy Conservation Standards for Residential Dishwashers Established by EISA 2007

Product class

Annual energy use

(kWh/year)

Per-cycle water consumption

(gallons/cycle)

Standard
355
6.5

Compact
260
4.5

The EPCA amendments in EISA 2007 also require DOE to publish a final rule no later than January 1, 2015 determining whether to amend the standards in effect for dishwashers manufactured on or after January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) Today's final rule fulfills this statutory requirement.

2. History of Standards Rulemaking for Residential Dishwashers

The National Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100-12 (March 17, 1989), amended EPCA and required that dishwashers be equipped with an option to dry without heat. NAECA further required that DOE conduct two cycles of rulemakings to determine if amended standards are justified. (42 U.S.C. 6295(g)(1) and (4))

On May 14, 1991, DOE issued a final rule establishing performance standards for dishwashers to complete the first required rulemaking cycle (56 FR 22250). Compliance with the new standards, codified at 10 CFR 430.32(f), was required on May 14, 1994.

DOE then conducted a second standards rulemaking for dishwashers. DOE issued an advance notice of proposed rulemaking (ANOPR) on November 14, 1994 to consider amending the energy conservation standards for clothes washers, dishwashers, and clothes dryers. 59 FR 56423. Subsequently, DOE published a Notice of Availability of the
Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and Cooking Products.
71 FR 15059 (Mar. 27, 2006). On November 15, 2007, DOE published a second ANOPR (hereafter, the November 2007 ANOPR) addressing energy conservation standards for these products. 72 FR 64432. On December 19, 2007, Congress enacted EISA 2007, which, among other things, established maximum energy and water use levels for residential dishwashers manufactured on or after January 1, 2010. (42 U.S.C. 6295(g)(10)) DOE codified the statutory standards for these products in a final rule published March 23, 2009. 74 FR 12058.

EPCA, as amended by EISA 2007, further requires that DOE publish a final rule no later than January 1, 2015, to determine whether to amend the standards in effect for dishwashers manufactured on or after January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) This rulemaking fulfills this statutory requirement.

On July 30, 2010, DOE received the Joint Petition, a comment submitted by groups representing manufacturers (the Association of Home Appliance Manufacturers (AHAM), Whirlpool Corporation (Whirlpool), General Electric Company (GE), Electrolux, LG Electronics, Inc. (LG), BSH Home Appliances (BSH), Alliance Laundry Systems (ALS), Viking Range, Sub-Zero Wolf, Friedrich A/C, U-Line, Samsung, Sharp Electronics, Miele, Heat Controller, AGA Marvel, Brown Stove, Haier, Fagor America, Airwell Group, Arcelik, Fisher & Paykel, Scotsman Ice, Indesit, Kuppersbusch, Kelon, and DeLonghi); energy and environmental advocates (American Council for an Energy Efficient Economy (ACEEE), Appliance Standards Awareness Project (ASAP), Natural Resources Defense Council (NRDC), Alliance to Save Energy (ASE), Alliance for Water Efficiency (AWE), Northwest Power and Conservation Council (NPCC), and Northeast Energy Efficiency Partnerships (NEEP)); and consumer groups (Consumer Federation of America (CFA) and the National Consumer Law Center (NCLC)) (collectively, the “Joint Petitioners”). The Joint Petitioners recommended specific energy conservation standards for residential dishwashers that, in their view, would satisfy the EPCA requirements in 42 U.S.C. 6295(o). Earthjustice submitted a comment affirming its support for the Joint Petition. (Earthjustice, No. 2 at p. 1)
8

8
A notation in the form “Earthjustice, No. 2 at p. 1” identifies a written comment that DOE has received and has included in the docket of the standards rulemaking for residential dishwashers (Docket No. EERE-2011-BT-STD-0060). This particular notation refers to a comment (1) submitted by Earthjustice, (2) in document number 2 in the docket of that rulemaking, and (3) appearing on page 1 of document number 2.

After careful consideration of the Joint Petition containing a consensus recommendation for amended energy conservation standards for residential dishwashers, the Secretary has determined that this “Consensus Agreement” has been submitted by interested persons who are fairly representative of relevant points of view on this matter. Congress provided some guidance within the statute itself by specifying that representatives of manufacturers of covered products, States, and efficiency advocates are relevant parties to any consensus recommendation. (42 U.S.C. 6295(p)(4)(A)) As delineated above, the Consensus Agreement was signed and submitted by a broad cross-section of the manufacturers who produce the subject products, their trade associations, and environmental, energy efficiency and consumer advocacy organizations. Although States were not signatories to the Consensus Agreement, they did not express any opposition to it. Moreover, DOE does not read the statute as requiring absolute agreement among all interested parties before the Department may proceed with issuance of a direct final rule. By explicit language of the statute, the Secretary has discretion to determine when a joint recommendation for an energy or water conservation standard has met the requirement for representativeness (
i.e.,
“as determined by the Secretary”). Accordingly, DOE will consider each consensus recommendation on a case-by-case basis to determine whether the submission has been made by interested persons fairly representative of relevant points of view.

Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine whether a jointly-submitted recommendation for an energy or water conservation standard is in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. This determination is exactly the type of analysis that DOE conducts whenever it considers potential energy conservation standards pursuant to EPCA. DOE applies the same principles to any consensus recommendations it may receive to satisfy its statutory obligation to ensure that any energy conservation standard that it adopts achieves the maximum improvement in energy efficiency that is technologically feasible and economically justified and will result in significant conservation of energy. Upon review, the Secretary determined that the Consensus Agreement submitted in the instant rulemaking comports with the standard-setting criteria set forth under 42 U.S.C. 6295(o). Accordingly, the consensus agreement levels were included as trial standard level (TSL) 2 in today's rule for residential dishwashers, the details of which are discussed at relevant places throughout this document. The definition of the TSLs considered in this direct final rule is discussed in section V.A.

In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have been satisfied, the Secretary has determined that it is appropriate to adopt amended energy conservation standards for residential dishwashers through this direct final rule.

As required by the same statutory provision, DOE is also simultaneously publishing a NOPR which proposes the identical standard levels contained in this direct final rule and is providing for a 110-day public comment period. DOE will consider whether any comment received during this comment period is sufficiently “adverse” as to provide a reasonable basis for withdrawal of the

direct final rule and continuation of this rulemaking under the NOPR. Typical of other rulemakings, it is the substance, rather than the quantity, of comments that will ultimately determine whether a direct final rule will be withdrawn. To this end, the substance of any adverse comment(s) received will be weighed against the anticipated benefits of the Consensus Agreement and the likelihood that further consideration of the comment(s) would change the results of the rulemaking. DOE notes that to the extent an adverse comment had been previously raised and addressed in the rulemaking proceeding, such a submission will not typically provide a basis for withdrawal of a direct final rule.

3. Issues on Which DOE Seeks Comment

As stated previously, in promulgating today's direct final rule pursuant to 42 U.S.C. 6295(p)(4), DOE carefully considered the Joint Petition submitted to DOE, which contained a consensus recommendation for amended energy conservation standards for residential dishwashers. For the reasons stated in this direct final rule, the Secretary determined that the “Consensus Agreement” was submitted by interested persons who are fairly representative of relevant points of view on this matter. The Secretary also determined, for the reasons set forth in this direct final rule, that the standards contained in the Consensus Agreement comport with the standard-setting criteria set forth under 42 U.S.C. 6295(o). Therefore, the Secretary promulgates this direct final rule establishing the amended energy conservation standards for residential dishwashers.

As required by EPCA, DOE is also simultaneously publishing a NOPR and providing for a 110-day public comment period. 42 U.S.C. 4295(p)(4). Should DOE determine to proceed with the NOPR, or to gather additional data for future energy conservation standards activities for residential dishwashers, DOE will consider any comments and data received on the direct final standards. Although comments are welcome on all aspects of this rulemaking, DOE is particularly interested in comments on the following:

(1) Impacts of the standards that may lessen or improve the utility or performance of the covered products. These impacts may include increased cycle times to wash dishware, ability to achieve good wash performance (
e.g.,
cleaning, rinsing) and drying performance, increase in noise, and other potential impacts. As discussed in section IV.I.3, manufacturers noted in interviews that any potential utility impacts may be more significant at efficiency levels above those adopted in today's direct final rule. DOE also seeks information on utility impacts at higher efficiency levels and will consider such information in any future rulemaking for dishwashers.

(2) The 2013 compliance date for the proposed standards and whether this compliance date adequately considers the typical dishwasher model design cycle for manufacturers.

(3) Whether repair costs for residential dishwashers would increase at the efficiency levels indicated in today's rule due to any changes in the design and materials and components used in order to comply with the new efficiency standards.

(4) Where there would be any anticipated changes in the consumption of complementary goods (
e.g.,
dishwasher detergent, rinse aid) that may result from the proposed standards.

(5) The 215 cycles per year estimate of consumer usage for residential dishwashers, as well as the estimated 1-hour cycle time, which includes all cycles available on the unit.

(6) The product lifetime for dishwashers assumed in the analysis and the method used to derive the mean age of 15 years.

DOE has prepared a technical support document (TSD) in support of this direct final rule. The TSD, which is available at the rulemaking Web site,
9

provides an overview of the activities DOE undertook in developing standards for residential dishwashers. It presents and describes in detail each analysis DOE performed, including descriptions of inputs, sources, methodologies, and results. These analyses are as follows:

9
The rulemaking Web site for residential dishwashers is located at
www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.

(1) A
market and technology assessment
addresses the scope of this rulemaking, identifies the dishwasher product classes, characterizes the markets for the products, and reviews techniques and approaches for improving their efficiency.

(2) A
screening analysis
reviews technology options to improve the efficiency of residential dishwashers and weighs those options against DOE's four prescribed screening criteria.

(3) An
engineering analysis
develops the relationship between increased manufacturer price and increased efficiency.

(4) A
markups analysis
establishes markups for converting manufacturer prices to customer product costs.

(5) An
energy use analysis
generates energy-use estimates for residential dishwashers as a function of efficiency levels.

(6) A
life-cycle cost analysis
calculates the effects of standards on individual customers and compares the life-cycle costs (LCC) and payback period (PBP) of products with and without higher efficiency standards.

(7) A
shipments analysis
forecasts shipments with and without higher efficiency standards.

(8) A
national impact analysis
forecasts the national energy savings (NES), and the national net present value of total consumer costs and savings, expected to result from specific, potential energy conservation standards for residential dishwashers.

(9) A
consumer subgroup analysis
discusses the effects of standards on different subgroups of consumers.

(10) A
manufacturer impact analysis
discusses the effects of standards on the finances and profitability of product manufacturers.

(11) An
employment impact analysis
discusses the indirect effects of standards on national employment.

(12) A
utility impact analysis
discusses the effects of standards on electric and gas utilities.

(13) An
emissions analysis
discusses the effects of standards on three pollutants—sulfur dioxide (SO
2
), nitrogen oxides (NO
X
), and mercury—as well as carbon dioxide emissions.

(14) A
regulatory impact analysis
discusses the impact of non-regulatory alternatives to efficiency standards.

4. Test Procedure History

As discussed in section II. A, the DOE test procedure for residential dishwashers is found at Title 10 of the CFR, part 430, subpart B, appendix C. DOE originally established its test procedure for dishwashers in 1977. 42 FR 39964 (Aug. 8, 1977). In 1983, DOE amended the test procedure to revise the representative average-use cycles to more accurately reflect consumer use and to address dishwashers that use 120 degrees Fahrenheit (°F) inlet water. 48 FR 9202 (March 3, 1983). DOE amended the test procedure again in 1984 to redefine the term “water heating dishwasher.” 49 FR 46533 (Nov. 27, 1984). In 1987, DOE amended the test procedure to address models that use 50 °F inlet water. 52 FR 47549 (Dec. 15, 1987). In 2001, DOE revised the test procedure's testing specifications to improve testing repeatability, changed the definitions of “compact dishwasher” and “standard dishwasher,” and reduced the average number of use cycles per year from 322

to 264. 66 FR 65091, 65095-97 (Dec. 18, 2001). In 2003, DOE again revised the test procedure to more accurately measure dishwasher efficiency, energy use, and water use. The 2003 dishwasher test procedure amendments included the following revisions: (1) The addition of a method to rate the efficiency of soil-sensing products; (2) the addition of a method to measure standby power; and (3) a reduction in the average-use cycles per year from 264 to 215. 68 FR 51887, 51899-903 (August 29, 2003). The current version of the test procedure includes provisions for determining estimated annual energy use (EAEU), estimated annual operating cost (EAOC), energy factor (EF) expressed in cycles per kilowatt-hour (kWh), and water consumption expressed in gallons per cycle. 10 CFR 430.23(c). As discussed in section II. A, DOE is currently considering amendments the test procedure to incorporate measures of off mode energy consumption in addition to the existing measures of standby mode energy use.

III. General Discussion

A. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justifies a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))

Existing energy conservation standards divide residential dishwashers into two product classes based on the capacity,
i.e.,
the number of place settings and serving pieces that can be loaded in the product.

• Standard (capacity equal to or greater than eight place settings plus six serving pieces)

• Compact (capacity less than eight place settings plus six serving pieces)

The Joint Petition proposes energy conservation standard levels for standard and compact product classes based on the same capacity definitions. (Joint Petition, No. 1 at p. 11) In this final rule, DOE maintains the existing standard and compact product classes for residential dishwashers. Based on a survey of products available on the market, DOE determined that compact dishwasher provide unique utility in their countertop or drawer configurations.

B. Technological Feasibility

1. General

In each standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available products or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

After DOE has determined that particular technology options are technologically feasible, it further 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. Section IV. B of this rule discusses the results of the screening analysis for residential dishwashers, particularly the designs DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the direct final rule TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for residential dishwashers, using the design parameters for the most efficient products available on the market or in working prototypes. (See chapter 5 of the direct final rule TSD.) The max-tech levels that DOE determined for this rulemaking are described in section IV.C.2 of this final rule.

C. Energy Savings

1. Determination of Savings

DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from amended standards for the products that are the subject of this rulemaking.
10

For each TSL, DOE forecasted energy savings beginning in the year that manufacturers would be required to comply with amended standards, and ending in 2047. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between the standards case and the base case. The base case represents the forecast of energy consumption in the absence of amended mandatory efficiency standards, and considers market demand for more efficient products.

10
The NIA spreadsheet model is described in section IV.G of this notice.

The NIA spreadsheet model calculates the electricity savings in site energy expressed in kilowatt-hours (kWh). Site energy is the energy directly consumed by appliances at the locations where they are used. DOE reports national energy savings on an annual basis in terms of the aggregated source (primary) energy savings, which is the savings in the energy that is used to generate and transmit the site energy. (See chapter 10 of the direct final rule TSD). To convert site energy to source energy, DOE derived annual conversion factors from the model used to prepare the Energy Information Administration's (EIA)
Annual Energy Outlook 2011
(
AEO2011
).

2. Significance of Savings

As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting a standard for a covered product unless such standard would result in “significant” energy savings. Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, in
Natural Resources Defense Council
v.
Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in this context to be savings that were not “genuinely trivial.” The energy savings for all of the TSLs considered in this rulemaking (presented in section V.3.a) are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria

As noted in section II.A, EPCA provides seven factors to be evaluated in

determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Consumers

In determining the impacts of an amended standard on manufacturers, DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year analysis period. The industry-wide impacts analyzed include industry net present value (INPV), which values the industry on the basis of expected future cash flows; cash flows by year; changes in revenue and income; and other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

For individual consumers, measures of economic impact include the changes in life-cycle cost (LCC) and payback period (PBP) associated with new or amended standards. The LCC, which is specified separately in EPCA as one of the seven factors to be considered in determining the economic justification for a new or amended standard, 42 U.S.C. 6295(o)(2)(B)(i)(II), is discussed in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts throughout the forecast period applicable to a particular rulemaking.

b. Life-Cycle Costs

The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC savings for the considered efficiency levels are calculated relative to a base case that reflects likely market trends in the absence of amended standards. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and consumer discount rates. In its analysis, DOE assumed that consumers will purchase the considered products in the first year of compliance with amended standards.

To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. Using this approach, DOE identifies the percentage of consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. In addition to identifying ranges of impacts, DOE evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA requires DOE, in determining the economic justification of a 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)) DOE uses the NIA spreadsheet results in its consideration of total projected energy savings.

d. Lessening of Utility or Performance of Products

In establishing classes of products, and in evaluating design options and the impact of potential standard levels, DOE developed standards for residential dishwashers that would not lessen the utility or performance of those products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) The TSL adopted in today's direct final rule will not reduce the utility or performance of the dishwashers under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition that is likely to result from standards. It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a direct final rule and simultaneously published proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE published the proposed rule containing energy conservation standards identical to those set forth in today's direct final rule and transmitted a copy of today's direct final rule and the accompanying TSD to the Attorney General, requesting that the Department of Justice (DOJ) provide its determination on this issue. DOE will consider DOJ's comments on the rule in determining whether to proceed with the direct final rule. DOE will also publish and respond to DOJ's comments in the
Federal Register
in a separate notice.

f. Need for National Energy Conservation

The energy savings from new or amended standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity.

Energy savings from today's standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE reports the environmental effects from today's standards, and from each TSL it considered, in the emissions analysis contained in chapter 15 in the direct final rule TSD and in section V.B.6 of this notice. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs.

g. Other Factors

EPCA allows 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 developing this direct final rule, DOE has also considered the submission of the Joint Petition, which DOE believes sets forth a statement by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, and efficiency advocates) and contains recommendations with respect to an energy conservation standard that are in accordance with 42 U.S.C. 6295(o). (Although States were not signatories to the Consensus Agreement, they did not express any opposition to it.) DOE has encouraged the submission of consensus agreements as a way to bring diverse

interested parties together, to develop an independent and probative analysis useful in DOE standard setting, and to expedite the rulemaking process. DOE also believes that standard levels recommended in the Consensus Agreement may increase the likelihood for regulatory compliance, while decreasing the risk of litigation.

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F.11 of this direct final rule and chapter 8 of the direct final rule TSD.

IV. Methodology and Discussion

DOE used two spreadsheet tools to estimate the impact of today's direct final rule. The first spreadsheet calculates LCCs and PBPs of potential new energy conservation standards. The second provides shipments forecasts and then calculates impacts of potential energy conservation standards on national energy savings and net present value. The two spreadsheets are available online at:
http://www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.
The Department also assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM).

Additionally, DOE estimated the impacts on utilities and the environment of energy conservation standards for residential dishwashers. DOE used a version of EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare its
Annual Energy Outlook,
a widely known baseline energy forecast for the United States. For more information on NEMS, refer to
The National Energy Modeling System: An Overview,
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, which makes minor modifications to the
AEO
version, is called NEMS-BT.
11

NEMS-BT offers a sophisticated picture of the effect of standards, because it accounts for the interactions among the various energy supply and demand sectors and the economy as a whole.

11
EIA approves the use of the name “NEMS” to describe only an
AEO
version of the model without any modification to code or data. 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.)

A. Market and Technology Assessment

1. General

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. The subjects addressed in the market and technology assessment for this rulemaking include products covered by the rulemaking, quantities and types of products sold and offered for sale, retail market trends, product classes and manufacturers, regulatory and non-regulatory programs, and technology options that could improve the energy efficiency of the product(s) under examination. See chapter 3 of the direct final rule TSD for further discussion of the market and technology assessment.

2. Products Included in This Rulemaking

DOE defines “dishwasher” under EPCA as “a cabinet-like appliance which with the aid of water and detergent, washes, rinses, and dries (when a drying process is included) dishware, glassware, eating utensils, and most cooking utensils by chemical, mechanical and/or electrical means and discharges to the plumbing drainage system.” (10 CFR 430.2) DOE considers this definition to encompass built-in, portable, and countertop dishwashers.

3. Product Classes

Existing energy conservation standards divide residential dishwashers into two product classes based on capacity: (1) Standard; and (2) compact. As mentioned previously in section III.A, DOE is maintaining these product classes for this rulemaking.

4. Non-Regulatory Programs

As part of the market and technology assessment, DOE reviews non-regulatory programs promoting energy efficient residential appliances in the United States. Non-regulatory programs that DOE considers in its market and technology assessment include ENERGY STAR and the Consortium for Energy Efficiency (CEE) Super-Efficient Home Appliance Initiative (SEHA).

ENERGY STAR is a voluntary labeling program administered jointly by the U.S. Environmental Protection Agency (EPA) and DOE. ENERGY STAR identifies energy efficient products through a qualification process.
12

To qualify, a product must exceed Federal minimum standards by a specified amount, or if no Federal standard exists, a product must exhibit select energy-saving features. ENERGY STAR specifications currently exist for residential dishwashers.

12
For more information, please visit
www.energystar.gov.

The CEE SEHA program develops initiatives for its North American members to promote the manufacture and purchase of energy efficient products and services.
13

The program establishes efficiency tiers beyond the DOE energy conservation standards and the ENERGY STAR specifications. Currently, CEE has set two efficiency tiers above the ENERGY STAR specification for standard dishwashers, and one efficiency tier above the ENERGY STAR specification for compact dishwashers.

13
For more information, please visit
www.cee1.org.

5. Technology Options

As part of the market and technology assessment, DOE developed a list of technologies to consider for improving the efficiency of residential dishwashers, as shown in Table IV.1. These technologies encompass all those DOE believes would improve energy efficiency and are technologically feasible, most of which were identified for the November 2007 ANOPR. 72 FR

64432, 64451 (Nov. 15, 2007). In addition to those technology options identified in the November 2007 ANOPR, DOE also considered the use of control strategies to decrease energy and water consumption. This technology option is a change in the product's operation. For instance, a manufacturer may lower the temperature of a wash or rinse cycle to decrease the amount of internal water heating required. Often, decreases in water temperatures or water use are combined with longer cycles to limit the impact on wash performance.

Table IV.1—Initial Technology Options for Residential Dishwashers

1. Condenser drying.

2. Control Strategies.

3. Fan/jet drying.

4. Flow-through heating.

5. Improved fill control.

6. Improved food filter.

7. Improved motor efficiency.

8. Improved spray-arm geometry.

9. Increased insulation.

10. Low-standby-loss electronic controls.

11. Microprocessor controls and fuzzy logic, including adaptive or soil-sensing controls.

12. Modified sump geometry, with and without dual pumps.

13. Reduced inlet-water temperature.

14. Supercritical carbon dioxide washing.

15. Ultrasonic washing.

16. Variable washing pressures and flow rates.

B. Screening Analysis

DOE uses the following four screening criteria to determine which technology options are suitable for further consideration.

(1)
Technological feasibility.
DOE will consider technologies incorporated in commercial products or in working prototypes to be technologically feasible. (The technological feasibility of options was discussed in the preceding section as part of the market and technology assessment.)

(2)
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 will consider that technology practicable to manufacture, install, and service.

(3)
Adverse impacts on product utility or product availability.
If DOE determines a technology would have 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.

(4)
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.

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

Technologies that pass through the screening analysis are referred to as “design options” in the engineering analysis. Details of the screening analysis are provided in chapter 4 of the direct final rule TSD.

Based on the preliminary determinations made in the November 2007 ANOPR (72 FR 64432, 64454-55 (Nov. 15, 2007)), and further analysis of the initial technology options, DOE retained the design options shown in Table IV.2 for its subsequent analyses. These remaining design options met all of the screening criteria listed above.

Table IV.2—Design Options Retained for Engineering Analysis

1. Condenser drying.

2. Control Strategies.

3. Fan/jet drying.

4. Flow-through heating.

5. Improved fill control.

6. Improved food filter.

7. Improved motor efficiency.

8. Improved spray-arm geometry.

9. Increased insulation.

10. Low-standby-loss electronic controls.

11. Microprocessor controls and fuzzy logic, including adaptive or soil-sensing controls.

12. Modified sump geometry, with and without dual pumps.

13. Variable washing pressures and flow rates.

C. Engineering Analysis

In the engineering analysis, DOE evaluates a range of product efficiency levels and their associated manufacturing costs. The purpose of the analysis is to estimate the incremental manufacturer production costs (MPCs) associated with increasing efficiency levels above that of the baseline model in each product class. The engineering analysis considers technologies not eliminated in the screening analysis, designated as design options, in developing cost-efficiency curves, which subsequently are used for the LCC and PBP analyses.

DOE has identified the following three methodologies for generating the manufacturing costs needed for the engineering analysis: (1) The design-option approach, which provides the incremental costs of adding to a baseline model design options that will improve its efficiency; (2) the efficiency-level approach, which provides the relative costs of achieving increases in energy efficiency levels, without regard to the particular design options used to achieve such increases; and (3) the cost-assessment (or reverse-engineering) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency, based on detailed data regarding costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

DOE conducted the engineering analyses for the standard product class in this rulemaking using the efficiency-level approach, combined with the cost-assessment approach, to develop a manufacturing cost for each efficiency level. DOE chose this approach because the efficiency levels considered in the engineering analysis are attainable using technologies currently available on the market for residential dishwashers. This approach involved physically disassembling commercially available products, consulting with outside experts, reviewing publicly available cost and performance information, and modeling equipment costs.

Given the data available for the compact product class, DOE used the design-option approach to develop the cost-efficiency relationship. There are very few, disparate platforms (
i.e.,
countertop units and dishdrawers) available on the market for this product class. Therefore, DOE developed the cost-efficiency relationship by estimating the incremental costs of adding specific design options to a baseline model that would provide sufficient improvement in efficiency to achieve the higher efficiency levels considered for the analysis. DOE weighted the costs at each efficiency level by market share of each platform.

To provide interested parties with additional information about DOE's assumptions and results and the ability to perform independent analyses for verification, DOE associated each efficiency level with specific technologies that manufacturers might use. Chapter 5 of the direct final rule TSD describes the methodology and results of the efficiency level analysis used to derive the cost-efficiency relationships.

1. Baseline Efficiency Levels

The baseline efficiency levels for both the standard and compact product classes are based on the current DOE

energy conservation standards for annual energy use and per-cycle water consumption. These standards took effect for residential dishwashers manufactured on or after January 1, 2010. (42 U.S.C. 6295 (g)(10)) Table IV.3 below shows the baseline efficiency level for each residential dishwasher product class.

Table IV.3—Baseline Efficiency Levels for Residential Dishwasher Analysis

Product class

Annual energy use

(kWh/year)

Per-cycle water consumption

(gallons/cycle)

Standard
355
6.5

Compact
260
4.5

2. Higher Efficiency Levels

DOE considered efficiency levels higher than baseline levels based on specifications prescribed by ENERGY STAR and CEE's Super-Efficient Home-Appliances Initiative. The highest efficiency levels were defined by the maximum available technology that DOE could identify on the market. (DOE did not identify any working prototypes that were more efficient than the maximum available technology on the market.) Where the increments between adjacent efficiency levels were large, DOE proposed to add an intermediate “gap-fill” level. Efficiency Level 2 for standard dishwashers and Efficiency Level 1 for compact dishwashers correspond to the efficiency levels proposed in the Consensus Agreement discussed in section II.B.2. Table IV.4 and Table IV.5 show the efficiency levels analyzed in today's direct final rule, based on annual energy use and per-cycle water consumption.

Table IV.4—Efficiency Levels for Standard Residential Dishwasher Analysis

Level
Efficiency level reference source
Efficiency level

Annual energy use
(kWh/year)

Per-cycle water consumption

(gal/cycle)

Baseline
DOE Standard
355
6.5

EL 1
ENERGY STAR (effective August 11, 2009)
324
5.8

EL 2
CEE Tier 1/Consensus Agreement
307
5.0

EL 3
CEE Tier 2/Upcoming ENERGY STAR (effective January 20, 2012)
295
4.25

EL 4
Gap Fill *
234
3.8

EL 5
Maximum Available *
180
1.6

* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

Table IV.5—Efficiency Levels for Compact Residential Dishwasher Analysis

Level
Efficiency level description

Annual energy use *
(kWh/year)

Per-cycle water consumption

(gal/cycle)

Baseline
DOE Standard
260
4.5

EL 1
Consensus Agreement/Upcoming ENERGY STAR (effective January 20, 2012)
222
3.5

EL 2

Maximum Available
*

154
2.1

* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

3. Proprietary Designs

In its engineering and economic analyses DOE considers all design options that are commercially available or present in a working prototype, including proprietary designs and technologies. DOE will consider a proprietary design in the subsequent analyses only if the achieved efficiency level can also be reached using other nonproprietary design options. If the proprietary design is the only approach available to achieve a given efficiency level, then DOE will reject that efficiency level to avoid impacts on competition that would likely result. DOE solicited comment on any proprietary design options during its manufacturer interviews, and although manufacturers mentioned several technologies that are currently in development, these technologies are not required to meet the efficiency levels considered in this analysis. Therefore, DOE believes that all efficiency levels in today's direct final rule can be achieved without the use of proprietary designs.

4. Reverse Engineering

Based on product teardowns and cost modeling, DOE developed overall cost-efficiency relationships for the standard and compact product classes. Table IV.6 and Table IV.7 show DOE's estimates of incremental manufacturing costs for improvement of dishwasher efficiency above the baseline. Chapter 5 of the direct final rule TSD provides details on DOE's engineering analysis and development of the cost-efficiency curves.

Table IV.6—Cost-Efficiency Relationship for Standard Residential Dishwashers

Efficiency level

Annual energy use

(kWh/year)

Per-cycle water consumption

(gal/cycle)

Incremental manufacturing cost

(2010$)

($/kWh/yr)

($/gal/cycle)

Baseline
355
6.5

EL 1
324
5.8
18.27
0.59
26.10

EL 2
307
5.0
31.82
0.66
21.21

EL 3
295
4.25
69.23
1.15
30.77

EL 4
234
3.8
75.18
0.62
27.85

EL 5
180
1.6
82.95
0.47
16.93

Table IV.7—Cost-Efficiency Relationship for Compact Residential Dishwashers

Efficiency level

Annual energy use

(kWh/year)

Per-cycle water consumption

(gal/cycle)

Incremental manufacturing cost

(2010$)

($/kWh/yr)

($/gal/cycle)

Baseline
260
4.5

EL 1
222
3.5
1.00
0.03
1.00

EL 2
154
2.1
12.11
0.11
5.05

D. Markups Analysis

The markups analysis develops appropriate markups in the distribution chain to convert the estimates of manufacturer cost derived in the engineering analysis to consumer prices. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin. For dishwashers, the main parties in the distribution chain are manufacturers and retailers.

DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly traded manufacturers primarily engaged in appliance manufacturing and whose combined product range includes residential dishwashers.

For retailers, DOE developed separate markups for baseline products (baseline markups) and for the incremental cost of more efficient products (incremental markups). Incremental markups are coefficients that relate the change in the manufacturer sales price of higher-efficiency models to the change in the retailer sales price. DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups.
14

14
U.S. Census, 2002 Business Expenditure Survey (BES), Electronics and Appliance Stores sectors.

Chapter 6 of the direct final rule TSD provides details on DOE's development of markups for dishwashers.

E. Energy and Water Use Analysis

DOE's energy and water use analysis estimated the range of energy and water use of dishwashers in the field,
i.e.,
as they are actually used by consumers. The energy and water use analysis provided the basis for other analyses DOE performed, particularly assessments of the energy and water savings and the savings in consumer operating costs that could result from DOE's adoption of amended standards.

DOE determined a range of annual energy and per-cycle water consumption of dishwashers by multiplying the per-cycle energy use and per-cycle water use of each considered design by the number of cycles per year in a representative sample of U.S. households.

DOE estimated the per-cycle energy use by subtracting the annual energy use associated with standby power from the total annual energy use and dividing the result by the national average number of dishwasher cycles per year. DOE used data provided by AHAM on the total annual dishwasher energy use and the standby power use for each considered efficiency level.

DOE analyzed per-cycle energy consumption based on two components: (1) Water-heating energy, and (2) machine (motor) and drying energy. The largest component of dishwasher energy consumption is water-heating energy use, which is the energy required to heat the inlet water to the temperature for dishwashing. The machine energy consists of the motor energy (for water pumping and food disposal) and drying energy consists of energy to dry cleaned dishes.

DOE estimated the per-cycle water-heating energy consumption based on DOE's dishwasher test procedure (which refers to this quantity as “water energy consumption”). DOE estimated this energy consumption for dishwashers that operate with a nominal inlet water temperature of 120 °F, the most common situation in U.S. homes. For a dishwasher using electrically heated water, the water energy consumption, expressed in kWh per cycle, is equal to the water consumption per cycle times a nominal water heater temperature rise of 70 °F times the specific heat of water (0.0024 kWh per gallon per °F).
15

For a dishwasher using gas-heated or oil-heated water, the calculation is the same, but also incorporates a nominal water heater recovery efficiency of 0.75.
16

15
The water heater temperature rise of 70 °F assumes an average water heater inlet temperature of 50 °F, as specified as the national average in the dishwasher test procedure.

16
The recovery efficiency indicates how efficient a water heater is at heating water. The DOE test procedure for dishwashers specifies a recovery efficiency of 0.75 for gas-fired water heating, which is representative of gas water heaters currently in the housing stock.

The per-cycle machine and drying energy was determined by subtracting the per-cycle water-heating energy consumption from the per-cycle total energy consumption.

DOE determined the standby annual energy consumption by multiplying the energy use in standby mode per hour by the hours the dishwasher is in standby mode, which is the difference between the number of hours in a year and the active hours, which is equal to the number of dishwasher cycles per year multiplied by cycle time, which is estimated to be one hour.
17

17
The one-hour cycle time is an estimate of the typical cycle time for a dishwasher. Actual cycle times vary based on wash selection, load, and model of dishwasher.

DOE estimated the per-cycle water use by efficiency level in its engineering analysis, as described in chapter 5 of the direct final rule TSD.

To estimate the number of cycles per year in a representative sample of U.S. households, DOE analyzed data from the Energy Information Administration (EIA)'s 2005 Residential Energy Consumption Survey (RECS), which was the most recent such survey available at the time of DOE's analysis.
18

RECS is a national sample survey of housing units that collects statistical information on the consumption of and expenditures for energy in housing units along with data on energy-related characteristics of the housing units and occupants. Of the more than 4,800 households in RECS, almost 2,500 have dishwashers. For each household using a dishwasher, RECS provides data on the number of dishwasher cycles in the following bins: (1) Less than once per week, (2) once per week, (3) 2-3 times per week, (4) 4-6 times per week, (5) at least once per day. DOE converted the above to annual values and created a triangular or uniform distribution for each bin. DOE randomly assigned a specific numerical value from within the appropriate bin to each household in the dishwasher sample. The average number of cycles per year derived from the RECS 2005 data is 174.

18
For information on RECS, see
www.eia.doe.gov/emeu/recs/
.

DOE also analyzed a review of survey data
19

to estimate the average number of dishwasher cycles per year. In the review, survey data on consumers' dishwasher usage habits were collected from a number of sources including several dishwasher manufacturers, detergent manufacturers, energy and consumer interest groups, independent researchers, and government agencies. These data were also used to develop the 2003 dishwasher test procedure amendments, which included a reduction in the average cycles per year from 264 to 215.
20

Because the survey data are more comprehensive than the RECS data, for today's rule DOE chose an average usage of 215 cycles per year as the most representative value for average dishwasher use.

19
Available at:
http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/survey_data.pdf.

20
68 FR 51887 (August 29, 2003). The 215 value was based on the review's recommendation that the number of average-use cycles per year be reduced into the range of 200 to 233 cycles.

To estimate the annual number of cycles for each RECS household in the dishwasher sample, DOE multiplied the specific value derived from RECS by the ratio of 215 cycles to 174 cycles (the RECS average). The resulting range of values used in the LCC analysis is consistent with the average use in the DOE dishwasher test procedure.

Table IV.8 shows the estimated average annual energy and water use for each efficiency level analyzed for standard dishwashers.

Table IV.8—Standard Dishwashers: Average Annual Energy and Water Use by Efficiency Level

Efficiency level
Annual energy use
Water heating *

kWh/year

Machine + drying

kWh/year

Standby †

kWh/year

Total

kWh/year

Annual water use

gal/year

Baseline
234.8
120.2
0.0
355
1,398

1
209.5
94.8
19.7
324
1,247

2
180.6
111.9
14.5
307
1,075

3
153.5
127.0
14.5
295
914

4
137.3
82.2
14.5
234
817

5
57.8
107.7
14.5
180
344

* Shown for the case of electrically heated water.
† Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours − (215 cycles × 1 hour) = 8,545 hours.

Table IV.9—Compact Dishwashers: Average Annual Energy and Water Use by Efficiency Level

Efficiency level
Annual energy use
Water heating *

kWh/year

Machine + drying

kWh/year

Standby †

kWh/year

Total

kWh/year

Annual water use

gal/year

Baseline
162.5
77.8
19.7
260
968

1
126.4
75.9
19.7
222
753

2
75.9
63.6
14.5
154
452

* Shown for the case of electrically heated water.
† Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours − (215 cycles × 1 hour) = 8,545 hours.

Chapter 7 of the direct final rule TSD provides details on DOE's energy and water use analysis for dishwashers.

F. Life-Cycle Cost and Payback Period Analysis

DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for dishwashers. The LCC is the total consumer expense over the life of a product, consisting of purchase and installation costs plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost (normally higher) due to a more stringent standard by the change in average annual operating cost (normally lower) that results from the standard.

For any given efficiency level, DOE measures the PBP and the change in LCC relative to an estimate of the base-case appliance efficiency levels. The base-case estimate reflects the market in the absence of new or amended energy conservation standards, including the market for products that exceed the current energy conservation standards.

For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of housing units. For the analysis for today's rule, DOE developed household samples from the 2005 RECS. For each sample household, DOE determined the energy consumption for the dishwasher and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of residential dishwashers.

Inputs to the calculation of total installed cost include the cost of the product—which includes manufacturer costs, manufacturer markups, retailer and distributor markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy and water prices and price projections, repair and maintenance costs, product lifetimes, discount rates, and the year that compliance with standards is required. DOE created distributions of values for product lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability.

The computer model DOE uses to calculate the LCC and PBP, which incorporates Crystal Ball (a commercially available software program), relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and dishwasher user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 housing units per simulation run.

Table IV.10 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 and its appendices of the direct final rule TSD (see Table 8.1.1 for a summary of inputs).

Table IV.10—Summary of Inputs and Methods for the LCC and PBP Analysis *

Inputs
Source/method

Product Cost
Derived by multiplying manufacturer cost by manufacturer and retailer markups and sales tax, as appropriate. Used historical data to derive a price scaling index to forecast product costs.

Installation Costs
Baseline installation cost determined with data from RS Means. Assumed no change with efficiency level.

Annual Energy and Water Use
The sum of the total per-cycle annual energy and water use multiplied by the number of cycles per year and the standby annual energy use. Average number of cycles based on ADL field data.

Variability: Based on the 2005 RECS normalized to the average number of cycles.

Energy and Water Prices
Electricity: Based on EIA's Form 861 data for 2010.

Variability: Regional energy prices determined for 13 regions.

Water: Based on 2010 AWWA/Raftelis Survey.

Variability: By census region.

Energy and Water Price Trends

Energy: Forecasted using
Annual Energy Outlook 2011
(
AEO2011)
price forecasts.

Water: Forecasted using BLS historic water price index information.

Repair and Maintenance Costs
Assumed no change with efficiency level.

Product Lifetime
Estimated using survey results from RECS (1990, 1993, 1997, 2001, 2005) and the U.S. Census American Housing Survey (2005, 2007), along with historic data on appliance shipments.

Variability: Characterized using Weibull probability distributions.

Discount Rates
Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board's SCF ** for 1989, 1992, 1995, 1998, 2001, 2004 and 2007.

Compliance Date
2018.†

* References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the direct final rule TSD.
** Survey of Consumer Finances.
† For TSL 2, DOE used 2013 as the compliance date.

1. Product Cost

To calculate consumer product costs, DOE multiplied the manufacturer selling prices developed in the engineering analysis by the supply-chain markups described above (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency products.

Examination of historical price data for a number of appliances that have been subject to energy conservation standards indicates that an assumption of constant real prices and costs may overestimate long-term trends in appliance prices. Economic literature and historical data suggest that the real costs of these products may in fact trend downward over time according to “learning” or “experience” curves. Experience curve analysis focuses on entire industries (often operating globally) and aggregates over many causal factors that may not be well characterized. Experience curve analysis implicitly includes factors such as efficiencies in labor, capital investment, automation, materials prices, distribution, and economies of scale at an industry-wide level.
21

Since market competition is very effective, learning in one plant or firm rapidly diffuses to other firms as well, leading to industry-wide effects.

21
Newell, R.G., 2000. Incorporation of Technological Learning into NEMS Buildings Modules. U.S. Department of Energy, Energy Information Administration, Washington, DC.

On February 22, 2011, DOE published a Notice of Data Availability (NODA, 76 FR 9696) stating that DOE may consider improving regulatory analysis by addressing equipment price trends. In the NODA, DOE proposed that when sufficiently long-term data are available on the cost or price trends for a given product, it would analyze the available data to forecast future trends.

Many commenters were supportive of DOE moving from an assumption-based equipment price trend forecasting method to a data-driven methodology for forecasting price trends. Other commenters were skeptical that DOE could accurately forecast price trends given the many variables and factors that can complicate both the estimation and the interpretation of the numerical price trend results and the relationship between price and cost. DOE evaluated the concerns expressed about its proposed approach for incorporating experience in its forecasts of product prices and determined that retaining an assumption-based approach of a constant real price trend was not consistent with the historical data for residential dishwashers. Therefore, DOE developed a range of potential price trends that was consistent with the available data.

For the default price trend for this final rule, DOE estimated an experience rate for residential dishwashers based on an analysis of long-term historical data. DOE derived a dishwasher price index from 1988 to 2010 using Producer Price Index (PPI) data for miscellaneous household appliances from the Bureau of Labor Statistics' (BLS). (PPI data specific to residential dishwashers were not available.) An inflation-adjusted price index was calculated using the GDP price deflator for the same years. This proxy for historic price data was then regressed on the quantity of dishwashers produced, based on a corresponding series for total shipments of dishwashers.

To calculate an experience rate, a least-squares power-law fit was performed on the dishwasher price index versus cumulative shipments (including imports). DOE then derived a price factor index, with the price in 2010 equal to 1, to forecast prices in the year of compliance for amended energy conservation standards in the LCC and PBP analysis, and for the NIA, for each subsequent year through 2047. The index value in each year is a function of the experience rate and the cumulative production through that year. To derive the latter, DOE used projected shipments from the base case projections made for the NIA (see section IV.G.1 of this notice). The average annual rate of price decline in the default case is 1.27 percent. By 2047, which is the end date of the forecast period, the price is forecasted to drop 38 percent relative to 2010. For the baseline model, the average price decreases from $630 in 2010 to $392 in 2047 (values given in 2010$). DOE's forecast of product prices for dishwashers is described in further detail in appendix 8-E of the direct final rule TSD.

For the NIA, DOE also considered several alternative price trends as sensitivity cases (see section IV.G.3 for a description). In recognition of the uncertainty regarding estimation of future product price trends, DOE will continue to review the relevant literature and seek to continually improve and refine its methodology through research, enhancements to its models and by seeking public input. DOE will also work to ensure the robustness of its data sets as a means to ensure the reliability of its projections.

2. Installation Cost

Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE used data from the 2010 RS Means Plumbing Cost data book to estimate the baseline installation cost. DOE found no evidence that installation costs would be impacted with increased efficiency levels.

3. Annual Energy Consumption

For each sampled household, DOE determined the energy consumption for a dishwasher at different efficiency levels using the approach described above in section IV.E.

4. Energy Prices

DOE derived average annual energy prices for 13 geographic areas consisting of the nine U.S. Census divisions, with four large states (New York, Florida, Texas, and California) treated separately. For Census divisions containing one of those large states, DOE calculated the regional average excluding the data for the large state.

DOE calculated average residential electricity prices for each of the 13 geographic areas using data from EIA's Form EIA-861 database (based on “Annual Electric Power Industry Report”).
22

DOE calculated an average annual regional residential price by: (1) Estimating an average residential price for each utility (by dividing the residential revenues by residential sales); and (2) weighting each utility by the number of residential consumers it served in that region. The final rule analysis used the data for 2009, the most recent data available.

22
Available at:
www.eia.doe.gov/cneaf/electricity/page/eia861.html.

DOE calculated average residential natural gas prices for each of the 13 geographic areas using data from EIA's “Natural Gas Monthly.”
23

DOE calculated average annual regional residential prices by: (1) Estimating an average residential price for each State; and (2) weighting each State by the number of residential consumers. The direct final rule analysis used the data for 2010.

23
Available at:
http://www.eia.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html
.

5. Energy Price Projections

To estimate energy prices in future years, DOE multiplied the average regional energy prices discussed in the preceding section by the forecast of annual average residential energy price changes in the Reference case from
AEO2011,
which has an end year of 2035.
24

To estimate price trends after 2035, DOE used the average annual rate of change in prices from 2020 to 2035.

24
U.S. Energy Information Administration.
Annual Energy Outlook 2011.
Washington, DC. April 2011.

6. Water and Wastewater Prices

For today's direct final rule, DOE obtained data on water and wastewater prices for 2010 from the Water and Wastewater Rate Survey conducted by Raftelis Financial Consultants and the water utility association, AWWA. The survey, which analyzes each industry separately, covers approximately 308 water utilities and 228 wastewater utilities. The water survey includes, for each utility, the cost to consumers of purchasing a given volume of water or treating a given volume of wastewater. The data provide a division of the total consumer cost into fixed and volumetric charges. DOE's calculations use only the volumetric charge to calculate water and wastewater prices, because only this charge is affected by a change in water use. Average water and wastewater prices were estimated for each of four census regions. Each RECS household was assigned a water and wastewater price depending on its census region location.

DOE also used price information for households that use well water and a septic tank from the National Ground Water Association, as well as national cost data on residential septic systems from the National Onsite Wastewater Recycling Association (NOWRA).

Chapter 8 of the direct final rule TSD provides more detail about DOE's

approach to developing water and wastewater prices.

7. Maintenance and Repair Costs

Repair costs are associated with repairing or replacing components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in product efficiency produce no, or only minor, changes in repair and maintenance costs compared to baseline efficiency products.

DOE requested information from manufacturers during interviews as to whether maintenance and repair costs are a function of efficiency level and product class. Manufacturers responded that these costs would not increase with efficiency. Therefore, DOE did not assume that more efficient dishwashers would have greater repair or maintenance costs.

8. Product Lifetime

Because the lifetime of appliances varies depending on utilization and other factors, DOE develops a distribution of lifetimes from which specific values are assigned to the appliances in the samples. DOE conducted an analysis of residential dishwasher lifetimes in the field based on a combination of shipments data and RECS 2005 data on the ages of the dishwashers reported in the household stock. As described in chapter 8 of the direct final rue TSD, the analysis yielded an estimate of mean age for residential dishwashers of approximately 15 years. It also yielded a survival function that DOE incorporated as a probability distribution in its LCC analysis. See chapter 8 of the direct final rule TSD for further details on the method and sources DOE used to develop product lifetimes.

9. Discount Rates

In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for dishwashers based on consumer financing costs and opportunity cost of any uses of their funds, including investments in more-efficient appliances.

To establish residential discount rates for the LCC analysis, DOE identified all debt or asset classes that might be used to purchase dishwashers, including household assets that might be affected indirectly. It estimated the average percentage shares of the various debt or asset classes for the average U.S. household using data from the Federal Reserve Board's
Survey of Consumer Finances
(SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Using the SCF and other sources, DOE then developed a distribution of rates for each type of debt and asset to represent the rates that may apply in the year in which amended standards would take effect. DOE assigned each sample household a specific discount rate drawn from one of the distributions. The average rate across all types of household debt and equity, weighted by the shares of each class, is 5.1 percent. DOE used the same approach for today's direct final rule. See chapter 8 in the direct final rule TSD for further details on the development of consumer discount rates.

10. Compliance Date of Amended Standards

In the context of EPCA, the compliance date is the future date when parties subject to the requirements of a new or amended standard must comply. EPCA, as amended by EISA 2007, requires that DOE publish a final rule no later than January 1, 2015, to determine whether to amend the standards in effect for dishwashers manufactured on or after January 1, 2018. (42 U.S.C. 6295(g)(10)(B)) Where appropriate, DOE calculated the LCC and PBP for dishwashers as if consumers would purchase new products in 2018. As discussed in section II.B.2, TSL 2, which corresponds to the Consensus Agreement level for standard dishwashers, has a compliance date of 2013. Thus, for TSL 2, DOE used 2013 as the compliance year.

11. Base-Case Efficiency Distribution

To accurately estimate the share of consumers that would be affected by a standard at a particular efficiency level, DOE's LCC analysis considered the projected distribution of product efficiencies that consumers purchase under the base case (
i.e.,
the case without new energy efficiency standards). DOE refers to this distribution of product of efficiencies as a base-case efficiency distribution.

To estimate the base-case efficiency distribution of standard-sized dishwashers for 2013 and 2018, DOE relied on data submitted by AHAM for the current rulemaking. These data provide shares of shipments by efficiency level for 2002-2005 and 2008-2010. These data show significant increase in the share of ENERGY STAR products in both periods. To predict the market shares for each efficiency level in 2013 and 2018, DOE considered the shares and market trends present in the AHAM data and assumed these trends would continue in a manner consistent with the decline in average energy use.

For compact dishwashers, AHAM data for efficiency distributions were not available. Thus, DOE first considered 2010 market data from the NPD Group, Inc.
25

These data show that nearly all shipments for both standard and compact dishwashers are at the baseline efficiency level. For the compact class base-case distribution, however, there were only two types of compact dishwashers in the NPD data set: “countertop” and “portable.” DOE is not aware of any portable dishwashers currently on the market in the United States that would be classified as compact size based on the number of place settings. Further, there are no compact dishdrawer platforms included in the NPD dataset, which DOE believes represent a sizeable fraction of compact dishwasher shipments. As a result, DOE estimated compact base-case efficiencies from its research on the number of models available at each efficiency level. Of the eight compact dishwashers listed in the FTC database for manufacturer certifications in 2010, four are dishdrawer models with similar performance. Therefore, DOE allocated half of shipments to the dishdrawer platform that meets candidate standard level (CSL) 2. DOE further estimated, based on the number of countertop models and underlying platforms contained within the CEC and FTC databases, that half of remaining shipments (25 percent of total compact dishwasher shipments) would meet CSL 1, while the remaining 25 percent of compact shipments are at the baseline.

25
NPD Group, Inc. offers marketing research services, industry tracking, data collection, and analysis. For more information, please visit:
www.npdgroup.com
.

The estimated shares for the base-case efficiency distribution for dishwashers are shown in Table IV.11. See chapter 8 of the direct final rule TSD for further information on the derivation of the base-case efficiency distributions. For standard-sized dishwashers, DOE also considered an alternative base-case efficiency distribution that uses a different set of historical data. This distribution is described in appendix 8-F of the direct final rule TSD.

Table IV.11—Dishwasher Base-Case Efficiency Distribution by Product Class in 2013

CSL

Efficiency level

(
kWh
)

Standard

(
% of shipments
)

Compact

(
% of shipments
)

Baseline
355
3.8
25.0

1
324
32.3
25.0

2
307
28.0
50.0

3
295
16.4

4
234
13.8

5
180
5.6

12. Inputs to Payback Period Analysis

The payback period is the amount of time it takes the consumer to recover the additional installed cost of more efficient products, compared to baseline products, through energy cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the product mean that the increased total installed cost is not recovered in reduced operating expenses.

The inputs to the PBP calculation are the total installed cost of the product to the customer for each efficiency level and the average annual operating expenditures for each efficiency level. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed.

13. Rebuttable-Presumption Payback Period

As noted above, EPCA, as amended, establishes a rebuttable presumption that a standard 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)) For each considered efficiency level, DOE determined the value of the first year's energy and water savings by calculating the quantity of those savings in accordance with the applicable DOE test procedure, and multiplying that amount by the average energy and water price forecast for the year in which compliance with the amended standard would be required. The results of the rebuttable payback period analysis are summarized in section V.B.1.c of this notice.

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

The national impact analysis (NIA) assesses the national energy savings (NES) and the national net present value (NPV) of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels. (“Consumer” in this context refers to consumers of the product being regulated.) DOE calculates the NES and NPV based on projections of annual appliance shipments, along with the annual energy consumption and total installed cost data from the energy use and LCC analyses.
26

For the present analysis, DOE forecasted the energy savings, operating cost savings, product costs, and NPV of consumer benefits for products sold from 2018 through 2047.
27

26
For the NIA, DOE adjusts the installed cost data from the LCC analysis to exclude sales tax, which is a transfer.

27
For TSL 2, which assumes a compliance date in 2013, DOE forecasted the impacts for products sold from 2013 through 2047.

DOE evaluates the impacts of new and amended standards by comparing base-case projections with standards-case projections. The base-case projections characterize energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. DOE compares these projections with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (
i.e.,
the TSLs or standards cases) for that class. For the base-case forecast, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. For the standards cases, DOE also considers how a given standard would likely affect the market shares of efficiencies greater than the standard.

DOE uses an MS Excel spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. The TSD and other documentation that DOE provides during the rulemaking help explain the models and how to use them, and interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs.

For the results presented in today's notice, DOE used projections of energy prices and housing starts from the
AEO2011
Reference case. As part of the NIA, DOE analyzed scenarios that used inputs from the
AEO2011
Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the Reference case, as well as higher and lower housing starts, which result in higher and lower appliance shipments to new homes. NIA results based on these cases are presented in appendix 10-C of the direct final rule TSD.

Table IV.12 summarizes the inputs and methods DOE used for the NIA analysis for the direct final rule. Discussion of these inputs and methods follows the table. See chapter 10 of the direct final rule TSD for further details.

Table IV.12—Summary of Inputs and Methods for the National Impact Analysis

Inputs
Method

Shipments
Annual shipments from shipments model.

Compliance Date of Standard
2018.*

Base-Case Forecasted Efficiencies
Efficiency distributions are forecasted based on historical efficiency data.

Standards-Case Forecasted Efficiencies
Used a “roll-up” scenario.

Annual Energy Consumption per Unit
Annual weighted-average values are a function of energy use at each CSL.

Total Installed Cost per Unit
Annual weighted-average values are a function of cost at each CSL. Incorporates forecast of future product prices based on historical data.

Annual Energy Cost per Unit
Annual weighted-average values as a function of the annual energy consumption per unit and energy prices.

Repair and Maintenance Cost per Unit
Annual values do not change with efficiency level.

Energy Prices

AEO2011
forecasts (to 2035) and extrapolation through 2047.

Energy Site-to-Source Conversion Factor
Varies yearly and is generated by NEMS-BT.

Discount Rate
Three and seven percent real.

Present Year
Future expenses discounted to 2012, when the final rule will be published.

* For TSL 2, the compliance date is 2013.

1. Shipments

Forecasts of product shipments are needed to calculate the national impacts of standards on energy and water use, NPV, and future manufacturer cash flows. DOE develops shipment forecasts based on an analysis of key market drivers for residential dishwashers. In DOE's shipments model, shipments of products are driven by new construction and stock replacements. The shipments model takes an accounting approach, tracking market shares of each product class and the vintage of units in the existing stock. Stock accounting uses product shipments as inputs to estimate the age distribution of in-service product stocks for all years. The age distribution of in-service product stocks is a key input to calculations of both the NES and NPV, because operating costs for any year depend on the age distribution of the stock. DOE also considers the impacts on shipments from changes in product purchase price and operating cost associated with higher energy efficiency levels.

New housing forecasts and market saturation data comprised the two primary inputs for DOE's estimates of new construction shipments. “New housing” includes newly-constructed single-family and multi-family units (referred to as “new housing completions”) and mobile home placements. For new housing completions and mobile home placements, DOE used actual data through 2008, and adopted the projections from
AEO2011
for later years.

DOE calibrated the shipments model against historical dishwasher shipments. In general, DOE estimated replacements using a product retirement function developed from product lifetime. DOE based the retirement function on a probability distribution for the product lifetime that was developed in the LCC analysis. The shipments model assumes that no units are retired below a minimum product lifetime and that all units are retired before exceeding a maximum product lifetime.

DOE applied a price elasticity parameter to estimate the effect of standards on dishwasher shipments. DOE estimated the price elasticity parameter from a regression analysis that used purchase pric

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2012-12340. Public record. Not legal advice.