Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers

Federal RegisterDec 19, 2014

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2014-BT-STD-0021]

RIN 1904-AD24

Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers

AGENCY:

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

ACTION:

Notice of proposed rulemaking (NOPR) and public meeting.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential dishwashers. EPCA also requires the U.S. Department of Energy (DOE) to determine whether amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this notice, DOE proposes amended energy conservation standards for residential dishwashers. The notice also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than February 17, 2015. See section VII Public Participation for details.

DOE will hold a public meeting on Thursday, February 5, 2015, from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also be broadcast as a webinar. See section VII Public Participation for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

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 participating in the public meeting are subject to advance security screening procedures which require advance notice prior to attendance at the public meeting. If a foreign national wishes to participate in the public meeting, please inform DOE as soon as possible by contacting Ms. Regina Washington at (202) 586-1214 or by email:

foreignvisit@ee.doe.gov

so that the necessary procedures can be completed. Please also note that those wishing to bring laptops into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons can attend the public meeting via webinar. For more information, refer to section VII of this document (Public Participation).

Any comments submitted must identify the NOPR for Energy Conservation Standards for residential dishwashers, and provide docket number EERE-2014-BT-STD-0021 and/or regulatory information number (RIN) number 1904-AD24. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal: www.regulations.gov

. Follow the instructions for submitting comments.

Email: ResDishwashers2014STD0021@ee.doe.gov

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

Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-5B, 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.

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, in which case 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

Chad_S_Whiteman@omb.eop.gov

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

Docket:

The docket, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at regulations.gov. All documents in the docket are listed in the regulations.gov index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0021

. 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 VII for further information on how to submit comments through

www.regulations.gov

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

Brenda.Edwards@ee.doe.gov

FOR FURTHER INFORMATION CONTACT:

Mr. Bryan Berringer, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-0371. Email:

dishwashers@ee.Doe.Gov

Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 202-586-7796. Email:

Elizabeth.Kohl@hq.doe.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Residential Dishwashers

3. Residential Dishwasher Test Procedure History

III. General Discussion

A. Product Classes and Scope of Coverage

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

1. Determination of Savings

2. Significance of Savings

D. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

a. Savings in Operating Costs Compared to Increase in Price

b. Energy Savings

c. Lessening of Utility or Performance of Products

d. Impact of Any Lessening of Competition

e. Need for National Energy Conservation

f. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion

A. Market and Technology Assessment

1. Scope and Product Classes

2. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Levels

a. Baseline Efficiency Levels

b. Higher Energy Efficiency Levels

2. Manufacturer Production Cost Estimates

D. Markups Analysis

E. Energy and Water Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

3. Annual Energy and Water Consumption

4. Energy Prices

5. Water and Wastewater Prices

6. Maintenance and Repair Costs

7. Product Lifetime

8. Discount Rates

9. Base-Case Efficiency Distribution

10. Inputs to Payback Period Analysis

11. Rebuttable-Presumption Payback Period

G. Shipments

H. National Impact Analysis

1. National Energy and Water Savings

a. Forecasted Efficiency in the Base Case and Standards Cases

2. Net Present Value Analysis

a. Total Installed Cost per Unit

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

a. Phase 1, Industry Profile

b. Phase 2, Industry Cash Flow Analysis

c. Phase 3, Sub-Group Impact Analysis

2. GRIM

a. GRIM Key Inputs

b. GRIM Scenarios

3. Manufacturer Interviews

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Valuation of Other Emissions Reductions

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash Flow Analysis Results

b. Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Sub-Groups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Impacts on Employment

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Summary of National Economic Impacts

8. Other Factors

C. Conclusion

1. Benefits and Burdens of TSLs Considered for Residential Dishwashers

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

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 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

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Prepared General Statements For Distribution

C. Conduct of the Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

Title III, Part B

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

These products include residential dishwashers, the subject of today's notice.

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

All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112-210 (Dec. 18, 2012).

Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in a 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 residential dishwashers. The proposed standards, which are the maximum annual energy use and maximum per-cycle water consumption for each product class, are shown in Table I.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 the date 3 years after the publication of any final rule for this rulemaking. For purposes of the analysis conducted in support of this proposed rule, DOE used 2016 as the expected year of publication of any final standards.

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

[Compliance Starting 2019]

Product class

Maximum annual

energy use*

Maximum per-cycle water

consumption

1. Standard (≥8 place settings plus 6 serving pieces)

234 kilowatt-hours per year (kWh/year)

3.1 gallons per cycle (gal/cycle).

2. Compact (<8 place settings plus 6 serving pieces)

203 kWh/year

3.1 gal/cycle.

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

A. Benefits and Costs to Consumers

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

The average LCC savings are positive for both the standard and compact product classes. The PBP for both product classes are also less than the projected

average lifetime of this product of approximately 15 years.

The average LCC savings are measured relative to the base-case efficiency distribution, which depicts the dishwasher market in the compliance year (see section IV.F.9). The simple PBP, which is designed to compare specific dishwasher efficiency levels, is measured relative to the baseline dishwasher (see section IV.C.1.a).

Table I.2—Impacts of Proposed Energy Conservation Standards on Consumers of Residential Dishwashers

Product class

Average LCC

savings

(2013$)

Simple

payback

period

(years)

Standard

9.0

Compact

4.5

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2014 to 2048). Using a real discount rate of 8.5 percent, DOE estimates that the INPV for manufacturers of residential dishwashers is $586.6 million in 2013$. Under the proposed standards, DOE expects that manufacturers may lose up to 34.7 percent of their INPV, which is approximately $203.7 million. Additionally, based on its analysis of available information, DOE does not expect any plant closings or significant loss of employment.

C. National Benefits

All monetary values in this section are expressed in 2013 dollars and are discounted to 2014.

DOE's analyses indicate that the proposed standards would save a significant amount of energy. The lifetime savings for residential dishwashers purchased in the 30-year period that begins in the year of compliance with amended standards (2019-2048) amount to 1.06 quadrillion Btu (quads)

and 0.24 trillion gallons of water. This is a savings of 12 percent relative to the energy use of this product in the base case.

A quad is equal to 10

British thermal units (Btu).

The base case assumptions are described in section IV.G.

The cumulative net present value (NPV) of total consumer costs and savings of the proposed standards for residential dishwashers ranges from $0.23 billion (at a 7-percent discount rate) to $ 2.14 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for products purchased in 2019-2048.

In addition, the proposed standards would have significant environmental benefits. The energy savings described above would result in cumulative emission reductions (over the same period as for energy savings) of 61.9 million metric tons (Mt)

of carbon dioxide (CO

), 345.1 thousand tons of methane, 42.9 thousand tons of sulfur dioxide (SO

), 126.7 thousand tons of nitrogen oxides (NO

), 0.7 thousand tons of nitrous oxide (N

O), and 0.1 tons of mercury (Hg).

The cumulative reduction in CO

emissions through 2030 amounts to 14.6 Mt.

A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO

are presented in short tons.

DOE calculated emissions reductions relative to the

Annual Energy Outlook 2014

(

AEO 2014

) Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2013.

The value of the CO

reductions is calculated using a range of values per metric ton of CO

(otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process.

The derivation of the SCC values is discussed in section IV.L of this notice. Using discount rates appropriate for each set of SCC values, DOE estimates the present monetary value of the CO

emissions reduction described above is between $0.4 billion and $6.1 billion. DOE also estimates the present monetary value of the NO

emissions reduction is $0.08 billion at a 7-percent discount rate and $0.17 billion at a 3-percent discount rate.

Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866

. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013; revised November 2013.

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf

DOE is currently investigating valuation of avoided Hg and SO

emissions.

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

Table I.3—Summary of National Economic Benefits and Costs of Proposed Energy Conservation Standards for Residential Dishwashers *

Category

Present value

billion 2013$

Discount rate

Benefits

Operating Cost Savings

4.1

9.2

Reduction Monetized Value ($12.0/t case) **

0.4

Reduction Monetized Value ($40.5/t case) **

2.0

Reduction Monetized Value ($62.4/t case) **

3.1

2.5%

Reduction Monetized Value ($119/t case) **

6.1

Reduction Monetized Value (at $2,684/ton)

0.1

0.2

Total Benefits †

6.2

11.4

Costs

3.9

Incremental Installed Costs

7.1

Total Net Benefits

2.3

Including Emissions Reduction Monetized Value †

4.3

* This table presents the costs and benefits associated with residential dishwashers shipped in 2019−2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019−2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule.

** The CO

values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate.

The benefits and costs of today's proposed standards, for products sold in 2019-2048, can also be expressed in terms of annualized values. The annualized monetary values are the sum of (1) the annualized national economic value of the benefits from consumer operation of products that meet the new or amended standards (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase and installation costs, which is another way of representing consumer NPV), and (2) the annualized monetary value of the benefits of emission reductions, including CO

emission reductions.

To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2014, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (

e.g.,

2020 or 2030), and then discounted the present value from each year to 2014. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO

reductions, for which DOE used case-specific discount rates, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.

Although combining the values of operating savings and CO

emission 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

reductions is based on a global value. Second, the assessments of operating cost savings and CO

savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of residential dishwashers shipped in 2019-2048. The SCC values, on the other hand, reflect the present value of some future climate-related impacts resulting from the emission of one ton of carbon dioxide in each year. These impacts continue well beyond 2100.

Estimates of annualized benefits and costs of the proposed standards are shown in Table I.4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction, for which DOE used a 3-percent discount rate along with the average SCC series that has a value of $40.5/t in 2015, the cost of the standards proposed in today's rule is $413million per year in increased equipment costs, while the benefits are $437 million per year in reduced equipment operating costs, $113 million in CO

reductions, and $8.37 million in reduced NO

emissions. In this case, the net benefit amounts to $146 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that has a value of $40.5/t in 2015, the cost of the standards proposed in today's rule is $406 million per year in increased equipment costs, while the benefits are $529 million per year in reduced operating costs, $113 million in CO

reductions, and $9.95 million in reduced NO

emissions. In this case, the net benefit amounts to $246 million per year.

Table I.4—Annualized Benefits and Costs of Proposed Energy Conservation Standards for Residential Dishwashers

Discount rate

Million 2013$/year

Primary estimate *

Low net benefits estimate *

High net benefits estimate *

Benefits

Operating Cost Savings

437

529

388

462

506.

624.

CO2 Reduction Monetized Value ($12.0/t case)*

39.

CO2 Reduction Monetized Value ($40.5/t case)*

113

100

131.

CO2 Reduction Monetized Value ($62.4/t case)*

2.5%

165

146

191.

CO2 Reduction Monetized Value ($119/t case)*

351

311

406.

Reduction Monetized Value (at $2,684/ton)

8.37

9.95

7.53

8.86

9.49.

11.43.

Total Benefits †

7% plus CO2 range

3% plus CO2 range

479 to 796

558

572 to 890

652

425 to 706

496

501 to 782

572

555 to 921.

647.

674 to 1,041.

766.

Costs

Consumer Incremental Product Costs

413

406

468

465

371.

361.

Net Benefits

Total†

7% plus CO2 range

3% plus CO2 range

66 to 383

146

167 to 484

246

−43 to 238

36 to 317

106

183 to 550.

275.

313 to 680.

405.

* This table presents the annualized costs and benefits associated with residential dishwashers shipped in 2019−2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019−2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the

AEO 2014

Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product prices in the Primary Estimate, a low decline rate for projected product prices in the Low Benefits Estimate, and a high decline rate for projected product prices in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.2 of this notice.

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost and NO

benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values.

DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for the product classes covered by today's proposal.

See chapter 10, section 10.2 for more discussion of the base case efficiency distribution. Based on the analyses described above, DOE has tentatively concluded that the benefits of the proposed standards to the nation (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers and LCC increases for some consumers).

Currently 12.1 percent of the standard product class and 48.1 percent of the compact product class are at the minimum efficiency level.

DOE also considered more and less stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the proposed standard level achieves the maximum improvement in energy efficiency that is technologically feasible and economically justified. Based on consideration of the public comments DOE receives in response to this notice and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency 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.

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 standards for residential dishwashers.

A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), established the Energy Conservation Program for Consumer Products Other Than Automobiles. Public Law 94-163 (as codified in 42 U.S.C. 6291-6309). The program covers most major household appliances (collectively referred to as “covered products”), which includes the types of residential dishwashers that are the subject of this rulemaking. (42 U.S.C. 6292(a)(6)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(1) and (10)(A)), and directed DOE to conduct further rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(g)(4) and (10)(B)) In addition, the agency must periodically review its already established energy conservation standards for a covered product. (42 U.S.C. 6295(m)) Under this requirement, the next review that DOE would need to conduct must occur no later than six years from the issuance of any final rule establishing or amending a standard for a covered product.

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

Id.

The DOE test procedures for residential dishwashers currently appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix C1 (appendix C1).

DOE must follow specific statutory criteria for prescribing amended standards for covered products. As indicated above, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and

economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including residential dishwashers, if no test procedure has been established for the product, 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)(A)-(B)) 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 make this determination 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)(I)-(VII))

EPCA, as codified, 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 interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Further, EPCA, as codified, 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. (42 U.S.C. 6295(o)(2)(B)(iii))

Additionally, EPCA specifies requirements when promulgating a standard for a type or class of covered product that has two or more subcategories. (42 U.S.C. 6295(q)(1)) DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that 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. (42 U.S.C. 6294(q)(1)) 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 the feature and other factors DOE deems appropriate.

Id.

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

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

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

DOE has also reviewed this regulation pursuant to Executive Order (E.O.) 13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). E.O. 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in E.O. 12866. To the extent permitted by law, agencies are required by E.O. 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 E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that today's NOPR 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 E.O. 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

In a direct final rule published on May 30, 2012 (hereinafter the “May 2012 direct final rule”), DOE prescribed the current energy conservation standards for residential dishwashers manufactured on or after May 30, 2013. 77 FR 31918. The current standards are set forth in Table II.1.

Table II.1—Federal Energy Efficiency Standards for Residential Dishwashers

Product class

Annual energy use

(kWh/year)

Per-cycle water consumption

(gal/cycle)

Standard

307

5.0

Compact

222

3.5

2. History of Standards Rulemaking for Residential Dishwashers

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

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

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

The current energy conservation standards for residential dishwashers were submitted to DOE by groups representing manufacturers, energy and environmental advocates, and consumer groups on September 25, 2010. This collective set of comments, titled “Agreement on Minimum Federal Efficiency Standards, Smart Appliances, Federal Incentives and Related Matters for Specified Appliances” (the “Joint Petition”

), recommended specific energy conservation standards for residential dishwashers that, in the commenters' view, would satisfy the EPCA requirements. (42 U.S.C. 6295(o)) DOE conducted its rulemaking analyses on multiple residential dishwasher efficiency levels, including those suggested in the Joint Petition. In the May 2012 direct final rule, DOE established energy conservation standards for residential dishwashers manufactured on or after May 30, 2013, consistent with the levels suggested in the Joint Petition. 77 FR 31918 (May 30, 2012).

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

DOE is conducting the current energy conservation standards rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 years of issuing any final rule establishing or amending a standard, DOE shall publish either a notice of determination that amended standards are not needed or a NOPR including new proposed standards. Because the current standards were established in the final rule issued on May 12, 2012, publication of this notice within the 6-year timeframe satisfies these requirements. The rulemaking will consider any information not available at the time of the May 2012 direct final rule. The definition of the TSLs considered in this NOPR is discussed in section V.A of this notice.

3. Residential Dishwasher Test Procedure History

DOE originally established its test procedure for residential dishwashers at Title 10 of CFR, part 430, subpart B, appendix C (appendix C) in 1977. 42 FR 39964 (Aug. 8, 1977). In 1983, DOE amended the test procedure to revise the representative average-use cycles to more accurately reflect consumer use and to address products that use 120 degrees Fahrenheit (°F) inlet water. 48 FR 9202 (Mar. 3, 1983). DOE amended the test procedure again in 1984 to redefine the term “water heating dishwasher.” 49 FR 46533 (Nov. 27, 1984). In 1987, DOE amended the test procedure to address models that use 50°F inlet water. 52 FR 47549 (Dec. 15, 1987).

In 2001, DOE revised the test procedure's testing specifications to improve testing repeatability, changed the definitions of “compact dishwasher” and “standard dishwasher,” and reduced the average number of use cycles per year from 322 to 264. 66 FR 65091, 65095-97 (Dec. 18, 2001).

In 2003, DOE again revised the test procedure to more accurately measure residential dishwasher efficiency, energy use, and water use. The 2003 residential dishwasher test procedure amendments included the following revisions: (1) The addition of a method to rate the efficiency of soil-sensing products; (2) the addition of a method to measure standby power; and (3) a reduction in the average-use cycles per year from 264 to 215. 68 FR 51887, 51899-903 (Aug. 29, 2003).

In 2012, DOE established a new test procedure for residential dishwashers in appendix C1. Appendix C1 follows the same general procedures as those included in the previously used appendix C, with updates to: (1) Revise the provisions for measuring energy consumption in standby mode or off mode; (2) add requirements for residential dishwashers with water softeners to account for regeneration cycles; (3) require an additional preconditioning cycle; (4) include clarifications regarding certain definitions, test conditions, and test setup; and (5) replace obsolete test load items and soils. 77 FR 65942, 65982-65987 (Oct. 31, 2012).

The current version of the test procedure at 10 CFR 430.23(c) includes provisions for determining estimated annual energy use (EAEU), estimated annual operating cost (EAOC), and water consumption expressed in gal/cycle. Because appendix C is now obsolete, DOE proposes to delete it in this rulemaking and re-designate appendix C1 as appendix C.

III. General Discussion

A. Product Classes and Scope of Coverage

Existing energy conservation standards divide residential dishwashers into two product classes based on capacity (

i.e.,

the number of place settings and serving pieces that can be loaded in the product as specified in American National Standards Institute (ANSI)/Association of Home Appliance Manufacturers (AHAM) Standard DW-1-2010,

Household Electric Dishwashers

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

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

In this NOPR, DOE proposes to maintain the existing standard and compact product classes for residential dishwashers. Based on a survey of products available on the market, DOE determined that compact residential dishwashers provide unique utility by means of their countertop or drawer configurations.

B. Technological Feasibility

1. General

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

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Section IV.B of this NOPR discusses the results of the screening analysis for residential dishwashers, particularly the designs DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR Technical Support Document (TSD).

2. Maximum Technologically Feasible Levels

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

C. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the residential dishwashers that are the subject of this rulemaking purchased in the 30-year period that begins in the expected year of compliance with any amended standards (2019-2048).

The savings are measured over the entire lifetime of residential dishwashers purchased in the 30-year analysis period.

DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the base case. The base case represents a projection of energy consumption in the absence of amended mandatory efficiency standards, and it considers market forces and policies that affect demand for more efficient products.

DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period.

In the past, DOE presented energy savings results for only the 30-year period that begins in the year of compliance. In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of products purchased in the 30-year period. DOE has modified its presentation of national energy savings consistent with the approach used for its national economic analysis.

DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from amended standards for the products that are the subject of this rulemaking. The NIA spreadsheet model (described in section IV.H of this NOPR) calculates energy savings in site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports national energy savings in terms of the savings in the energy that is used to generate and transmit the site electricity. To calculate this quantity, DOE derives annual conversion factors from the model used to prepare the Energy Information Administration's (EIA) most recent

Annual Energy Outlook

(

AEO

). The

AEO

used for this rulemaking is

AEO 2014.

DOE has begun to also estimate full-fuel-cycle (FFC) energy savings, as discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51281 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012). The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy efficiency standards. DOE's evaluation of FFC savings resulted in part by the National Academy of Science's (NAS) report on FFC measurement approaches for DOE's Appliance Standards Program.

The FFC methodology estimates how much additional energy, and in turn how many tons of emissions, may be displaced if the estimated quantity of energy was not consumed by the residential dishwashers covered in this rulemaking. For more information on

FFC energy savings, see section IV.H.1 of this NOPR.

“Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy- Efficiency Standards,” (Academy report) was completed in May 2009 and included five recommendations. A copy of the study can be downloaded at:

http://www.nap.edu/catalog.php?record_id=12670

2. Significance of Savings

To adopt more-stringent standards for a covered product, DOE must determine that such action would result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for today's proposed standards (presented in section V.B.3.a of this notice) are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria

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

a. Economic Impact on Manufacturers and Consumers

In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J of this notice. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year 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, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard.

a. Savings in Operating Costs Compared To Increase in Price

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product compared to any increases in the price of the covered product that are likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.

The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with amended standards.

The LCC savings for the considered efficiency levels are calculated relative to a base case that reflects projected market trends in the absence of amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this NOPR.

b. Energy Savings

Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H.1 of this NOPR, DOE uses the NIA spreadsheet to project national energy savings.

c. Lessening of Utility or Performance of Products

In establishing classes of products, and in evaluating design options and the impact of potential standard levels, DOE evaluates standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data from internal testing and the availability of products on the market, DOE has determined that the standards proposed in this NOPR would not reduce the utility or performance of the products under consideration in this rulemaking.

d. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a proposed standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the 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)(ii)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will address the Attorney General's determination in the final rule.

e. Need for National Energy Conservation

In evaluating the need for national energy conservation, DOE expects that the energy savings from the proposed standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity.

The proposed standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE reports the emissions impacts from today's standards, and from each TSL it considered, in section V.B.6 of this NOPR. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this NOPR.

f. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to

be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))

2. Rebuttable Presumption

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

IV. Methodology and Discussion

DOE used two spreadsheet tools to estimate the impact of this NOPR. The first spreadsheet calculates LCCs and PBPs of potential new energy conservation standards. The second provides shipments forecasts and then calculates impacts of potential energy efficiency standards on national energy savings and net present value. The two spreadsheets are available online at:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=106

. The Department also assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM).

Additionally, DOE estimated the impacts on utilities and the environment of energy conservation standards for residential dishwashers. DOE used a version of EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare its

Annual Energy Outlook,

a widely known baseline energy forecast for the United States. For more information on NEMS, refer to

The National Energy Modeling System: An Overview,

DOE/EIA-0581 (98) (Feb.1998), available at:

http://www.eia.gov/oiaf/aeo/overview/

The version of NEMS used for appliance standards analysis, which makes minor modifications to the

AEO

version, is called NEMS-BT.

NEMS-BT accounts for the interactions among the various energy supply and demand sectors and the economy as a whole.

EIA approves the use of the name “NEMS” to describe only an

AEO

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

AEO

assumptions, the name “NEMS-BT” refers to the model as used here. (BT stands for DOE's Building Technologies Program.)

A. Market and Technology Assessment

DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly available information. The subjects addressed in the market and technology assessment for this residential dishwasher rulemaking include: (1) Scope and product classes; (2) manufacturers and industry structure; (3) existing efficiency programs; (4) shipments information; (5) market and industry trends; and (6) technologies that could improve the energy efficiency of residential dishwashers. The key findings of DOE's market assessment are summarized below. See chapter 3 of the NOPR TSD for further discussion of the market and technology assessment.

1. Scope and Product Classes

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

When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) For this rulemaking, DOE proposes to maintain the scope of coverage as defined by its current regulations for residential dishwashers, which include two product classes based on capacity as specified in ANSI/AHAM Standard DW-1-2010:

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

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

2. Technology Options

DOE identified 16 technology options that would be expected to improve the efficiency of residential dishwashers: condensation drying; control strategies; fan or jet drying; flow-through heating; improved fill control; finer filters; increased motor efficiency; optimized spray-arm geometry; increased insulation; low standby-loss electronic controls; microprocessor controls (including soil-sensing controls); modified sump geometry, with and without dual pumps; reduced inlet water temperature; supercritical carbon dioxide washing; ultrasonic washing; and variable washing pressures and flow rates.

After identifying all potential technology options for improving the efficiency of residential dishwashers, DOE performed the screening analysis (see section IV.B of this notice and chapter 4 of the NOPR TSD) on these technologies to determine which to consider further in the analysis and which to eliminate.

B. Screening Analysis

DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:

Technological feasibility.

Technologies that are not incorporated in commercial products or in working prototypes will not be considered further.

Practicability to manufacture, install, and service.

If it is determined that mass production and reliable installation and servicing of a technology in commercial products could not be achieved on the scale necessary to serve the relevant market at the time of the compliance date of the standard, then that technology will not be considered further.

Impacts on product utility or product availability.

If it is determined that a technology would have significant

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

Adverse impacts on health or safety.

If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further.

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

In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the above four criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed below.

1. Screened-Out Technologies

Reduced Inlet-Water Temperature

Reduced inlet-water temperature requires that residential dishwashers tap the cold water line for their water supply. Because most residential dishwashers in the United States tap the hot water line, this design option would require significant alteration of existing residential dishwasher installations to accommodate newly purchased units incorporating this design option. Therefore, DOE believes that it would not be practicable to install this technology on the scale necessary to serve the relevant market at the time of the effective date of an amended standard.

Supercritical Carbon Dioxide Washing

Supercritical carbon dioxide washing, which uses supercritical carbon dioxide instead of conventional detergent and water to wash dishes, has been researched but has not been implemented in commercially available dishwashers. Thus, DOE believes that it would not be practicable to manufacture, install and service this technology on the scale necessary to serve the relevant market at the time of the effective date of an amended standard. Furthermore, because this technology has not progressed beyond the research stage, it is not yet possible to assess whether it will have any adverse impacts on equipment utility to consumers or equipment availability, or any adverse impacts on consumers' health or safety.

Ultrasonic Washing

A residential dishwasher using ultrasonic waves to generate a cleaning mist was produced for the Japanese market in 2002. However, this model is no longer available on the market. Available information indicates that the use of a mist with ion generation instead of water with detergent would decrease cleaning performance, impacting consumer utility.

Ultrasonic dishwashing based upon soiled-dish immersion in a fluid that is then excited by ultrasonic waves has not been demonstrated. In an immersion-based ultrasonic dishwasher, standing ultrasonic waves within the washing cavity and the force of bubble cavitation implosion can damage fragile dishware. Because no manufacturers currently produce ultrasonic dishwashers, it is impossible to assess whether this design option would have any impacts on consumers' health or safety, or product availability.

2. Remaining Technologies

Through a review of each technology, DOE found that all of the other identified technologies met all four screening criteria to be examined further in DOE's analysis. In summary, DOE did not screen out the following technology options: condensation drying; control strategies; fan or jet drying; flow-through heating; improved fill control; finer filters; increased motor efficiency; optimized spray-arm geometry; increased insulation; low standby-loss electronic controls; microprocessor controls (including soil-sensing controls); modified sump geometry, with and without dual pumps; and variable washing pressures and flow rates.

All of these technology options are technologically feasible, given that the evaluated technologies are being used in commercially available products or working prototypes. Therefore, all of the energy conservation levels evaluated in this notice are technologically feasible. DOE also finds that all of the remaining technology options also meet the other screening criteria (

i.e.,

practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, or safety). For additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

In the engineering analysis DOE establishes the relationship between the manufacturer production cost (MPC) and improved residential dishwasher efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option; (2) efficiency level; or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiency-improving design changes to the baseline to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency and determining cost from a detailed bill of materials (BOM) derived from reverse engineering representative products.

For this analysis, DOE relied on a hybrid approach of the three methods. DOE selected units available at each of the analyzed efficiency levels to develop a detailed BOM for each product, similar to the reverse-engineering approach. However, DOE did not assume the costs derived from the BOMs represented the MPC at each efficiency level. DOE used the design option approach to add features that can improve efficiency to the baseline BOM to estimate the MPC at higher efficiency levels, similar to the design-option approach. For residential dishwashers, it is difficult to assign a specific energy or water savings to a particular design option. DOE observed the sets of design options incorporated into units available on the market at each efficiency level to assign design options to each of the analyzed efficiency levels, similar to the efficiency-level approach. Using this hybrid approach, DOE developed the relationship between MPC and residential dishwasher efficiency.

This section provides more detail on how DOE selected the efficiency levels used for its analysis and developed the MPC at each efficiency level. Chapter 5 of the NOPR TSD contains further description of the engineering analysis.

1. Efficiency Levels

a. Baseline Efficiency Levels

A baseline unit is a unit that just meets current Federal energy conservation standards and provides basic consumer utility.

DOE identified products available on the market rated at the current energy conservation standards levels (see Table IV.1 below). Accordingly, DOE analyzed these

products as baseline units. DOE uses the baseline unit for comparison in several phases of the NOPR analyses, including the engineering analysis, LCC analysis, PBP analysis, and NIA. To determine energy savings that will result from an amended energy conservation standard, DOE compares energy use at each of the higher energy efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the changes in price to the consumer that will result from an amended energy conservation standard, DOE compares the price of a unit at each higher efficiency level to the price of a unit at the baseline. Additional details on the selection of baseline units may be found in chapter 5 of the NOPR TSD.

The current Federal energy conservation standards went into effect on May 30, 2013.

Table IV.1 presents the baseline levels identified for each residential dishwasher product class.

Table IV.1—Baseline Efficiency Levels

Product class

Annual energy use

(

kWh/year

)

Per-cycle water consumption

(

gal/cycle

)

Standard

307

5.0

Compact

222

3.5

b. Higher Energy Efficiency Levels

Table IV.2 shows the efficiency levels DOE selected for standard residential dishwashers in this NOPR analysis.

Table IV.2—Residential Dishwasher Efficiency Levels—Standard Product Class

Efficiency level

Annual energy use

(

kWh/year

)

Per-cycle water consumption

(

gal/cycle

)

0—Baseline

307

5.00

295

4.25

280

3.50

234

3.10

4—Max-Tech

180

2.22

For standard residential dishwashers, DOE selected efficiency levels according to key levels identified in other efficiency programs and based on availability of products on the market. Efficiency Level 1 corresponds to the existing ENERGY STAR

criteria for standard residential dishwashers. Efficiency Level 2 corresponds to potential ENERGY STAR criteria identified during the process of setting the current ENERGY STAR criteria. This level was included in the Draft 2 V5.0 Dishwashers Specification, released on February 3, 2011.

Efficiency Level 3 is a gap-fill level developed as described below. Efficiency Level 4 is the max-tech efficiency level, as defined by the maximum available technology that DOE identified on the market at the time of its analysis. DOE did not identify any working prototypes that were more efficient than this maximum available technology.

Information on the ENERGY STAR program can be found at energystar.gov.

The draft specification document is available at

https://www.energystar.gov/products/specs/sites/products/files/ES_Draft_2_V5.0_Dishwashers_Specification.pdf

. DOE notes that this level was removed from the Final V5.0 Dishwashers Specification, and subsequent specification versions 5.1 and 5.2; however, the energy and water consumption represent a technically feasible efficiency level beyond the current ENERGY STAR criteria.

DOE notes that a standard residential dishwasher is available with rated annual energy consumption of 171 kWh/year and water consumption of 4.1 gal/cycle. These ratings are based on a cold-water connection, which DOE eliminated from consideration as a technology option in the screening analysis.

To determine the appropriate Efficiency Level 3, DOE surveyed the products currently available on the market in the United States. DOE's Compliance Certification Database

contains standard residential dishwasher models with a range of rated annual energy consumption and per-cycle water consumption between the max-tech and baseline. However, after removing products certified using a cold-water connection, which DOE screened out as a technology option as discussed in section IV.B of this NOPR, DOE observed that very few products are available with rated annual energy consumption below 234 kWh/year and per-cycle water consumption below 3.1 gal/cycle. Figure IV.1 shows the distribution of standard residential dishwashers included in DOE's Compliance Certification Database, after removing models certified using a cold-water connection. DOE developed efficiency level 3 based on this distribution.

DOE's Compliance Certification Database is accessible at

http://www.regulations.doe.gov/certification-data/

Units certified using a cold-water connection removed. Database accessed on May 22, 2014.

EP19DE14.004

Table IV.3 shows the efficiency levels DOE considered for compact residential dishwashers in this NOPR analysis.

Table IV.3—Residential Dishwasher Efficiency Levels—Compact Product Class

Efficiency Level

Annual energy use

(kWh/year)

Per-cycle water consumption

(gal/cycle)

0—Baseline

222

3.50

203

3.10

2—Max-Tech

141

2.00

Based on basic model numbers listed in DOE's Compliance Certification Database, DOE expects that fewer than 10 individual compact basic models are currently available on the market. The majority of models included in the Compliance Certification Database are also rated either at the baseline or max-tech efficiency level. In the ENERGY STAR Draft 2 Version 6.0 Residential Dishwasher Specification

, however, the Environmental Protection Agency proposed eligibility criteria for compact residential dishwashers consistent with Efficiency Level 1 shown in Table IV.3. As part of its proposal, ENERGY STAR discussed feasible energy and water improvements for compact products with manufacturers. ENERGY STAR's supporting analysis included the expected design options manufacturers would use to reach this intermediate efficiency level. Accordingly, DOE considered the proposed compact ENERGY STAR criteria as an efficiency level in this analysis. Efficiency Level 2 is the maximum available efficiency level, as defined by the maximum available technology that DOE could identify on the market at the time of its analysis. DOE did not identify any working prototypes that were more efficient than the maximum available technology.

Information on the ENERGY STAR specification is available at:

https://www.energystar.gov/products/specs/residential_dishwasher_specification_version_6_0_pd

2. Manufacturer Production Cost Estimates

Based on product teardowns and cost modeling, DOE developed overall cost-efficiency relationships for the standard and compact residential dishwasher product classes. DOE selected products covering the range of efficiencies available on the market for the teardown analysis. During the teardown process, DOE created detailed BOMs that included all components and processes used to manufacture the products. DOE used the BOMs from the teardowns as an input to a cost model, which was used to calculate the MPC for each product torn down.

As discussed earlier in this section, DOE used a hybrid approach of the design-option, efficiency-level, and reverse-engineering approaches in this engineering analysis. During the teardown process, DOE observed the combinations of design options manufacturers used to reach higher efficiency levels. Using the BOMs from the products torn down, DOE constructed typical BOMs for each efficiency level to estimate the MPC based on the expected combinations of design options at each efficiency level. Table IV.4 and Table IV.5 show the incremental MPCs for each of the analyzed residential dishwasher efficiency levels compared to the baseline efficiency level MPC. For additional details, see chapter 5 of the NOPR TSD.

Table IV.4—Cost-Efficiency Relationship for Standard Residential Dishwashers

Efficiency level

Annual energy use

(kWh/year)

Per-cycle water consumption

(gal/cycle)

Incremental manufacturer production cost

(2013$)

0—Baseline

307

5.00

$ -

295

4.25

$ 9.52

280

3.50

$ 36.53

234

3.10

$ 74.72

4—Max-Tech

180

2.22

$ 74.72

Table IV.5—Cost-Efficiency Relationship for Compact Residential Dishwashers

Efficiency level

Annual energy use

(kWh/year)

Per-Cycle Water Consumption

(gal/cycle)

Incremental manufacturer production cost

(2013$)

0—Baseline

222

3.50

$ -

203

3.10

$ 8.01

2—Max-Tech

141

2.00

$ 21.50

D. Markups Analysis

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

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

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

U.S. Census, 2007 Annual Retail Trade Survey (ARTS), Electronics and Appliance Stores sectors.

Chapter 6 of the NOPR TSD provides details on DOE's development of markups for residential dishwashers.

E. Energy and Water Use Analysis

DOE's energy and water use analysis estimated the range of energy and water use of residential dishwashers in the field,

i.e.,

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

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

For the dishwasher standards rulemaking, DOE estimated consumer usage (cycles per year) to establish dishwasher annual energy use within the life-cycle cost (LCC) and payback period (PBP) analysis. To estimate average dishwasher usage, DOE utilized a 2001 Arthur D. Little (ADL) report that focused solely on dishwashers. Information from the ADL report was used to determine an average usage of 215 cycles per year. DOE used the

Residential Energy Consumption Survey 2009

(

RECS 2009

) to characterize household variability of dishwasher usage.

DOE analyzed per-cycle energy consumption based on two components: (1) Water-heating energy, and (2) machine (motor) and drying energy, values for which are taken from data developed by DOE in the engineering analysis. See chapter 5 of the NOPR TSD for more information. The largest component of residential dishwasher energy consumption is water-heating energy use, which is the energy required to heat the inlet water to the temperature for dishwashing. The machine energy consists of the motor energy (for water pumping and food disposal), and drying energy consists of heat to dry cleaned dishes.

DOE estimated the per-cycle water-heating energy consumption based on DOE's residential dishwasher test procedure (which refers to this quantity as “water energy consumption”). DOE estimated this energy consumption for residential dishwashers that operate with a nominal inlet water temperature of 120 °F

, the most common situation in U.S. homes. For a residential dishwasher using electrically heated water, the water-heating energy consumption, expressed in kWh per cycle, is equal to the water consumption per cycle times a nominal water heater temperature rise of 70 °F times the specific heat of water (0.0024 kWh per gallon per °F).

For a residential dishwasher using gas-heated or oil-heated water, the calculation is the same, but also incorporates a nominal water heater recovery efficiency of 0.80 for gas-fired water heating and 0.78 for oil-fired water heating.

Energy Conservation Program: Test Procedures for Residential Dishwashers, Dehumidifiers, and Conventional Cooking Products.

Available at

https://www.federalregister.gov/articles/2012/05/25/2012-11155/energy-conservation-program-test-procedures-for-residential-dishwashers-dehumidifiers-and#h-58

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

The recovery efficiency indicates how efficient a water heater is at heating water. The DOE test procedure for dishwashers specifies a recovery efficiency of 0.80 for gas-fired water heating and 0.78 for oil-fired water heating, which is representative of gas and oil water heaters currently in the housing stock.

The energy used to operate the machine powers the motor (to pump water and dispose of food) and the heating element, which boosts the supplied water's temperature to the

required washing temperature. DOE estimated the per-cycle machine and drying energy consumption for representative units at each efficiency level by subtracting the per-cycle water-heating energy consumption from the per-cycle dishwasher energy consumption as determined in the engineering analysis.

Standby power is defined as a product's minimum power consumption while plugged in and not performing any active mode function.

DOE estimated the per-cycle energy use by subtracting the annual energy use associated with standby power from the total annual energy use and dividing the result by the national average number of residential dishwasher cycles per year. DOE used data provided by AHAM for the May 2012 direct final rule on the total annual residential dishwasher energy use and the standby power use for each considered efficiency level.

Active mode includes the main functions of washing, rinsing, or drying (when a drying process is included), or is involved in functions necessary for these main functions, such as admitting water into the dishwasher, pumping water out of the dishwasher, circulating air, or regenerating an internal water softener. For more information, see the DOE dishwasher test procedure at 10 CFR part 430, subpart B, appendix C1.

For more information, see chapter 7 of the NOPR TSD.

DOE determined the standby annual energy consumption by multiplying the energy use in standby mode per hour by the hours the residential dishwasher is in standby mode, which is the difference between the number of hours in a year and the active hours, which is equal to the number of residential dishwasher cycles per year multiplied by cycle time, which is estimated to be 1 hour.

The 1-hour cycle time is an estimate of the typical cycle time for a dishwasher. Actual cycle times vary based on wash selection, load, and model of dishwasher.

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

To estimate the number of cycles per year in a representative sample of U.S. households, DOE considered the following data sources. DOE analyzed data from the Energy Information Administration (EIA)'s

2009 Residential Energy Consumption Survey

(

RECS 2009

), which was the most recent such survey available at the time of DOE's analysis.

RECS

is a national sample survey of housing units that collects statistical information on the consumption of and expenditures for energy in housing units along with data on energy-related characteristics of the housing units and occupants. Of the more than 12,000 households in

RECS,

almost 7,400 have residential dishwashers. For each household using a residential dishwasher,

RECS

provides data on the number of residential dishwasher cycles in the following bins: (1) Less than once per week, (2) once per week, (3) 2-3 times per week, (4) 4-6 times per week, (5) at least once per day. DOE converted the above information to annual values and created a triangular or uniform distribution for each bin. DOE randomly assigned a specific numerical value from within the appropriate bin to each household in the residential dishwasher sample. The average number of cycles per year derived from the

RECS 2009

data is 171.

Arthur D. Little. “Review of Survey Data to Support Revisions to DOE's Dishwasher Test Procedure,” December 18, 2001. Prepared for the U.S. Department of Energy by Arthur D. Little: Cambridge, MA. Available at:

http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001

While the

RECS

data represent the most recent nationally representative sample of dishwasher usage, the binning approach that the RECS survey uses to collect the data does not allow for the derivation of a point estimate to help determine annual energy and water use without making assumptions about the distribution of usage within bins. For example, of the 18% of national households that responded that they used their dishwashers at least once per day, it is not known what percentage of these households use their dishwashers more than once a day or if viewed weekly, more than 7 times a week. Because the

RECS

data do not include point estimates of usage, DOE relies on survey data it used to develop the 2003 residential dishwasher test procedure amendments and analyzed again during the 2012 standards rulemaking

to estimate the average number of residential dishwasher cycles per year. In the review, survey data on consumers' residential dishwasher usage habits from the 1990's were collected from a number of sources including several residential dishwasher manufacturers, detergent manufacturers, energy and consumer interest groups, independent researchers, and government agencies. This study provides a large data set of point estimates which DOE believes is the best source of information on usage rates at present. This survey review was used in the development of the 2003 residential dishwasher test procedure amendments to reduce the average cycles per year from 264 to 215, which DOE believed was more reflective of dishwasher use nation-wide at the time and was not inconsistent with the steady decrease over the previous 20 years in the average-use cycles for a dishwasher.

Because of the facts detailed above, DOE is proposing in this document to use an average usage of 215 cycles per year as the value for average residential dishwasher use instead of 171 cycles estimated from the RECS survey data. DOE notes that 215 cycles per year is the number of cycles required to be used to calculate energy usage in DOE's test procedure for residential dishwashers which is also the basis for the ENERGY GUIDE label administered by the Federal Trade Commission. DOE further notes that alternative analysis that relies on additional assumptions regarding use patterns within the “binned” RECS data could yield results similar to those from the earlier data, depending on the assumptions made for each of the bins. DOE does recognize that dishwasher usage data are a key input when calculating energy and water use and ultimately have a direct effect on the benefits derived from estimated energy and water use savings described by this proposed rulemaking. DOE is aware that a point estimate for the annual number of dishwasher cycles is subject to uncertainty given how data on this topic are collected. Given this uncertainty, DOE encourages the public to comment on its use of these surveys and the limitations of each.

http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001

Note that several of the surveys used in this review share the problem of defining a single value for a category (i.e, a point estimate), but to a much less extent than the RECS data. Generally the other surveys minimize this issue by including more categories, by better distributing categories, and by having more bounded categories.

68 FR 51887 (Aug. 29, 2003) and Arthur D. Little. “Review of Survey Data to Support Revisions to DOE's Dishwasher Test Procedure,” December 18, 2001. Prepared for the U.S. Department of Energy by Arthur D. Little: Cambridge, MA. Available at:

http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001

. The 215 value was based on the review's recommendation that the number of average-use cycles per year be reduced into the range of 200 to 233 cycles.

DOE did not assume that all dishwashers are operated exactly at the average usage per year and used other survey data to characterize the variability in the usage. For purposes of conducting the LCC and PBP analysis, DOE characterized each usage bin with a probability distribution. To capture the uncertainty inherent to the usage response for each household in the RECS sample, DOE used a Monte Carlo

simulation in the LCC and PBP analysis that selects a value for usage within the distribution that is used to characterize each bin. The result of using probability distribution to characterize the RECS response bins provided a weighted-average dishwasher usage of 171 cycles per year.

Although DOE characterized the usage bins with probability distributions, it is certainly possible and equally likely that the weighted-average value is as low as 146 and as high as 453. This uncertainty led DOE to conclude that the ADL survey review, which focused more closely and solely on dishwasher usage habits, provided a more representative value for the average number of cycles per year that did the

RECS

survey. The sorting of user responses in RECS into usage frequency bins, however, allowed DOE to use

RECS 2009

to capture dishwasher usage variability from household to household (since not every household will run the average number of dishwasher cycles per year). The LCC and PBP analysis normalized the dishwasher usage by the ratio of 215-to-171 cycles per year. The resulting range of values used in the LCC analysis is consistent with the average use in the DOE residential dishwasher test procedure.

Table IV.6 and Table IV.7 show the estimated average annual energy and water use for each efficiency level analyzed for standard residential dishwashers.

Table IV.6—Standard Residential Dishwashers: Average Annual Energy and Water Use by Efficiency Level

Efficiency Level

Annual Energy Use

Water Heating*

Machine + Drying

Standby †

Total

kWh/year

gal/year

Annual water use

Baseline

177.0

130.0

0.0

307

1,075.0

150.4

140.3

4.3

295

913.8

123.9

151.8

4.3

280

752.5

109.7

120.0

4.3

234

666.5

78.6

97.1

4.3

180

477.3

* Shown for the case of electrically heated water.

† Standby annual energy use based on a dishwasher cycle length of one hour. Standby hours = 8760 hours − (215 cycles × 1 hour) = 8545 hours.

Table IV.7—Compact Residential Dishwashers: Average Annual Energy and Water Use by Efficiency Level

Efficiency Level

Annual Energy Use

Water Heating*

Machine + Drying

Standby †

Total

kWh/year

gal/year

Annual water use

Baseline

123.9

78.4

19.7

222

752.5

109.7

78.7

14.5

203

666.5

70.8

65.9

4.3

141

430.0

* Shown for the case of electrically heated water.

† Standby annual energy use based on a dishwasher cycle length of 1 hour. Standby hours = 8760 hours—(215 cycles × 1 hour) = 8545 hours.

Chapter 7 of the NOPR TSD provides details on DOE's energy and water use analysis for residential dishwashers.

F. Life-Cycle Cost and Payback Period Analysis

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

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

For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of housing units. As stated previously, DOE developed household samples from the 2009

RECS.

For each sample household, DOE determined the energy consumption for the residential dishwasher and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of residential dishwashers.

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

value, to account for their uncertainty and variability.

The computer model DOE uses to calculate the LCC and PBP, which incorporates Crystal Ball

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

DOE calculated the LCC and PBP for all customers as if each were to purchase a new product in the year that compliance with any amended standards is expected to be required. Any amended standards would apply to residential dishwashers manufactured 3 years after the date on which any final amended standard is published. (42 U.S.C. 6295(g)(10)(B)) For today's NOPR, DOE estimates publication of any final standards in 2016. Therefore, for purposes of its analysis, DOE used 2019 as the first year of compliance with any amended standards.

Table IV.8 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 and its appendices of the NOPR TSD.

Table IV.8—Summary of Inputs and Methods for the LCC and PBP Analysis *

Inputs

Source/method

Product Cost

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

Installation Costs

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

Annual Energy and Water Use

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

Variability: Based on the 2009

RECS

normalized to the average number of cycles.

Energy and Water Prices

Electricity: Based on EIA's Form 861 data for 2012.

Gas: Based on EIA's Natural Gas Navigator for 2012.

LPG: Based on EIA's State Energy Consumption, Price and Expenditures Estimates for 2012.

Variability: Regional energy prices determined for 27 regions.

Water: Based on 2012 AWWA/Raftelis Survey.

Variability: By census region.

Energy and Water Price Trends

Energy: Forecasted using

AEO 2014

price forecasts.

Water: Forecasted using BLS historic water price index information.

Repair and Maintenance Costs

Assumed no change with efficiency level.

Product Lifetime

Estimated using survey results from

RECS

(1990, 1993, 1997, 2001, 2005, 2009) and the U.S. Census American Housing Survey (2005, 2007), along with historic data on appliance shipments.

Variability: Characterized using Weibull probability distributions.

Discount Rates

Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board's SCF ** for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010.

Compliance Date

2019

* References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the NOPR TSD.

** Survey of Consumer Finances.

1. Product Cost

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

Economic literature and historical data suggest that the real costs of many products may trend downward over time according to “learning” or “experience” curves. Experience curve analysis focuses on entire industries (often operating globally) and aggregates over many causal factors that may not be well characterized. Experience curve analysis implicitly includes factors such as efficiencies in labor, capital investment, automation, materials prices, distribution, and economies of scale at an industry-wide level.

Taylor, M. and Fujita, K.S.

Accounting for Technological Change in Regulatory Impact Analyses: The Learning Curve Technique.

LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA. April 2013.

http://escholarship.org/uc/item/3c8709p4#page-1.

For the default price trend for this NOPR, DOE estimated an experience rate for residential dishwashers based on an analysis of long-term historical data. Producer Price Index (PPI) data specific to residential dishwashers were not available. Instead, DOE derived a residential dishwasher price index from 1988 to 2013 using Producer Price Index (PPI) data for miscellaneous household appliances from the Bureau of Labor Statistics (BLS). An inflation-adjusted price index was calculated using the implicit price deflators for GDP for the same years. This proxy for historic price data was then regressed on the cumulative quantity of residential dishwashers produced, based on a corresponding series for total shipments of residential dishwashers.

To calculate an experience rate, a least-squares power-law fit was performed on the residential dishwasher price index versus cumulative shipments (including imports). DOE then derived a price factor index, with the price in 2013 equal to 1, to forecast prices in the year of compliance for amended energy conservation standards in the LCC and PBP analysis, and for the NIA, for each subsequent year through 2048. The index value in each year is a function of the experience rate and the cumulative production through that year. To derive the latter, DOE used projected shipments from the base-case projections made for the NIA (see section IV.G of this notice). The average annual rate of price decline in the default case is 1.33 percent.

2. Installation Cost

Installation cost includes labor, overhead, and any miscellaneous

materials and parts needed to install the product. DOE used data from the 2013 RS Means Plumbing Cost data book

to estimate the baseline installation cost. DOE found no evidence that installation costs would be impacted with increased efficiency levels.

RS Means,

Residential Cost Data, 2013.

3. Annual Energy and Water Consumption

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

4. Energy Prices

DOE derived average annual residential electricity prices for 27 geographic regions using data from EIA's Form EIA-861 database (based on “Annual Electric Power Industry Report”).

DOE calculated an average annual regional residential price by: (1) Estimating an average residential price for each utility (by dividing the residential revenues by residential sales); and (2) weighting each utility by the number of residential consumers it served in that region. The NOPR analysis used the data for 2012.

Available at:

www.eia.doe.gov/cneaf/electricity/page/eia861.html.

DOE calculated average residential natural gas prices for each of the 27 geographic regions using data from EIA's “Natural Gas Monthly.”

DOE calculated average annual regional residential prices by: (1) Estimating an average residential price for each state; and (2) weighting each state by the number of residential consumers. The NOPR analysis used the data for 2012.

Available at:

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

DOE calculated average residential LPG prices for each of the 27 geographic regions using data from EIA's “State Energy Consumption, Price, and Expenditures Estimates (SEDS).”

DOE calculated average annual regional residential prices by: (1) Estimating an average residential price for each State; and (2) weighting each State by the number of residential consumers. The NOPR analysis used the data for 2012.

Available at:

http://www.eia.gov/state/seds/seds-data-fuel.cfm?sid=US.

To estimate energy prices in future years, DOE multiplied the average regional energy prices discussed in the preceding section by the forecast of annual national-average residential energy price changes in the Reference case from

AEO 2014,

which has an end year of 2040.

To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2020 to 2040.

U.S. Department of Energy-Energy Information Administration,

Annual Energy Outlook 2013 with Projections to 2040

(Available at:

http://www.eia.gov/forecasts/aeo/

5. Water and Wastewater Prices

For today's NOPR, DOE obtained data on water and wastewater prices for 2012 from the Water and Wastewater Rate Survey conducted by Raftelis Financial Consultants and the water utility association, American Water Works Association. The survey, which analyzes each industry separately, covers approximately 290 water utilities and 214 wastewater utilities. The water survey includes, for each utility, the cost to consumers of purchasing a given volume of water or treating a given volume of wastewater. The data provide a division of the total consumer cost into fixed and volumetric charges. DOE's calculations use only the volumetric charge to calculate water and wastewater prices, because only this charge is affected by a change in water use. Average water and wastewater prices were estimated for each of four census regions. Each

RECS

household was assigned a water and wastewater price depending on its census region location.

To estimate the future trend for water and wastewater prices, DOE used data on the historic trend in the national water price index (U.S. city average) from 1970 through 2012, combined with the all-products CPI for this same period. It extrapolated a future trend based on the linear inflation-adjusted growth during the 1970 to 2012 period. DOE used the projected inflation-adjusted water price trend to forecast water and wastewater prices for residential dishwashers.

Chapter 8 of the NOPR TSD provides more detail about DOE's approach to developing water and wastewater prices.

6. Maintenance and Repair Costs

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

During the rulemaking for the May 2012 direct final rule, DOE requested information as to whether maintenance and repair costs are a function of efficiency level and product class. Manufacturers responded that these costs would not increase with efficiency. DOE does not expect repair costs to have changed since the last rulemaking; therefore, DOE did not assume that more efficient residential dishwashers would have greater repair or maintenance costs.

DOE did not have data showing how many households would repair rather than replace their dishwashers. The replacement frequency is determined by a survival function which is part of the shipments model. DOE used an accounting method that tracks the total stock of units by vintage. DOE estimated a stock of dishwashers by vintage by integrating historical shipments starting from 1972. Depending on the vintage, a certain percentage of units will fail and need to be replaced. To estimate how long a unit will function before failing, DOE used a survival function based on a product lifetime distribution having an average value of approximately 15 years. Because DOE assumed that a consumer's decision to replace or repair their dishwasher was not impacted by an increase in dishwasher efficiency, the replacement frequency was unaffected by the increased installed cost, the repair cost, and the energy costs savings associated with more efficient dishwashers.

7. Product Lifetime

Because the lifetime of appliances varies depending on utilization and other factors, DOE develops a distribution of lifetimes from which specific values are assigned to the appliances in the household sample. DOE conducted an analysis of residential dishwasher lifetimes in the field based on a combination of shipments data and

RECS

2009 data on the ages of the residential dishwashers reported in the household stock. As described in chapter 8 of the NOPR TSD, the analysis yielded an estimate of mean age for residential dishwashers of approximately 15 years. It also yielded a survival function that DOE incorporated as a probability distribution in its LCC analysis. See chapter 8 of the NOPR TSD for further details on the method and sources DOE used to develop product lifetimes.

8. Discount Rates

In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for dishwashers based on consumer financing costs and opportunity cost of funds related to

appliance energy cost savings and maintenance costs.

To establish residential discount rates for the LCC analysis, DOE's approach involved identifying all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings and maintenance costs. It estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, and 2010.

Using the SCF and other sources, DOE then developed a distribution of rates for each type of debt and asset by income group to represent the rates that may apply in the year in which amended standards would take effect. DOE assigned each sample household a specific discount rate drawn from one of the distributions. The average rate across all types of household debt and equity and income groups, weighted by the shares of each class, is 4.49 percent. See chapter 8 in the NOPR TSD for further details on the development of consumer discount rates.

Note that two older versions of the SCF are also available (1989 and 1992); these surveys are not used in this analysis because they do not provide all of the necessary types of data (

e.g.,

credit card interest rates). DOE determines that the 15-year span covered by the six surveys included is sufficiently representative of recent debt and equity shares and interest rates.

9. Base-Case Efficiency Distribution

To accurately estimate the share of consumers that would be affected by a standard at a particular efficiency level, DOE's LCC analysis considered the projected distribution of product efficiencies that consumers purchase under the base case (

i.e.,

the case without new energy efficiency standards). DOE refers to this distribution of product of efficiencies as a base-case efficiency distribution.

To estimate the base-case efficiency distribution of standard residential dishwashers for 2019, DOE relied on data submitted by AHAM for the May 2012 direct final rule. These data provide shares of shipments by efficiency level for 2002-2005 and 2008-2010. These data show a significant increase in the share of ENERGY STAR products in both periods. To predict the market shares for each efficiency level in 2019, DOE conducted efficiency distribution analysis based on the DOE's Compliance Certification Database for standard residential dishwashers and considered the market trends present in the AHAM data, and assumed these trends would continue in a manner consistent with the decline in average energy use. This trend is described in chapter 10 of the NOPR TSD. DOE also conducted efficiency distribution analysis based on DOE's Compliance Certification Database for compact residential dishwashers.

The estimated shares for the base-case efficiency distribution for residential dishwashers are shown in Table IV-9. See chapter 8 of the NOPR TSD for further information on the derivation of the base-case efficiency distributions. For standard residential dishwashers, DOE also considered an alternative base-case efficiency distribution that uses a different set of historical data. This distribution is described in appendix 8-F of the NOPR TSD.

Table IV.9—Residential Dishwasher Base-Case Efficiency Distribution by Product Class in 2013

Efficiency level

Standard

Annual energy use

(kWh/year)

% of

shipments

Compact

Annual energy use

(kWh/year)

% of

shipments

Baseline

307

12.1

222

48.1

295

43.9

203

14.8

234

3.2

141

37.0

180

0.4

10. Inputs to Payback Period Analysis

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

The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed.

11. Rebuttable-Presumption Payback Period

As noted above, EPCA, as amended, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the test procedure in place for that standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the first year's energy and water savings by calculating the quantity of those savings in accordance with the applicable DOE test procedure, and multiplying that amount by the average energy and water price forecast for the year in which compliance with the amended standard would be required. The results of the rebuttable payback period analysis are summarized in section V.B.1.c of this NOPR.

G. Shipments

DOE uses forecasts of product shipments to calculate the national impacts of potential amended energy conservation standards on energy use, NPV, and future manufacturer cash flows. DOE develops shipment projections based on historical data and an analysis of key market drivers for residential dishwashers. In DOE's shipments model, shipments of products are driven by new construction and stock replacements. The shipments model takes an accounting approach, tracking market shares of each product class and the vintage of units in the existing stock. Stock accounting uses

product shipments as inputs to estimate the age distribution of in-service product stocks for all years. The age distribution of in-service product stocks is a key input to calculations of both the NES and NPV, because operating costs for any year depend on the age distribution of the stock. DOE also considers the impacts on shipments from changes in product purchase price and operating cost associated with higher energy efficiency levels.

New housing forecasts and residential dishwasher saturation data comprised the two primary inputs for DOE's estimates of new construction shipments. “New housing” includes newly-constructed single-family and multi-family units (referred to as “new housing completions”) and mobile home placements. For new housing completions and mobile home placements, DOE used

AEO 2014

for forecasts of new housing, and adopted the projections from

AEO 2014

for later years.

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

DOE applied a price elasticity parameter to estimate the effect of standards on residential dishwasher shipments. DOE estimated the price elasticity parameter from a regression analysis that used purchase price and efficiency data specific to several residential appliances during 1980-2002. The estimated “relative price elasticity” incorporates the impacts from purchase price, operating cost, and household income. Based on evidence that the price elasticity of demand is significantly different over the short run and long run for other consumer goods (

i.e.,

automobiles),

DOE assumed that the relative price elasticity declines over time. DOE estimated shipments in each standards case using the relative price elasticity along with the change in the relative price between a standards case and the base case. For details on the shipments analysis, see chapter 9 of the NOPR TSD.

S. Hymans. Consumer Durable Spending: Explanation and Prediction,

Brookings Papers on Economic Activity,

1971. Vol. 1971, No. 1, pp. 234-239.

H. National Impact Analysis

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

For the present analysis, DOE forecasted the energy savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of products sold from 2019 through 2048.

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

DOE evaluates the impacts of new and amended standards by comparing base-case projections with standards-case projections. The base-case projections characterize energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. DOE compares these projections with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (

i.e.,

the TSLs or standards cases) for that class. For the base-case forecast, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. For the standards cases, DOE also considers how a given standard would likely affect the market shares of efficiencies greater than the standard.

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

For the results presented in today's notice, DOE used projections of energy prices and housing starts from the

AEO 2014

Reference case. As part of the NIA, DOE analyzed scenarios that used inputs from the

AEO 2014

Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the Reference case, as well as higher and lower housing starts, which result in higher and lower appliance shipments to new homes. NIA results based on these cases are presented in appendix 10-C of the NOPR TSD.

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

Table IV.10—Summary of Inputs and Methods for the National Impact Analysis

Inputs

Method

Shipments

Annual shipments from shipments model.

Compliance Date of Standard

2019.

Base-Case Forecasted Efficiencies

Efficiency distributions are forecasted based on historical efficiency data.

Standards-Case Forecasted Efficiencies

Used a “roll-up” scenario.

Annual Energy Consumption per Unit

Annual weighted-average values are a function of energy use at each CSL.

Total Installed Cost per Unit

Annual weighted-average values are a function of cost at each CSL.

Incorporates forecast of future product prices based on historical data.

Annual Energy Cost per Unit

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

Repair and Maintenance Cost per Unit

Annual values do not change with efficiency level.

Energy Prices

AEO 2014

forecasts (to 2040) and extrapolation through 2048.

Energy Site-to-Source Conversion Factor

Varies yearly and is generated by NEMS-BT.

Discount Rate

Three and seven percent real.

Present Year

Future expenses discounted to 2014, when the NOPR will be published.

1. National Energy and Water Savings

The national energy and water savings analysis involves a comparison of national energy and water consumption of the considered products in each potential standards case (TSL) with consumption in the base case with no new or amended energy and water conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy consumption (also by vintage). Vintage represents the age of the product. DOE calculated annual NES based on the difference in national energy consumption for the base case (without amended efficiency standards) and for each higher efficiency standard. DOE estimated energy consumption and savings based on site energy and converted the electricity consumption and savings to primary energy using annual conversion factors derived from the

AEO 2014

version of NEMS. Cumulative energy savings are the sum of the NES for each year over the timeframe of the analysis.

DOE has historically presented NES in terms of primary energy savings. In the case of electricity use and savings, this quantity includes the energy consumed by power plants to generate delivered (site) electricity.

In response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use FFC measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in the

Federal Register

in which DOE explained its determination that NEMS is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (Aug. 17, 2012).

a. Forecasted Efficiency in the Base Case and Standards Cases

A key component of the NIA is the trend in energy efficiency forecasted for the base case (without new or amended standards) and each of the standards cases. Section IV.F.9 of this notice describes how DOE developed a base-case energy efficiency distribution (which yields a shipment-weighted average efficiency) for each of the considered product classes for the first year of the forecast period. To project the trend in efficiency for standard residential dishwashers over the entire forecast period, DOE utilized the historical trend in shipment-weighted average efficiency from 2002 to 2010, as provided by AHAM, model-weighted data from the DOE's Compliance Certification Database and considered the potential effect of programs such as ENERGY STAR. The historical trend demonstrates that the shipment-weighted average annual energy use decreased by almost 75 percent from 2002 to 2010, reaching 309 kWh/year. DOE fit an exponential function to the 2002 to 2010 data that indicated that the base-case shipment-weighted average annual energy use will asymptotically approach a value of 280 kWh/year by 2048 and remain at that level. This trend is described in chapter 10 of the NOPR TSD.

DOE determined that a roll-up scenario is most appropriate to establish the distribution of efficiencies for the year that compliance with revised residential dishwasher standards would be required. Under the “roll-up” scenario, DOE assumes: (1) Product efficiencies in the base case that do not meet the standard level under consideration would “roll-up” to meet the new standard level; and (2) product efficiencies above the standard level under consideration would not be affected. The details of DOE's approach to forecast efficiency trends are described in chapter 10 of the NOPR TSD.

2. Net Present Value Analysis

The inputs for determining the NPV of the total costs and benefits experienced by consumers of considered appliances are: (1) Total annual installed cost, (2) total annual savings in operating costs, and (3) a discount factor. DOE calculates net savings each year as the difference between the base case and each standards case in total savings in operating costs and total increases in installed costs. DOE calculates operating cost savings over the life of each product shipped during the forecast period.

The operating cost savings are primarily energy cost savings. These are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate energy prices in future years, DOE multiplied the average regional energy prices discussed in the preceding section by the forecast of annual national-average residential energy price changes in the Reference case from

AEO 2014,

which has an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2020 to 2040.

In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. For today's NOPR, DOE estimated the NPV of consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses these discount rates in accordance with guidance provided by the Office of Management and Budget (OMB) to Federal agencies on the development of regulatory analysis.

The discount rates for the determination of NPV are in contrast to the discount rates used in the LCC analysis, which are designed to reflect a consumer's perspective. The 7-percent real value is an estimate of the average before-tax rate of return to private capital in the U.S. economy. The 3-percent real value represents the “social rate of time preference,” which is the rate at which society discounts future consumption flows to their present value.

OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs. Available at:

www.whitehouse.gov/omb/memoranda/m03-21.html

a. Total Installed Cost per Unit

As discussed in section IV.F.1 of this NOPR, DOE developed a residential dishwasher price trend based on an experience rate for miscellaneous household appliances. It used this trend to forecast the prices of residential dishwashers sold in each year in the forecast period. DOE applied the same values to forecast prices for each product class at each considered efficiency level. By 2048, which is the end date of the forecast period, the price is forecasted to drop 37.4 percent relative to 2013. DOE's projection of product prices for residential dishwashers is described in further detail in appendix 10-C of the NOPR TSD.

To evaluate the effect of uncertainty regarding the price trend estimates, DOE investigated the impact of different product price forecasts on the consumer NPV for the considered TSLs for residential dishwashers. In addition to the default price trend, DOE considered two product price sensitivity cases: (1) A high price decline case based on an exponential fit using PPI data for 1988 to 2013; (2) a low price decline case based on an experience rate derived using PPI and shipments data for 1991 to 2000. The derivation of these price trends and the results of these sensitivity cases are described in

appendix 10-C of the NOPR TSD. In the high price decline case, the NPV is significantly higher than in the default case. In the low price decline case, the NPV is slightly lower than in the default case. The rank order of the TSLs is the same in all of the cases.

I. Consumer Subgroup Analysis

In analyzing the potential impact of new or amended standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a national standard. DOE evaluated impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this rulemaking, DOE analyzed the impacts of the considered standard levels on low-income households and senior-only households. Chapter 11 in the NOPR TSD describes the consumer subgroup analysis.

J. Manufacturer Impact Analysis

The following sections address the various steps taken to analyze the impacts of the amended standards on manufacturers.

1. Overview

In determining whether an amended energy conservation standard for residential dishwashers is economically justified, DOE is required to consider “the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard.” (42 U.S.C. 6295(o)(2)(B)(i)(I)) The statute also calls for an assessment of the impact of any lessening of competition that is likely to result from the adoption of a standard as determined by the Attorney General. (42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE conducted the MIA to estimate the financial impact of amended energy conservation standards on manufacturers, and to assess the impacts of such standards on employment and manufacturing capacity.

The MIA involves both quantitative analysis and qualitative evaluation. The quantitative elements of the MIA rely on the Government Regulatory Impact Model (GRIM), an industry cash-flow model customized for this rulemaking. See section IV.J.2 of this notice for details on the GRIM. The qualitative parts of the MIA address factors such as product characteristics, characteristics of particular firms, and market trends. The complete MIA is discussed in chapter 12 of the NOPR TSD. DOE conducted the MIA in the three phases described below.

a. Phase 1, Industry Profile

In Phase 1 of the MIA, DOE prepared a profile of the residential dishwasher manufacturing industry based on the market and technology assessment prepared for this rulemaking. Before initiating the detailed impact studies, DOE collected information on the present and past market structure and characteristics of the industry, tracking trends in market share data, product attributes, product shipments, manufacturer markups, and the cost structure for various manufacturers.

The profile also included an analysis of manufacturers in the industry using Security and Exchange Commission 10-K filings,

Standard & Poor's stock reports,

and corporate annual reports released by both public and privately held companies. DOE used this and other publicly available information to derive preliminary financial inputs for the GRIM including industry revenues, cost of goods sold, and depreciation, as well as selling, general, and administrative (SG&A), and research and development (R&D) expenses. Based on its analysis, DOE used the same industry average financial parameters developed in support of the May 2012 direct final rule.

Available online at

www.sec.gov

Available online at

www.standardandpoors.com

b. Phase 2, Industry Cash Flow Analysis

Phase 2 focused on the financial impacts of potential amended energy conservation standards on the industry as a whole. Amended energy conservation standards can affect manufacturer cash flows in three distinct ways: (1) By creating a need for increased investment, (2) by raising production costs per unit, and (3) by altering revenue due to higher per-unit prices and/or possible changes in sales volumes. DOE used the GRIM to model these effects in a cash-flow analysis of the residential dishwasher manufacturing industry. In performing this analysis, DOE used the financial parameters from the 2012 residential dishwasher energy conservation standards rulemaking, the cost-efficiency curves from the engineering analysis, and the shipment assumptions from the NIA.

c. Phase 3, Sub-Group Impact Analysis

Using average cost assumptions to develop an industry-cash-flow estimate may not adequately assess differential impacts of amended energy conservation standards among manufacturer subgroups. For example, small businesses, manufacturers of niche products, or companies exhibiting a cost structure that differs significantly from the industry average could be more negatively affected. While DOE did not identify any other subgroup of manufacturers of residential dishwashers that would warrant a separate analysis, DOE specifically investigated impacts on small business manufacturers. See section VI.B of this notice for more information.

The MIA also addresses the direct impact on employment tied to the manufacturing of residential dishwashers. Using the GRIM, census data and information gained through manufacturer interviews conducted in support of the May 2012 direct final rule, DOE estimated the domestic labor expenditures and number of domestic production workers in the base case and at each TSL from 2014 to 2048.

2. GRIM

DOE uses the GRIM to quantify the changes in cash flow that alter industry value. The GRIM is a standard, discounted cash-flow model that incorporates manufacturer costs, markups, shipments, and industry financial information as inputs, and models changes in manufacturing costs, shipments, investments, and margins that may result from amended energy conservation standards. The GRIM uses these inputs to arrive at a series of annual cash flows, beginning with the base year of the analysis, 2014, and continuing to 2048. DOE uses the industry-average weighted-average cost of capital (WACC) of 8.5 percent, as this represents the minimum rate of return necessary to cover the debt and equity obligations manufacturers use to finance operations.

DOE used the GRIM to compare INPV in the base case with INPV at various TSLs (the standards cases). The difference in INPV between the base and standards cases represents the financial impact of the amended standard on manufacturers. Additional details about the GRIM can be found in chapter 12 of the NOPR TSD.

a. GRIM Key Inputs

Manufacturer Production Costs

Changes in the MPCs of residential dishwashers can affect revenues, gross margins, and cash flow of the industry, making product cost data key inputs for DOE's analysis. DOE estimated the MPCs for standard and compact product classes at the baseline and higher efficiency levels, as described in section IV.C of this notice. The cost model also disaggregated the MPCs into the cost of materials, labor, overhead, and

depreciation. DOE used the MPCs and cost breakdowns as described in section IV.C of this NOPR, and further detailed in chapter 5 of the NOPR TSD, for each efficiency level analyzed in the GRIM.

Base-Case Shipments Forecast

The GRIM estimates manufacturer revenues in each year of the forecast based in part on total unit shipments and the distribution of these values by efficiency level and product class. Changes in the efficiency mix and total shipments at each standard level affect manufacturer finances. For this analysis, the GRIM uses the NIA shipments forecasts from 2013 to 2048, the end of the analysis period.

To calculate shipments, DOE developed a shipments model for each product class based on an analysis of key market drivers for residential dishwashers. For greater detail on the shipments analysis, see section IV.G of this NOPR and chapter 9 of the NOPR TSD.

Product and Capital Conversion Costs

Amended energy conservation standards may cause manufacturers to incur conversion costs to bring their production facilities and product designs into compliance. For the MIA, DOE classified these costs into two major groups: (1) Product conversion costs and (2) capital conversion costs. Product conversion costs are investments in research, development, testing, marketing, and other non-capitalized costs focused on making product designs comply with the amended energy conservation standard. Capital conversion costs are investments in property, plant, and equipment needed to adapt or change existing production facilities so that new product designs can be fabricated and assembled.

DOE's estimates of the product and capital conversion costs for the residential dishwasher manufacturing industry can be found in section V.B.2 of this NOPR and in chapter 12 of the NOPR TSD.

b. GRIM Scenarios

Standards-Case Shipments Forecasts

The MIA results presented in section V.B.2 of this NOPR all use shipments from the NIA in the GRIM. For standards case shipments, DOE assumed that base-case shipments of products that did not meet the new standard would roll up to meet the standard in the compliance year. These forecasts also include the impact of relative price elasticity on shipment volumes. In this regard the balance of first costs and operating costs factor into the total shipments in the standards case. See section IV.G of this NOPR for a description of the standards-case efficiency distributions.

The NIA also used historical data to derive a price scaling index to forecast product costs. The MPCs and MSPs in the GRIM use the default price forecast for all scenarios. See section IV.F.1 of this notice for a discussion of DOE's price forecasting methodology.

Capital Conversion Cost Scenarios

DOE developed two model scenarios for the capital conversion costs required to meet each TSL. One scenario is based on the capital conversion costs developed for the energy conservation standards from the May 2012 direct final rule, scaled to reflect the new efficiency levels for each product class considered in this NOPR. Additionally, DOE developed a separate capital conversion cost scenario using the engineering cost model. For this estimate, DOE identified the design pathways considered in the engineering analysis, estimated the cost of the changes in production equipment to implement each design option, and aggregated these costs to reflect the industry-wide investment using market information about the number of platform and product families currently on the market from each manufacturer.

Markup Scenarios

MSP is equal to MPC times a manufacturer markup. The MSP includes direct manufacturing production costs (

i.e.,

labor, material, and overhead estimated in DOE's MPCs) and all non-production costs (

i.e.,

SG&A, R&D, and interest), along with profit. DOE used the baseline manufacturer markup, 1.24, developed for the May 2012 direct final rule for all products when modeling the base case in the GRIM.

For the standards case in the GRIM, DOE modeled two markup scenarios to represent the uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of amended energy conservation standards. For both GRIM markup scenarios, DOE placed no premium on higher efficiency products. This assumption is informed by a market structure in which 88 percent of product shipments currently adhere to ENERGY STAR standards, leaving little to no room for differentiation by efficiency level alone. The two standards-case markup scenarios are (1) a preservation of gross margin as a percentage of revenues markup scenario, and (2) a preservation of earnings before interest and taxes (EBIT) markup scenario. Modifying these markups from the base case to the standards cases yields different sets of impacts on industry revenues and cash flow.

The preservation of gross margin as a percentage of revenues markup scenario assumes that the baseline markup of 1.24 is maintained for all products in the standards case. This scenario represents the upper bound of industry profitability as manufacturers are able to fully pass through additional costs due to standards to their customers under this scenario.

The preservation of EBIT markup scenario is similar to the preservation of gross margin as a percentage of revenues markup scenario with the exception that in the standards case, minimally compliant products lose a fraction of the baseline markup. This scenario represents the lower bound profitability and a more substantial impact on the dishwasher industry as manufacturers accept a lower margin in an attempt to offer price competitive entry level products while maintaining the same level of EBIT they saw prior to amended standards.

3. Manufacturer Interviews

For this rulemaking, DOE relies on information gathered from manufacturer interviews conducted in support of the May 2012 direct final rule. For that rulemaking, DOE interviewed manufacturers representing more than 80 percent of residential dishwasher sales. These interviews were in addition to those DOE conducted as part of the engineering analysis for the May 2012 direct final rule. DOE used these interviews to tailor the GRIM for today's rule to incorporate unique financial characteristics of the industry. All interviews provided information that DOE used to evaluate the impacts of potential amended energy conservation standards on manufacturer cash flows, manufacturing capacities, and employment levels. See appendix 12-A of the NOPR TSD for additional information on the previous MIA interviews. The following sections describe the most significant issues identified by manufacturers during the interviews conducted in support of the May 2012 direct final rule.

a. Dishwasher Performance

All manufacturers interviewed expressed concerns about the potential impacts of amended standards on product performance, citing several adverse consequences of standards above those agreed upon in the Joint Petition. For higher efficiency standards, the performance metrics

manufacturers expected to be most severely impacted include wash performance, drying performance, cycle time, and the noise levels reached in operation. In considering these metrics, manufacturers anticipated negative reactions ranging from small but meaningful changes in consumer behavior to higher rates of service calls and returns. For efficiency standards well above those proposed in the Joint Petition, manufacturers expected blanket rejection of poorly performing products in the market. In considering impacts to wash performance, manufacturers cited an increase in unnecessary rinsing or washing of dishes prior to loading the dishwasher, switching to a more aggressive cycle, and running multiple cycles when dishes are not adequately cleaned in a single cycle as the most likely changes in consumer behavior. Manufacturers suggested that any of these changes would result in an increase in both energy and water consumption over that used by a dishwasher of satisfactory performance. To mitigate the impact of future standards on product performance, several manufacturers recommended the adoption of a performance metric into the test procedure and standard.

While all manufacturers suggested that the efficiency level specified in the Joint Petition would not likely have a substantial negative impact on wash performance, some manufacturers noted that standards above this level would result in a decrease in performance unless substantially higher-cost technology changes were implemented. The comments did not indicate the specific technology changes that would be required. Even without such technology changes, however, several manufacturers offer or have offered products at efficiency levels above those specified by the Joint Petition, including the max-tech efficiency level identified in today's proposed rule. Accordingly, DOE evaluated these higher efficiency levels as part of this rulemaking.

DOE conducted investigative testing to assess cleaning performance in support of this NOPR according to the ENERGY STAR Test Method for Determining Dishwasher Cleaning Performance (Cleaning Performance Test Method).

The testing included multiple units from different manufacturers at multiple efficiency levels. Based on this internal testing and the availability of products on the market, DOE determined that products from the baseline efficiency level to Efficiency Level 3 for standard residential dishwashers are able to maintain cleaning performance.

* * *

b. Test Procedures

During interviews conducted as part of the development of the May 2012 direct final rule for residential dishwashers, manufacturers raised concerns over the DOE dishwasher test procedure and the multitude of additional dishwasher test procedures in the field at that time. Several manufacturers suggested that the DOE test procedure did not accurately capture the energy used by dishwashers in the field. These manufacturers cited the single cycle specification and lack of performance metrics in the test procedure as providing an easy avenue for circumvention of the standards. In the scenario described, manufacturers could optimize a particular cycle to perform well on the DOE test procedure with the implicit understanding that this cycle will not meet customer expectations and thus will not be used in the field as customers opt for a different, more energy-intensive cycle.

In contrast, other manufacturers raised concerns over expanding the test procedure to cover multiple cycles, citing the additional testing burden this would generate. Similarly, some manufacturers raised concerns over how DOE would implement a performance test, noting that there already exist numerous performance tests in the industry including those developed by AHAM, IEC, and Consumer Reports and that each performance test procedure favors a different machine cycle algorithm.

As discussed in sections II.A and II.B.3 of this NOPR, the DOE test procedure for residential dishwashers is found at Title 10 of CFR part 430, subpart B, appendix C1 (proposed to be redesignated as appendix C in this rulemaking). Although appendix C1 does not include provisions for measuring cleaning performance, the ENERGY STAR program recently finalized the Cleaning Performance Test Method. The Cleaning Performance Test Method harmonizes with the procedures in appendix C1, requiring manufacturers to test on the same cycles. Appendix C1 also requires that testing be conducted on the cycles recommended for completely washing a full load of normally soiled dishes.

c. Increased Competition

During interviews conducted in support of the May 2012 direct final rule, manufacturers of both baseline and high efficiency products anticipated an increase in competition in industry stemming from amended standards. Manufacturers whose market share was largely attributed to baseline products expected to see either the removal of features from higher efficiency units as a means to cut costs to maintain a low-cost minimally-compliant product, or the disappearance of entry-level models as they are forced to add other features and cost in line with current higher efficiency products. If the latter approach prevails, manufacturers of higher efficiency products expected to see increased competition as manufacturers that previously focused on low efficiency products moved into their target segment of the market. As noted in section III.D.1.c of this NOPR, the Attorney General provides DOE with a determination and analysis of the impact of any lessening of competition that is likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))

d. Cumulative Regulatory Burden

During interviews conducted in support of the May 2012 direct final rule, several manufacturers noted that residential dishwashers are but one of a suite of appliances they produce and that the cumulative burden of research and development to meet standards, capital expenditures and retraining of staff to produce products at the new standards, and product testing to certify compliance of new products represent a significant burden when taken in combination across their various product lines. Manufacturers suggested that the ability to establish standards in a coordinated fashion by such vehicles as the Joint Petition and receiving adequate notice of DOE's plans for amended standards are both necessary elements in mitigating the cumulative burden and aligning changes in efficiency regulations with the product development cycle. Cumulative regulatory burden is discussed further in section V.B.2.e of this NOPR and chapter 12 of the NOPR TSD.

K. Emissions Analysis

In the emissions analysis, DOE estimates the reduction in power sector emissions of carbon dioxide (CO

), nitrogen oxides (NO

), sulfur dioxide (SO

), and mercury (Hg) from potential energy conservation standards for residential dishwashers. In addition to estimating impacts of standards on power sector emissions, DOE estimates emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants. These are referred to as “upstream” emissions. Together, these emissions account for the FFC. In accordance with DOE's FFC

Statement of Policy (76 FR 51281 (Aug. 18, 2011) as amended at 77 FR 49701 (August 17, 2012)), the FFC analysis also includes impacts on emissions of methane (CH

) and nitrous oxide (N

O), both of which are recognized as greenhouse gases.

DOE primarily conducted the emissions analysis using emissions factors for CO

and most of the other gases derived from data in

AEO 2014.

Combustion emissions of CH

and N

O were estimated using emissions intensity factors published by the Environmental Protection Agency (EPA) in its Greenhouse Gas (GHG) Emissions Factors Hub.

DOE developed separate emissions factors for power sector emissions and upstream emissions. The method that DOE used to derive emissions factors is described in chapter 13 of the NOPR TSD.

See

http://www.epa.gov/climateleadership/inventory/ghg-emissions.html

For CH

and N

O, DOE calculated emissions reduction in tons and also in terms of units of carbon dioxide equivalent (CO

eq). Gases are converted to CO

eq by multiplying each ton of the greenhouse gas by the gas's global warming potential (GWP) over a 100-year time horizon. Based on the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,

DOE used GWP values of 28 for CH

and 265 for N

IPCC, 2013:

Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change

[Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Chapter 8.

EIA prepares the

AEO

using NEMS. Each annual version of NEMS incorporates the projected impacts of existing air quality regulations on emissions.

AEO 2014

generally represents current legislation and environmental regulations, including recent government actions, for which implementing regulations were available as of October 31, 2013.

emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual emissions cap on SO

for affected EGUs in the 48 contiguous States and the District of Columbia (DC). SO

emissions from 28 eastern States and DC were also limited under the Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR, which created an allowance-based trading program that operates along with the Title IV program, was remanded to the EPA by the U.S. Court of Appeals for the District of Columbia Circuit, but it remained in effect.

In 2011, EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (Aug. 8, 2011). On August 21, 2012, the DC Circuit issued a decision to vacate CSAPR.

The court ordered EPA to continue administering CAIR. The emissions factors used for today's NOPR, which are based on

AEO 2014,

assume that CAIR remains a binding regulation through 2040.

See

North Carolina

EPA,

550 F.3d 1176 (D.C. Cir. 2008);

North Carolina

EPA,

531 F.3d 896 (D.C. Cir. 2008).

See

EME Homer City Generation, LP

EPA,

696 F.3d 7, 38 (D.C. Cir. 2012),

cert. granted,

81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).

On April 29, 2014, the U.S. Supreme Court reversed the judgment of the DC Circuit and remanded the case for further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other downwind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision that provides statutory authority for CSAPR. See

EPA

EME Homer City Generation,

No 12-1182, slip op. at 32 (U.S. April 29, 2014). Because DOE is using emissions factors based on

AEO 2014

for today's NOPR, the NOPR assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the purpose of DOE's analysis of SO

emissions.

The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Beginning in 2016, however, SO

emissions will decline significantly as a result of the Mercury and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), and also established a standard for SO

(a non-HAP acid gas) as an alternative equivalent surrogate standard for acid ga

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