Energy Conservation Program: Energy Conservation Standards for Residential Boilers

Federal RegisterMar 31, 2015

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2012-BT-STD-0047]

RIN 1904-AC88

Energy Conservation Program: Energy Conservation Standards for Residential Boilers

AGENCY:

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

ACTION:

Notice of proposed rulemaking and announcement of 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 boilers. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent, 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 boilers. The notice also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

Meeting:

DOE will hold a public meeting on Thursday, April 30, 2015 from 9:00 a.m. to 4:00 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.

Comments:

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than June 1, 2015. See section VII, “Public Participation,” for details.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Edwards to initiate the necessary procedures. Please also note that any person wishing to bring a laptop computer or tablet into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also attend the public meeting via webinar. For more information, refer to section VII, “Public Participation,” near the end of this notice.

Instructions:

Any comments submitted must identify the NOPR for Energy Conservation Standards for Residential Boilers, and provide docket number EE-2012-BT-STD-0047 and/or regulatory information number (RIN) number 1904-AC88. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

Email: ResBoilers2012STD0047@ee.doe.gov.

Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in Word Perfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form on encryption.

Postal Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, 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

No telefacsimilies (faxes) will be accepted. 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

www.regulations.gov

. All documents in the docket are listed in the

www.regulations.gov

index. However, some documents listed in the index may not be publically available, such as those containing information that is exempt from public disclosure.

A link to the docket Web page can be found at:

http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047

. This Web page contains a link to the docket for this notice on the

www.regulations.gov

site. The

www.regulations.gov

Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section VII, “Public Participation,” 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. Ronald Majette, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7935. Email:

residential_furnaces_and_boilers@ee.doe.gov

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202)-586-9507. Email:

Eric.Stas@hq.doe.gov

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

Brenda.Edwards@ee.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

D. Standby Mode and Off Mode

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Residential Boilers

III. General Discussion

A. Product Classes and Scope of Coverage

B. Test Procedure

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Savings in Operating Costs Compared To Increase in Price (LCC and PBP)

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Comments

A. Market and Technology Assessment

1. Definition and Scope of Coverage

2. Product Classes

3. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Levels

a. Baseline Efficiency Level and Product Characteristics

b. Other Energy Efficiency Levels

2. Cost-Assessment Methodology

a. Teardown Analysis

b. Cost Model

c. Manufacturing Production Costs

d. Cost-Efficiency Relationship

e. Manufacturer Markup

f. Shipping Costs

g. Manufacturer Interviews

D. Markups Analysis

E. Energy Use Analysis

1. Energy Use Methodology

2. Standby Mode and Off Mode

3. Comments on Boiler Energy Use Calculation

F. Life-Cycle Cost and Payback Period Analysis

1. Inputs To Installed Cost

2. Inputs To Operating Costs

a. Energy Consumption

b. Energy Prices

c. Maintenance and Repair Costs

d. Product Lifetime

e. Base-Case Efficiency

G. Shipments Analysis

H. National Impact Analysis

1. National Energy Savings Analysis

a. Full-Fuel-Cycle Energy Savings

2. Net Present Value Analysis

a. Discount Rates for Net Present Value

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Manufacturer Interviews

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

2. Valuation of Other Emissions Reductions

M. Utility Impact Analysis

N. Employment Impact Analysis

O. General Comments on Residential Boiler Standards

V. Analytical Results and Conclusions

A. Trial Standard Levels

1. TSLs for Energy Efficiency

2. TSLs for Standby Mode and Off Mode

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 Period

2. Economic Impacts on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Direct Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups 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. Indirect Impacts on Employment

4. Impact on Product Utility or Performance

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Proposed Standards

1. Benefits and Burdens of Trial Standard Levels Considered for Residential Boilers for AFUE Standards

2. Benefits and Burdens of Trial Standard Levels Considered for Residential Boilers for Standby Mode and Off Mode

3. Summary of Benefits and Costs (Annualized) of the Proposed 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 of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Requests to Speak and 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), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.

These products include residential boilers, 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), Public Law 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)) EPCA specifically provides that DOE must conduct a second round of energy conservation standards rulemaking for residential boilers. (42 U.S.C. 6295(f)(4)(C)) The statute also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) DOE initiated this rulemaking as required by 42 U.S.C. 6295(f)(4)(C), but once complete, this rulemaking will also satisfy the 6-year review provision under 42 U.S.C. 6295(m)(1).

Furthermore, EISA 2007 amended EPCA to require that any new or amended energy conservation standard adopted after July 1, 2010, shall address standby mode and off mode energy consumption pursuant to 42 U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) If feasible, the statute directs DOE to incorporate standby mode and off mode energy consumption into a single standard with the product's active mode energy use. If a single standard is not feasible, DOE may consider establishing a separate standard to regulate standby mode and off mode energy consumption.

In accordance with these and other statutory provisions discussed in this notice, DOE proposes amending the existing AFUE energy conservation standards and adopting new standby mode off mode electrical energy conservation standards for residential boilers. The proposed AFUE standards for each product class (described in section IV.A.2) are expressed as minimum annual fuel utilization efficiencies (AFUE), as determined by the DOE test method (described in section III.B), and are shown in Table I.1. Table I.2 shows the proposed standards for standby and off mode.

These proposed standards, if adopted, would apply to all products listed in Table I.1 and Table I.2 and manufactured in, or imported into, the United States on or after the date 5 years after the publication of the final rule for this rulemaking.

Table I.1—Proposed AFUE Energy Conservation Standards for Residential Boilers

Product class *

Proposed standard: AFUE **

(%)

Design requirement

Gas-fired hot water boiler

Constant-burning pilot not permitted. Automatic means for adjusting water temperature required (except for boilers equipped with tankless domestic water heating coils).

Gas-fired steam boiler

Constant-burning pilot not permitted.

Oil-fired hot water boiler

Automatic means for adjusting temperature required (except for boilers equipped with tankless domestic water heating coils).

Oil-fired steam boiler

None

Electric hot water boiler

None

Automatic means for adjusting temperature required (except for boilers equipped with tankless domestic water heating coils).

Electric steam boiler

None

None.

* Product classes are separated by fuel source—gas, oil, or electricity—and heating medium—steam or hot water. See section IV.A.2 for a discussion of product classes.

** AFUE is an annualized fuel efficiency metric that fully accounts for fuel consumption in active, standby, and off modes. See section III.B for a discussion of the AFUE test method.

Table I.2—Proposed Energy Conservation Standards for Residential Boilers Standby Mode and Off Mode Electrical Energy Consumption

Product class

Proposed standard:

W,SB

(watts)

Proposed standard:

W,OFF

(watts)

Gas-fired hot water boiler

Gas-fired steam boiler

Oil-fired hot water boiler

Oil-fired steam boiler

Electric hot water boiler

Electric steam boiler

A. Benefits and Costs to Consumers

Table I.3 presents DOE's evaluation of the economic impacts of the proposed AFUE and standby mode and off mode standards on consumers of residential boilers, as measured by the average life-cycle cost (LCC) savings and the median payback period (PBP).

Table I.4 presents the same results for standby mode and off mode. The average LCC savings are positive for all product classes. The estimated PBP for the standard levels proposed for all product classes fall below the average boiler lifetime, which is approximately 25 years.

DOE has not conducted an analysis of an AFUE standard level for electric boilers as the efficiency of these products already approaches 100 percent AFUE.

The average LCC savings and PBP are measured relative to the base case efficiency distribution, which depicts the boiler market in the compliance year (see section IV.F.2.e). The LCC savings and PBP calculations are further described in section IV.F and in chapter 8 of the NOPR TSD.

DOE used a distribution of boiler lifetimes that ranges from 2 to 55 years. See appendix 8F of the NOPR TSD for details of the derivation of the average boiler lifetime.

Table I.3—Impacts of Proposed AFUE Energy Conservation Standards on Consumers of Residential Boilers

Product class

Average LCC

savings

(2013$)

Median payback

period

(years *)

Gas-Fired Hot Water Boiler

123

7.7

Gas-Fired Steam Boiler

1.3

Oil-Fired Hot Water Boiler

257

7.6

Oil-Fired Steam Boiler

723

10.5

Electric Hot Water Boiler

N/A

Electric Steam Boiler

N/A

* The average PBP in years is 20.8 for Gas-Fired Hot Water Boiler, 3.7 for Gas-Fired Steam Boiler, 11.7 for Oil-Fired Hot Water Boiler, and 13.9 for Oil-Fired Steam Boiler.

(No Standard).

Table I.4—Impacts of Proposed Standby Mode and Off Mode Electrical Energy Cunsumption Energy Conservation Standards on Consumers of Residential Boilers

Product class

Average LCC

savings

(2013$)

Median payback

period

(years)

Gas-Fired Hot Water Boiler

7.8

Gas-Fired Steam Boiler

7.4

Oil-Fired Hot Water Boiler

7.4

Oil-Fired Steam Boiler

7.4

Electric Hot Water Boiler

11.0

Electric Steam Boiler

10.9

Estimates of the combined impact of the proposed AFUE and standby mode and off mode standards on the consumers are shown in Table I.5.

The average LCC savings and PBP for both standards are calculated for each household. To calculate the PBP, DOE determined the combined installed cost to the consumer and the first-year operating costs for both standards. The combined LCC savings and PBP are compared to the base case efficiency distribution for both standards, which depicts the boiler market in the compliance year (see section IV.F.2.e). The combined results for all households are used to derive the average LCC savings and the median payback period values shown in Table I.5.

Table I.5—Combined Impacts of Proposed AFUE and Standby Mode and Off Mode Energy Conservation Standards on Consumers of Residential Boilers

Product class

Average LCC

savings

(2013$)

Median payback

period

(years)

Gas-Fired Hot Water Boiler

137

7.8

Gas-Fired Steam Boiler

7.3

Oil-Fired Hot Water Boiler

272

7.4

Oil-Fired Steam Boiler

739

9.9

Electric Hot Water Boiler

11.0

Electric Steam Boiler

10.9

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 2049). Using a real discount rate of 8.0 percent, DOE estimates that the INPV for manufacturers is $380.96 million.

DOE analyzed the impacts of AFUE energy conservation standards and standby/off mode electrical energy consumption energy conservation standards on manufacturers separately. Under the proposed AFUE standards, DOE expects that the change in INPV will range from −2.10 to 0.20 percent, which is approximately equivalent to a reduction of $7.99 million to an increase of $0.77 million. DOE estimates that residential boiler manufacturers will incur $4.28 million in conversion costs as a result of this proposed AFUE standard. Under the proposed standby mode and off mode standards, DOE expects the change in INPV will range from −0.28 to 0.06 percent, which is approximately equivalent to a decrease of $1.08 million to an increase of $0.22 million. DOE estimates that residential boiler manufacturers will incur $0.21 million in conversion costs as a result of this this proposed standby and off mode standard. DOE expects the combined impact of the TSLs proposed for AFUE and standby and off mode electrical consumption in this NOPR to range from −2.38 to 0.26 percent, which is approximately equivalent to a reduction of $9.07 million to an increase of $0.99 million. DOE estimates that residential boiler manufacturers will incur $4.49 million in conversion costs as a result of both proposed standards. Based on DOE's interviews with residential boiler manufacturers, DOE does not expect any plant closings or significant loss of employment to result from the proposed standards for residential boilers. More information on DOE's direct employment impact analysis can be found in section V.B.2.b of this NOPR.

All monetary values in this document are expressed in 2013 dollars; discounted values are discounted to 2014 unless explicitly stated otherwise.

C. National Benefits

Energy savings in this section refer to full-fuel-cycle savings (see section IV.H for discussion).

DOE's analyses indicate that the proposed AFUE energy conservation standards for residential boilers would save a significant amount of energy. The lifetime energy savings for residential boilers purchased in the 30-year period that begins in the first full year of compliance with amended standards (2020-2049) amount to 0.21 quads

of full-fuel-cycle energy. This is a savings of 0.6 percent relative to the energy use of these products in the base case without amended standards.

A quad is equal to 10

British thermal units (Btu).

The cumulative net present value (NPV) of total consumer costs and savings for the proposed residential boilers AFUE standards ranges from $0.4 billion to $1.3 billion at 7-percent and 3-percent discount rates, respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for residential boilers purchased in 2020-2049.

In addition, the proposed residential boilers AFUE standards would have significant environmental benefits. The energy savings would result in cumulative emission reductions of 12.9 million metric tons (Mt)

of carbon dioxide (CO

), 110.1 thousand tons of methane (CH

), 0.1 thousand tons of

nitrous oxide (N

O), 0.3 thousand tons of sulfur dioxide (SO

), 32.07 thousand tons of nitrogen oxides (NO

), and −0.001 tons of mercury (Hg).

The cumulative reduction in CO

emissions through 2030 amounts to 1.4 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 2013

(

AEO 2013

) Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of December 31, 2012. DOE notes that the proposed AFUE standards are estimated to cause a very slight increase in mercury emissions due to associated increase in boiler electricity use.

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. Using discount rates appropriate for each set of SCC values, DOE estimates the present monetary value of the CO

emissions reduction is between $0.07 billion and $1.14 billion. Additionally, DOE estimates the present monetary value of the NO

emissions reduction to be $13.5 million to $35.5 million at 7-percent and 3-percent discount rates, respectively.

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) (Available at:

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.5 summarizes the national economic benefits and costs expected to result from the proposed AFUE standards for residential boilers.

Table I.6—Summary of National Economic Benefits and Costs of Proposed AFUE Energy Conservation Standards for Residential Boilers

[TSL 3] *

Category

Present value

(billion 2013$)

Discount rate

(%)

Benefits

Consumer Operating Cost Savings

0.250

0.596

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

0.012

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

0.058

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

0.094

2.5

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

0.180

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

0.001

0.002

Total Benefits †

0.309

0.657

Costs

Consumer Incremental Installed Costs

0.082

0.158

Total Net Benefits

Including Emissions Reduction Monetized Value †

0.226

0.499

** The CO

is the average of the low and high values used in DOE's analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015).

The benefits and costs of today's proposed energy conservation standards, for residential boiler products sold in 2020-2049, can also be expressed in terms of annualized values. Benefits and costs for the AFUE standards are considered separately from benefits and costs for the standby mode and off mode electrical consumption standards, because for the reasons explained in section I.D below, it was not technically feasible to develop a single, integrated standard. 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 proposed new or amended standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase price 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.

DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2014, the year used for discounting the NPV of total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven percent for all costs and benefits except for the value of CO

reductions. For the latter, DOE used a range of discount rates, as shown in Table I.7. From the present value, DOE then calculated the fixed annual payment over a 30-year period (2020 through 2049) that yields the same present value. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

Although 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 boilers shipped in 2020-2049. 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 AFUE standards are shown in Table I.7. 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 uses a 3-percent discount rate ($40.5/t in 2015)), cost of the residential boiler standards

proposed in today's rule is $32.3 million per year in increased equipment costs, while the estimated benefits are $73 million per year in reduced equipment operating costs, $21.8 million in CO

reductions, and $1.53 million in reduced NO

emissions. In this case, the net benefit would amount to $64 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the residential boiler standards proposed in today's rule is $31.7 million per year in increased equipment costs, while the estimated benefits are $108 million per year in reduced equipment operating costs, $21.8 million in CO

reductions, and $2.10 million in reduced NO

emissions. In this case, the net benefit would amount to $100 million per year.

Table I.7—Annualized Benefits and Costs of Proposed AFUE Energy Conservation Standards for Residential Boilers

[TSL 3]

Discount rate

(%)

(million 2013$/year)

Primary estimate *

Low net benefits

estimate *

High net benefits

estimate *

Benefits

Consumer Operating Cost Savings

75.

108

105

112.

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

6.1

6.2.

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

21.8

21.6

22.0.

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

2.5

32.2

31.9

32.5.

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

67.6

66.9

68.2.

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

1.53

2.10

1.52

2.08

1.53.

2.12.

Total Benefits †

7 plus CO2 range

80 to 142

79 to 140

83 to 145.

99.

3 plus CO2 range

116 to 177

113 to 174

121 to 183.

132

128

136.

Costs

Consumer Incremental Installed Costs

32.3

31.7

38.7

38.9

26.8.

25.6.

Net Benefits

Total †

7 plus CO2 range

48 to 110

40 to 101

56 to 118.

72.

3 plus CO2 range

84 to 146

74 to 135

95 to 157.

100

111.

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020-2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020-2049. 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 2013

Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.1.

** 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. The value for NO

is the average of the low and high values used in DOE's analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). 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.

Estimates of annualized benefits and costs of the proposed standby mode and off mode standards are shown in Table I.8. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reduction (for which DOE used a 3-percent discount rate along with the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015)), the estimated cost of the residential boiler standby mode and off mode standards proposed in today's rule is $9.31 million per year in increased equipment costs, while the estimated benefits are $28 million per year in reduced equipment operating costs, $3 million in CO2 reductions, and $0.09 million in reduced NO

emissions. In this case, the net benefit would amount to $22 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the residential boiler standby mode and off mode standards proposed in today's

rule is $9.35 million per year in increased equipment costs, while the estimated benefits are $35 million per year in reduced equipment operating costs, $3 million in CO2 reductions, and $0.12 million in reduced NO

emissions. In this case, the net benefit would amount to $29 million per year.

Table I.8—Annualized Benefits and Costs of Proposed Standby Mode and Off Mode Energy Conservation Standards for Residential Boilers

[TSL 3]

Discount rate

(%)

(million 2013$/year)

Primary estimate *

Low net benefits

estimate *

High net benefits

estimate *

Benefits

Consumer Operating Cost Savings

29.

36.

Reduction Monetized Value ($12.0/t case) *

Reduction Monetized Value ($40.5/t case) *

Reduction Monetized Value ($62.4/t case) *

2.5

Reduction Monetized Value ($119/t case) *

11.

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

0.09

0.12

0.09

0.12

0.09.

0.13.

Total Benefits †

7 plus CO

range

29 to 39

28 to 38

30 to 40.

33.

3 plus CO

range

36 to 46

35 to 44

38 to 47.

40.

Costs

Consumer Incremental Installed Costs

9.31

9.35

9.48

9.55

9.13.

9.15.

Net Benefits

Total †

7 plus CO

range

20 to 30

19 to 28

21 to 31.

24.

3 plus CO

range

27 to 37

25 to 35

28 to 38.

31.

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020−2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020−2049. 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 2013

** The CO

is the average of the low and high values used in DOE's analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

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

values.

DOE has tentatively concluded that the proposed standards (for both AFUE, as well as standby mode and off mode) 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 all product classes covered by today's proposal. 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).

DOE also considered more-stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. 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.

DOE also added the annualized benefits and costs from the individual annualized tables to provide a combined benefit and cost estimate of the proposed AFUE and standby mode and

off mode standards as shown in Table I.10.

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 uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the residential boilers AFUE and standby mode and off mode standards proposed in this rule is $41.7 million per year in increased equipment costs, while the estimated benefits are $101 million per year in reduced equipment operating costs, $25.3 million per year in CO

reductions, and $1.62 million per year in reduced NO

emissions. In this case, the net benefit would amount to $86.3 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that uses a 3-percent discount rate ($40.5/t in 2015), the estimated cost of the residential boilers AFUE and standby mode and off mode standards proposed in this rule is $41.0 million per year in increased equipment costs, while the estimated benefits are $143 million per year in reduced equipment operating costs, $25.3 million per year in CO

reductions, and $2.22 million per year in reduced NO

emissions. In this case, the net benefit would amount to $129 million per year.

To obtain the combined results, DOE added the results for the AFUE standard in Table I.7 and for the standby standards in Table I.8.

Table I.10—Annualized Benefits and Costs of Proposed AFUE and Standby Mode and Off Mode Energy Conservation Standards for Residential Boilers

[TSL 3]

Discount rate

(%)

(million 2013$/year)

Primary estimate *

Low net benefits

estimate *

High net benefits estimate*

Benefits

Consumer Operating Cost Savings

101

143

138

104.

149.

Reduction Monetized Value ($12.0/t case)*

7.11

7.04

7.18.

Reduction Monetized Value ($40.5/t case)*

25.3

25.0

25.6.

Reduction Monetized Value ($62.4/t case)*

2.5

37.3

36.8

37.7.

Reduction Monetized Value ($119/t case)*

78.2

77.3

79.1.

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

1.62

2.22

1.61

2.20

1.63.

2.24.

Total Benefits †

7 plus CO

range

110 to 181

107 to 177

113 to 185.

128

125

131.

3 plus CO

range

152 to 223

148 to 218

158 to 230.

170

165

177.

Costs

Consumer Incremental Installed Costs

41.7

41.0

48.2

48.5

35.9.

34.8.

Net Benefits

Total †

7 plus CO

range

68.1 to 139

58.8 to 129

77.0 to 149.

86.3

76.7

95.4.

3 plus CO

range

111 to 182

99 to 169

123 to 195.

129

117

142.

AEO 2013

Reference case, Low Estimate, and High Estimate, respectively.

** The CO

is the average of the low and high values used in DOE's analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

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

values.

D. Standby Mode and Off Mode

As discussed in section II.A of this NOPR, any final rule for amended or new energy conservation standards that is published on or after July 1, 2010 must address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) As a result, DOE has analyzed and is proposing new energy conservation

standards for the standby mode and off mode electrical energy consumption for residential boilers.

AFUE, the statutory metric for residential boilers, does not incorporate standby mode or off mode use of electricity, although it already fully addresses use in these modes of fossil fuels by gas-fired and oil-fired boilers. In the October 2010 test procedure final rule for residential furnaces and boilers, DOE determined that incorporating standby mode and off mode electricity consumption into a single standard for residential furnaces and boilers is not technically feasible. 75 FR 64621, 64626-64627 (Oct. 20, 2010). DOE concluded that a metric that integrates standby mode and off mode electricity consumption into AFUE is not technically feasible, because the standby mode and off mode energy usage, when measured, is essentially lost in practical terms due to rounding conventions for certifying furnace and boiler compliance with Federal energy conservation standards.

Id.

Therefore, in this notice, DOE is proposing amended boiler standards that are AFUE levels, which exclude standby mode and off mode electricity use, and DOE is also proposing separate standards that are maximum wattage (W) levels to address the standby mode (P

W,SB

) and off mode (P

W,OFF

) electrical energy use of boilers. DOE also presents corresponding trial standard levels (TSLs) for energy consumption in standby mode and off mode. DOE has tentatively decided to use a maximum wattage requirement to regulate standby mode and off mode for boilers. DOE believes using an annualized metric could add unnecessary complexities, such as trying to estimate an assumed number of hours that a boiler typically spends in standby mode. Instead, DOE believes that a maximum wattage standard is the most straightforward metric for regulating standby mode and off mode energy consumption of boilers and will result in the least amount of industry and consumer confusion.

DOE is using the metrics just described—AFUE, P

W,SB

, and P

W,OFF

—in the amended energy conservation standards it proposes in this rulemaking for boilers. This approach satisfies the mandate of 42 U.S.C. 6295(gg)(3) that amended standards address standby mode and off mode energy use. The various analyses performed by DOE to evaluate minimum standards for standby mode and off mode electrical energy consumption for boilers are discussed further in section IV.E of this NOPR.

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 boilers.

A. Authority

Title III, Part B

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”).

These products include the residential boilers that are the subject of this rulemaking. (42 U.S.C. 6292(a)(5)) EPCA, as amended, prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (3)), and directed DOE to conduct further rulemakings to determine whether to amend these standards (42 U.S.C. 6295(f)(4)). Under 42 U.S.C. 6295(m), the agency must periodically review established energy conservation standards for a covered product; under this requirement, such review must be conducted no later than 6 years from the issuance of any final rule establishing or amending a standard for a covered product. This rulemaking satisfies both statutory provisions (42 U.S.C. 6295(f)(4) and 42 U.S.C. 6295(m)).

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, Pub. L. 112-210 (enacted December 18, 2012).

Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) establishing 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 conduct a second round of rulemaking under 42 U.S.C. 6295(f)(4)(C) to consider amended energy conservation standards for residential boilers, and DOE is also required to consider amended standards under 42 U.S.C. 6295(m)(1) by July 15, 2014 (

i.e.,

with either: (1) A NOPR with proposed standards, or (2) a notice of determination not to amend the standards within six years of issuance of the last final rule for residential boilers). DOE is further required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product prior to the adoption of a new or amended energy conservation standard. (42 U.S.C. 6295(o)(3)(A) and (r)) 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. (42 U.S.C. 6295(s)) The DOE test procedures for residential boilers appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix N. In 2012, DOE initiated a rulemaking to review the residential furnace and boiler test procedure. In March 2015, DOE published a NOPR outlining the proposed changes to the test procedure. 80 FR 12876. Details regarding this rulemaking are discussed in section III.B.

DOE must follow specific statutory criteria for prescribing amended standards for covered products, including residential boilers. 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) and (3)(B)) 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 boilers, 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, after receiving comments on the proposed standard, 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 by, to the greatest extent practicable, considering the following seven statutory 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 standard;

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

(4) Any lessening of the utility or the performance of the covered products likely to result from 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 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 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, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of covered product that has 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 that other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(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 42 U.S.C. 6297(d).

Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to 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 a single 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 for residential boilers address standby mode and off mode energy use. In this rulemaking, DOE intends to adopt separate energy conservation standards to address standby mode and off mode energy use.

B. Background

1. Current Standards

In a final rule published on July 28, 2008 (2008 final rule), DOE prescribed energy conservation standards for residential boilers manufactured on or after September 1, 2012. 73 FR 43611. These standards are set forth in DOE's regulations at 10 CFR 430.32(e)(2)(ii) and are repeated in Table II.1 below.

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

Product class

Minimum annual fuel utilization efficiency

(%)

Design requirements

Gas-fired Hot Water Boiler

No Constant-Burning Pilot, Automatic Means for Adjusting Water Temperature.*

Gas-fired Steam Boiler

No Constant-Burning Pilot.

Oil-fired Hot Water Boiler

Automatic Means for Adjusting Temperature.*

Oil-fired Steam Boiler

None.

Electric Hot Water Boiler

None

Automatic Means for Adjusting Temperature.*

Electric Steam Boiler **

None

None.

* Excluding boilers equipped with a tankless domestic water heating coil.

** Although the “Electric steam boiler” product class is not included in the table at 10 CFR 430.32(e)(2)(ii), according to 42 U.S.C. 6295(f), there are no minimum AFUE or design requirements for these products. DOE intends to clarify the standards for these products in this NOPR.

2. History of Standards Rulemaking for Residential Boilers

Given the somewhat complicated interplay of recent DOE rulemakings and statutory provisions related to residential boilers, DOE provides the following regulatory history as background leading to the present rulemaking. On November 19, 2007, DOE published a final rule in the

Federal Register

(November 2007 final rule) revising the energy conservation standards for furnaces and boilers, which addressed the first required review of standards for boilers under 42 U.S.C. 6295(f)(4)(B). 72 FR 65136. Compliance with the standards in the November 2007 final rule would have been required by November 19, 2015. However, on December 19, 2007, EISA 2007, Public Law 110-140, was signed into law, which further revised the energy conservation standards for residential boilers. More specifically,

EISA 2007 amended EPCA to revise the AFUE requirements for residential boilers and set design requirements for most product classes. (42 U.S.C. 6295(f)(3)) EISA 2007 required compliance with the amended energy conservation standards for residential boilers beginning on September 1, 2012.

Only July 15, 2008, DOE issued a final rule technical amendment to the 2007 final rule, which was published in the

Federal Register

on July 28, 2008, to codify the energy conservation standard levels, the design requirements, and compliance dates for residential boilers outlined in EISA 2007. 73 FR 43611. For gas-fired hot water boilers, oil-fired hot water boilers, and electric hot water boilers, EISA 2007 requires that residential boilers manufactured after September 1, 2012 have an automatic means for adjusting water temperature. (42 U.S.C. 6295(f)(3)(A)-(C); 10 CFR 430.32(e)(2)(ii)-(iv)) The automatic means for adjusting water temperature must ensure that an incremental change in the inferred heat load produces a corresponding incremental change in the temperature of the water supplied by the boiler. EISA 2007 also disallows the use of constant-burning pilot lights in gas-fired hot water boilers and gas-fired steam boilers.

DOE initiated today's rulemaking pursuant to 42 U.S.C. 6295(f)(4)(C), which requires DOE to conduct a second round of amended standards rulemaking for residential boilers. EPCA, as amended by EISA 2007, also requires that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of the determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) As noted above, this rulemaking will satisfy both statutory provisions.

DOE initiated this current rulemaking by issuing an analytical Framework Document, “Rulemaking Framework for Residential Boilers” (February 11, 2013). DOE published the notice of public meeting and availability of the Framework Document for residential boilers in the

Federal Register

on February 11, 2013. 78 FR 9631. The residential boiler energy conservation standards rulemaking docket is EERE-2012-BT-STD-0047. See:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=112.

The Framework Document explained the issues, analyses, and process that DOE anticipated using to develop energy conservation standards for residential boilers. DOE held a public meeting on March 13, 2013, to solicit comments from interested parties regarding DOE's analytical approach. The comment period for the Framework Document closed on March 28, 2013.

To further develop the energy conservation standards for residential boilers, DOE gathered additional information and performed an initial technical analysis. This process culminated in publication in the

Federal Register

on February 11, 2014, of the notice of data availability (NODA), which announced the availability of analytical results and modeling tools. 79 FR 8122. In that document, DOE presented its initial analysis of potential amended energy conservation standards for residential boilers, and requested comment on the following matters discussed in the analysis: (1) The product classes and scope of coverage; (2) the analytical framework, models, and tools that DOE is using to evaluate potential standards; and (3) the results of the preliminary analyses performed by DOE.

Id.

DOE also invited written comments on these subjects, as well as any other relevant issues, and announced the availability of supporting documentation on its Web site at

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0047-0015

A PDF copy of the supporting documentation is available at

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0047-0011

. The comment period closed on March 13, 2014.

The supporting documentation in the NODA provided an overview of the activities DOE undertook in developing potential amended energy conservation standards for residential boilers, and discussed the comments DOE received in response to the Framework Document. It also described the analytical methodology that DOE used and each analysis DOE had performed up to that point. These analyses were as follows:

• A

market and technology assessment

addressed the scope of this rulemaking, identified the potential product classes of residential boilers, characterized the markets for these products, and reviewed techniques and approaches for improving their efficiency;

• A

screening analysis

reviewed technology options to improve the efficiency of residential boilers, and weighed these options against DOE's four prescribed screening criteria;

• An

engineering analysis

estimated the increase in manufacturer selling prices (MSPs) associated with more energy-efficient residential boilers;

• An

energy use analysis

estimated the annual energy use of residential boilers at various potential standard levels;

• A

markups analysis

converted estimated MSPs to consumer-installed prices.

• A

life-cycle cost (LCC) analysis

calculated, at the consumer level, the discounted savings in operating costs throughout the estimated average life of the product, compared to any increase in installed costs likely to result directly from the adoption of a given standard;

• A

payback period (PBP) analysis

estimated the amount of time it would take consumers to recover the higher expense of purchasing more-energy-efficient products through lower operating costs;

• A

shipments analysis

estimated shipments of residential boilers over the time period examined in the analysis (30 years), which were used in performing the national impact analysis;

• A

national impact analysis

assessed the aggregate impacts at the national level of potential energy conservation standards for residential boilers, as measured by the net present value of total consumer economic impacts and national energy savings;

The nature and function of the analyses in this rulemaking, including the engineering analysis, energy-use characterization, markups to determine installed prices, LCC and PBP analyses, and national impacts, are summarized in the February 2014 notice. 79 FR 8122, 8124-28 (Feb. 11, 2014).

Statements received after publication of the Framework Document, at the Framework public meeting, and comments received after the publication of the NODA have helped identify issues involved in this rulemaking and have provided information that has contributed to DOE's resolution of these issues. The Department considered

these statements and comments in developing revised engineering and other analyses for this rulemaking.

DOE received 30 comments in response to the February 2014 NODA. These commenters include: A joint comment from the American Council for an Energy-Efficient Economy (ACEEE), the Appliance Standards Awareness Project (ASAP), the Alliance to Save Energy (ASE), the Natural Resources Defense Council (NRDC), and the Northeast Energy Efficiency Partnerships (NEEP); a comment from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI); a comment from Edison Electric Institute (EEI); and a joint comment from the American Gas Association (AGA) and the American Public Gas Association (APGA). Manufacturers submitting written comments include: Energy Kinetics, Weil McLain, Weil McLain and various contractors and distributors (Weil McLain

et al.

), Crown Boiler, US Boiler, New Yorker Boiler, and HTP. Heating, ventilation, and air conditioning professionals and fuel companies who submitted written comments include: Belyea Brothers, Fire & Ice Heating &Cooling, Westmore Fuel Company, Maritime Energy, Brideau Oil Co., Hlavaty Plumb Heat and Cool, Rhoads Energy Corporation, Powers Energy Corporation, Sunshine Fuels & Energy Services, Petro Heating & Air Conditioning Services, OSI Comfort Specialists, Soundview Heating and Air Conditioning Corp, Aiello Home Services, Lombardi Oil, Boehm Heating Company, Kafin Oil Company, Wilkinson Oil Company, Santoro Oil Company, and Stocker Home Energy Services. This NOPR summarizes and responds to the issues raised in these comments. A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.

III. General Discussion

DOE developed today's proposed rule after considering verbal and written comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters.

A. Product Classes and Scope of Coverage

Existing energy conservation standards divide residential boilers into six product classes based on the fuel type (

i.e.,

gas, oil, or electricity) and heating medium of the product (

i.e.,

hot water or steam). For this rulemaking, DOE proposes to maintain the scope of coverage defined by its current regulations for the analysis of standards, so as to include six product classes of boilers: (1) Gas-fired hot water boilers; (2) gas-fired steam boilers; (3) oil-fired hot water boilers; (4) oil-fired steam boilers; (5) electric hot water boilers; and (6) electric steam boilers. DOE has not conducted an analysis of an AFUE standard level for electric boilers as the AFUE of these products already approaches 100 percent. DOE also did not conduct an analysis of a standard level for combination appliances as the DOE test procedure does not include a method with which to test these products. These reasons are explained in greater detail in section IV.A.1 of this NOPR. However, DOE did include electric boilers within the scope of its analysis of standby mode and off mode energy conservation standards.

The scope and product classes analyzed for today's NOPR are the same as those initially set forth proposed in the Framework Document and examined in DOE's initial analysis. Comments received relating to the scope of coverage are described in section IV.A of this proposed rule.

B. Test Procedure

DOE's current energy conservation standards for residential boilers are expressed in terms of annual fuel utilization efficiency (

see

10 CFR 430.32(e)(2)(ii)). AFUE is an annualized fuel efficiency metric that fully accounts for fuel consumption in active, standby, and off modes. The existing DOE test procedure for determining the AFUE of residential boilers is located at 10 CFR part 430, subpart B, appendix N. The current DOE test procedure for residential boilers was originally established by a May 12, 1997 final rule, which incorporates by reference the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE)/American National Standards Institute (ANSI) Standard 103-1993,

Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers

(1993). 62 FR 26140, 26157.

On October 20, 2010, DOE updated its test procedures for residential boilers in a final rule published in the

Federal Register

(October 2010 test procedure rule). 75 FR 64621. This rule amended DOE's test procedure for residential furnaces and boilers to establish a separate metric for measuring the electrical energy use in standby mode and off mode for gas-fired, oil-fired, and electric boilers pursuant to requirements established by EISA 2007. In the final rule, DOE determined that due to the magnitude of the electrical standby/off mode vs active mode, a single efficiency metric is technically infeasible. The test procedure amendments were primarily based on and incorporate by reference provisions of the International Electrotechnical Commission (IEC) Standard 62301 (First Edition), “Household electrical appliances—Measurement of standby power.” On December 31, 2012, DOE published a final rule in the

Federal Register

which updated the incorporation by reference of the standby mode and off mode test procedure provisions to refer to the latest edition of IEC Standard 62301 (Second Edition). 77 FR 76831.

On July 10, 2013, DOE published a final rule in the

Federal Register

(July 2013 final rule) that modified the existing testing procedures for residential furnaces and boilers. 78 FR 41265. The modification addressed the omission of equations needed to calculate AFUE for two-stage and modulating condensing furnaces and boilers that are tested using an optional procedure provided by section 9.10 of ASHRAE 103-1993 (incorporated by reference into DOE's test procedure), which allows the test engineer to omit the heat-up and cool-down tests if certain conditions are met. Specifically, the DOE test procedure allows condensing boilers and furnaces to omit the heat-up and cool-down tests provided that the units have no measurable airflow through the combustion chamber and heat exchanger (HX) during the burner off period and have post-purge period(s) of less than 5 seconds. For two-stage and modulating condensing furnaces and boilers, ASHRAE 103-1993 (and by extension the DOE test procedure) does not contain the necessary equations to calculate the heating seasonal efficiency (which contributes to the ultimate calculation of AFUE) when the option in section 9.10 is selected. The July 2013 final rule adopted two new equations needed to account for the use of section 9.10 for two-stage and modulating condensing furnaces and boilers.

Id.

EPCA, as amended by EISA 2007, requires that DOE must review test procedures for all covered products at least once every 7 years. (42 U.S.C

6293(b)(1)(A)) Accordingly, DOE must complete the residential furnaces and boiler test procedure rulemaking no later than December 19, 2014 (

i.e.,

7 years after the enactment of EISA 2007), which is before the expected completion of this energy conservation standards rulemaking. On March 11, 2015, DOE published a notice of proposed rulemaking for the test procedure in the

Federal Register

(March 2015 Test Procedure NOPR), a necessary step toward fulfillment of the requirement under 42 U.S.C. 6293(b)(1)(A) for residential furnaces and boilers. 80 FR 12876. DOE must base the analysis of amended energy conservation standards on the most recent version of its test procedures, and accordingly, DOE will use any amended test procedure when considering product efficiencies, energy use, and efficiency improvements in its analyses. Major changes proposed in the March 2015 Test Procedure NOPR included proposals to:

• Adopt ANSI/ASHRAE 103-2007 by reference in place of the existing reference to ANSI/ASHRAE 103-1993;

• Modify the requirements for the measurement of condensate under steady-state conditions;

• Update references to installation manuals;

• Update the auxiliary electrical consumption calculation to include additional measurements of electrical consumption;

• Adopt a method for determining if the automatic means requirement has been met;

• Adopt a method for qualifying the use of the minimum draft factor, and

• Revising the required reporting precision for AFUE.

DOE received several comments from stakeholders relating to the residential furnace and boiler test procedure. These comments were considered and addressed in that rulemaking proceeding.

C. Technological Feasibility

1. General

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

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, 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). Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. Section IV.B of this notice discusses the results of the screening analysis for residential boilers, particularly the designs DOE considered, those it screened out, and those that are the basis for the trial standard levels (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 boilers, using the design parameters for the most-efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking include efficiency levels currently only achieved through the use of condensing technology for both the gas fired hot water and the oil fired hot water product classes. Details regarding the max-tech efficiency levels determined for this rulemaking are described in section IV.C of this proposed rule and in chapter 5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the products that are the subject of this rulemaking purchased in the 30-year period that begins in the year of compliance with amended standards (2020-2049).

The savings are measured over the entire lifetime of products 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 energy conservation 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 chosen to modify its presentation of national energy savings to be consistent with the approach used for its national economic analysis.

DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from potential 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 on an annual basis in terms of primary (source) energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. To calculate this quantity (

i.e.,

converting site energy to primary energy), DOE derives annual conversion factors from the model used to prepare the Energy Information Administration's (EIA) most recent

Annual Energy Outlook

(

AEO

DOE also has begun to estimate full-fuel-cycle (FFC) energy savings, as discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 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 is driven in part by the National Academy of Sciences' (NAS) report on FFC measurement approaches for DOE's Appliance Standards Program.

The

NAS report discusses that the FFC metric was primarily intended for energy conservation standards rulemakings where multiple fuels may be used by a particular product. DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment (oil, gas and electricity in the case of residential boilers). Although the addition of FFC energy savings in the rulemakings is consistent with the recommendations, the methodology for estimating FFC does not project how fuel markets would respond to this particular standards rulemaking. The FFC methodology simply 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 boilers covered in this rulemaking. It is also important to note that inclusion of FFC savings did not affect DOE's choice of proposed standards. For more information on FFC energy savings, see section IV.H.1.

“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 for the District of Columbia Circuit, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for all of the trial standard levels considered in this rulemaking, including the proposed standards, are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.

E. 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)(I)-(VII)) 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. 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: (1) Industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) 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.

b. Savings in Operating Costs Compared To Increase in Price (LCC and PBP)

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analyses.

The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and consumer discount rates. 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 and the PBP for the considered conservation levels are calculated relative to a base case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC and PBP analyses are discussed in further detail in section IV.F.

c. 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, DOE uses the NIA spreadsheet to project national energy savings.

d. Lessening of Utility or Performance of Products

In establishing product classes and in evaluating design options and the impact of potential standard levels, DOE evaluates potential 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 available to DOE, the standards proposed in this notice would not reduce the utility or performance of the products under consideration in this rulemaking.

e. 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 publish and respond to the Attorney General's determination in the final rule.

f. 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. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) 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, as discussed in section IV.M.

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 proposed standards and from each TSL it considered and discussed in sections IV.K and 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.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the 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 an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1 of this proposed rule.

IV. Methodology and Discussion of Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to residential boilers. Separate subsections will address each component of DOE's analyses.

DOE used three spreadsheet tools to estimate the impact of today's proposed standards. The first spreadsheet calculates LCCs and payback periods of potential standards. The second provides shipments forecasts, and then calculates national energy savings and net present value impacts of potential standards. Finally, DOE assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM). All three spreadsheet tools are available online at the rulemaking portion of DOE's Web site:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=112.

Additionally, DOE estimated the impacts on utilities and the environment that would be likely to result from potential amended standards for residential boilers. DOE used a version of EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses.

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

Annual Energy Outlook,

a widely-known energy forecast for the United States. NEMS offers a sophisticated picture of the effect of standards, because it accounts for the interactions between the various energy supply and demand sectors and the economy as a whole.

For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is

National Energy Modeling System: An Overview 2009,

DOE/EIA-0581(2009) (October 2009) (Available at:

http://www.eia.doe.gov/oiaf/aeo/overview/index.html

A. Market and Technology Assessment

DOE develops information 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 boilers rulemaking include: (1) A determination of the scope of the rulemaking and product classes; (2) manufacturers and industry structure; (3) quantities and types of products sold and offered for sale; (4) retail market trends; (5) regulatory and non-regulatory programs; and (6) technologies or design options that could improve the energy efficiency of the product(s) under examination. 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. Definition and Scope of Coverage

EPCA defines residential boilers as a type of furnace. Specifically, the term “furnace” is defined as “a product which utilizes only single-phase electric current, or single-phase electric current or DC current in conjunction with natural gas, propane, or home heating oil, and which—

(A) is designed to be the principal heating source for the living space of a residence;

(B) is not contained within the same cabinet with a central air conditioner whose rated cooling capacity is above 65,000 Btu [British thermal units] per hour;

(C) is an electric central furnace, electric boiler, forced- air central furnace, gravity central furnace, or low pressure steam or hot water boiler; and

(D) has a heat input rate of less than 300,000 Btu per hour for electric boilers and low pressure steam or hot water boilers and less than 225,000 Btu per hour for forced-air central furnaces, gravity central furnaces, and electric central furnaces.”

(42 U.S.C. 6291(23))

DOE has incorporated this definition into its regulations in the Code of Federal Regulations (CFR) at 10 CFR 430.2. DOE has generally defined an electric boiler as an electrically powered furnace designed to supply low pressure steam or hot water for space heating applications, including a low pressure steam boiler that operates at or below 15 pounds per square inch gauge (psig) steam pressure and a hot water boiler that operates at or below 160 psig water

pressure and 250 °F water temperature. DOE has generally defined a low pressure steam or hot water boiler as an electric, gas or oil burning furnace designed to supply low pressure steam or hot water for space heating applications, including a low pressure steam boiler that operates at or below 15 psig steam pressure; a hot water boiler operates at or below 160 psig water pressure and 250 °F water temperature. See 10 CFR part 430.2.

For this rulemaking, DOE proposes to maintain the scope of coverage as defined by its current regulations for this analysis of new and amended standards, which includes six product classes of boilers (gas-fired hot water boilers, gas-fired steam boilers, oil-fired hot water boilers, oil-fired steam boilers, electric hot water boilers, and electric steam boilers). DOE has not conducted an analysis of an AFUE standard level for electric boilers or combination appliance for the reasons explained below.

Combination appliances provide both space heating and domestic hot water to a residence. These products are available on the market in two major configurations, including a water heater fan-coil combination unit and a boiler tankless coil combination unit. Currently, manufacturers certify combination appliances by rating the efficiency of the unit when performing their primary function (

i.e.,

space heating for boiler tankless coil combination units or water heating for water heater fan-coil units). In the March 2015 residential furnaces and boilers test procedure NOPR, DOE did not propose a method for which to calculate AFUE for combination appliances, because DOE chose not to delay or complicate the test procedure rulemaking. Rather, DOE plans to continue to seek input about the development of a test procedure for combination appliances and may consider a separate rulemaking devoted specifically to those products in the future. 80 FR 12876. Without a Federal test procedure for combination appliances, DOE was not able to perform an AFUE standards analysis for such products.

DOE did not include electric boilers in the analysis of amended AFUE standards. Electric boilers do not have an AFUE requirement under 10 CFR 430.32(e)(2)(ii). Electric boilers typically use electric resistance coils as their heating elements, which are highly efficient. Furthermore, the current DOE test procedure for determining AFUE classifies boilers as indoor units and, thus, considers jacket losses to be usable heat, because those losses would go to the conditioned space. The efficiency of these products already approaches 100 percent AFUE. Therefore, there are no options for increasing the rated AFUE of this product, and the impact of setting AFUE energy conservation standards for these products would be negligible. However, DOE has considered standby mode and off mode standards for electric boilers.

The proposed scope used for the analysis for this NOPR is the same as the scope used for the NODA analysis. In response to the NODA analysis, AGA and AGPA filed a joint comment which stated that DOE should clarify that gas-fired boilers that do not have an electrical supply requirement are not subject to this regulation. (AGA and AGPA, No. 21 at p. 2) DOE agrees that under EPCA, an exception already exists for boilers which are manufactured to operate without any need for electricity. (42 U.S.C. 6295(f)(3)(C); 10 CFR 430.32(e)(2)(iv)) Thus, DOE did not consider such products in the course of this analysis, and such products would not be covered by amended standards resulting from this process.

2. Product Classes

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 this analysis of standards, which includes six product classes of boilers. Table IV.1 lists the six proposed product classes.

Table IV.1—Proposed Product Classes for Residential Boilers

Boiler by fuel type

Heat transfer medium

Gas-fired Boiler

Steam.

Hot Water.

Oil-fired Boiler

Steam.

Hot Water.

Electric Boiler

Steam.

Hot Water.

Several interested parties suggested that the product classes should be further subdivided into condensing and non-condensing products for gas-fired hot water boilers. (Weil McLain No. 20 at p. 2, AGA and APGA No.21 at p. 2, HTP No. 31 at p. 2)

Weil McLain commented that condensing and noncondensing boilers should be in separate product classes because each presents significant options to have available for different applications. Weil McLain added that each type of boiler can provide a good solution to a residential boiler need, but the solution requires the correct application of the boiler to a particular home. In particular, Weil McLain commented that there are important differences between new installations and replacement installations for these products. (Weil McLain No. 20 at p. 2)

Similarly, AGA and APGA suggested that the gas-fired hot water boiler product class should be subdivided into condensing and non-condensing subclasses, such that DOE may consider establishing separate standards for Category I and Category IV gas boilers based on their different venting and condensing characteristics. Category I gas boilers are those that operate with a non-positive vent static pressure and with a vent gas temperature that avoids excessive condensate production in the vent. Category IV gas boilers are those that operate with a positive vent static pressure with a vent gas temperature that is capable of causing excessive condensation.

AGA and APGA commented that in the past, DOE has established separate standards for clothes dryers based on venting characteristics. (AGA and APGA No.21 at p. 2-3)

See ANSI Z223.1-2009/NFPA 54, National Fuel Gas Code, 3.3.6.11.1 and 3.3.6.11.4 (2009). See also 2012 International Fuel Gas Code, at p. 16 (2011).

In response to these comments, DOE notes that, in evaluating and establishing energy conservation standards, EPCA directs DOE to divide covered products into classes based on differences including the type of energy used, capacity, or other performance-related feature that justifies a different standard for products having such feature. (42 U.S.C. 6295(q)) In deciding whether a feature justifies a different standard, DOE must consider factors such as the utility of the features to users. In evaluating Weil McLain's, AGA's, and AGPA's suggestion to consider separate product classes for non-condensing and condensing boilers (and specifically in AGA's and APGA's comments for boilers using Category I and Category IV venting), DOE considered the utility to consumers of condensing and non-condensing boilers, including the ability to use one venting type versus another. The utility derived

by consumers from boilers is in the form of the space heating function that a boiler performs. Condensing and non-condensing boilers perform equally well in providing this function. Likewise, a boiler requiring Category I venting and a boiler requiring Category IV venting are capable of providing the same heating function to the consumer, and, thus, provide virtually the same utility with respect to their primary function. AGA and AGPA contend that the ability to vent a boiler with Category I venting provides boiler consumers with a special utility due to the cost-saving benefits compared to having to retrofit a venting system to accommodate a Category IV boiler. DOE does not agree with the characterization of reduced costs associated with Category I venting in certain installations as a special utility, but rather, it is an economic impact on consumers that must be considered in the rulemaking's cost-benefit analysis. Rather, the average installation cost by efficiency level for gas-fired hot water boilers ranges from $3,301 to $3,599; for gas-fired steam boilers, from $3,037 to $3,061; for oil-fired hot water boilers, from $3,069 to $3,662; and for oil-fired steam boilers, from $3,074 to $3,081. Information related to installation costs can be found in section IV.F.1 of this NOPR and Chapter 8 of the NOPR TSD. DOE also recognizes the merit in Weil McLain's comments regarding the important operational differences between condensing and non-condensing systems. However, DOE believes this issue is also analytical and best addressed in the analyses as DOE considers these operational differences. Accordingly, DOE is not proposing to establish separate product classes for condensing and non-condensing boilers, or for boilers utilizing Category I and Category IV venting systems. Rather, DOE considered the impacts of these characteristics in the relevant analyses performed for the NOPR. DOE requests comment on the installation costs cited above.

HTP suggested that the Department should consider separate residential boiler standards for new construction and retrofits. (HTP, No. 31 at p.2)

In response, as set forth in the statutory definition for “energy conservation standard,” DOE notes that EPCA directs the Department to establish performance standards that prescribe minimum levels of energy efficiency or maximum levels of energy use for covered products. (42 U.S.C. 6291(6)(A)) EPCA does not authorize setting multiple levels of efficiency for a given covered product, depending on where the product is installed in terms of home type (

i.e.,

new or existing). The Department does not have the authority to set separate standards for residential boilers for new homes and for existing homes and, therefore, must reject the suggestion that it consider separate standards for new construction and retrofits.

3. Technology Options

In the NODA analysis, DOE identified 10 technology options that would be expected to improve the AFUE of residential boilers, as measured by the DOE test procedure: (1) Heat exchanger improvements; (2) modulating operation; (3) dampers; (4) direct vent; (5) pulse combustion; (6) premix burners; (7) burner derating; (8) low-pressure air-atomized oil burner; (9) delayed-action oil pump solenoid valve; and (10) electronic ignition.

In addition, DOE identified three technologies that would reduce the standby mode and off mode energy consumption of residential boilers: (1) Transformer improvements; (2) control relay for models with brushless permanent magnet motors; and (3) switching mode power supply.

Although DOE has identified vent dampers and electronic ignition as technologies that improve residential boiler efficiency, DOE did not consider these technologies further in the analysis as options for improving efficiency of baseline units, because they are already included in baseline residential boilers.

DOE received no comments suggesting additional technology options in response to the NODA analysis, and thus, DOE has maintained the same list of technology options in the NOPR analysis. After identifying all potential technology options for improving the efficiency of residential boilers, DOE performed the screening analysis (see section IV.B of this NOPR or chapter 4 of the TSD) on these technologies to determine which could be considered further in the analysis and which should be eliminated.

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.

The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.

1. Screened-Out Technologies

During the NODA phase, DOE screened out pulse combustion as a technology option for improving AFUE and screened out control relay for boiler models with brushless permanent magnet motors as a technology option for reducing standby electric losses. DOE decided to screen out pulse combustion based on manufacturer feedback during the Framework public meeting indicating that pulse combustion boilers have had reliability issues in the past, and therefore, manufacturers do not consider this a viable option to improve efficiency. Further, manufacturers indicated that similar or greater efficiencies than those of pulse combustion boilers can be achieved using alternative technologies. For this reason, DOE is not including pulse combustion as a technology option, as it could reduce consumer utility (reliability). DOE decided to screen out using a control relay to depower BPM motors due to feedback received during the residential furnace rulemaking (which was reconfirmed during manufacturer interviews for the residential boiler rulemaking), which indicated that using a control relay to depower brushless permanent magnet

motors could reduce the lifetime of the motors, which would lead to a reduction in utility of the product. For this reason, DOE is not including control relays for models with brushless permanent magnet motors as a technology option, as it could reduce consumer utility. DOE did not receive any comments relating to the screening out of these two technologies.

AHRI stated that neither direct vent nor burner derating should be included in the analysis since they are not currently practical ways to achieve higher levels of efficiency. (AHRI, No. 16 at p. 1)

In response, DOE agrees that burner derating should be screened out, and has done so for the NOPR analysis. Burner derating reduces the burner firing rate while keeping heat exchanger geometry and surface area and the fuel-air ratio the same, which increases the ratio of heat transfer surface area to energy input, and increases efficiency. However, the lower energy input means that less heat is provided to the user than with conventional burner firing rates. As a result of the decreased heat output of boilers with derated burners, DOE has screened out burner derating as a technology option, as it could reduce consumer utility.

For direct vent, DOE has found that boilers using this technology can improve AFUE by reducing the heat loss through draft, because direct vent systems are sealed systems in which combustion air is brought in from outside, rather than from the space surrounding the boiler. This reduces infiltration losses, and would improve AFUE. In addition, this technology has been demonstrated as technologically feasible and practicable to manufacture, install, and service, as it is currently offered in boiler models available on the market. In addition, DOE is not aware of any impacts on product utility or adverse impacts on safety that would result from the use of this technology. Thus, DOE has maintained direct vent as a technology option. However, it should be noted that this technology option was not considered to be a primary driver of increased efficiency in the engineering analysis (see section IV.C).

2. Remaining Technologies

Through a review of each technology, DOE found that all of the other identified technologies met all four screening criteria and consequently, are suitable for further examination in DOE's analysis. In summary, DOE did not screen out the following technology options to improve AFUE: (1) Heat exchanger improvements; (2) modulating operation; (3) direct vent; (4) premix burners; (5) low-pressure air-atomized oil burner; and (6) delayed-action oil pump solenoid valve. DOE also maintained the following technology options to improve standby mode and off mode energy consumption: (1) Transformer improvements; and (2) switching mode power supply. All of these technology options are technologically feasible, given that the evaluated technologies are being used (or have been used) in commercially-available products or working prototypes. Therefore, all of the trial standard 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, please see chapter 4 of the NOPR TSD. DOE requests further comment from interested parties regarding whether there are any technologies which have passed the screening analysis that should be screened out based on the four screening criteria (

i.e.,

technological feasibility; practicability to manufacture, install, and service; impacts on product utility or product availability; and adverse impacts on health or safety).

C. Engineering Analysis

In the engineering analysis (corresponding to chapter 5 of the NOPR TSD), DOE establishes the relationship between the manufacturer selling price (MSP) and improved residential boiler 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 efficiency of various efficiency-improving design changes to the baseline to model different levels of efficiency. The efficiency-level approach uses estimates of cost and efficiency at distinct levels of efficiency from publicly-available information, and information gathered in manufacturer interviews that is supplemented and verified through technology reviews. 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. The efficiency values range from that of a least-efficient boiler sold today (

i.e.,

the baseline) to the maximum technologically feasible efficiency level. At each efficiency level examined, DOE determines the manufacture production cost (MPC) and MSP; this relationship is referred to as a cost-efficiency curve.

As noted in section III.B, the active mode AFUE metric fully accounts for the fuel use consumption in active, standby and off modes whereas the standby and off mode metric (maximum wattage) only accounts for the electrical energy use in standby and off mode. In analyzing the technologies that would be likely to be employed to effect changes in these metrics, DOE found that the efficiency changes were mostly independent. For example, the primary means of improving AFUE is to improve the heat exchanger design, which would likely have little or no impact on standby and off mode electrical consumption. Similarly, the design options considered likely to be implemented for reducing standby mode and off mode electrical consumption are not expected to impact the AFUE. Therefore, DOE conducted separate engineering and cost-benefit analyses for each of these two metrics and their associated systems (fuel and electrical). In order to account for the total impacts of both proposed standards, DOE added the monetized impacts from these two separate analyses in the NIA, LCC, and MIA as a means of providing a cumulative impact on residential boilers. For the PBP, to estimate the cumulative impact for both standards, DOE determined the combined installed cost to the consumer and the first-year operating costs for each household. DOE requests comment on this approach and whether it is reasonable to assume that the design changes implemented by manufacturers in order to comply with the standby and off mode would be independent of those implemented to comply with AFUE standards.

DOE also requests comment on employing an alternative methodology to inform the selection of the appropriate technologically feasible and economically justified standard level, which would occur as follows: (1) First the agency would first consider the technological feasibility and economic justification of one standard (

e.g.,

standby and off mode) in the engineering cost model and downstream cost-benefit analysis to select a proposed level; and (2) DOE would then incorporate the estimated impacts of the proposed level into the baseline of the engineering cost model and downstream cost-benefit analysis prior to conducting the analysis for the second standard (

e.g.

active mode). DOE recognizes that this methodology would yield the exact same incremental costs since the cost and savings are truly independent of one another—that is the cost to achieve the savings from the AFUE standard are not impacted by the compliance to the proposed sand-by and off mode standard.

For the NODA analysis of AFUE efficiency levels, DOE conducted the engineering analysis for residential boilers using a combination of the efficiency level and cost-assessment approaches. More specifically, DOE identified the efficiency levels for analysis and then used the cost-assessment approach to determine the technologies used and the associated manufacturing costs at those levels.

For the standby mode and off mode analyses, DOE adopted a design option approach, which allowed for the calculation of incremental costs through the addition of specific design options to a baseline model. DOE decided on this approach because it did not have sufficient data to execute an efficiency-level analysis, as manufacturers typically do not rate or publish data on the standby mode and or off mode energy consumption of their products.

DOE continued to use the same analytical approaches for the NOPR phase of this rulemaking as used in the NODA. In response to the NODA, DOE received specific comments from interested parties on certain aspects of the engineering analysis. A brief overview of the methodology, a discussion of the comments DOE received, DOE's response to those comments, and any adjustments made to the engineering analysis methodology or assumptions as a result of those comments is presented in the sections below. See chapter 5 of the NOPR TSD for additional details about the engineering analysis.

1. Efficiency Levels

As noted above, for analysis of amended AFUE standards, DOE used an efficiency-level approach to identify incremental improvements in efficiency for each product class. An efficiency-level approach enabled DOE to identify incremental improvements in efficiency for efficiency-improving technologies that boiler manufacturers already incorporate in commercially-available models. After identifying efficiency levels for analysis, DOE used a cost-assessment approach (section IV.C.2) to determine the MPC at each efficiency level identified for analysis. This method estimates the incremental cost of increasing product efficiency. For the analysis of amended standby mode and off mode energy conservation standards, DOE used a design-option approach and identified efficiency levels that would result from implementing certain design options for reducing power consumption in standby mode and off mode.

a. Baseline Efficiency Level and Product Characteristics

In the analysis presented in the NODA, DOE selected baseline units typical of the least-efficient commercially-available residential boilers. DOE selected baseline units as reference points for each product class, against which it measured changes resulting from potential amended energy conservation standards. The baseline efficiency level in each product class represents the basic characteristics of products in that class. A baseline unit is a unit that just meets current Federal energy conservation standards and provides basic consumer utility.

DOE uses the baseline unit for comparison in several phases of the analyses, including the engineering analysis, LCC analysis, PBP analysis, and the 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 baseline unit to the price of a unit at each higher efficiency level.

DOE received no comments regarding the baseline efficiency levels and characteristics chosen for the NODA analysis of amended AFUE standards. Thus, DOE has maintained these baseline efficiency levels, which are equal to the current federal minimum standards for each product class in the NOPR analysis. Table IV.2 presents the baseline AFUE levels identified for each product class. Additional details on the selection of baseline efficiency levels may be found in chapter 5 of the NOPR TSD.

Table IV.2—Table Baseline AFUE Efficiency Levels

Product class

AFUE

(%)

Gas-Fired Hot Water Boilers

Gas-Fired Steam Boilers

Oil-Fired Hot Water Boilers

Oil-Fired Steam Boilers

AHRI commented that the baseline efficiency levels shown in the engineering analysis are assumed to have dampers. AHRI asked for clarification as to the type of damper the baseline gas-fired hot water boilers are assumed to have in the analysis. (AHRI No. 22 at p. 3) In the engineering analysis, DOE assumed baseline gas-fired hot water boilers to have stack dampers, as described in chapter 5 of the TSD.

For the standby mode and off mode analysis, DOE identified baseline components as those that consume the most electricity during the operation of those modes. Since it would not be practical for DOE to test every boiler on the market to determine the baseline and since manufacturers do not currently report standby mode and off mode energy consumption, DOE “assembled” the most consumptive baseline components from the models tested to model the electrical system of a boiler with the expected maximum system standby mode and off mode power consumption observed during testing of boilers and similar equipment. Additional boiler standby mode and off mode testing was performed for the NOPR analysis and has led DOE to lower the standby mode and off mode baseline consumption level for each product class as compared to the NODA analysis. The baseline standby mode and off mode consumption levels used in the NOPR analysis are presented in Table IV.3.

Table IV.3—Baseline Standby Mode and Off Mode Power Consumption Used in the NOPR Analyses

Component

Standby mode and off mode power consumption

(watts)

Gas-fired hot water

Oil-fired hot water

Gas-fired steam

Oil-fired steam

Electric hot water

Electric steam

Transformer

ECM Burner Motor

N/A

Controls

2.5

Display

Oil Burner

N/A

Total (watts)

11.5

13.5

10.5

13.5

10.5

b. Other Energy Efficiency Levels

Table IV.4 through Table IV.7 shows the efficiency levels DOE selected for the NOPR analysis of amended AFUE standards, along with a description of the typical technological change at each level. DOE seeks comment from interested parties regarding the typical technological change associated with each efficiency level.

HTP commented that it does not support an incremental increase in AFUE for gas hot water boilers. The commenter stated that appliances utilizing combustion technology that operates at efficiencies above 82 percent and below 90 percent AFUE will likely experience cyclic condensation within their venting and periods of high vent temperatures. HTP added that the safety and installation cost implications of operating within this range should be seriously considered. (HTP, No. 31 atp. 1)

The Department recognizes that efficiency levels within the non-condensing to condensing range could pose health or safety concerns under certain conditions, but the concerns can be resolved with proper product installations and venting system design. This is evidenced by the high number of models of products that are currently commercially available at these efficiency levels, as well as the lack of restrictions on the installation of these units (in terms of location) in installation manuals. Therefore, due to the significant product availability, DOE considered efficiency levels above 82 percent and below 90 percent in its analysis. However, DOE requests further comment from interested parties on non-condensing levels above 82 percent, as well as the appropriateness of considering such levels for amended energy conservation standards.

Table IV.4—AFUE Efficiency Levels for Gas-Fired Hot Water Boilers

Efficiency level

AFUE

(%)

Technology options

0-Baseline

Baseline.

EL0 + Increased Heat Exchanger (HX) Area, Baffles.

EL1 + Increased HX Area.

EL2 + Increased HX Area.

Condensing HX.

EL4 + Improved HX.

6-Max-Tech

EL5 + Improved HX.

Table IV.5—AFUE Efficiency Levels for Gas-Fired Steam Boilers

Efficiency level

AFUE

(%)

Technology options

0-Baseline

Baseline.

EL0 + Increased HX Area.

2-Max-Tech

EL1 + Increased HX Area.

Table IV.6—AFUE Efficiency Levels for Oil-Fired Hot Water Boilers

Efficiency level

AFUE

(%)

Technology options

0-Baseline

Baseline.

EL0 + Increased HX Area.

EL1 + Increased HX Area.

3-Max-Tech

EL2 + Improved HX, baffles and Secondary Condensing HX.

Table IV.7-AFUE Efficiency Levels for Oil-Fired Steam Boilers

Efficiency level

AFUE

(%)

Technology options

0-Baseline

Baseline.

EL0 + Increased HX Area.

EL1 + Increased HX Area.

3-Max-Tech

EL2 + Improved HX.

In addition, DOE considered whether changes to the residential furnaces and boilers test procedure, as proposed by the March 2015 test procedure NOPR would necessitate changes to the AFUE levels being analyzed. The primary change proposed in the test procedure included updating the incorporation by reference to ASHRAE 103-2007. As discussed in the March 2015 test procedure NOPR, adopting ASHRAE 103-2007 would not be expected to change the AFUE rating for single-stage products and would result in a

de minimis

increase in the AFUE ratings for two-stage and modulating non-condensing products. Adopting ASHRAE 103-2007 provisions was assessed to have no statistically significant impact on the AFUE for condensing products. 80 FR 12876. DOE has found that single-stage (rather than two-stage or modulating) cast iron products make up the majority of non-condensing residential boilers and, therefore, has tentatively determined that this amendment to the test procedure would not be substantial enough to merit a revision of the proposed AFUE efficiency levels for residential boilers. Consequently, DOE used the same AFUE efficiency levels in the NOPR analysis as were used in the NODA analysis.

Table IV.8 through Table IV.13 show the efficiency levels DOE selected for the NOPR analysis of standby mode and off mode standards, along with a description of the typical technological change at each level. For the NOPR analysis, DOE has modified the baseline standby mode and off mode efficiency levels, as discussed in section IV.C.1.a. However, DOE has assumed the same impacts from the design options in the NOPR analysis, as was assumed for the NODA analysis. As a result, the change to the baseline standby mode and off mode power consumption have resulted in corresponding changes to the standby mode and off mode power consumption at each efficiency level.

“Standby mode” and “off mode” power consumption are defined in the DOE test procedure for residential furnaces and boilers. DOE defines “standby mode” as “the condition during the heating season in which the furnace or boiler is connected to the power source, and neither the burner, electric resistance elements, nor any electrical auxiliaries such as blowers or pumps, are activated.” 10 CFR part 430, subpart B, appendix N, section 2.8. “Off mode” is defined as “the condition during the non-heating season in which the furnace or boiler is connected to the power source, and neither the burner, electric resistance elements, nor any electrical auxiliaries such as the blowers or pumps, are activated.” 10 CFR part 430, subpart B, appendix N, section 2.6. A “seasonal off switch” is defined as “the switch on the furnace or boiler that, when activated, results in a measurable change in energy consumption between the standby and off modes.” 10 CFR part 430, subpart B, appendix N, section 2.7.

Through review of product literature and discussions with manufacturers, DOE has found that boilers generally do not have a seasonal off switch. Manufactures stated that if a switch is included with a product, it is primarily used as a service/repair switch, not for turning off the product during the off season. Therefore, DOE assumed that the standby mode and the off mode power consumption are equal. DOE requests comment on the efficiency levels analyzed for standby mode and off mode, and on the assumption that standby mode and off mode energy consumption (as defined by DOE) would be equal.

Table IV.8—Standby Mode and Off Mode Efficiency Levels for Gas-Fired Hot Water Boilers

Efficiency level

Standby mode and off mode

power

consumption

(W)

Technology Options

0-Baseline

11.5

Linear Power Supply.*

10.0

Linear Power Supply with Low-Loss Transformer (LLTX).

9.7

Switching Mode Power Supply.**

3-Max-Tech

9.0

Switching Mode Power Supply with LLTX.

* A linear power supply regulates voltage with a series element.

** A switching mode power supply regulates voltage with power handling electronics.

Table IV.9—Standby Mode and Off Mode Efficiency Levels for Gas-Fired Steam Boilers

Efficiency level

Standby mode

and off mode

power

consumption

(W)

Technology options

0-Baseline

10.5

Linear Power Supply.

9.0

Linear Power Supply with LLTX.

8.7

Switching Mode Power Supply.

3-Max-Tech

8.0

Switching Mode Power Supply with LLTX.

Table IV.10—Standby Mode and Off Mode Efficiency Levels for Oil-Fired Hot Water Boilers

Efficiency level

Standby mode

and off mode

power

consumption

(W)

Technology options

0-Baseline

13.5

Linear Power Supply.

12.0

Linear Power Supply with LLTX.

11.7

Switching Mode Power Supply.

3-Max-Tech

11.0

Switching Mode Power Supply with LLTX.

Table IV.11—Standby Mode and Off Mode Efficiency Levels for Oil-Fired Steam Boilers

Efficiency level

Standby mode

and off mode

power

consumption

(W)

Technology options

0-Baseline

13.5

Linear Power Supply.

12.0

Linear Power Supply with LLTX.

11.7

Switching Mode Power Supply.

3-Max-Tech

11.0

Switching Mode Power Supply with LLTX.

Table IV.12—Standby Mode and Off Mode Efficiency Levels for Electric Hot Water Boilers

Efficiency level

Standby mode

and off mode

power

consumption

(W)

Technology options

0-Baseline

10.5

Linear Power Supply

9.0

Linear Power Supply with LLTX.

8.7

Switching Mode Power Supply.

3-Max-Tech

8.0

Switching Mode Power Supply with LLTX.

Table IV.13—Standby Mode and Off Mode Efficiency Levels for Electric Steam Boilers

Efficiency level

Standby mode

and off mode

power

consumption

(W)

Technology options

0-Baseline

10.5

Linear Power Supply.

9.0

Linear Power Supply with LLTX.

8.7

Switching Mode Power Supply.

3-Max-Tech

8.0

Switching Mode Power Supply with LLTX.

2. Cost-Assessment Methodology

At the start of the engineering analysis, DOE identified the energy efficiency levels associated with residential boilers on the market using data gathered in the market assessment. DOE also identified the technologies and features that are typically incorporated into products at the baseline level and at the various energy efficiency levels analyzed above the baseline. Next, DOE selected products for the physical teardown analysis having characteristics of typical products on the market at the representative input capacity. DOE gathered information by performing a physical teardown analysis (see section IV.C.2.a) to create detailed BOMs, which 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 then used to calculate the manufacturing production cost (MPC) for products at various efficiency levels spanning the full range of efficiencies from the baseline to the maximum technology available (“max-tech”). DOE reexamined and revised its cost assessment performed for the NODA analysis based on additional teardowns and in response to comments received on the NODA analysis.

During the development of the engineering analysis for the NOPR, DOE held interviews with manufacturers to gain insight into the residential boiler industry, and to request feedback on the engineering analysis and assumptions that DOE used. DOE used the information gathered from these interviews, along with the information obtained through the teardown analysis and public comments, to refine the assumptions and data in the cost model. Next, DOE derived manufacturer markups using publicly-available residential boiler industry financial data in conjunction with manufacturers' feedback. The markups were used to convert the MPCs into MSPs. Further information on comments received and the analytical methodology is presented in the subsections below. For additional detail, see chapter 5 of the NOPR TSD.

a. Teardown Analysis

To assemble BOMs and to calculate the manufacturing costs for the different components in residential boilers, DOE disassembled multiple units into their base components and estimated the materials, processes, and labor required for the manufacture of each individual component, a process referred to as a “physical teardown.” Using the data gathered from the physical teardowns, DOE characterized each component according to its weight, dimensions, material, quantity, and the manufacturing processes used to fabricate and assemble it.

DOE also used a supplementary method, called a “virtual teardown,” which examines published manufacturer catalogs and supplementary component data to estimate the major physical differences between a product that was physically disassembled and a similar product that was not. For supplementary virtual teardowns, DOE gathered product data such as dimensions, weight, and design features from publicly-available information, such as manufacturer catalogs. The initial teardown analysis for the NODA included 6 physical and 5 virtual teardowns of residential boilers. The NOPR teardown analysis included 16 physical and 4 virtual teardowns of residential boilers. The additional teardowns performed for the NOPR analysis allowed DOE to further refine the assumptions used to develop the MPCs.

DOE selected the majority of the physical teardown units in the gas hot water product class because it has the largest number of shipments. DOE conducted physical teardowns of twelve gas hot water boilers, five of which were non-condensing cast iron boilers, two were non-condensing copper boilers, and the remaining five were condensing boilers. DOE performed an additional two virtual teardowns of gas hot water boilers.

DOE also performed physical teardowns on two gas-fired steam boilers as well as two oil-fired hot water boilers. DOE conducted one virtual teardown of an oil steam boiler as well as a virtual teardown of an oil hot water boiler.

The teardown analysis allowed DOE to identify the technologies that manufacturers typically incorporate into their products, along with the efficiency levels associated with each technology or combination of technologies. The end result of each teardown is a structured BOM, which DOE developed for each of the physical and virtual teardowns. The BOMs incorporate all materials, components, and fasteners (classified as either raw materials or purchased parts and assemblies), and characterize the materials and components by weight, manufacturing processes used, dimensions, material, and quantity. The BOMs from the teardown analysis were then used as inputs to the cost model to calculate the MPC for each product that was torn down. The MPCs resulting from the teardowns were then used to develop an industry average MPC for each product class analyzed.

In response to the teardown analysis performed for the NODA, AHRI stated that it is not appropriate to perform a virtual teardown of a baseline 82-percent AFUE gas hot water boiler based on information developed by physically tearing down an 85-percent AFUE gas hot water boiler. (AHRI, No. 22 at p. 3) AHRI explained that the designs to achieve an 85-percent AFUE model are significantly different than that to build an 82-percent AFUE model, so it is not appropriate to do a virtual teardown of a baseline 82-percent AFUE model, as this approach assumes a commonality of design between an 85-percent AFUE model and an 82-percent AFUE model that is greater than it actually is. In response, DOE agrees that it is preferable to conduct a physical teardown at the baseline level as to not overstate the similarities between the baseline and higher efficiency levels. Accordingly, DOE has supplemented the virtual teardown conducted at the 82-percent AFUE baseline level for the gas-fired hot water boiler product class during the initial analysis with two physical teardowns at the baseline level for the NOPR analysis.

AHRI also stated that conducting a single teardown for the oil-fired hot water boiler product class is inadequate for this analysis. (AHRI, No. 22 at p. 3) In response to this comment, DOE has conducted an additional physical teardown for the oil-fired hot water boiler product class.

More information regarding details on the teardown analysis can be found in chapter 5 of the NOPR TSD.

b. Cost Model

The cost model is a spreadsheet that converts the materials and components in the BOMs into dollar values based on the price of materials, average labor rates associated with manufacturing and assembling, and the cost of overhead and depreciation, as determined based on manufacturer interviews and DOE expertise. To convert the information in the BOMs to dollar values, DOE collected information on labor rates, tooling costs, raw material prices, and other factors. For purchased parts, the cost model estimates the purchase price based on volume-variable price quotations and detailed discussions with manufacturers and component suppliers. For fabricated parts, the prices of raw metal materials

(

e.g.,

tube, sheet metal) are estimated on the basis of 5-year averages (from 2009 to 2014). The cost of transforming the intermediate materials into finished parts is estimated based on current industry pricing.

American Metals Market (Available at:

http://www.amm.com

(Last accessed January, 2014).

U.S. Department of Labor, Bureau of Labor Statistics, Produce Price Indices (Available at:

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

) (Last accessed January, 2014).

Burnham subsidiaries Crown Boiler, US Boiler, and New Yorker all commented that the material price for cast iron was not shown in chapter 5 of the TSD. (Crown Boiler, No. 24 at p. 1; US Boiler, No. 25 at p. 1; New Yorker, No. 26 at p. 1) DOE acknowledges that a large portion of the manufacturer production cost can typically be attributed to raw materials and the omission of the cost used for cast iron may make it difficult to review how DOE arrived at the MSPs. The omission of this value from chapter 5 of the NODA TSD was in error, and chapter 5 of the NOPR TSD corrects this deficiency.

c. Manufacturing Production Costs

Once the cost estimates for all the components in each teardown unit were finalized, DOE totaled the cost of materials, labor, and direct overhead used to manufacture a product in order to calculate the manufacturer production cost. The total cost of the product was broken down into two main costs: (1) The full manufacturer production cost, referred to as MPC; and (2) the non-production cost, which includes selling, general, and administration (SG&A) expenses; the cost of research and development; and interest from borrowing for operations or capital expenditures. DOE estimated the MPC at each efficiency level considered for each product class, from the baseline through the max-tech. After incorporating all of the assumptions into the cost model, DOE calculated the percentages attributable to each element of total production cost (

i.e.,

materials, labor, depreciation, and overhead). These percentages are used to validate the assumptions by comparing them to manufacturers' actual financial data published in annual reports, along with feedback obtained from manufacturers during interviews. DOE uses these production cost percentages in the

manufacturer impact analysis (MIA) (see section IV.J).

In developing the MPCs for the NODA analysis, DOE considered the draft type (

i.e.,

natural draft or fan-assisted draft) and whether the model would have fan-assisted draft at a given efficiency level. Some boilers utilize natural draft, in which the natural buoyancy of the combustion gases is sufficient to vent those gases. Other boilers employ fan-assisted draft to help vent the products of combustion. As product efficiency increases, more heat is extracted from the flue gases, thereby resulting in less natural buoyancy that can be used to vent the flue gases. DOE surveyed the market to determine the percentage of models at each efficiency level that currently utilize fan-assisted draft, and DOE assumed that under an amended standard, that percentage would remain unchanged. DOE received various comments in response to the MPCs presented in its NODA analysis, as discussed below.

AHRI stated that it disagrees with the assumption that if the minimum efficiency level were to change, the percentage of models using inducer fans (

i.e.,

a fan-assisted boiler design) at each efficiency level would remain unchanged. AHRI stated that, at higher efficiency levels that are non-condensing (such as 84 percent and 85 percent for gas-fired hot water boilers), the manufacturer would consider anew the question of whether to use a fan-assisted design, if that higher level were to become the minimum standard. AHRI added that manufacturers face challenges in trying to address the wide range of venting systems that are connected to existing residential boiler installations. The commenter argued that models developed by manufacturers must be able to work safely and properly with existing venting systems that vary widely relative to an ideally-sized and configured vent system. AHRI stated that today, the models that are available at 84-percent AFUE or 85-percent AFUE are offered by the manufacturer with the knowledge that in cases where such models are not compatible with the existing vent system, lower efficiency models are available. Those lower efficiency models are more likely to be designed in a manner compatible with the existing vent system. If the minimum standard is raised to 84 percent or 85 percent, this current market equilibrium would be eliminated, and manufacturers would need to reconsider the mix of models they offer. For these reasons, AHRI recommended that DOE should increase the percentage of fan-assisted models at these levels. (AHRI No. 22 at p. 3-4)

In response to AHRI's comment, DOE notes that AHRI did not provide any information as to how the mix of products with and without inducers might change in response to amended energy conservation standards. As mentioned above, for the NODA analysis, DOE used information gathered from a survey of models currently on the market to determine the percentages of units with and without inducer fans. DOE was unable to identify any better source of data or methodology for estimating the percentage of products which would have inducer fans under amended standards, so DOE maintained this methodology for the NOPR. DOE requests comments regarding how the mix of products with and without inducers would change under amended energy conservation standards, and how to best estimate and account for such changes in this analysis.

Crown Boiler stated that the incremental MPCs for EL1 and EL2 for gas-fired hot water and gas-fired steam boilers are optimistic and cannot be analyzed for accuracy. In addition, Crown Boiler stated that the incremental costs for the gas-fired product classes imply that DOE is assuming simple changes to the heat pin size to increase heat exchanger area, but that in reality, this change would be more complicated. Crown Boiler added that this is contradicted by the assumption of heat exchanger cost increase in non-condensing oil-fired boilers. The commenter stated that the use of larger heat transfer pins would likely require a wider heat exchanger to avoid excessive flue gas pressure drop. In addition, atmospheric boilers would probably require a taller draft hood to overcome the increased pressure drop caused by larger heat transfer pins. Crown Boiler also stated that the cost of sheet metal is not accounted for in the analysis. (Crown Boiler, No. 24 at p. 1)

As noted previously, DOE determined the incremental MPC at various efficiency levels for each product class by conducting physical and virtual teardowns. DOE determined the incremental cost between EL1 and EL2 for gas-fired hot water boilers in the NODA analysis using virtual teardowns, which are based on physical teardowns of similar units and then supplemented with catalog data. For the NOPR, DOE acquired additional data by conducting physical teardowns, which confirmed its observations from catalog data at the NODA analysis stage. Based on the observations from physical teardowns and manufacturer product literature and parts list, DOE found that many manufactures are able to increase the efficiency of their baseline gas-fired hot water boilers through the addition of baffles and/or a modest increase in heat transfer surface. Through product literature review, DOE has found it is common for manufacturers of non-condensing oil-fired boilers to derate the burner input (thereby increasing the ratio of heat transfer area to input rating) rather than create new cast iron patterns. However, as discussed previously, derating was screened out as a design option because it reduces the heating capability of the boiler. Therefore, DOE estimated the cost of improving efficiency as an increase in heat exchanger size, using information observed to model the appropriate amount of heat exchanger increase that would be required to improve efficiency. Based upon the different observed methods for improving efficiency, DOE's NODA and NOPR analyses reflect the different designs and different costs of achieving incremental AFUE increases in gas-fired and oil-fired boilers. The differential cost in efficiency improvement between gas-fired and oil-fired non-condensing boilers is also due in part to the larger representative input capacity of oil-fired boilers, as well as the larger heat exchanger design for oil-fired boilers (

i.e.,

wet-based rather than dry-based). DOE has also accounted for the additional sheet metal cost of increasing the cabinet to accommodate an increase in heat exchanger size. Because DOE's analysis is based upon observations from teardowns of actual products available on the market, DOE did not change its assumptions for how EL1 and EL2 are achieved in gas-fired or oil-fired boilers, as suggested by Crown Boiler.

In the NOPR analysis, DOE revised the cost model assumptions it used for the NODA analysis based on additional teardown analysis, updated pricing information (for raw materials and purchased parts), and additional manufacturer feedback. These changes resulted in refined MPCs and production cost percentages. Table IV.14 through Table IV.17 present DOE's estimates of the MPCs by AFUE efficiency level for this rulemaking.

Table IV.14—Manufacturing Cost for Gas-Fired Hot Water Boilers

Efficiency level

(AFUE)

(%)

MPC *

($)

Incremental cost

($)

Baseline

624

EL1

631

EL2

637

EL3

675

EL4

1,023

399

EL5

1,158

534

EL6

1,522

898

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an inducer.

Table IV.15—Manufacturing Cost for Gas-Fired Steam Boilers

Efficiency level

(AFUE)

(%)

MPC *

($)

Incremental cost

($)

Baseline

798

EL1

812

EL2

952

154

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an inducer.

Table IV.16—Manufacturing Cost for Oil-Fired Hot Water Boilers

Efficiency level

(AFUE)

(%)

MPC *

($)

Incremental cost

($)

Baseline

1,247

EL1

1,319

EL2

1,392

146

EL3

2,204

957

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an inducer.

Table IV.17—Manufacturing Cost for Oil-Fired Steam Boilers

Efficiency level

(AFUE)

(%)

MPC *

($)

Incremental cost

($)

Baseline

1,270

EL1

1,416

146

EL2

1,489

218

EL3

1,634

364

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an inducer.

Table IV.18 through Table IV.23 present's DOE's estimate estimates of the MPCs at each standby mode and off mode efficiency level for this rulemaking.

Table IV.18—Manufacturing Cost for Gas-Fired Hot Water Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

11.5

9.56

EL1

10.0

10.56

1.00

EL2

9.7

20.03

10.47

EL3

9.0

20.68

11.12

Table IV.19—Manufacturing Cost for Gas-Fired Steam Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

10.5

9.56

EL1

9.0

10.56

1.00

EL2

8.7

20.03

10.47

EL3

8.0

20.68

11.12

Table IV.20—Manufacturing Cost for Oil-Fired Hot Water Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

13.5

9.56

EL1

12.0

10.56

1.00

EL2

11.7

20.03

10.47

EL3

11.0

20.68

11.12

Table IV.21—Manufacturing Cost for Oil-Fired Steam Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

13.5

9.56

EL1

12.0

10.56

1.00

EL2

11.7

20.03

10.47

EL3

11.0

20.68

11.12

Table IV.22—Manufacturing Cost for Electric Hot Water Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

10.5

9.56

EL1

9.0

10.56

1.00

EL2

8.7

20.03

10.47

EL3

8.0

20.68

11.12

Table IV.23—Manufacturing Cost for Electric Steam Boilers Standby Mode and Off Mode

Efficiency level

Standby mode and

off mode power

consumption

(W)

MPC

($)

Incremental cost

($)

Baseline

10.5

9.56

EL1

9.0

10.56

1.00

EL2

8.7

20.03

10.47

EL3

8.0

20.68

11.12

Chapter 5 of the NOPR TSD presents more information regarding the development of DOE's estimates of the MPCs for this rulemaking.

d. Cost-Efficiency Relationship

The result of the engineering analysis is a cost-efficiency relationship. DOE created cost-efficiency curves representing the cost-efficiency relationship for each product class that it examined. To develop the cost-efficiency relationships for residential boilers, DOE examined the cost differential to move from one efficiency level to the next for each manufacturer. DOE used the results of teardowns on a market-share-weighted average basis to determine the industry average cost increase to move from one efficiency level to the next. Additional details on how DOE developed the cost-efficiency relationships and related results are available in chapter 5 of the NOPR TSD, which also presents these cost-efficiency curves in the form of energy efficiency versus MPC.

The results indicate that cost-efficiency relationships are nonlinear. In other words, as efficiency increases, manufacturing becomes more difficult

and more costly. A large cost increase is evident between non-condensing and condensing efficiency levels due to the requirement for a heat exchanger that can withstand corrosive condensate.

e. Manufacturer Markup

To account for manufacturers' non-production costs and profit margin, DOE applies a non-production cost multiplier (the manufacture

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