Energy Conservation Program: Energy Conservation Standards for Standby Mode and Off Mode for Microwave Ovens

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2011-BT-STD-0048]

RIN 1904-AC07

Energy Conservation Program: Energy Conservation Standards for Standby Mode and Off Mode for Microwave Ovens

AGENCY:

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

ACTION:

Supplemental Notice of Proposed Rulemaking (SNOPR) and public meeting.

SUMMARY:

The Energy Policy and Conservation Act (EPCA) prescribes energy conservation standards for various consumer products and commercial and industrial equipment. Microwave ovens are covered products under EPCA, although there are no existing microwave oven standards. EPCA requires the U.S. Department of Energy (DOE) to determine whether amended, more stringent, standards are technologically feasible and economically justified, and would save a significant amount of energy. Additionally, the Energy Independence and Security Act of 2007 (EISA 2007) amended EPCA to require any final rule adopted after July 1, 2010 establishing or revising energy conservation standards for covered products, including microwave ovens, to address standby mode and off mode energy use. On October 17, 2008, DOE issued a Notice of Proposed Rulemaking (NOPR) in which DOE proposed amendments to the energy conservation standards for several residential and commercial products, including microwave ovens. In response to the NOPR, DOE received comment expressing concern and encouraging the Department to re-examine standby mode and off mode of microwave ovens as a part of DOE's rulemaking analyses. Additionally, DOE received comment alleging certain data problems affecting DOE's rulemaking analyses. DOE's preliminary assessment suggested that the concerns might be valid, thereby necessitating additional, supplemental rulemaking analyses. In this notice, DOE responds to the comments received on the NOPR and proposes amended energy conservation standards for microwave oven standby mode and off mode. The notice also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

DOE will hold a public meeting on March 14, 2012, from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also be broadcast as a Webinar. See section VIII, “Public Participation,” for Webinar registration information, participant instructions, and information about the capabilities available to Webinar participants.

DOE will accept comments, data, and information regarding this SNOPR before and after the public meeting, but no later than April 16, 2012. See section VIII, “Public Participation,” for details.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advanced security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Brenda Edwards at (202) 586-2945 to initiate the necessary procedures.

Any comments submitted must identify the SNOPR for Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode and must provide docket number EERE-2011-BT-STD-0048 and/or regulatory information number (RIN) 1904-AC07. Comments may be submitted using any of the following methods.

1.

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

2.

Email: MWO-2011-BT-STD-0048@ee.doe.gov

Include the docket number and/or RIN in the subject line of the message.

3.

Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a CD. It is not necessary to include printed copies.

4.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, please submit all items on a CD. It is not necessary to include printed copies.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to

Christine_J._Kymn@omb.eop.gov.

For detailed instructions on submitting comments and additional information on the rulemaking process, see section VIII of this document (“Public Participation”).

Docket:

The docket is available for review at

regulations.gov,

including

Federal Register

notices, framework documents, public meeting attendee lists and transcripts, comments, and other supporting documents/materials. All documents in the docket are listed in the regulations.gov index. However, not all documents listed in the index may be publicly available, 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;dct=FR+PR+N+O+SR;rpp=10;po=0;D=EERE-2011-BT-STD-0048.

This Web page will contain a link to the docket for this notice on the regulations.gov site. The regulations.gov Web page will contain simple instructions on how to access all documents, including public comments, in the docket. See section VIII for information on how to submit comments through regulations.gov.

For further information on how to submit or review public comments or participate in the public meeting, contact Ms. Brenda Edwards at (202) 586-2945 or email:

Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:

Mr. Wes Anderson, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7335. Email:

wes.anderson@ee.doe.gov.

Mr. Ari Altman, Esq., U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-6307. Email:

Ari.Altman@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Microwave Ovens

III. General Discussion

A. Test Procedures

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

1. Determination of Energy Savings

2. Significance of Savings

D. Economic Justification

1. Specific Criteria

2. Rebuttable Presumption

IV. Methodology and Revisions to the Analyses Employed in the October 2008 Proposed Rule

A. Product Classes

B. Technology Assessment

1. Cooking Sensors

2. Display Technologies

3. Power Supply and Control Boards

4. Power-Down Options

C. Engineering Analysis

1. Energy Use Metric

2. Standby Power Levels

3. Manufacturing Costs

D. Life-Cycle Cost and Payback Period Analysis

1. Product Costs

2. Annual Energy Consumption

3. Energy Prices

4. Repair and Maintenance Costs

5. Product Lifetime

6. Discount Rates

7. Effective Date of New Standards

8. Product Energy Efficiency in the Base Case

9. Inputs to Payback Period Analysis

10. Rebuttable-Presumption Payback Period

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

1. General

2. Shipments

3. Purchase Price, Operating Cost, and Income Impacts

4. Other Inputs

5. Effects of Standards on Energy Prices

F. Consumer Subgroup Analysis

G. Manufacturer Impact Analysis

H. Employment Impact Analysis

I. Utility Impact Analysis

J. Emissions Analysis

K. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

2. Valuation of Other Emissions Reductions

L. Discussion of Other Comments

1. Off Mode Power Consumption

2. Proposed Standards for Microwave Oven Standby Mode and Off Mode Energy Use

3. Manufacturer Tax Credits Impact on Market Adoption of More Efficient Products

V. Analytical Results

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers

2. Economic Impacts on Manufacturers

3. National Impact Analysis

4. Impact on Utility or Performance of Product

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

C. Proposed Standard

1. Benefits and Burdens of TSLs Considered for Microwave Ovens

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

VI. Additional Technical Corrections to 10 CFR 430.32

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and 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

VIII. Public Participation

A. Attendance at Public Meeting

B. Procedure for Submitting Prepared General Statements for Distribution

C. Conduct of Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

IX. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

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

et seq.

; EPCA or the Act), as amended, provides that any amended energy conservation standard DOE prescribes for certain consumer products, such as microwave ovens, shall be designed to “achieve the maximum improvement in energy efficiency * * * which the Secretary determines is technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A)) 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 proposes amended energy conservation standards for microwave oven standby mode and off mode. The proposed standards, which prescribe the maximum allowable energy use when a product is in standby mode, are shown in Table I.1.

1

These proposed standards, if adopted, would apply to all products listed in Table I.1 and manufactured in, or imported into, the United States on or after April 1, 2014.

1

DOE considered energy use in off mode for microwave ovens, but is not proposing a maximum allowable off mode power because it is unaware of any current microwave ovens that are capable of operating in such a mode.

Table I.1—Proposed Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode

[Compliance Starting in 2014]

Product classes

Proposed energy conservation standard

Microwave-Only Ovens and Countertop Combination Microwave Ovens

Maximum Standby Power = 1.0 watt.

Built-In and Over-the-Range Combination Microwave Ovens

Maximum Standby Power = 2.2 watts.

DOE's analyses indicate that the proposed standards would save a significant amount of energy-an estimated 0.41 quads over 30 years (2014 through 2043). According to the Energy Information Administration's (EIA's)

Annual Energy Outlook 2010

(

AEO 2010

), total residential energy consumption is projected to be 21.3 quads in 2015. The amount of energy saved per year is equivalent to 0.06 percent of the projected household energy use.

The cumulative national net present value (NPV) of total consumer costs and savings of the proposed standards for products shipped in 2014-2043, in 2010$, ranges from $1.82 billion (at a 7-percent discount rate) to $3.59 billion (at a 3-percent discount rate).

2

The NPV is the estimated total value of future operating-cost savings during the analysis period, minus the estimated increased product costs, discounted to 2011. 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 (2014 to 2043). Using a real discount rate of 7.2 percent, DOE estimates that INPV for manufacturers of all microwave ovens in the base case is $1.1 billion in 2010$. If DOE adopts the proposed standard, it expects manufacturers will lose 4.7 to 6.5 percent of their INPV, or approximately $52.9 million to $73.6 million. Using a 7-percent discount rate, the NPV of consumer costs and savings from today's proposed standards would amount to 25 to 34 times the total estimated industry losses. Using a 3-percent discount rate, the NPV would amount to 49 to 68 times the total estimated industry losses.

2

DOE uses discount rates of 7 and 3 percent based on guidance from the Office of Management and Budget (OMB Circular A-4, section E, September 17, 2003). See section IV.E for further information.

The projected economic impacts of the proposed standards on individual consumers are positive. For example, for Microwave-Only and Countertop Combination Microwave Ovens (Product Class 1), the estimated average life-cycle cost (LCC) savings in 2010$ are $13, and all consumers of these products would have positive economic impacts. For Built-In and Over-the-Range Combination Microwave Ovens (Product Class 2), the estimated average LCC savings in 2010$ are $4, and most consumers of this product would have positive economic impacts.

In addition, the proposed standards would have significant environmental benefits. The energy savings projected from the proposed standards would result in cumulative greenhouse gas emission reductions of 31.48 million metric tons (Mt)

3

of carbon dioxide (CO

2

) in 2014-2043. During this period, the proposed standards would result in emissions reductions of 25.6 tons of nitrogen oxides (NO

X

), and have a negligible impact on emissions of mercury (Hg).

4

DOE estimates the present monetary value of the CO

2

emissions reduction is between $139 million and $2,118 million, expressed in 2010$. DOE also estimates the present monetary value of the NO

X

emissions reduction, expressed in 2010$, is between $3.82 million and $39.3 million at a 7-percent discount rate, and between $7.44 million and $76.4 million at a 3-percent discount rate.

5

3

Results for NO

X

and Hg are presented in short tons. A metric ton is equivalent to 1.1 short tons.

4

DOE calculates emissions reductions relative to the most recent version of the

Annual Energy Outlook

(

AEO

) Reference case forecast. This forecast accounts for emissions reductions from in-place regulations, 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 Cross-State Air Pollution rule issued on July 6, 2011, do not appear in the forecast at this time.

5

DOE is aware of multiple agency efforts to determine the appropriate range of values used 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 once again monetizes Hg in its rulemakings.

The benefits and costs of today's proposed standards can also be expressed in terms of annualized values over a 30-year period. The annualized monetary values are the sum of (1) the annualized national economic value of the benefits from operating products that meet the proposed standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase costs, which is another way of representing consumer NPV), and (2) the monetary value of the benefits of emission reductions, including CO

2

emission reductions.

6

The value of the CO

2

reductions, otherwise known as the Social Cost of Carbon (SCC), is calculated using a range of values per metric ton of CO

2

developed by a recent interagency process. The monetary costs and benefits of cumulative emissions reductions are reported in 2010$ to permit comparisons with the other costs and benefits in the same dollar units. The derivation of the SCC values is discussed in section IV.K.

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 the same year used for discounting the NPV of total consumer costs and savings. To calculate the present value, DOE used 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.2. From the present value, DOE then calculated the corresponding time-series of fixed annual payments over a 30-year period starting in the same year used for discounting the NPV of total consumer costs and savings. 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 would be a steady stream of payments.

Although combining the values of operating savings and CO

2

reductions provides a useful perspective, two issues should be considered. First, the national operating savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas 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 different time frames for analysis. The national operating cost savings is measured for the lifetime of microwave ovens shipped in 2014-2043. The SCC values, on the other hand, reflect the present value of all future climate-related impacts resulting from the emission of one ton of CO

2

in each year. These impacts continue well beyond 2100.

Table I.2 shows the annualized values for today's proposed standards, 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

reductions, 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 proposed in today's rule is $20.3 million per year in increased product costs, while the annualized benefits are $167 million in reduced product operating costs, $35.4 million in CO

2

reductions, and $1.74 million in reduced NO

X

emissions. In this case, the net benefit amounts to $184 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 proposed in today's rule is $21.6 million per year in increased product costs, while the annualized benefits are $205 million in reduced operating costs, $35.4 million in CO

2

reductions, and $2.14 million in reduced NO

X

emissions. In this case, the net benefit amounts to $221 million per year.

Table I.2—Annualized Benefits and Costs of Proposed Standards for Microwave Oven Standby Mode and Off Mode for Products Sold in 2014-2043

Discount rate

Primary

estimate *

Low benefits

estimate *

High benefits

estimate *

Monetized (

million 2010$/year

)

Benefits

Operating Cost Savings

7%

167

150

185

3%

205

182

229

CO

2

Reduction at $4.9/t **

5%

9.02

8.49

9.55

CO

2

Reduction at $22.3/t **

3%

35.4

33.3

37.6

CO

2

Reduction at $36.5/t **

2.5%

55.9

52.5

59.3

CO

2

Reduction at $67.6/t **

3%

108.0

101.5

114.6

NO

X

Reduction at $2,537/t **

7%

1.74

1.65

1.82

3%

2.14

2.02

2.26

Total

†

7% plus CO

2

range

178 to 277

160 to 253

196 to 301

7%

204

185

224

3%

243

217

269

3% plus CO

2

range

216 to 315

193 to 286

241 to 346

Costs

Incremental Product Costs

7%

20.32

23.39

20.25

3%

21.59

25.48

21.48

Total Net Benefits

Total

†

7% plus CO

2

range

157 to 256

137 to 230

176 to 281

7%

184

162

204

3%

221

192

247

3% plus CO

2

range

195 to 294

167 to 260

219 to 324

* The Primary, Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the

AEO2010

Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a declining trend (default learning rate) for product prices in the Primary Estimate, constant prices (no learning rate) for product prices in the Low Estimate, and a declining trend (high learning rate) in the High Estimate. The derivation and application of learning rates for product prices is explained in section IV.D.1.

** 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 $22.3/ton in 2010 (in 2010$). 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.

DOE has made an initial determination that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, while maintaining product utility in the form of a continual clock display, and would result in the significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for one of the product classes covered by today's proposal.

7

Based on the analyses described above, DOE found the benefits of the proposed standards to the Nation (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) outweigh the burdens (loss of INPV for manufacturers).

7

Products in the Microwave-Only Ovens and Countertop Combination Microwave Ovens product class that meet the proposed standards are currently commercially available. The Built-In and Over-the-Range Combination Microwave Ovens class does not currently comprise products that meet the proposed standards, primarily because of the larger components necessary for the convection system and the more complex displays. However, DOE believes it is technologically feasible for all microwave ovens to meet the proposed standards.

Based on consideration of the public comments DOE receives in response to this supplemental notice and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy use levels presented in this notice that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part. In particular, DOE is proposing TSL 3 for built-in products as the level which it has tentatively concluded meet the applicable statutory criteria (i.e., the highest level that is technologically feasible, economically justified, and would result in significant conservation of energy). Based upon public comments and any accompanying data submissions, DOE would consider finalizing other TSLs (as presented in this NOPR or at some level in between), including the option of not finalizing the standard for built-ins proposed in this rule. Accordingly, DOE is presenting a variety of issues throughout today's notice upon which it is seeking comment, which will bear upon its consideration of standards for built-ins in the final rule.

II. Introduction

The following section briefly discusses the statutory authority underlying today's proposal as well as some of the relevant historical background related to the establishment of energy conservation standards for microwave oven standby mode and off mode.

A. Authority

Title III of EPCA sets forth various provisions designed to improve energy efficiency. Part B of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other Than Automobiles.

8

EPCA covers consumer products and certain commercial equipment (referred to collectively hereafter as “covered products”), including the microwave

ovens that are the subject of this rulemaking. (42 U.S.C. 6292(a)(10))

9

8

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

9

DOE notes that under 42 U.S.C. 6295(m), the agency must periodically review its already established energy conservation standards for a covered product. Under this requirement, the next review that DOE would need to conduct would occur no later than 6 years from the issuance of a final rule establishing or amending a standard for a covered product.

Under the Act, 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 rest of the program. Section 323 of the Act authorizes DOE, subject to certain criteria and conditions, 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) The National Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100-12, amended EPCA to establish prescriptive standards for cooking products, specifically gas cooking products. No standards were established for microwave ovens. 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 (42 U.S.C. 6295(s)) and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted under EPCA. (42 U.S.C. 6295(s)) The test procedure for microwave ovens currently appears at title 10, Code of Federal Regulations (CFR), part 430, subpart B, appendix I.

EPCA provides 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, EPCA precludes DOE from adopting any standard for certain products, including microwave ovens, if no test procedure has been established for the product. (42 U.S.C. 6295(o)(3)(A)) Moreover, DOE may not prescribe a standard: (1) If it would not result in the significant conservation of energy, or (2) if DOE determines by rule that the proposed standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(B)) The Act also provides that, in deciding whether a proposed 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 do so after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven factors:

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

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

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

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

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

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

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

EPCA also 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 the Secretary finds that 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 at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4))

Further, EPCA 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 which have the same function or intended use, if products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard than applies or will apply to the other products 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 can, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d))

Finally, section 310(3) of the Energy Independence and Security Act of 2007 (EISA 2007; Pub. L. 110-140) amended EPCA to require that energy conservation standards address standby mode and off mode energy use. (42 U.S.C. 6295(gg)) Specifically, when DOE adopts a standard for a covered product after July 1, 2010, it must, pursuant to criteria for adoption of standards at 42 U.S.C. 6295(o), incorporate standby mode and off mode energy use into the standard, if feasible, or adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)) These provisions in EISA 2007 do not preclude DOE from considering standards for standby mode and off mode energy use in a rulemaking that does not consider standards for active

mode energy use. In this rulemaking, DOE intends to incorporate standby mode and off mode energy use into any standard it adopts in the final rule.

It is pursuant to the authority set forth above that DOE is conducting the present SNOPR rulemaking for standby mode and off mode electricity consumption of microwave ovens.

DOE has also reviewed this regulation pursuant to Executive Order 13563. (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 (OIRA) 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 proposed rule is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized. Consistent with Executive Order 13563, and the range of impacts analyzed in this rulemaking, the energy efficiency standards proposed herein by DOE achieve maximum net benefits.

B. Background

1. Current Standards

Section 310 of EISA 2007 amends section 325 of EPCA to require DOE to regulate standby mode and off mode energy use for all covered products, including microwave ovens, as part of energy conservation standards for which a final rule is adopted after July 10, 2010. (42 U.S.C. 6295(gg)(3)(A))

Based on its ongoing analyses and comments from interested parties, DOE decided not to amend energy conservation standards for microwave oven energy factor (microwave oven operation in active mode), but instead develop a separate energy use metric for standby mode and off mode. 74 FR 16040 (Apr. 8, 2009).

2. History of Standards Rulemaking for Microwave Ovens

On March 15, 2006, DOE published on its Web site a document titled, “Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and Cooking Products” (Framework Document).

10

71 FR 15059. The Framework Document described the procedural and analytical approaches that DOE anticipated using to evaluate energy conservation standards for these products, and identified various issues to be resolved in conducting the rulemaking. On December 4, 2006, DOE posted on its Web site two spreadsheet tools for this rulemaking.

11

The first tool calculates life-cycle cost (LCC) and payback periods (PBPs). The second tool—the national impact analysis (NIA) spreadsheet—calculates the impacts on shipments and the national energy savings (NES) and NPV at various candidate standard levels. DOE subsequently published the advance notice of proposed rulemaking (ANOPR) for this rulemaking (72 FR 64432 (Nov. 15, 2007), the November 2007 ANOPR) and on December 13, 2007, held a public meeting to present and seek comment on the analytical methodology and results in the ANOPR (the December 2007 Public Meeting).

10

This document is available on the DOE Web site at:

www.eere.energy.gov/buildings/appliance_standards/residential/dehumidifiers.html.

(Last accessed March 18, 2011.)

11

These spreadsheets are available on the DOE Web site at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential_products.html.

(Last accessed March 18, 2011.)

At the December 2007 Public Meeting, DOE invited comment in particular on the following issues concerning microwave ovens: (1) Incorporation of the International Electrotechnical Commission (IEC) test standard IEC Standard 62301

12

into DOE's microwave oven test procedure to measure standby mode and off mode power; (2) IEC Standard 62301 test conditions; and (3) a requirement that if the measured standby mode power varies as a function of the time displayed, the standby mode power test would run for 12 hours, with an initial clock setting of 12:00.

12

IEC standards are available for purchase at:

http://www.iec.ch/.

Interested parties' comments presented during the December 2007 Public Meeting and submitted in response to the November 2007 ANOPR addressed the standby mode and off mode energy use of microwave ovens and the ability to combine that energy use into a single metric with cooking energy use. Those concerns lead DOE to thoroughly investigate standby mode, off mode, and active mode power consumption of microwave ovens.

On October 17, 2008, DOE published a NOPR (the October 2008 NOPR) for cooking products and commercial clothes washers in the

Federal Register

proposing amended energy conservation standards. 73 FR 62034. In the October 2008 NOPR, DOE tentatively concluded that a standard for microwave oven standby mode and off mode energy use would be technologically feasible and economically justified.

Id.

at 62120. Therefore, concurrent with the standards NOPR, DOE published in the

Federal Register

a test procedure NOPR for microwave ovens to incorporate a measurement of standby mode and off mode power and to consider inclusion of such power as part of the energy conservation standards rulemaking. 73 FR 62134 (Oct. 17, 2008).

In conjunction with the October 2008 NOPR, DOE posted on its Web site the associated technical support document (TSD). The TSD included the results of DOE's analyses, including: (1) The market and technology assessment, (2) screening analysis, (3) engineering analysis, (4) energy and water use determination, (5) markups analysis to determine product price, (6) LCC and PBP analyses, (7) shipments analysis, (8) NES and NIA, and (9) manufacturer impact analysis (MIA). The engineering analysis spreadsheet, the LCC spreadsheets, the national and regional impact analysis spreadsheets, and the MIA spreadsheet were all made available at

www.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.

In the October 2008 NOPR, DOE concluded based on its additional investigations that, “although it may be mathematically possible to combine energy consumption into a single metric encompassing active (cooking), standby, and off modes, it is not technically feasible to do so at this time * * *.” 73 FR 62034, 62043 (Oct. 17, 2008). The separate prescriptive standby mode and off mode energy conservation standards proposed in the October 2008 NOPR for microwave ovens were as shown in Table II.1.

Table II.1—October 2008 NOPR Proposed Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode

Product class

Proposed energy conservation standard

Microwave Ovens

Maximum Standby Power = 1.0 watt

In the October 2008 NOPR, DOE described and sought further comment on the analytical framework, models, and tools (

e.g.,

LCC and NIA spreadsheets) it was using to analyze the impacts of energy conservation standards for this product. DOE held a public meeting in Washington, DC, on November 13, 2008 (the November 2008 Public Meeting), to present the methodologies and results for the October 2008 NOPR analyses.

Multiple interested parties commented in response to the October 2008 NOPR that insufficient data and information were available to complete this rulemaking, and requested that it be postponed to allow DOE to gather such inputs on which to base its analysis. Whirlpool Corporation (Whirlpool) commented that DOE should work with industry to gather comprehensive data. Whirlpool stated that DOE and industry must ensure the product is useful to the consumer at the standards adopted, which could mean delaying standards until the next round of rulemaking. (Whirlpool, No. 50 at p. 2; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 63)

13

GE Consumer & Industrial (GE) stated that DOE's approach could have important implications for how standby power is approached for other covered products, and thus it is essential that DOE take the time to address these issues. GE commented that DOE should postpone the microwave oven standby mode and off mode energy conservation standards rulemaking to allow standby power issues for covered products to be addressed either through negotiation or through a rulemaking that considers how the definition of standby power would affect all appliances, not just microwave ovens. GE further commented that if the microwave oven standby mode and off mode energy conservation standards rulemaking was not postponed, DOE should issue a “no standard” standard for microwave oven standby power. (GE, No. 48, at pp. 2, 4)

13

A notation in the form “Whirlpool, No. 50 at p. 2” identifies a written comment that DOE has received and has included in the docket of the standards rulemaking for microwave ovens (Docket No. EE-2006-STD-0127). This particular notation refers to a comment (1) submitted by Whirlpool, (2) recorded in document number 50 in the docket of this rulemaking, and (3) which appears on page 2 of document number 50. A notation in the form “Whirlpool, Public Meeting Transcript, No. 40.5 at p. 63” identifies an oral comment that DOE received during the November 13, 2008 NOPR public meeting and which was recorded in the public meeting transcript in the docket for this rulemaking (Docket No. EE-2006-STD-0127), available on

www.regulations.gov.

This particular notation refers to a comment (1) made by Whirlpool during the public meeting, (2) recorded in document number 40.5, which is the public meeting transcript that is filed in the docket of this rulemaking, and (3) which appears on page 63 of document number 40.5.

DOE agreed with these commenters that additional information would improve its analysis and, in April 2009, it concluded that it should defer a decision regarding amended energy conservation standards for standby mode and off mode energy use for microwave ovens pending further rulemaking. FR 16040, 16042 (Apr. 8, 2009). In the interim, DOE proceeded with consideration of energy conservation standards for microwave oven active mode energy use based on its proposals in the October 2008 NOPR, and its analysis determined that no new standards for microwave oven active mode (as to cooking efficiency) were technologically feasible and economically justified. Therefore, in a final rule published on April 8, 2009, DOE maintained the “no standard” standard for microwave oven active mode energy use.

Id.

at 16087. The final rule is available on DOE's Web site at:

www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/74fr16040.pdf.

After continuing its analysis of microwave oven standby mode and off mode through additional testing, research, and consideration of an updated version of IEC Standard 62301, DOE developed this SNOPR to enable interested parties to comment on the revised standby power levels proposed for microwave oven standby mode and off mode energy use.

The effective date of any new energy conservation standards for this product would be 3 years after the final rule is published in the

Federal Register

.

III. General Discussion

A. Test Procedures

The test procedures for cooking products including microwave ovens initially appeared at 10 CFR part 430, subpart B, appendix I. Those test procedures were part of a May 10, 1978 final rule that first established test procedures for conventional ranges, cooktops, and ovens (including microwave ovens). 43 FR 20108. DOE later revised its test procedures for cooking products to measure their efficiency and energy use more accurately, publishing a final rule on October 3, 1997. 62 FR 51976. The 1997 rule incorporated parts of IEC Standard 705-1998 and Amendment 2-1993, “Methods for Measuring the Performance of Microwave Ovens for Households and Similar Purposes.” It measured microwave oven cooking efficiency, but did not address energy use in the standby mode or off mode.

Section 310 of EISA 2007 amended EPCA to require DOE to amend the test procedures for covered products to address energy consumption of standby mode and off mode. If technically infeasible, DOE must prescribe a separate standby mode and off mode energy use test procedure. (42 U.S.C. 6295(gg)(2)(A))

As discussed previously, DOE published a notice of proposed rulemaking in October 2008 to amend the microwave oven test procedure to provide for measuring standby mode and off mode power consumption, (73 FR 62134 (Oct. 17, 2008)) and held a public meeting on the proposed rulemaking on November 14, 2008. DOE received comments from interested parties both in written responses to the October 2008 NOPR and at the November 2008 Public Meeting.

After considering stakeholder comments and additional information, DOE issued an SNOPR for the test procedure for measuring microwave oven standby mode and off mode power consumption. 75 FR 42612 (July 22, 2010). In that SNOPR, DOE proposed adopting definitions of modes based on relevant provisions from IEC Standard 62301 Second Edition, Committee Draft for Vote (IEC Standard 62301 CDV), as well as language to clarify application of those provisions for measuring microwave oven standby mode and off mode power consumption.

Id.

Also on July 22, 2010, DOE issued a repeal final rule (the July 2010 TP Final Rule) eliminating the active mode cooking efficiency provisions in the microwave oven test procedure after it determined that those provisions did not produce accurate and repeatable results. 75 FR 42579. DOE held a public meeting on September 16, 2010, and accepted comments, data, and information regarding the test procedure SNOPR no later than October 4, 2010. DOE also invited inputs on microwave active mode test procedures for a potential new test procedure rulemaking. After consideration of these comments, an interim final rule for a microwave oven test procedure addressing standby mode and off mode power was published in the

Federal Register

on March 9, 2011 (the March 2011 TP Interim Final Rule). 76 FR 12825. DOE provided a 180-day comment period on the March 2011 TP Interim Final Rule, during which it received several comments on potential improvements to the microwave oven test procedure recently adopted. DOE is currently considering these comments, but does not believe that any of the suggested amendments would impact the analysis in today's notice.

B. Technological Feasibility

1. General

DOE considers a design option to be technologically feasible if it is in use by the associated industry or if research has progressed to development of a working prototype. In each standards rulemaking, therefore, DOE conducts a screening analysis, based on information it has gathered regarding existing technology options and prototype designs. In consultation with manufacturers, design engineers, and other stakeholders, DOE develops a list of design options for consideration in the rulemaking. After DOE determines that particular design options are technologically feasible, the first of the screening criteria, it evaluates each option in light of the following three additional criteria: (a) Practicability to manufacture, install, and service; (b) adverse impacts on product utility or availability; and (c) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(3) and (4). All technologically feasible design options that pass the three additional screening criteria are candidates for further assessment in the engineering and subsequent analyses in the NOPR stage. DOE may amend the list of retained design options in SNOPR analyses based on comments received on the NOPR and on further research.

DOE published a list of evaluated microwave oven technologies in the November 2007 ANOPR. 72 FR 64432 (Nov. 15, 2007). DOE identified lower-power display technologies, improved power supplies and controllers, and alternative cooking sensor technologies as options to reduce standby power. DOE conducted this research when it became aware of the likelihood of EISA 2007 being signed, which DOE understood was to contain provisions pertaining to standby mode and off mode energy use. Therefore, DOE presented details of each design option to stakeholders at the December 2007 Public Meeting even though the results were not available in time for publication in the November 2007 ANOPR. DOE believes all of these options are technologically feasible, and in the ANOPR invited comment on technology options that reduce standby power in microwave ovens. 72 FR 64432, 64513 (Nov. 15, 2007). For more details of these technology options and stakeholder comments, see section IV.B of this notice.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt, or to decline to adopt, an amended or new standard for a type (or class) of product such as microwave ovens, it must “determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible” for such a product. (42 U.S.C. 6295(p)(1)) Using the design parameters that lead to creation of the highest available product efficiencies, in the engineering analysis DOE determined the maximum technologically feasible (“max-tech”) standby power levels

14

for microwave ovens, as shown in Table III.1. (See chapter 3 in the SNOPR TSD.) The max-tech microwave oven standby power level corresponds to a unit equipped with a default automatic power-down function that shuts off certain power-consuming components after a specified period of user inactivity. The max-tech microwave oven standby power level was determined in the October 2008 NOPR to be 0.02 watts (W). 73 FR 62052 (Oct. 17, 2008). Based upon additional analyses for today's SNOPR, DOE is proposing that this max-tech level applies to the product class of microwave-only ovens and countertop combination microwave ovens. For built-in and over-the-range combination microwave ovens, DOE proposes, based on its analysis, a max-tech standby power level of 0.04 W. For more details of the max-tech levels and stakeholder comments, see section IV.C of this notice.

14

As noted previously, DOE is unaware of any microwave ovens currently available that can operate in off mode. Therefore, efficiency levels for the purposes of evaluating standby mode and off mode energy use in microwave ovens are defined on the basis of standby power only.

Table III.1—Proposed Max-Tech Microwave Oven Standby Power Levels

Product class

Max-Tech standby power level

Microwave-Only Ovens and Countertop Combination Microwave Ovens

0.02 watts

Built-In and Over-the-Range Combination Microwave Ovens

0.04 watts

C. Energy Savings

1. Determination of Energy Savings

DOE used its NIA spreadsheet tool to estimate energy savings from amended standards for standby mode and off mode energy use for microwave ovens. (Section IV.E of today's supplemental notice and chapter 10 of the SNOPR TSD describe the NIA spreadsheet model.) DOE forecasted energy savings throughout the period of analysis (beginning in 2014, the year that amended standards would go into effect, and ending in 2043) for each TSL,

relative to the base case, which represents the forecast of energy consumption in the absence of amended energy conservation standards. DOE quantified the energy savings attributable to amended energy conservation standards as the difference in energy consumption between each standards case and the base case. The base case incorporates market demand for more efficient products.

The NIA spreadsheet tool calculates the electricity savings in “site energy” expressed in kilowatt-hours (kWh). Site energy is the energy consumed directly on location by an individual product. DOE reports national energy savings on an annual basis in terms of the aggregated source energy savings, which is the savings in energy used to generate and transmit the energy consumed at the site. To convert site energy to source energy, DOE derived conversion factors, which change with time, from the

AEO 2010.

(See SNOPR TSD chapter 10 for further details.)

2. Significance of Savings

EPCA, as amended, prohibits DOE from adopting a standard for a product if that standard would not result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B)) Although EPCA does not define the term “significant,” the U.S. Court of Appeals for the District of Columbia Circuit, in

Natural Resources Defense Council

v.

Herrington,

768 F.2d 1355, 1373 (DC Cir. 1985), indicated that Congress intended “significant” energy savings in this context to be savings that were not “genuinely trivial.” The energy savings for energy conservation standards at the TSL considered in this rulemaking are nontrivial, and, therefore, DOE considers them “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B).

D. Economic Justification

1. Specific Criteria

As noted earlier, EPCA provides seven factors to be evaluated in determining whether an energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)) The following sections describe how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impacts on Manufacturers and Consumers

In determining the impacts of an amended standard on manufacturers, DOE first determines the quantitative impacts using an annual cash-flow approach. This step includes both a short-term assessment—based on the cost and capital requirements during the period between the issuance of a regulation 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 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, paying particular attention to 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 different DOE regulations and other regulatory requirements on manufacturers. For more details on the MIA, see section IV.G and chapter 12 of the SNOPR TSD.

For consumers, measures of economic impact include the changes in life-cycle cost (LCC) and payback period for the product at each TSL. Under EPCA, the LCC is one of seven factors to be considered in determining economic justification. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It is discussed in detail in the following section.

b. Life-Cycle Cost

The LCC is the sum of the purchase price of product (including any installation) and the operating expense (including energy and maintenance expenditures), discounted over the lifetime of the product.

In this rulemaking, DOE calculated both LCC and LCC savings for various power consumption levels in standby and off modes. DOE established the variability and uncertainty in energy use by defining the uncertainty and variability in the standby and off modes (hours per day) of the product. The variability in energy prices was characterized by use of regional energy prices. To account for uncertainty and variability in other inputs, such as product lifetime and discount rate, DOE used a distribution of values with probabilities attached to each value. For each consumer with a microwave oven, DOE sampled the values of those inputs from the probability distributions.

DOE's analysis produced a range of LCCs. In addition to providing the average LCC savings or average payback for a standard, this approach enables DOE to identify the percentage of consumers achieving LCC savings or attaining certain payback values due to an energy conservation standard. DOE presents the LCC savings as a distribution, with a mean value and a range. In the analysis prepared for the October 2008 NOPR, DOE assumed that consumers will purchase the product in 2012. For today's SNOPR, that assumption has been changed to 2014, as this is the expected first year of compliance. See section IV.D for more details on the LCC and PBP analysis.

c. Energy Savings

Significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard. Additionally, EPCA requires DOE, in determining the economic justification of a proposed standard, to consider the total energy savings that are projected to result directly from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As noted in the October 2008 NOPR, DOE used the NIA spreadsheet to estimate total energy savings attributable to the considered standard levels. 73 FR 62034, 62046 (Oct. 17, 2008). See section IV.E and chapter 10 of the SNOPR TSD for more details on this analysis.

d. Lessening of Utility or Performance of Product

In preparing the NOPR, DOE considered whether the evaluated design options likely would lessen the utility or performance of the standby mode and off mode of microwave ovens. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) In the October 2008 NOPR, DOE determined that none of the considered TSLs would reduce the utility or performance of microwave ovens; all consumer utility features that affect standby power, such as a clock display and a cooking sensor, would be retained. 73 FR 62034, 62047 (Oct. 17, 2008).

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition likely to result from standards. It 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 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 received the Attorney General's determination, dated December 16, 2008, on standards proposed in the October 2008 NOPR. The Attorney General's determination for October 2008 NOPR did not mention microwave oven standards. (DOJ, No. 53 at pp. 1-

2). DOE has transmitted a copy of today's proposed rule to the Attorney General and has requested that the Department of Justice provide its determination on this issue.

f. Need of the Nation To Conserve Energy

The non-monetary benefits of proposed standards are likely to be reflected in improvements to the reliability of the Nation's energy system—namely, reductions in the demand for energy will result in reduced costs for maintaining reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may impact the Nation's needed power generation capacity. This analysis captures the effects of efficiency improvements on electricity consumption by the product that is the subject of this rulemaking.

Proposed standards also likely result in improvements to the environment. In quantifying those improvements, DOE has calculated emission reductions based on the estimated level of power generation displaced by each TSL for microwave oven standby power. DOE reports the environmental effects from the proposed standards in an environmental assessment in chapter 15 of the SNOPR TSD. (42. U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a)) See section IV.J for more details on this analysis.

g. Other Factors

The Secretary, in determining whether a standard is economically justified, may consider other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In considering amended standards for today's supplemental notice of proposed rulemaking, the Secretary found no relevant factors other than those identified elsewhere in today's SNOPR.

2. Rebuttable Presumption

As set forth under 42 U.S.C. 6295(o)(2)(B)(iii), there is a rebuttable presumption that an energy conservation standard is economically justified if the increased installed cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. DOE's LCC and PBP analyses generate values that calculate the payback period for consumers of products that meet potential energy conservation standards. Included is the 3-year payback period contemplated under the rebuttable presumption test. DOE routinely conducts a full economic analysis that considers the full range of impacts, however, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). Section V.B.1.c of today's supplemental notice and chapter 8 of the SNOPR TSD address the calculation of rebuttable-presumption payback.

IV. Methodology and Revisions to the Analyses Employed in the October 2008 Proposed Rule

In weighing the benefits and burdens of amended standards for microwave oven standby mode and off mode energy use, DOE used economic models to estimate the impacts of each TSL. The life-cycle cost (LCC) spreadsheet calculates the LCC impacts and payback periods for potential amended energy conservation standards. DOE used the engineering spreadsheet to develop the relationship between cost and efficiency and to calculate the simple payback period for purposes of addressing the rebuttable presumption that a standard with a payback period of less than 3 years is economically justified. The NIA spreadsheet provides shipments forecasts and then calculates NES and NPV impacts of potential amended energy conservation standards. DOE also assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM).

Additionally, DOE estimated the impacts of potential amended energy conservation standards on utilities and the environment. DOE used a version of the EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses. The EIA has developed the NEMS model, which simulates the energy economy of the United States, over several years primarily for the purpose of preparing the

AEO.

The NEMS produces forecasts for the United States energy situation that are available in the public domain. The version of NEMS used for appliance standards analysis is called NEMS-BT.

15

The 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.

15

The EIA approves the use of the name NEMS to describe only an

AEO

version of the model without any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from

AEO

assumptions, the model used here has been named NEMS-BT. (“BT” stands for DOE's Building Technologies Program.) 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

). (Last accessed March 18, 2011.)

A. Product Classes

In general, when evaluating and establishing energy conservation standards, DOE divides covered products into classes by the type of energy used, capacity, or other performance-related features that affect consumer utility and efficiency. (42 U.S.C. 6295(q); 6316(a)) Different energy conservation standards may apply to different product classes.

Id.

At the time of the October 2008 NOPR, DOE's regulations codified at 10 CFR 430.2 defined a microwave oven as a class of kitchen ranges and ovens which is a household cooking appliance consisting of a compartment designed to cook or heat food by means of microwave energy. In the October 2008 NOPR, DOE proposed a single product class for microwave ovens that would encompass microwave ovens with and without browning (thermal) elements, but would not include microwave ovens that incorporate convection systems. 73 FR 62034, 62048 (Oct. 17, 2008).

Whirlpool commented that DOE's proposed definition of covered products creates a new product definition without proper engagement of interested parties by covering microwave ovens with or without thermal elements designed for surface browning of food. Whirlpool also commented that DOE stated combination microwave ovens, which were previously undefined, are not products covered by the microwave oven test procedure or standard. Whirlpool stated that DOE's proposed definition of covered products is inconsistent with the regulatory definition of a microwave oven provided in 10 CFR part 430 because there is no mention of thermal elements designed for browning food, and furthermore is not clear and should be clarified. (Whirlpool, No. 50 at pp. 1-2; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29) GE also commented that DOE should clarify what products are considered covered products. GE stated that DOE should review data for different product types, and exclude those for which there is insufficient data to support DOE's analysis. (GE, No. 48 at pp. 2-3)

As part of its microwave oven test procedure rulemaking, DOE reassessed what products would be considered microwave ovens under the regulatory definition, and whether multiple product classes would be appropriate. As discussed in the March 2011 TP

Interim Final Rule, DOE amended the definition of microwave oven in 10 CFR 430.2 to clarify that it includes microwave ovens with or without thermal elements designed for surface browning of food and combination ovens. DOE also discussed its determination that all ovens equipped with microwave capability would be considered a covered product, regardless of which cooking mode (

i.e.,

radiant heating or microwave energy) is primary. Based on its preliminary analysis, DOE concluded that the general standby mode and off mode operation for microwave ovens that incorporate other means of cooking food does not differ from that of microwave-only units. As a result, DOE amended the microwave oven test procedure to require that the same standby mode and off mode testing methods be used for all microwave ovens. 76 FR 12825, 12828-30 (Mar. 9, 2011).

In order to determine whether specific types of microwave ovens should be separated into different product classes, DOE investigated whether there are any performance related features that would justify the establishment of a separate energy conservation standard. As discussed in the October 2008 NOPR, DOE tested a sample of 32 countertop microwave-only units and measured standby mode power ranging from 1.2 W to 5.8 W. 73 FR 62034, 62042 (Oct. 17, 2008). None of these units was capable of operation in off mode, nor, as noted previously, is DOE aware of any other current microwave ovens capable of such operation. As discussed below in section IV.B, DOE noted that standby power consumption for microwave-only units largely depended on the presence of a cooking sensor, the display technology, the power supply and control board, and implementation of a power-down feature. With regards to display technologies, DOE noted that microwave-only units incorporated Light Emitting Diode (LED) displays, Liquid Crystal Displays (LCDs), and Vacuum Fluorescent Displays (VFDs).

Based on comments received in response to the October 2008 NOPR (Association of Home Appliance Manufacturers (AHAM), No. 47 at p. 6; Whirlpool, No. 50 at p. 1), DOE conducted a survey of over-the-range microwave-only units available on the U.S. market. DOE determined that the display technologies used are similar to those used in countertop microwave-only units (

i.e.,

LED displays, LCDs, and VFDs). DOE also conducted in-store standby mode testing on a limited sample of over-the-range microwave-only units which showed similar standby power consumption as countertop microwave-only units. For these reasons, DOE tentatively concludes that over-the-range microwave-only units would not warrant a separate product class. DOE understands that over-the-range microwave-only units may have additional components that are energized during active mode operation (

i.e.,

exhaust fan motors). However, DOE's testing showed that the presence of such features did not increase the standby power consumption to warrant establishing a separate product class.

DOE also conducted standby power testing on a sample of 13 representative combination microwave ovens, including 5 countertop combination microwave ovens, 6 over-the-range combination microwave ovens, and 2 built-in combination microwave ovens. DOE's testing showed that the countertop combination microwave ovens use similar display technologies as countertop microwave-only units (

i.e.,

LED displays, LCDs, and VFDs), and had standby power consumption ranging from 1.2 W to 4.7 W, which is similar to the standby power consumption for countertop microwave-only units. As a result, DOE tentatively concludes that countertop combination microwave ovens would not warrant a product class separate from microwave-only ovens.

DOE's testing of built-in and over-the-range combination microwave ovens showed that the standby power consumption for these products ranged from 4.1 W to 8.8 W, which is higher than the standby power consumption for other microwave oven product types (

i.e.,

countertop microwave-only, over-the-range microwave-only, and countertop combination microwave ovens). DOE's reverse-engineering analysis suggests that the additional features in built-in and over-the-range combination microwave ovens required to handle the thermal loads associated with their installation and to provide consumer utility, such as additional exhaust fan motors, convection fan motors and heaters, and additional lights, require a significant number of additional relays on the control board, and thus require a larger power supply for the control of such relays. While the relays themselves do not consume power in standby mode, they increase the total power supply requirements of the control board and thus increase the standby losses of the power supply. As a result, DOE believes that a separate product class should be established for built-in and over-the-range combination microwave ovens. DOE recognizes that built-in and over-the-range microwave-only units may similarly require some additional relays for exhaust fans and lights, and that countertop combination microwave ovens would require some additional relays for convection fans and heaters. However, DOE's product testing and reverse-engineering analyses indicated that these product types use similar-sized power supplies as those found in countertop microwave-only units, and as a result would not warrant a separate product class from countertop microwave-only units. Details of standby power testing for the determination of product classes is presented in chapter 5 of the SNOPR TSD.

In summary, DOE proposes to establish the following two product classes for microwave ovens:

Table IV.1—Microwave Oven Product Classes

Product class

1. Microwave-Only Ovens and Countertop Combination Microwave Ovens.

2. Built-in and Over-the-Range Combination Microwave Ovens.

DOE determined that separate product classes for the purposes of setting energy conservation standards addressing standby mode and off mode energy use are warranted on the basis of different standby power performance. DOE did not evaluate whether the same product class distinction would also be appropriate for any active mode energy use standards because DOE eliminated the regulatory provisions establishing the cooking efficiency test procedure for microwave ovens in the July 2010 TP Final Rule. 75 FR 42579 (July 22, 2010). If DOE adopts amendments to the microwave oven test procedure to include provisions for measuring active mode cooking efficiency, DOE may reevaluate these product classes as part of a future microwave oven energy conservation standards rulemaking. At that time, DOE may consider dividing countertop combination microwave ovens and over-the-range/built-in microwave-only units into separate product classes to account for the energy performance of heating components other than the microwave portion.

B. Technology Assessment

Product teardowns performed by DOE for this and past rulemakings gave DOE an insight into the strategies a manufacturer could adopt to achieve higher energy conservation standards. In the October 2008 NOPR, DOE asked stakeholders to provide data and information that would help DOE

evaluate the utility provided by specific features that contribute to microwave oven standby power. In addition, DOE conducted additional research on several microwave oven technologies that significantly affect standby power, including cooking sensors, display technologies, and control strategies and associated control boards. In the October 2008 NOPR, DOE determined that control strategies are available that enable manufacturers to make design tradeoffs between incorporating features that consumer standby power (such as displays or cooking sensors) and including a function to turn power off to those components during standby mode. 73 FR 62034, 62052 (Oct. 17, 2008).

As discussed above, DOE believes that the standby power characteristics for countertop combination microwave ovens and over-the-range microwave-only units are similar to that of counter-top microwave-only units, and therefore, the same technology options would apply to these products. Additional testing on over-the range combination microwave ovens conducted by DOE also showed that standby power in these products depends largely on the same factors. The following sections discuss each of these technology options.

1. Cooking Sensors

In the October 2008 NOPR, DOE reported that its teardown analysis had revealed one cooking sensor technology with no standby power consumption used in microwave ovens on the U.S. market: A piezoelectric steam sensor. DOE also found that infrared and weight sensors, which require little to no warm-up time or standby power, had been applied successfully in Japanese-market microwave ovens. Furthermore, DOE identified relative humidity sensors with no standby power consumption as a feasible microwave oven cooking sensor technology, but found no microwave ovens using these sensors at the time. Finally, DOE learned that a major microwave oven supplier to the U.S. market was preparing to introduce microwave ovens using a new type of absolute humidity sensor with no standby power requirement and no cost premium over that of a conventional absolute humidity sensor. 73 FR 62034, 62051 (Oct. 17, 2008). DOE requested input and data on the utility provided by specific microwave oven features, including in relevant part cooking sensors that do not require standby power.

Id.

at 62133.

AHAM agreed with DOE that some manufacturers in certain areas of the world have already started to incorporate some of the cooking sensor design options into microwave ovens. (AHAM, Public Meeting Transcript, No. 40.5 at pp. 78-79) AHAM expressed two concerns about these sensors: That reliability and accuracy of the sensors have not been fully proved through testing, and that there is limited availability of those sensors to microwave oven manufacturers due to intellectual property protections. (AHAM, Public Meeting Transcript, No. 40.5 at pp. 69-70) AHAM further requested that DOE provide data on the availability, reliability, and functionality of the cooking sensors that consume no standby power. AHAM stated that data collection for such sensors provides an additional rationale for postponing the rulemaking or not adopting a standby power standard for microwave ovens. (AHAM, No. 47 at p. 5)

Whirlpool agreed with DOE that cooking sensors with no standby power consumption are becoming available, though experience with them is limited. According to Whirlpool, there is a lack of necessary data regarding reliability, accuracy and intellectual property status. (Whirlpool, No. 50 at p. 7)

GE similarly commented that cooking sensors with no standby power consumption, while in limited use at that time, had not been fully tested and evaluated as appropriate alternatives. GE also requested that DOE provide data on the availability, reliability, and functionality of the sensors discussed in the October 2008 NOPR, relative to sensors currently in use. (GE, No. 48 at p. 3) GE also commented that absolute humidity sensors with standby power consumption offer greater resolution than relative humidity sensors with no standby power consumption and therefore offer consumer utility. (GE, Public Meeting Transcript, No. 40.5 at pp. 74-75) Furthermore, GE suggested that some of the sensor technologies described in the October 2008 NOPR, such as infrared and weight sensors, are not feasible alternatives to the absolute humidity sensors used today. For instance, infrared sensors are easily fouled by contaminants and condensation. GE commented that DOE should provide further information about absolute humidity sensors with no standby power consumption and no cost premium over that of a conventional absolute humidity sensor. GE stated that it needed to review performance parameters and any associated intellectual property issues associated with these sensors. (GE, No. 48, pp. 3-4)

DOE requested comment on whether any intellectual property or patent infringement issues are associated with the cooking sensor technologies discussed above; however, DOE did not receive any such data. In addition, DOE is not currently aware of any intellectual property or patent infringement issues for infrared sensors, weight sensors, piezoelectric sensors, or relative humidity sensors. With respect to the accuracy and reliability of low- and zero-standby power cooking sensors, DOE notes that a significant number of microwave oven models using the alternate cooking sensor technologies discussed above are available on the international market, and have been available for a number of years. As discussed above, DOE is also aware of one zero-standby power cooking sensor technology used in microwave ovens on the U.S. market. DOE is not aware of any data indicating that the reliability and accuracy associated with these low- and zero-standby power cooking sensors significantly differs from that of the absolute humidity sensors currently employed in microwave ovens on the U.S. market. DOE is also unaware of data showing that fouling of infrared cooking sensors, as commented by GE, would significantly differ from that of absolute humidity sensors, or data on the decreased accuracy due to fouling as compared to the fouling of absolute humidity sensors. DOE recognizes GE's concern regarding the use of relative humidity sensors in microwave ovens. Because DOE is not aware of any relative humidity cooking sensors used in microwave ovens currently on the market, DOE is not aware of any data regarding the accuracy of these sensors for detecting the state of the cooking load to adjust the cooking time. However, DOE notes that multiple other cooking sensor technology options exist that have been employed in microwave ovens in place of an absolute humidity cooking sensor. For these reasons, DOE tentatively concludes that the low- and zero-standby-power cooking sensor technologies discussed above are viable design options, and has analyzed them for this SNOPR. DOE requests data and information on the accuracy and reliability of low- and zero-standby power cooking sensors as compared to absolute humidity cooking sensors currently used in microwave ovens on the U.S. market, and whether these technologies would affect how consumers use their microwave ovens or their satisfaction in using them due to any lessening of the utility or the performance of microwaves imposed by the standard. DOE also seeks information on the current commercial availability of this technology, the

likelihood of future adoption, and the potential impact on the lessening of competition amongst manufacturers. DOE also continues to request comment on whether any intellectual property or patent infringement issues are associated with the cooking sensor technologies discussed above.

With respect to GE's comment that DOE should provide further information on absolute humidity sensors with no standby power consumption and no cost premium over that of a conventional absolute humidity sensor, because DOE was made aware of this information during interviews with microwave oven manufacturers, DOE is unable to provide further information regarding this absolute humidity cooking sensor.

Edison Electric Institute (EEI) stated that due to the reduction in cooking time and thus energy consumption made possible by use of a cooking sensor, it is important to retain this feature in microwave ovens. (EEI, Public Meeting Transcript, No 40.5 at pp. 71-72) Also, EEI expressed concern about the recovery time of a cooking sensor after a full microwave oven power-down and the impacts on consumer utility of a slow recovery time. (EEI, Public Meeting Transcript, No. 40.5 at pp. 77-78) As discussed in the October 2008 NOPR, low- and zero-standby-power cooking sensor technologies require little to no warm-up time. 73 FR 62034, 62050-51 (Oct. 17, 2008). As a result, DOE believes that low- and zero-standby-power cooking sensor technologies can be used in microwave ovens without impacting consumer utility.

2. Display Technologies

DOE stated in the October 2008 NOPR that it would consider three display technologies for reducing microwave oven standby power consumption: LED displays, LCDs with and without backlighting, and VFDs. DOE stated that LED displays and LCDs consume less power than VFDs. DOE also stated that each identified display technology provides acceptable consumer utility, including brightness, viewing angle, and ability to display complex characters. 73 FR 62034, 62051 (Oct. 17, 2008). DOE requested input and data on the utility provided by specific microwave oven features, including, in relevant part, display technologies.

Id.

at 62133.

EEI commented that consumer utility is associated with an electronic display and timer rather than a mechanical timer. (EEI, Public Meeting Transcript, No. 40.5 at pp. 63-64). As discussed in the October 2008 NOPR, DOE was not aware of any microwave ovens currently available on the U.S. market using electromechanical controls (73 FR 62034, 62051 (Oct. 17, 2008)), and thus has considered only electronic controls (including displays) in determining standby power levels. In addition, DOE is not considering electromechanical controls as a design option to reduce standby power consumption.

AHAM, GE, and Whirlpool suggested that not all microwave oven display technologies considered by DOE will maintain consumer utility in all applications. Whirlpool stated that limiting the information displayed and/or reducing the size of the clock reduces standby power consumption at the expense of consumer utility. AHAM and Whirlpool expressed concerns about the reliability of LED displays, particularly in over-the-range microwave oven applications. According to AHAM, GE, and Whirlpool, for over-the-range microwave oven applications, VFDs are generally preferred over other display technologies such as backlit LCDs or LED displays, as VFDs: (1) Have greater reliability when exposed to the higher heat encountered above a cooking surface; (2) allow a wider viewing angle and have greater visibility; and (3) are available in more sizes and colors as demanded by the consumers of higher-end products, also allowing a manufacturer to provide a “family look” to product suites. (AHAM, No. 47 at p. 5; AHAM, Public Meeting Transcript, No. 40.5 at pp. 70-71; GE, No. 48 at p. 3; GE, Public Meeting Transcript, No 40.5, p. 75; Whirlpool, No. 50 at pp. 6-7).

As discussed above, DOE's research suggests that multiple over-the-range microwave ovens with low power displays, including the LED and LCD types, are currently available on the U.S. market. DOE has also found that manufacturer temperature ratings for the three types of displays are comparable. Furthermore, DOE has found that LED displays and LCDs in both countertop and over-the-range microwave ovens offer acceptable consumer utility features, including brightness, viewing angle, and ability to display complex characters. DOE found no microwave oven display technologies with intermittent backlighting or other features that impair consumer utility. As a result, DOE believes that LED displays and LCDs can be integrated into any countertop or over-the-range microwave oven, with proper heat shielding and without significant loss of consumer utility.

3. Power Supply and Control Boards

In the October 2008 NOPR, DOE found several technologies available to increase power supply and control board efficiency that would reduce microwave oven standby power consumption. DOE found some microwave ovens on the U.S. market using switching power supplies with up to 75-percent conversion efficiencies and 0.2 W or less no-load standby losses, though these models came with a higher cost, higher part count, and greater complexity. DOE stated that switching power supplies are as yet unproven in long-term microwave oven applications, and the greater complexity of these power supplies may also lower overall reliability. DOE was also aware of high efficiency power supply and control board components that could be used to reduce standby power consumption, but these were not found on commercially available microwave ovens at the time. 73 FR 62034, 62051 (Oct. 17, 2008). DOE requested comments on the ability of switching or similar modern power supplies to operate successfully inside a microwave oven and on the impacts of the efficiency of such power supplies on microwave oven standby power.

Id.

at 62133.

AHAM commented that switching power supplies can operate successfully in microwave ovens, but that associated reliability is still relatively unknown. (AHAM, No. 47 at p. 6) Whirlpool cited limited data suggesting that the costs and potential reliability issues associated with switching power supplies do not support their economic viability. (Whirlpool, No. 50 at p. 8) Nevertheless, Whirlpool stated that it sells products with switching power supplies outside of the U.S. (Whirlpool, Public Meeting Transcript, No. 40.5 at pp. 81-82) DOE observes that switching power supplies are found in products such as computers, battery chargers, clothes washers, and clothes dryers, suggesting that the reliability and durability of switching power supplies has been proven in residential appliance applications. DOE notes that microwave ovens incorporating switching power supplies have been available for multiple years and are still used, as evidenced by such power supplies being observed in DOE's most recent test sample of combination microwave ovens. DOE is also unaware of data indicating that the reliability of switching power supplies is significantly worse than conventional linear power supplies over the lifetime of the product.

Whirlpool suggested that switching power supplies are modestly more efficient than conventional power supplies. (Whirlpool, No. 50 at p. 8) Pacific Gas and Electric (PG&E) commented that switching power

supplies can have efficiency exceeding 90 percent and those in computers are routinely exceeding 95 percent. (PG&E, Public Meeting Transcript, No. 40.5 at p. 81) DOE believes that the application of power supplies is very different for computers and microwave ovens, and DOE research indicates that switching power supplies for appliance applications in sizes similar to those utilized in microwave ovens achieve no greater than 75-percent efficiency.

16

Furthermore, DOE notes that the most efficient power supplies available for consumer computer use typically do not exceed 92-percent efficiency.

17

16

Information on the design and efficiency of switch mode power supplies can be found at

http://www.powerint.com/en/applications/major-appliances.

17

Information can be found at

http://www.plugloadsolutions.com/80PlusPowerSupplies.aspx.

AHAM expressed concern that electromechanical controls may be necessary in order to meet standby power requirements. (AHAM, Public Meeting Transcript, No. 40.5 at p. 58) As discussed above, DOE is not aware of any microwave ovens currently on the market with electromechanical controls. As a result, DOE has considered only microwave ovens with electronic controls in determining standby power levels. DOE does not believe that electromechanical controls would be required to achieve any of the standby power levels presented in section IV.D.

4. Power-Down Options

In the October 2008 NOPR, DOE determined that control strategies are available that allowed microwave oven manufacturers to make design tradeoffs between incorporating power-consuming features such as displays or cooking sensors and including a function to cut power to those components during standby. DOE found that a large number of microwave ovens incorporating this automatic power-down feature were available in other markets such as Japan. 73 FR 62034, 62051-52 (Oct. 17, 2008). DOE requested input and data on these control strategies as well as comments on the viability and cost of microwave oven control board circuitry that could accommodate transistors to switch off cooking sensors and displays.

Id.

at 62133.

AHAM commented that the industry lacks data on control board circuitry to allow for a function to cut off power during standby mode. According to AHAM, such features must be reliable in high-temperature environments. AHAM noted that DOE has allowed no time for manufacturers to evaluate the viability or feasibility of the proposed technologies. (AHAM, No. 47 at pp. 3, 6) DOE research has not identified any technical barrier that would prevent microwave oven manufacturers from successfully integrating such control board circuitry with proper heat shielding and other design elements. DOE is also aware of similar automatic power-down control technologies incorporated in products such as clothes washers and clothes dryers, which utilize an additional transformerless power supply to provide just enough power to maintain the microcontroller chip while the unit is powered down, resulting in very low standby power levels. Therefore, DOE continues to believe that an automatic power-down feature is technically feasible in microwave applications.

AHAM commented that it is concerned with a reduction in consumer utility and how the consumer interfaces with the unit. AHAM added that evaluating the impacts on consumer utility will require substantial consumer research. (AHAM, No. 47 at p. 6) AHAM suggested that an indicator light may be desirable in a microwave oven with the automatic power-down feature to communicate the product's status to the user. (AHAM, Public Meeting Transcript, No. 40.5 at p. 59) Whirlpool stated that an automatic power-down feature in microwave ovens may cause consumer confusion and complaints and could require significant consumer education efforts. (Whirlpool, Public Meeting Transcript, No. 40.5 at pp. 65-66) Whirlpool commented that control technologies are available to dim or turn off a display after a period of inactivity has elapsed but that Whirlpool does not currently incorporate such a technology into its products. (Whirlpool, No. 50 at p. 7) Whirlpool and ASAP both commented that there could be a variety of ways to implement a power-down feature, including consumer-activated or fuzzy logic-based power response. (ASAP, Public Meeting Transcript, No. 40.5 at p. 79; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 80) DOE has considered consumer utility issues in the determination of the proposed standby mode and off mode energy conservation standards. (See section V.C of today's supplemental notice and chapter 5 of the SNOPR TSD for additional discussion of this topic.) DOE welcomes further comments regarding consumer utility issues associated with each of the technology options, and in particular the low- and zero-standby power cooking sensors and display technologies, considered in this analysis.

The comment filed jointly (hereafter, the Joint Comment) by ASAP, American Council for an Energy-Efficient Economy, American Rivers, Natural Resources Defense Council, Northeast Energy Efficiency Partnerships, Northwest Power and Conservation Council, Southern California Gas Company, San Diego Gas and Electric Company, Southern California Edison, and Earthjustice (EJ), stated that DOE should analyze user-activated controls to turn the display on and off, in addition to automatic power-down features. According to these commenters, a microwave oven equipped with such controls would meet the EPCA definition of operating in standby or off mode, and would give consumers the ability to reduce energy use below the proposed standby power standard level. The Joint Comment asserted that this type of switch is similar to power switches found on many computers, copiers, printers, televisions, and other products sold outside of the U.S. (Joint Comment, No. 44 at p. 10)

ASAP requested clarification whether an on/off switch, particularly a consumer-activated one, would be considered as a design option. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 66, 73-74) GE questioned whether a microwave oven would be in standby mode or off mode if the display is turned off. (GE, Public Meeting Transcript, No. 40.5 at p. 73)

Under the mode definitions adopted by the amended microwave oven test procedure (76 FR 12825, 12834-37 (Mar. 9, 2011)), a product for which an on/off switch has turned off the display would be considered to be in off mode, unless other energy consuming features associated with standby mode remain energized (

i.e.,

features to facilitate the activation of other modes by remote switch, internal sensor, or timer; or continuous functions, including other information or status displays or sensor-based features). In the latter case, the microwave oven would remain in standby mode even with the display turned off.

DOE is not aware of any products incorporating a user-activated control to turn the display on or off. Further, DOE does not have information to evaluate how often consumers might make use of this feature. Therefore, at this time DOE is unable to analyze such a control as a design option. DOE agrees that such a feature, if provided, could result in decreased energy usage in standby mode or off mode, and remains open to consideration of such a design option in future rulemakings. DOE also notes that manufacturers would not be precluded

from incorporating such a feature in their products under the proposed standards.

C. Engineering Analysis

The purpose of the engineering analysis is to characterize the relationship between the energy use and the cost of standby mode features of microwave ovens. DOE used this standby power/cost relationship as input to the payback period, LCC, and NIA analyses. The engineering analysis provides data that can be used to establish the manufacturer selling price of more efficient products. Those data include manufacturing costs and manufacturer markups.

DOE has identified three basic methods for generating manufacturing costs: (1) The design-option approach, which provides the incremental costs of adding to a baseline model design options that will improve its efficiency (

i.e.,

lower its energy use in standby mode and off mode); (2) the efficiency-level approach, which provides the incremental costs of moving to higher energy efficiency levels (

in this case,

levels of reduced standby power), without regard to the particular design option(s) 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 on costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels. DOE conducted the engineering analysis for this rulemaking using the efficiency-level approach. For this analysis, DOE relied on laboratory testing of representative microwave ovens. DOE supplemented the standby power data with data gained through reverse-engineering analysis and primary and secondary research, as appropriate. To identify microwave oven design options, DOE performed a reverse engineering analysis on a representative sample of microwave ovens. Details of the engineering analysis are in chapter 5 of the SNOPR TSD.

1. Energy Use Metric

In the October 2008 NOPR, DOE explored whether it would be technically feasible to combine the existing measure of energy efficiency during the cooking cycle per use with standby mode and off mode energy use over time to form a single metric, as required by EISA 2007. (42 U.S.C. 6295(gg)(2)(A)) DOE tentatively concluded that, although it may be mathematically possible to combine energy consumption into a single metric encompassing active, standby, and off modes, it is not technically feasible to do so due to the high variability in the cooking efficiency measurement based on the microwave oven test procedure at that time and because of the significant contribution of standby power to overall microwave oven energy use. Therefore, DOE proposed a separate metric to measure standby power as provided by EISA 2007. 73 FR 62034, 62042-43 (Oct. 17, 2008).

ASAP, EEI, the Joint Comment, and Whirlpool agree with DOE's determination that it is not technically feasible to integrate standby and off mode energy use into a single efficiency metric for microwave ovens. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 53; EEI, Public Meeting Transcript, No. 40.5 at p. 55; Joint Comment, No. 44 at p. 10; Whirlpool, No. 50 at p. 4; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29) AHAM stated that an integrated energy descriptor, while technically feasible, is not practical. (AHAM, No. 47 at p. 4; AHAM, Public Meeting Transcript, No. 40.5 at pp. 27, 54-55) ASAP questioned whether there was any legal prohibition on a prescriptive standard for microwave oven standby power, especially since DOE was at that time proposing a prescriptive standard for standing pilots in gas cooking products. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 64-65)

As noted previously, DOE eliminated the active mode cooking efficiency provisions in the July 2010 TP Final Rule after it determined that those provisions did not produce accurate and repeatable results. 75 FR 42579 (July 22, 2010). Therefore, the absence of active mode provisions results in a

de facto

separate energy use descriptor for microwave oven standby mode and off mode energy use.

2. Standby Power Levels

DOE is considering standby mode and off mode standards based on a maximum average standby power, in W, for microwave ovens. For the reasons noted previously, the standards do not include off mode power. For the October 2008 NOPR, DOE's analysis estimated the incremental manufacturing cost for microwave ovens having standby power consumption less than the baseline level of 4 W. For the purposes of that analysis, a baseline microwave oven was considered to incorporate an absolute humidity cooking sensor. To analyze the cost-energy use relationship for microwave oven standby power, DOE defined standby power levels expressed as a maximum average standby power in W. To analyze the impacts of standards, DOE defined the following four standby power levels for analysis: (1) The Federal Energy Management Program (FEMP) procurement efficiency recommendation; (2) the International Energy Agency's (IEA's) 1-Watt Plan; (3) a standby power level as a gap-fill between the FEMP Procurement Efficiency Recommendation and IEA 1-Watt Plan; and (4) the current maximum microwave oven standby technology (max-tech;

i.e.,

lowest standby power) that DOE believes is or could be commercially available when the energy conservation standards become effective, based on a review of microwave ovens currently on the market worldwide. Table IV.2 provides the microwave oven standby power levels and the reference source for each level that DOE analyzed for the October 2008 NOPR. For more details on the determination of standby power levels, see chapter 5 of the SNOPR TSD.

Table IV.2—October 2008 NOPR Proposed Microwave Oven Standby Power Levels

Standby

power level

(TSL)

Source

Standby

power (

W)

Baseline

Baseline

4.0

1

FEMP Procurement Efficiency Recommendation

2.0

2

Gap Fill

1.5

3

IEA 1-Watt Program

1.0

4

Max Tech

0.02

In the October 2008 NOPR, DOE requested comments and views of interested parties concerning the selection of microwave oven standby power levels for the engineering analysis. 73 FR 62034, 62133 (Oct. 17, 2008). As discussed in section V.A, due to the definition of only four standby power levels, a TSL was defined for each standby power level and thus standby power levels may also be referred to as TSLs.

AHAM commented that the microwave oven standby power TSLs are appropriate. In particular, AHAM asserted that much of the worldwide industry is moving towards the IEA 1-Watt Program, which corresponds to one of the TSLs. However, AHAM stated that DOE's engineering analysis based on these TSLs is incomplete and inaccurate. For example, none of the 32 units tested by DOE were over-the-range units, whereas six of the 21 units in the AHAM sample were over-the-range units. According to AHAM, it is important to include over-the-range microwave ovens in the analysis because most of these units likely include a VFD, which is the most reliable display type in high temperature conditions. (AHAM, No. 47 at p. 3; AHAM, Public Meeting Transcript, No. 40.5 at p. 83)

As previously discussed, DOE research found that multiple over-the-range microwave ovens are currently available on the market that incorporate low-power display technologies, including LEDs and LCDs. DOE has also found that manufacturer temperature ratings for the three types of displays are comparable, and that LED displays and LCDs in both countertop and over-the-range microwave ovens offer acceptable consumer utility features, including brightness, viewing angle, and ability to display complex characters. Due to these findings, DOE believes that the TSLs and the associated analyses are still valid.

Additionally, AHAM stated that each microwave oven standby power TSL should be set in a way that allows manufacturers a variety of pathways to reduce standby power consumption to that level. While some manufacturers are already starting to incorporate some of the standby power consumption-reducing design options identified by DOE, little or no data is available on some of the design trade-offs and reliability. (AHAM, Public Meeting Transcript, No. 40.5 at pp. 78-79) DOE believes that multiple pathways exist, based on the selection of the (1) display technology, (2) power supply/control boards, (3) cooking sensors, and (4) the possible incorporation of algorithms to automatically reduce standby power after a period of inactivity, as stated in the October 2008 NOPR.

Whirlpool commented that it is unaware of technologies that would allow microwave ovens equipped with VFDs to meet the 1-W standby power consumption limit of TSL 3 while keeping the display energized during standby mode. (Whirlpool, No. 50 at p. 7) GE stated that it has significant concerns about retaining all features associated with VFDs that impact consumer utility while reducing microwave oven standby power consumption to TSL 3. As a result, GE believes TSL 3 would reduce the utility or performance of microwave ovens. (GE, Public Meeting Transcript, No. 40.5 at p. 89) DOE has determined that microwave oven manufacturers can meet TSL 3 in microwave ovens with VFDs by incorporating an automatic power-down feature. In addition, DOE research suggests that LED displays and LCDs in both countertop and over-the-range microwave ovens offer acceptable consumer utility features, including brightness, viewing angle, and ability to display complex characters. Additional issues related to consumer utility are addressed in section V.C, which discusses the TSLs considered for proposed standby mode and off mode standards.

AHAM requested additional information about the functionality associated with the microwave oven max-tech level, including response time from power-down. (AHAM, Public Meeting Transcript, No. 40.5 at p. 84) EEI also requested information about the max-tech level, such as whether it has as many display features and includes all the features of the baseline model. (EEI, Public Meeting Transcript, No. 40.5 at p. 84)

As discussed in the October 2008 NOPR, the max-tech microwave oven standby power level of 0.02 W corresponds to a unit equipped with a default automatic power-down function that shuts off certain power-consuming components after a specified period of user inactivity. The standby power at max-tech was obtained from a microwave oven currently on the market in Korea which incorporates such a feature. 73 FR 62034, 62045 (Oct. 17, 2008). Although DOE does not have operational information on this specific model, DOE has analyzed the components necessary to achieve an automatic power-down function, and does not believe such a feature would limit the selection of display technologies or other features that provide consumer utility. DOE analysis suggests that response times for startup will be short enough (less than 1 second) to be acceptable to consumers.

For the reasons discussed above in section IV.A, DOE also analyzed a separate product class for over-the-range combination microwave ovens. DOE's analysis estimates the incremental manufacturing cost for built-in and over-the-range combination microwave ovens having standby power consumption less than the baseline value of 4.5 W. To determine that baseline level, DOE measured the standby power consumption of a representative sample of built-in and over-the-range combination microwave ovens currently on the market. For the purpose of this standby power analysis, a baseline built-in/over-the-range combination microwave oven is considered to incorporate an absolute humidity cooking sensor. In order to analyze the cost-energy use relationship for this product class, DOE defined each standby power level as a maximum average standby power in watts.

To determine the maximum average standby power at each level, DOE reverse-engineered a representative sample of built-in and over-the-range combination microwave ovens to analyze the various components that contribute to the standby power consumption of the unit. DOE also measured the standby power consumed by these components individually. In its analysis, DOE observed that the absolute humidity cooking sensor used in these combination microwave ovens on average consume 0.9 W of standby power. For Standby Power Level (SL) 1, DOE believes that standby power can be reduced by incorporating a zero-standby cooking sensor. For SL 2, DOE analyzed potential improvements to the power supply design. DOE noted that microwave ovens at the baseline standby energy use incorporate a linear power supply. DOE measured the standby power consumption of the power supply and found that the transformer used to step down the line input voltage contributes most significantly to the standby power consumption. DOE then performed a power budget analysis to determine the size of the transformer needed to operate a microwave at full load, and the results suggest that replacing the conventional linear power supply with a more efficient switch mode power supply will eliminate the need for a large transformer and effectively reduce the standby power associated with the power supply. DOE thus estimated the standby power for SL 2 based on the improvement associated with changing from a conventional linear power supply with an efficiency of 55 percent

to a switch mode power supply with an efficiency of 75 percent. DOE developed this estimate for the efficiency of a switch mode power supply based on research of such power supply designs for appliance applications.

18

For SL 3, DOE analyzed the impact relays have in determining the size of a power supply. DOE compared the power budget of a control board with electromechanical relays to that with solid state relays, and observed that the power requirement of a control board, with similar input and load, is lower with solid state relays than with electromechanical relays. Therefore, DOE estimated the standby power at SL 3 based on design improvements associated with using more efficient components in a switch mode power supply that incorporates solid state relays. For SL 4, DOE analyzed an automatic function that turns off power to standby power consuming components after a certain period of inactivity and that uses a transformerless power supply to maintain the microcontroller chip while the microwave oven is not powered on. DOE estimated the standby power at SL 4 based on the standby power requirements of the controller microcontroller chip.

18

Information on the design and efficiency of switch mode power supplies can be found at

http://www.powerint.com/en/applications/major-appliances.

Table IV.3 provides the proposed standby power levels for the two product classes considered for today's SNOPR. Details of the engineering analysis are in chapter 5 of the SNOPR TSD.

Table IV.3—Proposed Microwave Oven Standby Power Levels

Standby power level

Standby power (

W

)

Microwave-only

and countertop

combination

Built-in and

over-the-range

combination

Baseline

4.0

4.5

1

2.0

3.7

2

1.5

2.7

3

1.0

2.2

4

0.02

0.04

3. Manufacturing Costs

In this rulemaking DOE estimates a manufacturing cost for microwave ovens at each standby power level. The manufacturing costs are the basis of inputs for other analyses, including the LCC, national impact, and GRIM analyses.

For microwave oven standby mode and off mode energy use, DOE estimated a cost-energy use relationship (or “curve”) in the form of the incremental manufacturing costs associated with incremental reductions in baseline standby power. In the October 2008 NOPR, DOE determined that microwave oven standby power depends on, among other factors, the display technology used, the associated power supplies and controllers, and the presence or lack of a cooking sensor. From testing and reverse engineering, DOE observed correlations between (1) specific components and technologies, or combinations thereof, and (2) measured standby power. DOE obtained preliminary incremental manufacturing costs associated with standby power levels by considering combinations of those components as well as other technology options identified to reduce standby power. In the October 2008 NOPR, DOE presented manufacturing cost estimates based on quotes obtained from suppliers, interviews with manufacturers, interviews with subject matter experts, research and literature review, and numerical modeling. 73 FR 62034, 62055 (Oct. 17, 2008). They are shown in Table IV.4.

Table IV.4—October 2008 NOPR Proposed Microwave Oven Standby Power Incremental Manufacturing Costs

Standby

power

level

Standby

power (

W

)

Incremental

cost

2007$)

Baseline

4.0

NA

1

2.0

0.30

2

1.5

0.67

3

1.0

1.47

4

0.02

5.13

Based on DOE's research, interviews with subject matter experts, and discussions with manufacturers, DOE believes that all consumer utility (display, cooking sensor, etc.) could be maintained by standby power consumption down to SL 3 (1.0 W). At the max-tech level, DOE would expect implementation of an automatic power-down feature that would, among other things, shut off the display after a period of inactivity, potentially impacting consumer utility.

DOE observed several different cooking sensor technologies. Follow-on testing after the December 2007 public meeting showed that some sensors are zero-standby (relative humidity) cooking sensors. During the MIA interview for the NOPR, one manufacturer indicated that its supplier of cooking sensors had developed zero-standby absolute humidity cooking sensors that would have the same manufacturing cost as the higher-standby power devices they would replace. Based on the number of available approaches to zero-standby cooking sensors from which manufacturers can choose, DOE believes that all manufacturers can and likely will implement zero-standby cooking sensors by the effective date of standby mode and off mode energy conservation standards, and maintain the consumer utility of a cooking sensor without affecting unit cost. DOE believes that a standard at standby power levels of 1 or 2 W would not affect consumer utility, because all display types could continue to be used. At SL 3 for VFDs and SL 4 for all display technologies, DOE analysis suggests the need for a separate controller (automatic power-down) that automatically turns off all other power-consuming components during standby mode. Such a feature would affect the consumer utility of having a clock display only if the consumer could not opt out of auto power-down.

DOE requested input and data from interested parties on the estimated incremental manufacturing costs, as well as the assumed approaches, to achieve each microwave oven standby power level. DOE also requested comment on whether any intellectual property or patent infringement issues are associated with the design options

presented in the NOPR TSD to achieve each standby power level. 73 FR 62034, 62133 (Oct. 17, 2008).

AHAM questioned the source of the incremental cost data associated with each standby power level presented by DOE, since some microwave oven manufacturers cannot recall providing this information to DOE. AHAM commented on the need for incremental manufacturing costs to reflect both a one-time cost as well as the possibility of multiple paths to achieve each TSL. (AHAM, Public Meeting Transcript, No. 40.5 at p. 87) GE commented that the cost associated with upgrading power supplies to reach TSL 3 is a question. (GE, Public Meeting Transcript, No. 40.5 at pp. 75-76)

As described in chapter 5 of the TSD published with the October 2008 NOPR, DOE developed incremental cost estimates for each standby power level using the design-option approach. (One-time costs are evaluated as part of the MIA.) DOE estimated costs for each of the components and technologies based on quotes from component suppliers, interviews with manufacturers, interviews with subject matter experts, research and literature review, and numerical modeling. The incremental manufacturing costs for each standby power level were determined by considering different combinations of these components as well as other technology options identified to reduce standby power.

DOE is aware that manufacturers may employ a number of strategies to achieve the different standby power levels. The estimated manufacturing costs for each standby power level represent the approach DOE believes manufacturers would most likely use to achieve the standby power at each level. For each level, DOE assumed manufacturers would implement design options with the lowest associated manufacturing cost. If DOE determined there were multiple paths with similar costs to reach a certain level, it assumed manufacturers would be equally likely to choose either strategy.

Whirlpool commented that its market research suggests high costs associated with consumer education on proper operation of microwave ovens with automatic power-down features. Whirlpool clarified that the marketing costs it submitted for the ANOPR did not include these costs, estimated at $10 million, including retailer training, point-of-purchase material, product tags, telephone support, and possibly more. (Whirlpool, No. 50 at p. 7) AHAM also commented that DOE did not complete a rigorous analysis on manufacturing costs. According to AHAM, DOE obtained component costs, but did not account for the cost implications on appliance manufacturers. AHAM stated that this includes variables such as component reliability and/or utility, both of which will impact manufacturer cost. (AHAM, No. 47 at p. 6)

DOE considered any conversion costs associated with changes to consumer utility and reliability in the manufacturer impact analysis, discussed in section IV.G. However, as previously discussed, DOE found no reliability or consumer utility concerns with switching from VFD to LCD or LED displays. Through discussions with manufacturers and OEMs, DOE believes that zero-standby cooking sensors could be implemented with no effect on consumer utility or reliability. DOE is aware that an automatic power-down feature required at SL 3 for VFDs and at SL 4 for all display types could affect consumer utility, and considered these impacts in the selection of the proposed standards.

For the reasons described above, DOE believes the standby power levels and corresponding incremental manufacturing costs presented in the October 2008 NOPR remain fundamentally valid for the microwave-only and countertop combination microwave oven product class. DOE is unaware of any technologies that have become available since the publishing of the October 2008 NOPR that would alter the incremental cost for any standby power level. However, the costs presented in the October 2008 NOPR are in 2008 dollars. DOE scaled these costs to 2010 dollars using the producer price index (PPI) to reflect more current values.

19

The relevant PPI for microwave ovens is a subset of the household cooking appliance manufacturing industry, specifically for electric (including microwave) household ranges, ovens, surface cooking units, and equipment. Table IV.5 shows the revised incremental costs for each standby power level for Product Class 1, scaled to 2010 dollars.

19

Information on the PPI databases can be found at

http://www.bls.gov/ppi/data.htm.

(Last accessed March 18, 2011.)

Table IV.5—Microwave Oven Product Class 1 Standby Power Incremental Manufacturing Costs

Standby power level

Standby power (

W

)

Incremental cost (

2010$

)

Baseline

4.0

NA

1

2.0

$0.27

2

1.5

0.60

3

1.0

1.31

4

0.02

4.58

As discussed in section IV.A, for today's SNOPR, DOE is proposing two product classes for microwave ovens. While the analysis presented in the October 2008 NOPR remains relevant for the microwave-only and countertop combination microwave oven product class, DOE conducted analyses on a test sample of 13 combination microwave ovens for this SNOPR to evaluate the built-in and over-the-range combination microwave oven product class. DOE again used the design-option approach to determine the incremental manufacturing costs of combination microwave ovens for each standby power level.

DOE estimated the incremental cost associated with reductions in baseline standby power of built-in and over-the-range combination microwave ovens. DOE performed engineering teardowns and control board cost analyses to determine the cost of the baseline control board used in these units. DOE estimated the cost associated with each standby power level by using quotes from various component suppliers to determine the cost of the components used in each design option.

For SL 1, DOE estimated that the manufacturing cost of a zero-standby cooking sensor would be the same as that of the cooking sensor with high standby power. To estimate the manufacturing cost for SL 2, DOE used reverse engineering to determine the cost of the components used in a design of a switch mode power supply capable of delivering the same output power as the baseline conventional linear power supply. In its analysis for the manufacturing cost of SL 3, DOE determined the cost of the components used to design a control board with a switch mode power supply and solid state relays capable of driving the same loads as the electromechanical relays. DOE estimated the manufacturing cost for SL 4 based on the cost of the components needed to design an automatic power-down function that uses a transformerless power supply.

The results of these new analyses are summarized in Table IV.6. For the detailed cost-energy use analysis, including descriptions of design options and design changes to meet standby

power levels, see chapter 5 of the SNOPR TSD.

Table IV.6—Microwave Oven Product Class 2 Standby Power Incremental Manufacturing Costs

Standby power level

Standby power (

W

)

Incremental cost (

2010$

)

Baseline

4.5

NA

1

3.7

$0

2

2.7

2.29

3

2.2

9.44

4

0.04

5.18

D. Life-Cycle Cost and Payback Period Analysis

In response to the requirements of section 325(o)(2)(B)(i) of the Act, DOE conducted LCC and PBP analyses to evaluate the economic impacts of possible amended energy conservation standards for consumers of microwave ovens having standby mode and off mode features. (42 U.S.C. 6295(o)(2)(B)(i)) DOE conducted the analyses using a spreadsheet model developed in Microsoft (MS) Excel for Windows 2007. (See chapter 8 of the SNOPR TSD.)

The LCC represents the total consumer expense over the life of a product, including purchase and installation expense and operating costs (energy expenditures, repair costs, and maintenance costs). The PBP is the number of years it would take for the consumer to recover the increased costs of a higher-efficiency product through energy savings. To calculate the LCC, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. DOE forecasts the change in LCC and the change in PBP associated with a given efficiency level relative to the base-case product efficiency. The base-case forecast reflects the market in the absence of amended mandatory energy conservation standards. As part of the LCC and PBP analyses, DOE develops data that it uses to establish product prices, annual energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates.

DOE developed a consumer sample for microwave ovens having standby mode and off mode features from EIA's 2005 Residential Energy Consumption Survey (RECS). It used this sample to establish the variability and uncertainty in microwave oven electricity use. The variability in electricity pricing was characterized by incorporating regional energy prices. DOE calculated the LCC associated with a baseline microwave oven having standby mode and off mode features. To calculate the LCC savings and PBP associated with products that could meet potential amended energy conservation standards, DOE substituted the baseline unit with more efficient designs.

Table IV.7 summarizes the approaches and data DOE used to derive the inputs to the LCC and PBP calculations for the October 2008 NOPR, and the changes it made for today's SNOPR. DOE did not introduce changes to the LCC and PBP analysis methodology described in the October 2008 NOPR. As the following sections discuss in more detail, however, DOE revised some of the inputs to the analysis. Chapter 8 of the SNOPR TSD contains a detailed discussion of the methodology utilized for the LCC and PBP analysis as well as the inputs developed for the analysis.

Table IV.7—Summary of Inputs and Key Assumptions in LCC and PBP Analyses

Inputs

October 2008 NOPR

Changes for the SNOPR

Affecting Installed Costs

Product Cost

Derived by multiplying manufacturer cost by manufacturer, distributor markups and sales tax

Used experience curve fits to forecast a price scaling index to forecast product costs.

Affecting Operating Costs

Annual Energy Use

Annual energy use determined from the annual usage (average daily use cycles)

No change.

Energy Prices

Electricity: Updated using EIA's 2006 Form 861 data. Variability: Regional energy prices determined for 13 regions

Electricity: Updated using EIA's 2009 Form 861 data. Variability: No change.

Energy Price Trends

Energy: Forecasts updated with EIA's

Annual Energy Outlook 2008

(

AEO 2008)

Reference Case, High Growth, and Low Growth forecasts updated with EIA's

AEO 2010

May Release.

Repair and Maintenance Costs

Assumed no repair or maintenance costs

No change.

Affecting Present Value of Annual Operating Cost Savings

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

No change.

Discount Rates

Variability: Characterized using Weibull probability distributions

No change.

Affecting Installed and Operating Costs

Effective Date of New Standard

2012

2014.

1. Product Costs

To calculate the product costs paid by microwave oven purchasers, DOE multiplied the manufacturing selling prices developed from the engineering analysis by the supply chain markups it developed (along with sales taxes). DOE used the same supply chain markups for today's SNOPR that were developed for the October 2008 NOPR. See chapter 6 of the SNOPR TSD for additional information. For the October 2008 NOPR, DOE analyzed only countertop models of microwave ovens and considered installation costs to be zero. For today's SNOPR, DOE analyzed both countertop and over-the-range microwave ovens and considered installation costs to be zero.

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. Consistent with the NODA, DOE examined historical producer price indices (PPI) for electric cooking equipment generally and microwave ovens specifically and found a consistent, long-term declining real price trend. Consistent with the method proposed in the NODA, DOE used experience curve fits to develop a price scaling index to forecast product costs for this rulemaking.

DOE also considered the public comments that were received in response to the NODA and refined its experience curve trend forecasting estimates. 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 these concerns and determined that retaining the assumption-based approach of a constant real price trend was not consistent with the historical data for the products covered in this rule (though this scenario does represent a reasonable upper bound on the future equipment price trend). DOE also performed an initial evaluation of the possibility of other factors complicating the estimation of the long-term price trend, and developed a range of potential price trend values that was consistent with the available data and justified by the amount of data that was available to DOE at this time. DOE recognizes that its price trend forecasting methods are likely to be modified as more data and information becomes available to enhance the statistical certainty of the trend estimate and the completeness of the model. Additional data should enable an improved evaluation of the potential impacts of more of the factors that can influence equipment price trends over time.

To evaluate the impact of the uncertainty of the price trend estimates, DOE performed price trend sensitivity calculations in the national impact analysis to examine the dependence of the analysis results on different analytical assumptions. DOE also included a constant real price trend assumption as a sensitivity scenario representing an upper bound on the forecast price trend.

A more detailed discussion of DOE's price trend modeling and calculations is provided in appendix 8-E of the SNOPR TSD.

2. Annual Energy Consumption

DOE determined the annual energy consumption of the standby mode and off mode of microwave ovens by estimating the number of hours of operation throughout the year and assuming that the unit would be in standby mode or off mode the rest of the time. DOE estimated the number of operating hours relative to the baseline of 71 hours calculated in the NOPR. DOE subtracted the number of calculated operating hours from the total number of hours in a year and multiplied by the standby mode and off mode power usage to determine yearly standby mode and off mode energy consumption.

3. Energy Prices

DOE derived average electricity 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. DOE estimated residential electricity prices for each of the 13 geographic areas based on data from EIA Form 861, “Annual Electric Power Industry Report.” DOE calculated an average residential electricity price by first estimating an average residential price for each utility, and then calculating a regional average price by weighting each utility having customers in a region by the number of residential customers served in that region. The calculations for today's SNOPR used the most recent available data (2009).

To estimate trends in electricity prices for the October 2008 NOPR, DOE used the price forecasts in EIA's

AEO 2008.

To arrive at prices in future years, DOE multiplied the average prices described above by the forecast of annual average price changes in

AEO 2008.

For today's supplemental notice, DOE updated its energy price forecasts using those in the

AEO 2010

May Release. Because the

AEO

forecasts prices only to 2035, DOE followed past guidelines that EIA provided to the Federal Energy Management Program and used the average rate of change during 2020-2035 to estimate price trends beyond 2035.

The spreadsheet tools used to conduct the LCC and PBP analysis allow users to select energy price forecasts for either the

AEO'

s High economic growth case or Low economic growth case to estimate the sensitivity of the LCC and PBP to different energy price forecasts.

DOE received comment regarding the inputs to the energy price forecasts. The Joint Comment recommended that DOE conduct a sensitivity analysis using a basket of other forecasts besides the

AEO.

(Joint Comment, No. 44 at p. 11) As mentioned above, DOE considered price forecasts from the

AEO's

High and Low economic growth cases to estimate the sensitivity of the LCC and PBP results to different energy price forecasts. The alternative forecasts from the

AEO

provide a suitable range to examine the sensitivity of LCC and PBP results to different energy price forecasts.

The Joint Comment also stated that to realistically depict energy prices in the future, DOE must consider the impact of carbon control legislation, because such legislation is likely. It also noted that there are regional cap-and-trade programs in effect in the Northeast (Regional Greenhouse Gas Initiative [RGGI]) and the West (Western Climate Initiative [WCI]) that will affect the price of electricity, which was not yet reflected in the

AEO

energy price forecasts. (Joint Comment, No. 44 at p. 12) EJ stated that caps likely will be in place by the time new standards become effective, so DOE should increase its electricity prices to reflect the cost of complying with emission caps. (EJ, Public Meeting Transcript, No. 40.5 at pp. 105-106)

In response, DOE believes that the shape of Federal carbon control legislation, and the ensuing cost to electricity generators of carbon mitigation, is too uncertain to incorporate into the energy price forecasts that DOE uses. The costs to electricity generators of carbon mitigation resulting from the regional programs are also uncertain over the forecast period for this rulemaking. That being said, EIA included the effect of

the RGGI in its energy price forecasts for the

AEO 2010

May Release. (WCI did not provide sufficient detail to EIA in order for them to model WCI's impact on energy price forecasts.) Therefore, the energy price forecasts used in today's supplemental notice include the impact of one of the two regional cap-and-trade programs in the United States.

4. Repair and Maintenance Costs

Repair costs are those associated with repairing or replacing components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. For the October 2008 NOPR, DOE did not include repair or maintenance costs in its analyses. DOE maintained the same approach for this SNOPR.

5. Product Lifetime

For the October 2008 NOPR and today's SNOPR, DOE used a variety of sources to establish low, average, and high estimates for product lifetime. The average microwave oven lifetime used was 9.3 years. DOE used a Weibull probability distribution to characterize microwave oven lifetime.

6. Discount Rates

In the calculation of LCC, DOE applies discount rates to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for microwave ovens. See chapter 8 in the SNOPR TSD for further details on the development of consumer discount rates.

To establish residential discount rates for the LCC analysis in the October 2008 NOPR and today's SNOPR, DOE identified all debt or asset classes that consumers might use to purchase household appliances, including household assets that might be affected indirectly. It estimated 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 new 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 supplemental notice.

7. Effective Date of New Standards

The effective date is the future date when parties subject to the requirements of a new energy conservation standard must begin compliance. For the NOPR, DOE assumed that any new standards adopted in this rulemaking would become effective in March 2012, 3 years after the month when it expected the final rule would be published in the

Federal Register

. For today's SNOPR, DOE expects that the final rule will be published in 2011, with new standards requiring compliance three years later. Thus, DOE calculated the LCC for appliance consumers as if they would purchase new products in 2014.

8. Product Energy Efficiency in the Base Case

For the LCC and PBP analysis, DOE analyzes higher efficiency levels relative to a base case (

i.e.,

the case without new energy conservation standards). However, some consumers may already purchase products having efficiencies greater than the baseline product levels. Thus, to accurately estimate the percentage of consumers that would be affected by a particular standard level, DOE estimates the distribution of product efficiencies that consumers are expected to purchase under the base case. DOE refers to this distribution of product energy efficiencies as a base-case efficiency distribution. For the October 2008 NOPR and today's SNOPR, DOE used the current shares of available models at specific standby power levels to establish the base-case efficiency distributions. Table IV.8 presents the market shares of the standby power levels in the base case for standby mode and off mode energy use of microwave ovens.

Table IV.8—Microwave Ovens: Base-Case Market Shares

Level

Product Class 1

Standby power (

W

)

2005 Share

(

%

)

Product Class 2

Standby power (

W

)

2005 Share (

%

)

Baseline

4.00

46.2

4.50

100.0

TSL1

*

2.00

34.6

3.70

0.0

TSL 2

1.50

19.2

2.70

0.0

TSL 3

1.00

0.0

2.20

0.0

TSL 4

0.02

0.0

0.04

0.0

* TSL = Trial Standard Level.

9. Inputs to Payback Period Analysis

The PBP is the amount of time (expressed in years) it takes the consumer to recover the additional installed cost of a more efficient product through operating cost savings, compared to the baseline product. The simple payback period does not account for changes in operating expenses over time or the time value of money. The inputs to the PBP calculation are the total installed cost of the product to the consumer for each efficiency level and the annual (first-year) operating expenditures for each efficiency level. For the October 2008 NOPR and today's SNOPR, the PBP calculation uses the same inputs as the LCC analysis, except that energy price trends and discount rates are not needed.

10. Rebuttable-Presumption Payback Period

As noted above, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)) 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 test procedure in place for that standard. For each TSL, DOE determined the value of the first year's energy savings by calculating the quantity of those savings in accordance with DOE's test procedure, and multiplying that amount by the average energy price forecast for the year in which a new standard first would be effective—in this case, 2014.

DOE received comments addressing the topic of using a rebuttable-presumption payback period to establish the economic justification of an energy conservation standard. The Joint Comment and EJ stated that DOE's view that it is necessary to consider a full range of impacts because the rebuttable presumption criterion is insufficient for determining economic justification does not reflect the extent to which the rebuttable-presumption analysis constrains DOE's authority to reject standards based on economic impacts. (Joint Comment, No. 44 at appendix B, p. 1; EJ, Public Meeting Transcript, No. 40.5 at p. 130) The Joint Comment stated that in 42 U.S.C. 6295(o)(2)(B)(iii), Congress erected a significant barrier to DOE's rejection, on the basis of economic justifiability, of standard levels to which the rebuttable presumption applies. Further, EJ and the Joint Comment stated DOE's preference to proceed under the seven-factor test contained in 42 U.S.C. 6295(o)(2)(B)(i) is not pertinent. The Joint Comment agreed with DOE that analysis under the seven-factor test is necessary and typically has supported standards having paybacks longer than 3 years. However, the Joint Comment stated that DOE's decision making must reflect the expressed intent of Congress that the highest standard level resulting in cost recovery within 3 years constitutes the presumptive lowest standard level that DOE must adopt. (Joint Comment, No. 44 at appendix B, pp. 1-2)

In response, when examining potential standard levels DOE considers both the rebuttable-presumption payback criteria, as well as a full analysis that includes all seven relevant statutory criteria under 42 U.S.C. 6295(o)(2)(B)(i). DOE believes, however, that the commenters are misinterpreting the statutory provision in question. The Joint Comment and EJ state that DOE need not look beyond the results of the rebuttable-presumption analysis, but DOE believes that the statute contains no such restriction, and following this approach would potentially force the agency to ignore other relevant information that would bear on the selection of the most stringent standard level that meets all applicable statutory criteria. Similarly, DOE believes that the Joint Comment misreads the statute in calling for a level that meets the rebuttable-presumption test to serve as a minimum level when setting the final energy conservation standard. To do so would not only eliminate the “rebuttable” aspect of the presumption but also would lock in place a level that may not be economically justified based on a full review of statutory criteria. EPCA already obligates DOE to select the most stringent standard level that meets the applicable statutory criteria.

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

1. General

DOE's NIA assesses the national energy savings, as well as the national NPV, of total consumer costs and savings expected to result from new or amended standards at specific efficiency levels. DOE applied the NIA spreadsheet to calculate energy savings and NPV, using the annual energy consumption and total installed cost data from the LCC analysis. DOE forecasted the energy savings, energy cost savings, product costs, and NPV for the two product classes from 2014 to 2043. The forecasts provide annual and cumulative values for all four parameters. In addition, DOE incorporated into its NIA spreadsheet the capability to analyze sensitivity of the results to forecasted energy prices and product efficiency trends. Table IV.9 summarizes the approach and data DOE used to derive the inputs to the NES and NPV analyses for the October 2008 NOPR and the changes made in the analyses for today's SNOPR. A discussion of the 2008 inputs and the changes follows. (See chapter 10 of the SNOPR TSD for further details.)

Table IV.9—Approach and Data Used To Derive Inputs to the National Energy Savings and NPV Analyses

Inputs

2008 NOPR Description

Changes for the SNOPR

Shipments

Annual shipments from shipments model

See Table IV.10.

Compliance Date of Standard

2012

2014.

Base-Case Forecasted Efficiencies

Shipment-weighted efficiency (SWEF) determined in 2005. SWEF held constant over forecast period

No change.

Standards-Case Forecasted Efficiencies

Analyzed as one product class. Roll-up scenario used for determining SWEF in the year that standards become effective for each standards case. SWEF held constant over forecast period

Analyzed as two product classes. Roll-up scenario used for determining SWEF in the year that standards become effective for each standards case. SWEF held constant over forecast period

Annual Energy Consumption per Unit

Annual weighted-average values as a function of SWEF

No change.

Total Installed Cost per Unit

Annual weighted-average values as a function of SWEF

Incorporated learning rate to forecast product prices.

Energy Cost per Unit

Annual weighted-average values as a function of the annual energy consumption per unit and energy (and water) prices

No change.

Repair Cost and Maintenance Cost per Unit

Incorporated changes in repair costs as a function of standby power

No change.

Escalation of Energy Prices

AEO 2008

forecasts (to 2030); extrapolated to 2042

Updated to

AEO 2010

May release forecasts (to 2035); extrapolated to 2043.

Energy Site-to-Source Conversion

Conversion varies yearly and is generated by DOE/EIA's NEMS program (a time-series conversion factor; includes electric generation, transmission, and distribution losses)

No change.

Discount Rate

3 and 7 percent real

No change.

Present Year

Future expenses discounted to 2007

Future expenses discounted to 2011.

2. Shipments

The shipments portion of the NIA spreadsheet is a model that uses historical data as a basis for projecting future shipments of the products that are the subject of this rulemaking. In projecting microwave oven shipments, DOE accounted for two market segments: (1) New construction; and (2) replacement of failed products. Because shipments for new construction and replacements were not enough to account for all product shipments, DOE developed another market segment to calibrate its shipments model. In addition to normal replacements, DOE's shipments model also assumed that a small fraction of the stock would be replaced early. It also considered retired units not replaced. DOE used the non-replacement market segment to calibrate the shipments model to historical shipments data.

To estimate the impacts of prospective standards on product shipments (

i.e.,

to forecast standards-case shipments), DOE considered the combined effects of changes in purchase price, annual operating cost, and household income on the magnitude of shipments.

Table IV.10 summarizes the approach and data DOE used to derive the inputs to the shipments analysis for the October 2008 NOPR, and the changes it made for today's SNOPR. The general approach for forecasting microwave shipments for today's SNOPR remains unchanged from the NOPR.

Table IV.10—Approach and Data Used To Derive Inputs to the Shipments Analysis

Inputs

2008 NOPR description

Changes for the SNOPR

Number of Product Classes

One product class. Market share data provided by AHAM

Two product classes: (1) All microwave oven-only and countertop microwave oven-combination; (2) over-the-range microwave oven-combination. Market share data provided by AHAM; 99% product class #1 and 1% product class #2. Product class market shares held constant over forecast period.

New Construction Shipments

Housing forecasts updated with EIA

AEO 2009

April release forecasts for the Reference case, High growth case, and Low growth case

No change in approach. Housing forecasts updated with EIA

AEO 2010

forecasts for the Reference case, High growth case, and Low growth case.

Replacements

Determined by tracking total product stock by vintage and establishing the failure of the stock using retirement functions from the LCC and PBP analysis. Retirement functions revised to be based on Weibull lifetime distributions

No change.

Retired Units not Replaced (

i.e.,

non-replacements)

Used to calibrate shipments model to historical shipments data

No change.

Historical Shipments

Data sources include AHAM data submittal and

Appliance

magazine

No change.

Purchase Price, Operating Cost, and Household Income Impacts due to Efficiency Standards

Developed “relative price” elasticity, which accounts for the purchase price and the present value of operating cost savings divided by household income. Used purchase price and efficiency data specific to residential refrigerators, clothes washers, and dishwashers between 1980 and 2002 to determine a “relative price” elasticity of demand of −0.34

No change.

Fuel Switching

Not applicable

No change.

a. New Construction Shipments

To estimate shipments for new construction, DOE used forecasts of housing starts coupled with microwave oven saturation data. In other words, to forecast the shipments for new construction in any given year, DOE multiplied the housing forecast by the forecasted saturation of microwave ovens for new housing.

New housing comprises single- and multi-family units (also referred to as “new housing completions”) and mobile home placements. DOE forecasted new housing based on EIA's

AEO 2010

for 2005-2035.

AEO 2010

provides three sets of forecasts: the Reference case, the High economic growth case, and the Low economic growth case. DOE used the forecasts from the Reference case for the NIA results reported in this notice. For the Reference case, the forecast shows a decline in housing completions from 2.2 million in 2005 to 1.7 million by 2030. For 2035-2043, DOE froze completions at the level in 2035.

b. Replacements and Non-Replacements

To determine shipments for the replacement market, DOE used an accounting method that tracks the total stock of units by vintage. DOE estimated a stock of microwave ovens by vintage by integrating historical shipments starting from 1972. Over time, some units are retired and removed from the stock, triggering the shipment of a replacement unit. Depending on the vintage, a certain percentage of each type of unit will fail and need to be replaced. To determine when a microwave oven fails, DOE used data from RECS and AHS to estimate a product survival function. This function was modeled as a Weibull distribution. Based on this method, the average calculated microwave oven lifetime is 9.3 years. For a more complete discussion of microwave lifetimes, refer to section 8.2.3 of chapter 8 of the SNOPR TSD.

3. Purchase Price, Operating Cost, and Income Impacts

To estimate the combined effects of increases in product purchase price and decreases in product operating costs on microwave oven shipments, for the October 2008 NOPR DOE used a

literature review and a statistical analysis on a limited set of appliance price, efficiency, and shipments data. DOE used purchase price and efficiency data specific to microwave ovens between 1980 and 2002 to conduct regression analyses. DOE's analysis suggested that the relative short-run price elasticity of demand is −0.34.

Because DOE's forecast of shipments and national impacts attributable to standards spans more than 30 years, DOE also considered how the relative price elasticity is affected once a new standard takes effect. After the purchase price changes, price elasticity becomes more inelastic over the years until it reaches a terminal value. For the October 2008 NOPR and today's SNOPR, DOE incorporated a relative price elasticity change that resulted in a terminal value of approximately one-third of the short-run elasticity. In other words, DOE determined that consumer purchase decisions, in time, become less sensitive to the initial change in the product's relative price.

4. Other Inputs

a. Forecasted Efficiencies

A key input to the calculations of NES and NPV are the energy efficiencies that DOE forecasts for the base case (without new standards). The forecasted efficiencies represent the annual shipment-weighted energy efficiency (SWEF) of the product under consideration during the forecast period (

i.e.,

from the estimated effective date of a new standard to 30 years after that date). Because DOE had no data to reasonably estimate how microwave oven standby power levels might change during the next 30 years, it assumed that forecasted efficiencies will stay at the 2014 standby power levels until the end of the forecast period.

For its determination of the cases under alternative standard levels (“standards cases”), DOE used a “roll-up” scenario in the October 2008 NOPR to establish the SWEF for 2012. For today's SNOPR, DOE established the SWEF for 2014 and assumed that product efficiencies in the base case that do not meet the standard level under consideration would roll-up to meet the new standard level. DOE assumed that all product efficiencies in the base case that were above the standard level under consideration would not be affected by the standard.

DOE made the same assumption regarding forecasted standards-case efficiencies as for the base case; namely, that efficiencies will remain at the 2014 standby power level until the end of the forecast period. By maintaining the same rate of increase for forecasted efficiencies in the standards case as in the base case (

i.e.,

no change), DOE retained a constant efficiency difference between the two cases throughout the forecast period. Although the no-change trends may not reflect what would happen to base-case and standards-case product efficiencies in the future, DOE believes that maintaining a constant efficiency difference between the base case and each standards case provides a reasonable estimate of the impact that standards would have on product efficiency. It is more important to accurately estimate the efficiency difference between the standards case and base case than to accurately estimate the actual product efficiencies in the standards and base cases. DOE retained the approach used in the October 2008 NOPR for today's SNOPR. Because the effective date of the standard is now assumed to be 2014, DOE applied the “roll-up” scenario in the year 2014 to establish the SWEF for each standards case.

b. Annual Energy Consumption

The annual energy consumption per unit depends directly on product efficiency. For the October 2008 NOPR and today's SNOPR, DOE used the SWEFs associated with the base case and each standards case, in combination with the annual energy use data, to estimate the shipment-weighted average annual per-unit energy consumption under the base case and standards cases. The national energy consumption is the product of the annual energy consumption per unit and the number of units of each vintage, which depends on shipments.

As noted above, DOE used a relative price elasticity to estimate standards-case shipments for microwave ovens. To avoid the inclusion of energy savings from any reduction in shipments attributable to a standard, DOE used the standards-case shipments projection and the standards-case stock to calculate the annual energy consumption in the base case. For microwave ovens, DOE assumed that any drop in shipments caused by standards would result in the purchase of used machines. DOE retained the use of the base-case shipments to determine the annual energy consumption in the base case for today's SNOPR.

c. Site-to-Source Energy Conversion

To estimate the national energy savings expected from appliance standards, DOE uses a multiplicative factor to convert site energy consumption (energy use at the location where the appliance is operated) into primary or source energy consumption (the energy required to deliver the site energy). For the October 2008 NOPR, DOE used annual site-to-source conversion factors based on the version of NEMS that corresponds to

AEO 2008

. For today's SNOPR, DOE used

AEO 2010

. For electricity, the conversion factors vary over time because of projected changes in generation sources (

i.e.,

the types of power plants projected to provide electricity to the country). Because the

AEO

does not provide energy forecasts beyond 2035, DOE used conversion factors that remain constant at the 2035 values throughout the rest of the forecast.

d. Total Installed Costs and Operating Costs

The increase in total annual installed cost is equal to the difference in the per-unit total installed cost between the base case and standards case, multiplied by the shipments forecasted in the standards case.

In the NOPR analysis, DOE assumed that the manufacturer costs and retail prices of products meeting various efficiency levels remain fixed, in real terms, throughout the period of the analysis. As discussed in section IV.F.1, examination of historical price data for certain appliances that have been subject to energy conservation standards indicates that the assumption of constant real prices and costs may, in many cases, over-estimate long-term appliance price trends.

For the SNOPR, DOE applied a learning rate of 28.9 percent to forecast the prices of microwave ovens sold in each year in the forecast period (2014-2043). The learning rate expresses the change in price associated with a doubling in cumulative production. The price in each year is a function of the learning rate and the cumulative production of microwave ovens forecast in each year. DOE applied the same values to forecast prices for each product class at each considered efficiency level. Learning curve analysis characterizes the reduction in production cost mainly associated with labor-based performance improvement and higher investment in new capital equipment at the microeconomic level. Experience curve analysis tends to focus more on entire industries and aggregates over various casual factors at the macroeconomic level: “Experience curve” and “progress function” typically represent generalizations of the learning concept to encompass behavior of all inputs to production and cost (

i.e.,

labor, capital, and materials).” The economic literature often uses these two terms interchangeably. The term

“learning” is used here to broadly cover these general macroeconomic conce

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