Energy Conservation Program: Energy Conservation Standards for Commercial Prerinse Spray Valves
Federal RegisterJul 9, 2015
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DEPARTMENT OF ENERGY
10 CFR Parts 429 and 431
[Docket Number EERE-2014-BT-STD-0027]
RIN 1904-AD31
Energy Conservation Program: Energy Conservation Standards for Commercial Prerinse Spray Valves
AGENCY:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
ACTION:
Notice of proposed rulemaking (NOPR) 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 commercial prerinse spray valves (CPSVs). EPCA also requires the U.S. Department of Energy (DOE) to 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 commercial prerinse spray valves. 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 Tuesday, July 28, 2015. The standards meeting will start immediately following the test procedure meeting. 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 NOPR before and after the public meeting, but no later than September 8, 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.
Instructions:
Any comments submitted must identify the NOPR for Energy Conservation Standards for commercial prerinse spray valves, and provide docket number EERE-2014-BT-STD-0027 and/or regulatory information number (RIN) number 1904-AD31. Comments may be submitted using any of the following methods:
1.
Federal eRulemaking Portal:
www.regulations.gov
. Follow the instructions for submitting comments.
2.
Email:
SprayValves2014STD0027@ee.doe.gov
. Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.
3.
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 CD, in which case it is not necessary to include printed copies.
4.
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 previously and by email to
Chad_S_Whiteman@omb.eop.gov
.
No 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, such as those containing information that is exempt from public disclosure, may not be publicly available.
A link to the docket Web page can be found at:
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100
. This Web page will contain a link to the docket for this notice on the
www.regulations.gov
site. The
www.regulations.gov
Web page will contain 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 CONTACT:
Mr. James Raba, 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) 586-8654. Email:
jim.raba@ee.doe.gov.
Mr. Peter Cochran, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7935. Email:
Peter.Cochran@hq.doe.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
.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
II. Introduction
A. Authority
B. Background
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Savings in Operating Costs Compared to Increase in Price
3. Energy Savings
4. Lessening of Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need for National Energy Conservation
7. Other Factors
F. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Market Assessment
2. Efficiency Metrics
3. Product Classes
4. Technology Assessment
1. Backflow Preventers
2. Specially Designed Spray Patterns
B. Screening Analysis
1. Addition of Flow Control Insert
2. Smaller Spray Hole Area
3. Aerators
4. Additional Valves
5. Changing Spray Hole Shape
6. Venturi Meter to Orifice Plate Nozzle Geometries
C. Engineering Analysis
1. Engineering Approach
2. Product Classes
3. Baseline and Max-Tech Models
4. Manufacturing Cost Analysis
D. Markups Analysis
E. Energy and Water Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy and Water Consumption
4. Energy Prices
5. Water and Wastewater Prices
6. Maintenance and Repair Costs
7. Product Lifetime
8. Discount Rates
9. No-New-Standards Case Efficiency Distribution
10. Payback Period Analysis
11. Rebuttable-Presumption Payback Period
G. Shipments
H. National Impact Analysis
1. National Energy and Water Savings
2. Forecasted Efficiency in the No-Standards Case and Standards Cases
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
3. Discussion of Comments
4. 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
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
2. Economic Impacts on Manufacturers
3. National Impact Analysis
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Summary of National Economic Impacts
8. Other Factors
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Commercial Prerinse Spray Valves
2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description and Estimated Number of Small Entities Regulated
2. Description and Estimate of Compliance Requirements
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared General Statements For Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Rule
Title III, Part B
1
of the Energy Policy and Conservation Act of 1975 (EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.
2
These products include commercial prerinse spray valves (CPSV), the subject of this document.
3
1
For editorial reasons, upon codification in the U.S. Code, part B was redesignated part A.
2
All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (Apr. 30, 2015).
3
Because Congress included commercial prerinse spray valves in part A of Title III of EPCA, the consumer product provisions of part A (not the industrial equipment provisions of part A-1) apply to commercial prerinse spray valves. However, because commercial prerinse spray valves are commonly considered to be commercial equipment, as a matter of administrative convenience and to minimize confusion among interested parties, DOE placed the requirements for commercial prerinse spray valves into subpart O of 10 CFR part 431. Part 431 contains DOE regulations for commercial and industrial equipment.
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 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 (NOPR) including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1))
In accordance with these and other statutory provisions discussed in this notice, DOE proposes amended energy conservation standards for commercial prerinse spray valves. The proposed standards, which are described in terms of the maximum water flow rate (in gallons per minute, gpm) for each product class (defined by spray force in ounce-force, ozf), are shown in Table I.1. The proposed standards, if adopted, would apply to all products listed in Table I.1 and manufactured in, or imported into, the United States on or after the date 3 years after the publication of the final rule for this rulemaking. For purposes of the analyses conducted in support of this NOPR, DOE used 2015 as the expected year of publication of any final standards and 2018 as the expected compliance year.
4
4
Because the anticipated compliance date is late in the year 2018, for analytical purposes, DOE conducted its analyses utilizing shipments associated with the 2019-2048 period. The analytical effect is equivalent to the use of a 2019 compliance year. In the MIA, 2019 is referred to as the “analysis compliance year.”
Table I.1—Proposed Energy Conservation Standards for Commercial Prerinse Spray Valves (Compliance Starting 2018)
Product class
Maximum water flow rate
(gpm)
1. Light duty (≤5 ozf)
0.65
2. Standard duty (>5 ozf and ≤8 ozf)
0.97
3. Heavy duty (>8 ozf)
1.24
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the proposed amended standards on consumers of commercial prerinse spray valves, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
5
The average LCC savings are positive for all product classes. The PBP for all product classes is also less than the projected average CPSV lifetime of approximately 5 years.
5
The average LCC savings are measured relative to the no-new-standards case efficiency distribution, which depicts the CPSV market in the compliance year (see section IV.F.9). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline CPSV model (see section IV.C.1).
Table I.2—Impacts of Proposed Energy Conservation Standards on Consumers of Commercial Prerinse Spray Valves
Product class
Average LCC savings
(2014$)
Simple payback period
(years)
1. Light duty (≤5 ozf)
211
0.0
2. Standard duty (>5 ozf and ≤8 ozf)
472
0.0
3. Heavy duty (>8 ozf)
667
0.0
DOE's analysis of the impacts of the proposed standards on consumers is described in section IV.F of this notice.
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 (2015 to 2048). Using a real discount rate of 6.9 percent,
6
DOE estimates that the INPV for manufacturers of commercial prerinse spray valves is $9.1 million in 2014$. Under the proposed standards, DOE expects that manufacturers may lose up to 21.6 percent of their INPV, which is approximately $2.0 million. Additionally, based on its analysis of available information, DOE does not expect any plant closings or significant loss of employment.
6
The discount rate is an industry average discount rate, which was estimated using publically available industry financial data for companies that sell CPSVs in the U.S. Data sources are listed in section IV.J.1.
C. National Benefits and Costs
7
7
All monetary values in this section are expressed in 2014 dollars and are discounted to 2015, unless otherwise noted.
DOE's analyses indicate that the proposed standards would save a significant amount of energy and water. The lifetime savings for commercial prerinse spray valves purchased in the 30-year period (2019 to 2048) amount to 0.10 quadrillion Btu (quads)
8
and 120.18 billion gallons of water. This represents a savings of 9 percent relative to the energy use of this product in the no-new-standards case.
9
This also represents a savings of 9 percent relative to the water use of this product in the no-new-standards case.
8
A quad is equal to 10
15
British thermal units (Btu).
9
The no-new-standards case assumptions are described in section IV.F.9. The no-new-standards case represents a projection of energy consumption in the absence of amended mandatory efficiency standards, and it considers market forces and policies that may affect future demand for more efficient products.
The cumulative net present value (NPV) of total consumer costs and savings of the proposed standards for commercial prerinse spray valves ranges from $0.71 billion (at a 7-percent discount rate) to $1.46 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for commercial prerinse spray valves purchased in 2019-2048.
In addition, the proposed standards would have significant environmental benefits.
10
The described energy savings would result in cumulative emission reductions (over the same period as for energy savings) of 5.76 million metric tons (Mt)
11
of carbon dioxide (CO
2
), 46.94 thousand tons of methane (CH
4
), 2.43 thousand tons of sulfur dioxide (SO
2
), 13.22 thousand tons of nitrogen oxides (NO
X
), 0.04 thousand tons of nitrous oxide (N
2
O), and 0.01 tons of mercury (Hg).
12
The cumulative reduction in CO
2
emissions through 2030 amounts to 1.83 Mt, which is equivalent to the emissions resulting from the annual electricity use of about 251,719 homes.
10
The emission reductions calculated here result from the energy savings only. The emission reductions from water savings are not calculated as part of this analysis.
11
A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO
2
are presented in short tons.
12
DOE calculated emissions reductions relative to the
Annual Energy Outlook 2014
(
AEO2014
) reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2013.
The value of the CO
2
reduction is calculated using a range of values per metric ton of CO
2
(otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process.
13
The derivation of the SCC values is discussed in section IV.L of this notice. Using discount rates appropriate for each set of SCC values, DOE estimates the present monetary value of the CO
2
emissions reduction is between $0.04 billion and $0.61 billion. DOE also estimates the present monetary value of the NO
X
emissions reduction is between $1.80 and $18.48 million at a 7-percent discount rate and between $3.52 and $36.15 million at a 3-percent discount rate.
14
13
Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,
Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised November 2013) (Available at:
http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf
).
14
DOE is currently investigating valuation of avoided Hg and SO
2
emissions.
Table I.3 summarizes the national economic costs and benefits expected to result from the proposed standards for commercial prerinse spray valves.
Table I.3—Summary of National Economic Benefits and Costs of Proposed Energy Conservation Standards for Commercial Prerinse Spray Valves *
Category
Present value
(million 2014$)
Discount rate
(%)
Benefits
Operating Cost Savings
708
7
1,459
3
CO
2
Reduction Monetized Value ($12.2/metric ton case) * *
44
5
CO
2
Reduction Monetized Value ($41.1/metric ton case) * *
196
3
CO
2
Reduction Monetized Value ($63.3/metric ton case) * *
309
2.5
CO
2
Reduction Monetized Value ($121/metric ton case) * *
606
3
NO
X
Reduction Monetized Value (at $2,723/ton)
10
7
20
3
Total Benefits †
914
7
1,675
3
Costs
Manufacturer Conversion Costs
‡
2 to 3
N/A
Total Net Benefits
Including Emissions Reduction Monetized Value †
914
7
1,675
3
* This table presents the costs and benefits associated with commercial prerinse spray valves shipped in 2019−2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019−2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the proposed standard, some of which may be incurred in preparation for the rule.
* * The CO
2
values represent global monetized values of the SCC, in 2014$ per metric ton, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3 percent discount rate.
† Total benefits for both the 3 percent and 7 percent cases are derived using the series corresponding to average SCC with 3 percent discount rate. Manufacturer Conversion Costs are not included in the Total Net Benefits calculations.
‡ The lower value of the range represents costs associated with the Sourced Components conversion cost scenario. The upper value represents costs associated with the Fabricated Components conversion cost scenario. Manufacturer conversion cost estimates are based on the engineering analysis and product teardowns conducted in 2014, and, therefore, have not been discounted. In the GRIM, these values are spread over the 3-year conversion period leading up to the compliance year.
The benefits and costs of these proposed standards, for commercial prerinse spray valves sold in 2019-2048, can also be expressed in terms of annualized values. The annualized monetary values are the sum of: (1) The annualized national economic value of the benefits from consumer operation of products that meet the proposed standards (consisting primarily of operating cost savings from using less energy and water, minus increases in product purchase and installation costs, which is another way of representing consumer NPV); and (2) the annualized monetary value of the benefits of emission reductions, including CO
2
emission reductions.
15
15
To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, the year used for discounting the NPV of total customer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (
e.g.,
2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO
2
reductions, for which DOE used case-specific discount rates, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the first year of the analysis period, which yields the same present value.
Although combining the values of operating savings and CO
2
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
2
reductions is based on a global value. Second, the assessments of operating cost savings and CO
2
savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of commercial prerinse spray valves shipped in 2019-2048. Because CO
2
emissions have a very long residence time in the atmosphere,
16
the SCC values in future years reflect future CO
2
-emissions impacts that continue beyond 2100.
16
The atmospheric lifetime of CO
2
is estimated of the order of 30-95 years. Jacobson, MZ, “Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' ”
J. Geophys. Res.
110. pp. D14105 (2005).
Estimates of annualized benefits and costs of the proposed standards are shown in Table I.4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO
2
reduction (for which DOE used a 3-percent discount rate, along with the average SCC series that has a value of $41.1 per metric ton in 2015), there are no increased product costs associated with the standards proposed in this rule, while the benefits are $69.90 million per year in reduced product operating costs, $10.94 million per year in CO
2
reductions, and $1.00 million per year in reduced NO
X
emissions. In this case, the net benefit amounts to $81.85 million per year. Using a 3-percent discount rate for all benefits and costs as well as the average SCC series that has a value of $41.1 per metric ton in 2015, there are no increased product costs associated with the standards proposed in this rule, while the benefits are $81.32 million per year in reduced operating costs, $10.94 million in CO
2
reductions, and $1.11 million in reduced NO
X
emissions. In this case, the net benefit amounts to $93.37 million per year.
Table I.4—Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Prerinse Spray Valves
Discount rate
(%)
Million 2014$/year
Primary
estimate *
Low net
benefits
estimate *
High net
benefits
estimate *
Benefits
Consumer Operating Cost Savings
7
69.90
65.90
72.70
3
81.32
75.92
85.10
CO
2
Reduction at $12.0/t * *
5
3.33
3.33
3.33
CO
2
Reduction at $40.5/t * *
3
10.94
10.94
10.94
CO
2
Reduction at $62.4/t * *
2.5
15.91
15.91
15.91
CO
2
Reduction at $119/t * *
3
33.81
33.81
33.81
NO
X
Reduction at $2,723/ton
7
1.00
1.00
1.00
3
1.11
1.11
1.11
Total†
7 plus CO
2
range
74 to 105
70 to 101
77 to 108
7
81.85
77.84
84.64
3 plus CO
2
range
86 to 116
80 to 111
90 to 120
3
93.37
87.96
97.15
Costs
Manufacturer Conversion Costs †
7
0.16 to 0.24
0.16 to 0.24
0.16 to 0.24
3
0.10 to 0.15
0.10 to 0.15
0.10 to 0.15
Total Net Benefits
Total ‡
7 plus CO
2
range
74 to 105
70 to 101
77 to 108
7
81.85
77.84
84.64
3 plus CO
2
range
86 to 116
80 to 111
90 to 120
3
93.37
87.96
97.15
* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the proposed standard, some of which may be incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the
AEO2014
reference case, low estimate, and high estimate, respectively.
* * The CO
2
values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3 percent discount rate.
† The lower value of the range represents costs associated with the Sourced Components conversion cost scenario. The upper value represents costs for the Fabricated Components scenario.
‡ Total benefits for both the 3 percent and 7 percent cases are derived using the series corresponding to the average SCC with 3 percent discount rate. In the rows labeled “7% plus CO
2
range” and “3% plus CO
2
range,” the operating cost and NO
X
benefits are calculated using the labeled discount rate, and those values are added to the full range of CO
2
values. Manufacturer Conversion Costs are not included in the Net Benefits calculations.
DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for the product classes covered by this proposal. See chapter 8 of the NOPR technical support document (TSD) for more discussion of the no-new-standards case efficiency distribution. Based on DOE's analyses, DOE has tentatively concluded that the benefits of the proposed standards to the nation (energy savings, water savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers).
DOE also considered both more and less stringent energy efficiency levels (EL) as trial standard levels (TSL), and will continue to consider 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 levels that incorporate the proposed standards in part.
II. Introduction
The following section discusses the statutory authority underlying this proposal, as well as some of the relevant historical background related to the establishment of standards for commercial prerinse spray valves.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles. As part of this program, EPCA prescribed energy conservation standards for commercial prerinse spray valves. (42 U.S.C. 6295(dd)) Under 42 U.S.C. 6295(m), DOE must periodically review its already established energy conservation standards for a covered
product. DOE is undertaking this rulemaking to meet this EPCA requirement.
Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Secretary or the Federal Trade Commission, as appropriate, may prescribe labeling requirements for commercial prerinse spray valves. (42 U.S.C. 6294(a)(5)(A)) Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293(b)(3)) 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 procedure for commercial prerinse spray valves currently appears at title 10 of the Code of Federal Regulations (CFR) part 431, subpart O. DOE recently proposed updates to its CPSV test procedure in a proposed rule issued for prepublication on June 05, 2015 (80 FR 35874).
DOE must follow specific statutory criteria for prescribing amended standards for covered products. As indicated previously, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) Moreover, DOE may not prescribe a standard for certain products, including commercial prerinse spray valves, if no test procedure has been established for the product. (42 U.S.C. 6295(o)(3)(A))
In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven factors:
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard;
(3) The total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;
(4) Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I) through (VII))
EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (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 and water savings the consumer will receive during the first year that the standard applies, 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 a standard for a type or class of covered products that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that products within such group: (1) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (2) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6294(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE shall 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) though (c)) California, however, has a statutory exemption to preemption for commercial prerinse spray valve standards adopted by the California Energy Commission before January 1, 2005. (42 U.S.C. 6297(c)(7)) As a result, while federal commercial prerinse spray valve standards, including any amended standards that may result from this rulemaking, apply in California, California's commercial prerinse spray valve standards also apply as they are exempt from preemption. DOE may also grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under EPCA. (42 U.S.C. 6297(d))
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 the standard, or, if that is not feasible, adopt a
separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A) and (B)) DOE's current test procedures and standards for commercial prerinse spray valves do not address standby mode and off mode energy use, which are not applicable for this product. Similarly, in this rulemaking, DOE only addresses active mode energy consumption because commercial prerinse spray valves only consume energy and water in active mode.
B. Background
In a final rule published on October 18, 2005 (“2005 CPSV final rule”), DOE codified the current energy conservation standards for commercial prerinse spray valves that were prescribed by the Energy Policy Act of 2005, Public Law 109-58 (August 8, 2005). 70 FR 60407, 60410. The 2005 CPSV final rule established that all commercial prerinse spray valves manufactured on or after January 1, 2006, must have a flow rate of not more than 1.6 gpm.
DOE is conducting the current energy conservation standards rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 years of issuing any final rule establishing or amending a standard, DOE shall publish either a notice of determination that amended standards are not needed or a NOPR proposing amended standards.
DOE initiated the current rulemaking on September 11, 2014, by issuing an analytical Framework document, “Rulemaking Framework for Commercial Prerinse Spray Valves” (“2014 Framework document”), which described the procedural and analytical approaches DOE anticipated using to evaluate energy conservation standards for commercial prerinse spray valves. 79 FR 54213. DOE also announced a public meeting to discuss the proposed analytical framework for the rulemaking and invited written comments from the public. 79 FR 54213. The 2014 Framework document is available at:
www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0027-0001
.
The 2014 Framework document explained the issues, analyses, and process that DOE anticipated using to develop energy conservation standards for commercial prerinse spray valves. DOE held a public meeting on September 30, 2014, to solicit comments from interested parties regarding DOE's analytical approach. Comments received in response to DOE's proposed analytical approach have helped DOE identify and resolve issues relevant to energy conservation standards for commercial prerinse spray valves, and have informed the analyses presented in this notice. DOE discusses and responds to the comments received in response to the 2014 Framework document in section IV.
III. General Discussion
A. Product Classes and Scope of Coverage
EPCA defines the term “commercial prerinse spray valve” as a “handheld device designed and marketed for use with commercial dishwashing and ware washing equipment that sprays water on dishes, flatware, and other food service items for the purpose of removing food residue before cleaning the items.” (42 U.S.C. 6291(33)(A) In the 2015 CPSV test procedure NOPR, DOE is proposing to modify the CPSV definition to redefine the scope of coverage, as authorized under 42 U.S.C. 6291(33)(B). For specific details on the proposed modifications to the CPSV definition, including how to submit comments see the test procedure NOPR (80 FR 35874).
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 considers such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) Different energy conservation standards may apply to different product classes.
Currently, all covered commercial prerinse spray valves are included in a single product class that is subject to a 1.6-gpm standard for maximum flow rate. 10 CFR 431.266. In the 2014 Framework document, DOE considered whether to retain a single product class for all commercial prerinse spray valves, or to establish separate product classes based on the statutory criteria in 42 U.S.C. 6295(q) and comments from interested parties. See sections IV.A.2 and IV.C.2 for more discussion on the product classes addressed in this NOPR.
B. Test Procedure
EPCA established the current maximum flow rate for commercial prerinse spray valves and prescribed an industry test procedure, American Society for Testing and Materials (ASTM) Standard F2324-03, to measure the flow rate. (42 U.S.C. 6295(dd), 42 U.S.C. 6293(b)(14)) In a final rule published December 8, 2006, DOE incorporated by reference ASTM Standard F2324-03 under 10 CFR 431.263, and prescribed it as the uniform test method to measure the flow rate of commercial prerinse spray valves under 10 CFR 431.264. 71 FR 71340, 71374. In a final rule published October 23, 2013, DOE incorporated by reference ASTM Standard F2324-03 (2009) for testing commercial prerinse spray valves, which updated the 2003 version. 78 FR 62970, 62980.
In 2013, ASTM amended Standard F2324-03 (2009) to replace the cleanability test with a spray force test, based on research conducted by the U.S. Environmental Protection Agency's (EPA) WaterSense® program.
17
17
EPA WaterSense program,
WaterSense Specification for Commercial Prerinse Spray Valves Supporting Statement,
Version 1.0 (Sept. 19, 2013) (Available at:
http://www.epa.gov/watersense/partners/prsv_final.html
).
In the 2015 CPSV test procedure NOPR, DOE proposed to incorporate by reference the amended ASTM Standard F2324-13. Additionally, DOE proposed requiring spray force to be measured based on the procedure in ASTM Standard F2324-13. For commercial prerinse spray valves with multiple spray patterns, DOE proposed that both flow rate and spray force be measured for each possible spray pattern.
C. Technological Feasibility
In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and working prototype designs that could improve the efficiency of the products 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 options 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) through (iv). Section IV.B of this notice discusses the results of the screening analysis for commercial prerinse spray valves, particularly the
technology options DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR Technical Support Document (TSD).
When DOE proposes to adopt an amended standard for a type or class of covered products, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such products. (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 commercial prerinse spray valves, 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 are described in chapter 5 of the NOPR TSD.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the commercial prerinse spray valves purchased in the 30-year period that begins in the expected year of compliance with any amended standards (2019-2048). The savings are measured over the entire lifetime of commercial prerinse spray valves 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 no-new-standards case. The no-new-standards case represents a projection of energy consumption in the absence of amended mandatory efficiency standards, and it considers market forces and policies that may affect future demand for more efficient products.
DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from amended standards. The NIA spreadsheet model (described in section IV.H of this notice) calculates energy savings in site energy, which is the energy consumed by a product at the location where it is used. For electricity, DOE calculates national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. To calculate primary energy savings, DOE derived annual conversion factors from the model used to prepare the Energy Information Administration's (EIA)
Annual Energy Outlook 2014
(
AEO2014
).
18
18
U.S. Department of Energy—Energy Information Administration,
Annual Energy Outlook 2014 with Projections to 2040 (Available at: www.eia.gov/forecasts/aeo/)
.
For electricity and natural gas and oil, DOE also calculates full-fuel-cycle (FFC) energy savings. As discussed in DOE's statement of policy and notice of policy amendment, 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. 76 FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012). For FFC energy savings, DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products. For more information, see section IV.H.1 of this notice.
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 EPCA, the U.S. Court of Appeals for DC Circuit, in
Natural Resources Defense Council
v.
Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for the proposed standards (presented in section V.B.3.a of this notice) are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.
E. Economic Justification
EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
1. 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) 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.
2. Savings in Operating Costs Compared to Increase in Price
EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product compared to any increases in the price of the covered products that are likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including water, energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC and PBP analysis requires a variety of inputs, such as product prices, product water and energy consumption, water and sewer prices, 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
product in the first year of compliance with amended standards.
19
19
Because the anticipated compliance date is late in the expected compliance year, 2018, for analytical purposes, DOE assumes that customers will purchase the CPSV equipment that meets the potential amended standards in 2019. In other words, the first year of the analysis period is 2019.
The LCC savings for the considered efficiency levels are calculated relative to a no-new-standards 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 a LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this notice.
3. Energy Savings
EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H.1, DOE uses spreadsheet models to project national energy savings.
4. Lessening of Utility or Performance of Products
In determining whether a proposed standard is economically justified, DOE evaluates any lessening of 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.
5. 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)) 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 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 publish and respond to the Attorney General's determination in the final rule.
6. Need for National Energy Conservation
DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the proposed standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity may also 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 and use. DOE conducts an emissions analysis to estimate how standards may affect these emissions and reports the emissions impacts from each TSL it considered in section V.B.6. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs in section IV.L.
7. 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 that interested parties submit any relevant information regarding economic justification that does not fit into the other categories described in the previous sections, DOE could consider such information under “other factors.”
F. 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 PBP for consumers. These analyses include, but are not limited to, the 3-year PBP contemplated under the rebuttable-presumption test. The rebuttable presumption payback calculation is discussed in section IV.F.11 of this proposed rule.
IV. Methodology and Discussion of Related Comments
DOE used several spreadsheet tools to estimate the impact of the proposed standards. One of these spreadsheet tools calculates LCCs and PBPs of potential amended energy conservation standards. Another provides shipments forecasts and then calculates impacts of potential standards on national energy savings and net present value. The Department also assessed manufacturer impacts, largely through the use of the Government Regulatory Impact Model (GRIM) spreadsheet tool. The spreadsheets are available online at:
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100
.
Additionally, DOE estimated the impacts of amended standards for commercial prerinse spray valves on utilities and the environment. DOE used a version of EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses.
20
The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare its
Annual Energy Outlook,
a widely known baseline energy forecast for the United States. The version of NEMS used for appliance standards analysis, which makes minor modifications to the
AEO
version, is called NEMS-BT.
21
NEMS-BT accounts for the interactions among the various energy supply and demand sectors and the economy as a whole.
20
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
).
21
EIA approves the use of the name “NEMS” to describe only an
AEO
version of the model without any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from
AEO
assumptions, the name “NEMS-BT” refers to the model as used here. (BT stands for DOE's Building Technologies Office.)
A. Market and Technology Assessment
DOE develops information in the market and technology assessment that provides an overall picture of the market for the product concerned, including the purpose of the product, the industry structure, manufacturers, market characteristics, and technologies used in the product. 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 commercial prerinse spray valves
rulemaking include: (1) Market assessment, (2) efficiency metrics, (3) product classes, and (4) technology assessment. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the NOPR TSD for further discussion of the market and technology assessment.
1. Market Assessment
As part of the market assessment, DOE examined manufacturers, trade associations, and the quantities and types of products sold and offered for sale. DOE reviewed relevant literature to develop an understanding of the CPSV industry in the United States, including market research data, government databases, retail listings, and industry publications (
e.g.,
manufacturer catalogs). Using this information, DOE assessed the overall state of the industry, CPSV manufacturing and market shares, shipments, general technical information on commercial prerinse spray valves, and industry trends.
In the Framework document, DOE sought comments regarding the market for commercial prerinse spray valves, and in particular on product features, market shares, and trends. Additionally, DOE also sought comments on which organizations had a vested interest in commercial prerinse spray valves. DOE recognized Plumbing Manufacturers International (PMI) and North American Association of Food Equipment Manufacturers (NAFEM) in the Framework document as organizations that have an interest in commercial prerinse spray valves. In addition to these trade organizations, T&S Brass suggested including the National Restaurant Association (NRA) as an organization that has an interest in commercial prerinse spray valves. (T&S Brass, Public Meeting Transcript, No. 6 at p. 30)
22
Additionally, the International Association of Plumbing and Mechanical Officials (IAMPO) commented that it tests and certifies commercial prerinse spray valves to make sure they meet mandated levels. Hence, IAMPO is also a body that has an interest in commercial prerinse spray valves. (IAPMO, Public Meeting Transcript, No. 6 at p. 30) Alliance for Water Efficiency (AWE) recommended that DOE consider service companies, such as Ecolab, as a subtype in its list of retailers. It stated that such companies provide on-demand, on-site maintenance and other services to food service operators, and have the most influence over the selection of commercial prerinse spray valves at the restaurant site. (AWE, No. 8 at p. 2) DOE acknowledges and appreciates the information provided by these interested parties.
22
A notation in this form provides a reference for information that is in the docket of DOE's rulemaking to amend energy conservation standards for commercial prerinse spray valves. (Docket No. EERE-2014-BT-STD-0027, which is maintained at
www.regulations.gov
) This particular notation refers to a comment: (1) submitted by T&S Brass; (2) appearing in the Public Meeting Transcript, which is document number 6 of the docket; and (3) appearing on page 30 of that document.
Commenting on the commercial prerinse spray valve industry in general, T&S Brass stated that a small number of manufacturers control the majority of the market because commercial prerinse spray valves are a niche product. Two or three manufacturers have the majority of the market share. Most of the manufacturers in the industry are family-owned businesses. (T&S, Public Meeting Transcript, No. 6 at p. 58)
DOE also held phone conversations with representatives from the EPA WaterSense® program regarding the market assessment.
23
The representatives commented that the industry comprises a small number of CPSV manufacturers, most of which are private companies which do not readily provide market information.
23
Information on the WaterSense program for commercial prerinse spray valves is available at
www.epa.gov/WaterSense/products/prsv.html
.
DOE researched government databases for CPSV product listings, including DOE's Compliance Certification Management System (CCMS), the California Energy Commission (CEC) Appliance Database, and the WaterSense database. Based on this research, DOE concluded that the CPSV market includes 54 basic models from 13 different brands and 11 manufacturers. Chapter 3 provides more details on the CPSV market.
2. Efficiency Metrics
Currently, all covered commercial prerinse spray valves are included in a single product class that is subject to a 1.6 gpm standard for maximum flow rate. 10 CFR 431.266. As part of the 2014 Framework document, DOE considered adopting an alternative metric to replace the existing flow rate (gpm) metric. DOE examined alternative metrics that could achieve energy and water savings while also preserving product functionality. In the 2014 Framework document, DOE presented two alternate metrics. One alternative metric under consideration was a performance metric that takes into account both flow rate and spray force (measured in gpm divided by ozf). Another metric considered was gallons per plate washed, which was calculated using the flow rate and the cleanability time, which is defined in ASTM Standard F2324-2003, as the “effectiveness of the prerinse spray valve to remove soil from the plate before it is placed in a dishwashing machine.” DOE requested comments from interested parties on these suggested alternate metrics.
A joint comment submitted by the Alliance to Save Energy, the Appliance Standards Awareness Project, and the Natural Resources Defense Council (“Advocates”) supported the consideration of a metric that incorporates both flow rate and spray force because this may allow DOE to adopt an amended standard that ensures functionality, while improving water and energy efficiency of commercial prerinse spray valves. In addition, the Advocates pointed out that a widely used industry standard, ASTM Standard F2324-13, already incorporates spray force measurement, and so a metric accounting for both flow rate and spray force would not cause additional burden to manufacturers listing products to the industry standard. (Advocates, No. 11 at p. 1) However, the Advocates also commented that product classes must be considered to distinguish between commercial prerinse spray valves and DOE could consider using spray force as one way to delineate separate product classes. (Advocates, No. 11 at p. 2)
A joint comment submitted by Pacific Gas and Electric Company (PG&E), Southern California Gas Company, San Diego Gas and Electric, and Southern California Edison (CA IOUs) urged DOE to consider a metric or a product classification structure that addresses product performance in addition to water consumption. The CA IOUs stated that if a single metric does not capture both performance and water consumption, the standard should be structured to preserve the primary function of the product while addressing water efficiency. (CA IOUs, No. 14 at p. 1)
The CA IOUs also urged DOE to consider user satisfaction when considering the metric, as some field surveys have shown that users that are dissatisfied with efficient commercial prerinse spray valves will substitute them with those that likely increase overall water consumption. Therefore, CA IOUs suggested either incorporating spray force into the metric, or alternatively, using spray force to establish product classes as a way to account for differentiating products. (CA IOUs, No. 14 at p. 1)
In terms of considering cleanability in the metric, the Advocates commented that they opposed using gallons per
plate washed as a metric because of concerns about efficacy and replicability of cleanability testing. (Advocates, No. 11 at p. 1) CA IOUs also suggested that DOE consider not using the cleanability test given the problems with repeatability and little correlation to user satisfaction. (CA IOUs, No. 14 at p. 2) Additionally, AWE commented that the cleanability test was an unreliable indicator of top-performing products and was not easily repeatable in laboratories across North America. (AWE, No. 8 at p. 1)
Although the purpose of the rulemaking is to achieve water savings, DOE recognizes that the utility of commercial prerinse spray valves must also be ensured. DOE agrees with interested parties that there are specific applications for different commercial prerinse spray valves, and to preserve utility, another measure besides flow rate must be considered in the analysis. There was a consensus among interested parties not to include cleanability in the test method metric because of the issues regarding repeatability of test results. Additionally, interested parties stated that cleanability had little correlation to performance and user satisfaction. Therefore, DOE did not use cleanability in the analysis.
However, a majority of the interested parties supported including spray force in the analysis. Whereas some stakeholders suggested incorporating spray force as part of the water consumption metric, others commented that spray force can also be used as a characteristic to distinguish product classes. Based on the comments received, DOE proposes to retain flow rate (in gpm) as the efficiency metric, and to incorporate spray force as a characteristic to distinguish product classes. Because the industry currently uses flow rate as the efficiency metric, DOE will continue using this industry-accepted metric. However, to ensure that utility of the commercial prerinse spray valves is maintained, DOE proposes to use spray force as a characteristic to establish product classes. The following section provides further discussion on incorporating spray force as a characteristic to differentiate product classes.
3. Product Classes
As stated previously, all commercial prerinse spray valves are included in a single product class. In the 2014 Framework document, DOE also considered whether to establish separate product classes based on the statutory criteria in 42 U.S.C. 6295(q), and requested comments from interested parties.
The Advocates stated that separate product classes should be established to distinguish among commercial prerinse spray valves that fit different applications. The Advocates also stated that DOE should consider establishing product classes for commercial prerinse spray valves that would distinguish between valves designed and marketed for light duty, standard duty, and heavy-duty applications. (Advocates, No. 11 at p. 2) The CA IOUs also suggested that DOE should examine what applications do not require a higher flow rate for establishing product classes. (CA IOUs, No. 14 at p. 2)
NAFEM suggested evaluating the impacts of the rule on other applications where commercial prerinse spray valves are currently used. (NAFEM, No. 9 at p. 2) Similarly, T&S Brass commented that the applications of commercial prerinse spray valves could vary from rinsing to cleaning baked-on food, and that the different applications might require different spray forces. T&S Brass stated that it offers a variety of prerinse spray valves that have different design features based on end users' applications. (T&S Brass, Public Meeting Transcript, No. 6 at p. 40) T&S Brass also commented that nozzle design and spray pattern provide specific CPSV applications and performance and that consumers choose a commercial prerinse spray valve based on application by trying various designs and determining which commercial prerinse spray valve works best for their specified application. (T&S, No. 12 at p. 4) Additionally, T&S Brass commented that CPSV efficiency depends on water pressure, water temperature, duration, flow rate, spray patterns, and other factors, and that the end-user application will dictate several of these variables. (T&S, No. 12 at p. 6)
DOE agrees with interested parties that there are different applications of commercial prerinse spray valves, such as cleaning baked-on food and light rinsing. Therefore, commercial prerinse spray valves designed for heavy duty cleaning require a higher flow rate in order to achieve satisfactory cleaning performance compared to products designed for light rinsing. Therefore, to preserve consumer utility for all CPSV applications, DOE proposes to establish separate product classes for commercial prerinse spray valves.
To determine what criteria to use to establish the product classes, DOE presented several different CPSV characteristics in the 2014 Framework document and requested input from interested parties. DOE received input on whether cleanability, flow rate, and spray force are criteria that should be used to establish product classes.
a. Cleanability
T&S Brass stated that because cleanability depends on subjective features such as spray pattern, end-user's application, and duration, this characteristic should not be used to establish product classes. (T&S Brass, No. 12 at p. 4) AWE suggested that DOE develop a more viable cleanability test method than that in ASTM F2324-2003 if cleanability is to be used as the defining characteristic. (AWE, No. 8 at p. 2) CA IOUs suggested that DOE consider not using the cleanability test given the problems with repeatability and little correlation to user satisfaction. (CA IOUs, No. 14 at p. 2) T&S Brass commented that ultra-low-flow commercial prerinse spray valves are designed for applications that allow for minimum water consumption, and that cleanability using an ultra-low-flow commercial prerinse spray valve is not applicable to every CPSV application in the foodservice environment. (T&S Brass, No. 12 at p. 4)
Based on these comments, as well as ASTM's update of the F2324 standard (ASTM Standard F2324-13), which replaces the cleanability test with a spray force test, DOE is not considering using cleanability as a characteristic to define product classes.
b. Flow Rate
T&S Brass stated that flow rate is a useful characteristic to define product classes and that spray force is a related parameter that can be altered with the nozzle design. (T&S Brass, Public Meeting Transcript, No. 6 at p. 39) T&S Brass commented that the data for flow rates for commercial prerinse spray valves are available and verifiable because they are based upon consistent test methods of a national test standard. (T&S Brass, No. 12 at p. 3) T&S Brass suggested using three product classes: (1) An ultra low-flow commercial prerinse spray valve with a maximum flow rate of 0.8 gpm; (2) a low-flow commercial prerinse spray valve with flow rates of 0.8 to 1.28 gpm; and (3) a standard commercial prerinse spray valve with flow rates of 1.28 to 1.6 gpm. (T&S Brass, No. 12 at p. 3) T&S Brass stated that the 1.6 gpm class is currently called the EPAct 2005 class. The 1.28 gpm class is based on the WaterSense voluntary standard. The 0.80 gpm class represents a 50 percent reduction of the current DOE standard. (T&S Brass, Public Meeting Transcript, No. 6 at p. 54) However, the Advocates commented that if the metric is not changed from the current gpm, then including flow
rate as a differentiator for product class would be inconsistent. (Advocates, Public Meeting Transcript, No. 6 at p. 38)
Additionally, T&S Brass commented that the performance of the maximum technologically feasible model (max-tech model) should not be evaluated solely based on flow rate. (T&S Brass, Public Meeting Transcript, No. 6 at p. 52) Also, as described in section IV.A.1, interested parties commented that for DOE to maintain the utility of the commercial prerinse spray valves, another measure besides flow rate must be considered in the analysis.
In the 2014 Framework document, DOE noted that it would be difficult to establish product classes based on flow rate if the flow rate efficiency metric was retained. For this rulemaking, DOE proposes to retain flow rate as the efficiency metric for commercial prerinse spray valves. Therefore, DOE is not considering flow rate as a characteristic to establish product classes.
c. Spray Force
As described in section IV.A.1, interested parties recommended that DOE incorporate spray force in the analysis. Additionally, the Northwest Energy Efficiency Alliance (NEEA) recommended that DOE investigate whether spray force and flow rate are directly proportional, and to investigate whether spray force is a good characteristic to predict the performance of a commercial prerinse spray valve. (NEEA, No. 13 at p. 2)
DOE investigated whether any relationship exists between spray force and flow rate. DOE tested multiple spray valves for both flow rate and spray force using the ASTM Standard F2324-13 test procedure. The test results showed a direct linear relationship between flow rate and spray force, such that higher flow rate corresponds to higher spray force. Additionally, DOE found literature online that supported the linear relationship between spray force and flow rate.
24
Chapter 3 of the NOPR TSD provides further discussion on this relationship.
24
Spraying Systems Co., “Optimizing Your Spray System” (2009) (Available at:
www.spray.com/Literature_PDFs/TM410A_Optimizing_Your_Spray_System.pdf
);
PNR America, “Some Uses of Spray Nozzles” (Available at:
http://www.pnramerica.com/pdfs/p2_6.pdf
).
Multiple interested parties also recommended the use of spray force to establish product classes. The Advocates suggested that spray force might be a suitable criterion to create product classes. (Advocates, No. 11 at p. 2) T&S Brass commented that there are several applications of commercial prerinse spray valves, and all might require different spray forces. (T&S Brass, Public Meeting Transcript, No. 6 at p. 39) AWE stated that spray force is a useful characteristic that could be used to define product classes. (AWE, No. 8 at p. 2) CA IOUs suggested using spray force to establish product classes as a way to account for differentiating products.
However, NEEA stated that establishing product classes based on spray force could overlook cleaning effectiveness. It stated that a solid water jet and pattern jet could have the same flow rate and spray force, but that the pattern jet would clean better than a solid jet, despite both having the same spray force. (NEEA, No. 13 at p. 2)
A WaterSense field study found that low water pressure, or spray force, is a source of user dissatisfaction. WaterSense evaluated 14 commercial prerinse spray valve models and collected 56 consumer satisfaction reviews, of which 9 were unsatisfactory. Seven of the nine unsatisfactory scores were attributed, among other factors, to the water pressure, or the user-perceived force of the spray.
25
25
EPA WaterSense,
Prerinse Spray Valves Field Study Report,
at 24-25 (Mar. 31, 2011) (Available at:
www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf
).
Based on all comments from interested parties, DOE recognizes that spray force is an important criterion for characterizing consumer utility and is directly correlated with flow rate. Therefore, DOE is proposing to use spray force as the criterion to establish product classes. The 2015 CPSV test procedure NOPR proposes to incorporate by reference ASTM Standard F2324-13, which includes a test method for measuring spray force.
DOE is proposing three product classes based on ranges of spray force: (1) light-duty (less than or equal to 5 ozf), (2) standard-duty (greater than 5 ozf but less than or equal to 8 ozf), and (3) heavy-duty (greater than than 8 ozf). The light-duty equipment class would be suitable for light rinsing purposes, the standard-duty product class would be suitable to clean wet foods, and the heavy-duty product class would be suitable to clean baked-on foods. DOE testing of commercial prerinse spray valves provided clear indication of three clusters of commercial prerinse spray valves within these spray force ranges. Chapter 3 of the NOPR TSD provides a detailed description of the product classes that DOE is proposing in this rulemaking.
d. Impact of Product Classes on Compliance, Certification and Enforcement
The procedures required for certification, determination, and enforcement of compliance of covered products with the applicable conservation standards are set forth in 10 CFR 429. The sampling plan and certification requirements for commercial prerinse spray valves are dictated in 10 CFR 429.51. DOE received comments from interested parties regarding the impact of product classes on product compliance, certification, and enforcement.
T&S Brass commented that the impact of assigning product classes should be considered with regard to the regulation and certification process. T&S Brass seeks clarification on how commercial prerinse spray valves will be certified (
e.g.,
through accredited third parties) in the future, if product classes will create more burden on manufacturers, and if it will be an additional requirement besides WaterSense certification. (T&S Brass, No. 12 at p. 8) T&S Brass also commented that there is a general lack of enforcement for manufacturers to file with DOE and that many imported products do not follow the federal regulations. (T&S, No. 12 at p. 8)
As described in this NOPR, DOE proposes to designate product classes based on ranges of spray force. In the concurrent 2015 CPSV test procedure NOPR, DOE is proposing that spray force be tested for each spray pattern. Therefore, DOE proposes to revise the certification reporting requirements under 10 CFR 429.51(b)(2) to include reporting the average spray force in ozf, in addition to reporting the average flow rate. The reported spray force will determine which product class applies to each certified basic model. As DOE understands that spray force is already a widely accepted and measured characteristic of commercial prerinse spray valves, DOE believes that adding the reporting requirement for spray force will not create significant additional burden for CPSV manufacturers.
DOE further notes that the WaterSense prerinse spray valve program is a voluntary program administered by EPA, and DOE's reporting and certification requirements for commercial prerinse spray valves would be separate from the requirements of the WaterSense program.
The Advocates noted that ASTM Standard F2324-13, which is being incorporated by reference in the concurrent 2015 CPSV test procedure
NOPR (80 FR 35874), already incorporates spray force measurement, and so accounting for both flow rate and spray force would not cause additional burden to manufacturers listing products to the industry standard. (Advocates, No. 11 at p. 1) However, the Advocates also noted that it would be challenging to administer the separate product classes when commercial prerinse spray valves in a commercial kitchen are interchangeable, as many users have both heavy-duty and light-duty cleaning to perform. (Advocates, No. 11 at p. 2) The Advocates cautioned that enforcement issues should also be considered when considering spray force. (Advocates, No. 11 at p. 2)
While DOE administers the certification, determination, and enforcement of compliance of covered products, DOE does not administer the end-use of the covered products by the consumers. Under DOE enforcement activities, conservation standards cases deal with manufacturers that have distributed products in the U.S. that DOE has found do not meet the required energy standards. Compliance certification cases deal with manufacturers that either have not certified that the products that they manufacture and distribute in the U.S. have been tested and meet the applicable energy conservation standards or have submitted invalid compliance certifications. With respect to products certified to EPA's ENERGY STAR program, DOE refers to the EPA any products that DOE tests that do not meet the ENERGY STAR specification. Any complaints regarding non-compliant products can be sent to:
energyefficiencyenforcement@hq.doe.gov
.
4. Technology Assessment
In the technology assessment, DOE identifies technology options that may decrease CPSV water consumption. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. In the 2014 Framework Document, DOE suggested an initial list of technology options that it would consider, which included the following:
• Addition of a flow control insert;
• Smaller nozzle tip openings to increase pressure;
• Incorporation of additional components including, but not limited to backflow preventers, additional valves, or hoses; and
• Specially designed spray patterns, such as the following: fan spray pattern (single nozzle with a hollow cone stream); solid stream pattern (single nozzle with single solid jet stream); triple-action spray pattern (three nozzles with solid jet streams); knife-like spray pattern (single nozzle with a flat stream); and rose spray pattern (multiple nozzles resembling a common showerhead).
DOE received several comments regarding the feasibility and impact of the technology options identified in the 2014 Framework document, which are discussed in the screening and engineering analyses in section IV.B and section IV.C, respectively. T&S Brass commented that there should not be too many design restrictions, as commercial prerinse spray valves are used in different applications, and, based on the application, the incorporation of certain design options might be required. (T&S Brass, Public Meeting Transcript, No. 6 at p. 44) T&S Brass also commented that the rulemaking should not stifle innovation.
Id.
AWE recommended that DOE not be design-restrictive, but focus on cleaning performance, water consumption, and durability of commercial prerinse spray valves for the rulemaking. (AWE, No. 8 at p. 2)
DOE notes that the proposed standard is a performance-based standard, not a design-based standard.
After further research regarding the potential technology options identified in the 2014 Framework document, DOE determined that several of them do not affect CPSV efficiency and thus are not considered to be technology options. The following subsections provide background on these product features that DOE determined had no impact on CPSV efficiency. The technology options that do affect CPSV efficiency are discussed further in section IV.B.
1. Backflow Preventers
Backflow preventers prevent reverse flow of water. They are mainly used in plumbing devices to protect water supplies from contamination or pollution. DOE did not identify any means by which incorporating a backflow preventers into a commercial prerinse spray valve could improve its efficiency by limiting the water flow rate.
2. Specially Designed Spray Patterns
In the 2014 Framework document, DOE identified five different spray patterns that are incorporated in commercial prerinse spray valves. DOE performed several tests on various CPSV units with different spray patterns using the ASTM Standard F2324-13 test procedure. While the units provided different flow rate and spray force results, DOE research showed no direct correlation between the type of spray pattern and flow rate. Hence, DOE found no indication that a different spray pattern can be used to reduce water consumption. Additionally, T&S Brass commented that different nozzle designs and spray patterns have been developed to meet the requirements for specific CPSV applications. (T&S Brass, No. 12 at p. 4) Hence, the type of spray pattern is more relevant to a specific CPSV application, rather than being a potential design option to reduce water consumption in commercial prerinse spray valves.
DOE did, however, identify additional CPSV technology options beyond those in the 2014 Framework document which could improve CPSV efficiency. The additional technology options analyzed include spray hole eccentricity and orifice plate nozzle geometry, and are discussed further in the section IV.B.
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:
(1)
Technological feasibility.
Technologies that are not incorporated in commercial products or in working prototypes will not be considered further.
(2)
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 projected compliance date of the standard, then that technology will not be considered further.
(3)
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.
(4)
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 response to the technology options presented in the 2014 Framework document, T&S Brass stated that design and technology aspects to improve
CPSV performance are considered proprietary information by manufacturers. (T&S Brass, No. 12 at p. 5) The Natural Resources Defense Council (NRDC) asked whether the spray patterns and associated nozzles used in the engineering analysis would be non-proprietary options. (NRDC, Public Meeting Transcript, No. 6 at p. 46).
In the engineering and economic analyses, DOE considered all design options that are commercially available or present in a working prototype, including proprietary designs that meet the screening criteria. DOE will consider a proprietary design, however, only if it does not represent a unique path to a given efficiency level. If the proprietary design is the only approach available to achieve a given efficiency level, then DOE will eliminate that efficiency level from further analysis. However, if a given energy efficiency level can be achieved by a number of design approaches, including a proprietary design, DOE will examine the given efficiency level, despite the proprietary nature of that one design.
Additionally, NAFEM stated that DOE's suggested design options in the 2014 Framework document fail to satisfy the criteria as specified in 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii) through (iv). (NAFEM, No. 9 at p. 2) Sections 4(a)4(ii) through (iv) define three of the four screening criteria described previously, which are: Practicability to manufacture, install and service; adverse impacts on product or equipment utility or availability; and adverse impacts on health or safety. The technology options presented in the 2014 Framework document had not been screened using the four factors discussed above. For the analysis in this notice, DOE evaluated the technology options being considered in the engineering analysis based on the four screening criteria. While a majority of the technology options were not considered in the analysis because they failed to satisfy the screening criteria, there are several technology options that DOE believes satisfy the screening criteria, which are discussed in the following sections. Those technology options not screened out by the four criteria are called “design options” and are considered in the engineering analysis as possible methods of improving efficiency. The following sections describe which technology options were screened out, and which were included as design options.
1. Addition of Flow Control Insert
A flow control insert is a component that can be installed within certain plumbing products to limit the amount of water that flows out of the product. Several faucets and showerheads on the market use flow control inserts to reduce water consumption. Therefore, a flow control insert could also be used in other water products, like commercial prerinse spray valves, to control flow. However, T&S Brass commented that the addition of a flow control insert should not be considered as a design option. T&S reports that a flow control insert would hinder CPSV performance, and can often be physically removed by the end user. (T&S Brass, No. 12 at p. 5) Additionally, T&S Brass mentioned that the nozzle itself is what regulates the flow rate in commercial prerinse spray valves. (T&S Brass, No. 12 at p. 5)
Based on research, DOE did not identify any commercial prerinse spray valves on the market that use flow control inserts to regulate water flow. Therefore, because flow control inserts are not incorporated in commercially available products or working prototypes, DOE has screened out flow control inserts from its analysis because they are not technologically feasible.
2. Smaller Spray Hole Area
The spray hole(s) are located at the exterior of the commercial prerinse spray valve and allow water to flow out of the nozzle. The total spray hole area is the sum of all the areas of the individual spray holes. DOE determined that the flow rate and nozzle spray hole area are directly related. Additional technical details regarding this relationship are provided in chapter 5 of the TSD.
Given its relationship to flow rate, DOE identified nozzle spray hole area as an important factor to consider in the engineering analysis. Additionally, reducing the spray hole area is a relatively simple design change that satisfies the 4 screening criteria discussed above: (1) It is technologically feasible; (2) it would be practicable to manufacture, install, and service; (3) it would not have adverse impacts on product utility or availability;
26
and (4) it would not have adverse impacts on health and safety. Therefore, DOE will consider smaller nozzle tip openings, or a smaller nozzle spray hole area, as a design option in the engineering analysis.
26
Although smaller spray hole area would result in lower flow rates and thus a lower amount of force, DOE's proposed revised product class structure would preserve product utility for heavy-duty applications.
3. Aerators
An aerator is a device that can be used to mix air with water, to reduce the flow of water from the device without reducing the water pressure. DOE is aware of only one commercial prerinse spray valve that incorporates an aerator. DOE tested this unit to determine how the aerator reduces water consumption. DOE testing indicated that the performance of this aerated unit differed substantially from the more common non-aerated units: It exhibited a very low spray force, and did not demonstrate the same linear relationship between flow rate and spray force that is typical of most other commercial prerinse spray valves that DOE tested. At the present time, DOE does not have enough information to determine (1) whether the addition of an aerator represents a technologically feasible design option for improving CPSV efficiency, or (2) whether aerators can be applied more generally to other CPSV designs. Therefore, DOE is tentatively screening out aerators from the analysis. DOE requests comment about its approach to screen out aerators in section V.E.14.
4. Additional Valves
Plumbing fixtures often use globe valves and butterfly valves to regulate water flow. Globe valves are comprised of a movable disk-like element and a stationary ring seated in a generally spherical body. The most common application of a globe valve is in a standard water faucet, such that when the handle is turned, a disc is lowered or raised. Butterfly valves regulate flow by means of a disc that rotates on an axis across the diameter of a pipe. Based on DOE's research to date, however, there are no commercially available products or working prototypes of commercial prerinse spray valves that use these additional valves. Additionally, T&S Brass also commented that the incorporation of additional components, such as backflow preventers, additional valves, or hoses, should not be considered as a design option because they are not necessarily aspects incorporated within the commercial prerinse spray valve itself. (T&S Brass, No. 12 at p. 5). DOE considers any component separate from the commercial prerinse spray valve to not be part of the covered product, and therefore not subject to evaluation as a design option. For these reasons, DOE has screened out the incorporation of additional valves from its analysis.
5. Changing Spray Hole Shape
DOE found evidence that spray hole shape affects flow rate. DOE found that commercial prerinse spray valves with circular holes have higher flow rates than commercial prerinse spray valves
with oval-shaped spray holes, if all other design elements are identical. Additionally, changing spray hole shape is a design change that satisfies the 4 screening criteria discussed above: (1) It is technologically feasible; (2) it would be practicable to manufacture, install, and service; (3) it would not have adverse impacts on product utility or availability;
27
and (4) it would not have adverse impacts on health and safety. Therefore, DOE will consider spray hole shape as a design option in the engineering analysis. Chapter 5 of the TSD provides further details on spray hole shape.
27
Although smaller spray hole area would result in lower flow rates and thus a lower amount of force, DOE's proposed revised product class structure would preserve product utility for heavy-duty applications.
6. Venturi Meter to Orifice Plate Nozzle Geometries
DOE has observed that the nozzle geometry affects the flow rate of commercial prerinse spray valves. Based on DOE testing, reverse-engineering teardowns and information available in the literature, DOE has determined that a “venturi meter” geometry allows water to pass through the nozzle more easily than an “orifice plate” geometry. Therefore, if all other design elements are identical, commercial prerinse spray valves with an orifice plate geometry have a lower flow rate than commercial prerinse spray valves with a venture meter geometry. Additionally, changing spray nozzle geometry is a design change that satisfies the 4 screening criteria discussed above: (1) It is technologically feasible; (2) it would be practicable to manufacture, install, and service; (3) it would not have adverse impacts on product utility or availability;
28
and (4) it would not have adverse impacts on health and safety. Therefore, DOE will consider spray nozzle geometry as a design option in the engineering analysis. Chapter 5 of the TSD provides a more detailed discussion on this topic.
28
Although an orifice plate geometry would result in lower flow rates and thus a lower amount of force, DOE's proposed revised product class structure would preserve product utility for heavy-duty applications.
C. Engineering Analysis
In the engineering analysis, DOE establishes the relationship between the manufacturer production cost (MPC) and improved CPSV efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option, (2) efficiency level, or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiency-improving design changes to the baseline to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency and determining cost from a detailed bill of materials (BOM) derived from reverse engineering representative products.
For this analysis, DOE structured its engineering analysis for commercial prerinse spray valves using a combination of the design-option approach and the reverse-engineering approach. The analysis is performed in terms of incremental decreases in water consumption due to the implementation of selected design options, while the estimated MPCs for each successive design option are based on product teardowns and a bottom-up manufacturing cost assessment. Using this hybrid approach, DOE developed the relationship between MPC and CPSV efficiency.
Chapter 5 of the NOPR TSD discusses the baseline efficiencies for each product class (in terms of flow rate), the design options DOE considered, the methodology used to develop manufacturing production costs, and the cost-efficiency curves. The LCC and PBP analysis uses the cost-efficiency relationships developed in the engineering analysis.
1. Engineering Approach
For each of the three proposed product classes, DOE selected a baseline efficiency (in terms of flow rate) as a reference point from which to measure changes resulting from each design option. DOE then developed separate cost-efficiency relationships for each product class analyzed. The following is a summary of the method DOE used to determine the cost-efficiency relationship for commercial prerinse spray valves:
(1) Perform flow rate and spray force tests on a representative sample of commercial prerinse spray valves in every product class.
(2) Develop a detailed BOM for the tested commercial prerinse spray valves through product teardowns, and construct a commercial prerinse spray valve cost model.
(3) Use the test data and cost model to calculate the incremental increase in efficiency (
i.e.,
decrease in flow rate) and cost increase of adding specific design options to a baseline model.
In the 2014 Framework document, DOE presented plans for its engineering analysis and sought comment on its approach to calculating the cost-efficiency relationship for commercial prerinse spray valves. T&S Brass stated that the range of efficiency levels should be determined based on the performance of commercial prerinse spray valves evaluated per ASTM Standard F2324-13. (T&S Brass, No. 12 at p. 5) DOE agrees that ASTM Standard F2324-13 reflects the latest changes in the industry and conducted all testing in support of this rulemaking using ASTM Standard F2324-13.
The CA IOUs recommended that DOE look at DOE's CCMS and the CEC appliance databases for available product data. The CA IOUs also provided separate charts that showed the range of flow rates from these databases; the ranges reported were from 0.65 to 1.48 gpm. (CA IOUs, No. 14 at p. 3) For the analysis, DOE used CCMS and CEC databases to incorporate product data for the analysis. Additionally, DOE looked at the EPA WaterSense database and the Food Service Technology Center (FSTC) commercial prerinse spray valves testing results to determine the flow rates and spray forces.
2. Product Classes
DOE is proposing three product classes, defined by spray force ranges, as shown in Table IV.1.
Table IV.1—Product Classes Definitions
Product class
Spray force range
Light-duty
≤ 5 ozf.
Standard-duty
> 5 ozf and ≤ 8 ozf.
Heavy-duty
> 8 ozf.
Chapter 3 of the NOPR TSD includes a detailed discussion regarding how the product classes were determined.
3. Baseline and Max-Tech Models
To analyze technology options for energy efficiency improvements, DOE defined a baseline model for each commercial prerinse spray valve product class. Typically, the baseline model is a model that just meets current energy conservation standards.
For the heavy-duty product class (spray force greater than 8 ozf), DOE determined that the baseline flow rate is the current commercial prerinse spray valve energy conservation standard of 1.6 gpm. For the standard-duty and
light-duty product classes, DOE established baseline flow rates that correspond to upper spray force bounds of these two product classes. DOE determined these baseline flow rates using the linear relationship between flow rate and spray force. DOE determined a best-fit linear equation that related flow rate and spray force using the test results for all the commercial prerinse spray valves that DOE tested. DOE then calculated the flow rates that corresponded to the spray force bounds for the standard-duty and light-duty product classes using the best fit linear equation. Chapter 5 of the NOPR TSD provides more detail on the flow rate and spray force relationship.
T&S Brass cautioned against picking the highest efficiency level (max-tech) solely based on flow rate. T&S Brass commented that there are products on the market with a low flow rate that have an unsatisfactory user rating. T&S Brass suggested also looking at spray force when determining the max-tech model. According to T&S Brass, the current definition of the max-tech model solely based on flow rate may work in certain applications, but may work poorly for a standard market application. (T&S Brass, Public Meeting Transcript, No. 6 at p. 51) Additionally, T&S Brass also noted that the max-tech model in each product class may not adequately perform for all commercial foodservice applications. (T&S Brass, No. 12 at p. 6)
As described above, DOE proposes three product classes, defined by spray force ranges, which correspond to three major categories of CPSV usage (
i.e.
light-duty, standard-duty, and heavy-duty). Separating commercial prerinse spray valves into three product classes will ensure that consumer utility is maintained within each product class. DOE believes that the max-tech level selected for each product class would not reduce consumer utility for the applications associated with each spray force range.
To develop the relationships between flow rate and the design options for commercial prerinse spray valves, DOE used publicly available data, including data from government databases, manufacturer catalogs and Web sites, and selected product testing for commercial prerinse spray valves. The engineering analysis focused on identifying and evaluating commercially available prerinse spray valves that incorporate design options that reduce flow rate. The analysis also identified the lowest flow rate that is commercially available within each product class (
i.e.,
the max-tech model).
Additionally, DOE found that the spray nozzle geometry is a variable that affects flow rate. The nozzle geometry is expressed in terms of a discharge coefficient. DOE calculated the discharge coefficient for the max-tech model in each product class and assumed a constant discharge coefficient for each efficiency level within that class. DOE requests comments on whether this approach is appropriate.
Chapter 5 of the NOPR TSD includes details on the baseline flow rates and max-tech flow rates considered as part of the engineering analysis.
4. Manufacturing Cost Analysis
DOE estimated the manufacturing costs using a reverse-engineering approach, which involves a bottom-up manufacturing cost assessment based on a detailed BOM derived from teardowns of the product being analyzed. The detailed BOM includes labor costs, depreciation costs, utilities, maintenance, tax, and insurance costs, in addition to the individual component costs. These manufacturing costs are developed to be an industry average and do not take into account how efficiently a particular manufacturing facility operates.
To develop the relationship between cost and performance for commercial prerinse spray valves, DOE used a reverse-engineering analysis, or teardown analysis. DOE purchased off-the-shelf commercial prerinse spray valves available on the market and dismantled them component by component to determine what technologies and designs manufacturers use to decrease commercial prerinse spray valve flow rate. DOE then used independent costing methods, along with component-supplier data, to estimate the costs of the components.
T&S Brass stated that materials and processes for metallic, plastic, and rubber parts should be taken into consideration in the reverse-engineering process. (T&S Brass, No. 12 at p. 5) T&S Brass also commented that the costs for incremental efficiency improvements of existing commercial prerinse spray valve are different among manufacturers, or even among models from the same manufacturer. Therefore, the costs to improve efficiency depend on the design of commercial prerinse spray valve. (T&S Brass, No. 12 at p. 6)
DOE derived detailed manufacturing cost estimate data based on its reverse engineering analysis, which included the cost of the product components, labor, purchased parts and materials, and investment.
DOE tested three series of commercial prerinse spray valves from three manufacturers. Through testing, DOE found that the flow rates of the units within each series were different. However, based on the reverse-engineering analysis, the manufacturing costs for the units within each series were the same. Therefore, DOE concluded that there is no manufacturing cost difference for incremental efficiency improvements between models within the same series from the same manufacturer.
DOE also tested and performed a teardown analysis on commercial prerinse spray valves from additional manufacturers. These commercial prerinse spray valves represented a range of baseline to max-tech units. The testing and teardown results indicated that the manufacturing costs between different units from different manufacturers can vary based on the type of material, amount of material, and/or process used. However, DOE determined that these factors do not affect the efficiency of a commercial prerinse spray valve. Therefore, DOE did not include these cost differences in the engineering analysis. Chapter 5 of the NOPR TSD provides further details on the teardown analysis, component costs, and costs that were developed as part of the cost-efficiency curves.
D. Markups Analysis
The purpose of the markups analysis is to translate the MPC derived from the engineering analysis into the final consumer purchase price by applying the appropriate markups. The first step in this process is converting the MPC into the MSP by applying the manufacturer markup. The manufacturer markup includes sales, general and administrative, research and development, other corporate expenses, and profit. As described further in chapter 6 of the TSD, the manufacturer markup of 1.30 was calculated as the market share weighted average value for the industry. DOE developed this manufacturer markup by examining several major CPSV manufacturers' gross margin information from annual reports and Securities and Exchange Commission 10-K reports. Because the 10-K reports do not provide gross margin information at the subsidiary level, the estimated markups represent the average markups that the parent company applies over its entire range of equipment offerings, and does not necessarily represent the manufacturer markup of the subsidiary. Both the MPC and the MSP values are used in the MIA.
Next, DOE uses manufacturer-to-consumer markups to convert the MSP estimates into consumer purchase prices, which are then used in the LCC and PBP analysis, as well as the NIA. Consumer purchase prices are necessary for the baseline efficiency level and all other efficiency levels under consideration.
For the markups analysis, DOE identified the following distribution channels (
i.e.
how the product is distributed from the manufacturer to the consumer):
A. Manufacturer → Final Consumer (Direct Sales)
B. Manufacturer → Authorized Distributor → Final Consumer
C. Manufacturer → Retailer → Final Consumer
D. Manufacturer → Service Company → Final Consumer
During the Framework public meeting and public comment period, three comments were received with regard to distribution channels. T&S Brass commented that the trade associations did not maintain information on the percentage allocations among the various distribution channels. T&S Brass stated that such information was proprietary. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 71-72) T&S Brass also noted that there were numerous combinations of entities making up the potential distribution channels, and the three listed by DOE (A through C, as listed above) are only but a subset of the potential channels. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 70-71) Additionally, AWE commented that the dominant CPSV sales outlet is made up of service companies providing on-demand, on-site maintenance and other services to food service operators. (AWE, No. 8 at p. 2) As such, DOE added a fourth distribution channel (Service Company), in addition to the three discussed in the Framework document (Direct Sales, Authorized Distributor, and Retail Merchant). Beyond this, DOE did not attempt to incorporate additional channels or investigate combinations of the existing channels, because of a lack of specific information on distribution channels.
In the 2014 Framework document, DOE discussed both baseline and incremental markups. Baseline markups are multipliers that convert the MSP of products at the baseline efficiency level to consumer purchase price. Incremental markups are multipliers that convert the incremental increase in MSP for products at each higher efficiency level (compared to the MSP at the baseline efficiency level) to corresponding incremental increases in the consumer purchase price. In the analysis in this notice, DOE used only baseline markups, as the engineering analysis indicated that there is no price increase with improvements in efficiency for commercial prerinse spray valves. Chapter 6 of the NOPR TSD provides further details on the distribution channels and calculated markups.
E. Energy and Water Use Analysis
The purpose of the energy and water use analysis is to establish the annual energy and water consumption used by the product to assess the associated energy and water savings potential of different product efficiencies. To this end, DOE performed an energy and water use analysis that calculated energy and water use of commercial prerinse spray valves for each product class and efficiency level identified in the engineering analysis. The energy and water use analysis provided the basis for other analyses DOE performed, particularly the LCC and PBP analysis and the NIA.
In the 2014 Framework document, DOE indicated the analysis conducted for the NOPR is intended to capture and estimate water savings as a result of reduced flow rate and the related energy savings as a result of reduced hot water use. DOE calculated the energy and water use by determining the representative daily operating time of the product by major building types that contain commercial kitchens found in the Commercial Building Energy Consumption Survey (CBECS).
29
The daily commercial prerinse spray valve operating time was annualized based on operating schedules for each building type. Water use for each product class was determined by multiplying the annual operating time by the flow rate at an operating pressure of 60 pounds per square inch (psi) for each efficiency level.
30
29
Survey data available at
www.eia.gov/consumption/commercial/data/2003/index.cfm
.
30
DOE considered a range of operating pressures in the analysis to account for the variations in water pressure supplied to buildings across the country. Through a sensitivity analysis on the impacts of water pressure on the flow rate of the prerinse spray valve, DOE concluded that 60 psi is a representative water pressure for prerinse spray valves. DOE used flow rates at a water pressure of 60 psi for each efficiency level in the energy and water use analysis, which is further discussed in the energy and water use TSD chapter.
Energy use was calculated by multiplying the annual water use in gallons by the energy required to heat each gallon of water to an end-use temperature of 108 °F.
31
Cold water supply temperatures used in this calculation were derived for the nine U.S. census regions based on ambient air temperatures and hot water supply temperature was assumed to be 140 °F based on ASHRAE Standard 12-2000.
32
The proportion of buildings which used natural gas or electricity for water heating found in the CBECS database were multiplied by the energy consumption of each kind of water heater, taking into account the efficiency level of the product, to obtain the total energy consumption of each product class and efficiency level of commercial prerinse spray valves.
31
End-use temperature was determined based on a review of several field studies. See chapter 7 of the NOPR TSD for a list of the field studies reviewed.
32
ASHRAE Standard 12-2000: Minimizing the Risk of Legionellosis Associated with Building Water Systems,
(February 2000).
In response to the 2014 Framework document, DOE received several comments related to potential data sources for the energy and water use analysis. IAPMO asked whether the rulemaking team had coordinated with DOE's Water, Energy, and Technology team. (IAPMO, Public Meeting Transcript, No. 6 at pp. 77-78) WaterSense asked how DOE planned to collect data on CPSV operation. (WaterSense, Public Meeting Transcript, No. 6 at pp. 78-79) T&S Brass noted that operation data might be available through NAFEM and FSTC. (T&S Brass, Public Meeting Transcript, No. 6 at p. 80) Finally, AWE commented that it had data available on operating time and water temperature from California Urban Water Conservation Council (CUWCC) studies. (AWE, No. 8 at p.3)
In response to these comments, and as discussed above, DOE collected data from several end-use studies that measured operating time of commercial prerinse spray valves in field applications, such as restaurants and cafeteria settings. Data on water temperature measured in the field studies were also utilized by DOE to determine the hot water and end-use temperature.
Additionally, T&S Brass commented that operational patterns varied widely across applications that use CPSV products. The different operational patterns across applications are a result of such factors as the volume of dishwashing or ware washing (
i.e.,
number of pieces) requiring prerinsing, the rate at which dishwashing or ware washing needs to be done in order to return the commercial ware back into service, the difficulty in cleaning debris from the commercial ware, and operational patterns for product classes. T&S Brass added that these operational
patterns will vary in duration of usage, as flow rates change within each application. (T&S Brass, No. 12 at p. 6)
DOE acknowledges comments submitted by T&S Brass regarding varying operational spray patterns and considered the varying operational patterns across applications of commercial prerinse spray valves in the analysis for this notice. As described in further detail in chapter 7 of the NOPR TSD, DOE determined operational time for the product based on operational patterns of distinct building types that house commercial prerinse spray valves, including educational facilities, food retail, healthcare, lodging, and restaurants. Operational patterns taken into consideration for each building category included operating days per week, operating hours per day, and estimated daily number of meals served. DOE assumed the same operating time for different flow rates based on the conclusion of the EPA WaterSense field study that determined the flow rate of a CPSV did not significantly impact the operating time of the unit.
33
33
EPA WaterSense,
Prerinse Spray Valves Field Study Report,
(March 2011) (Available at:
www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf
.).
T&S Brass also commented that potential energy savings due to a lower flow rate might be offset by using a higher water temperature that would create water savings, but not energy savings due to the increase in water temperature. (T&S, No. 12 at p. 8)
In regards to the comment submitted by T&S Brass, DOE assumed an end-use temperature of 108 °F based on measured temperatures in field studies for commercial prerinse spray valves of varying flow rates. The field studies demonstrated that the end-use temperature did not significantly vary with flow rate. Therefore, DOE tentatively concludes this temperature is a reasonable representation of the temperature used by the majority of CPSV consumers, regardless of the flow rate of the unit.
In response to the 2014 Framework document, NEEA commented that it had access to the data for utility programs in the Northwest. (NEEA, No. 13 at p. 2)
DOE appreciates the comment from NEEA regarding their access to regional utility program data. In the analysis for this NOPR, DOE utilized field studies and data that approximated national potable water supply temperatures and operational water temperatures.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted the LCC and PBP analysis to evaluate the economic impacts on individual consumers of potential amended energy conservation standards for commercial prerinse spray valves. The LCC is the total consumer expense over the life of the product, consisting of purchase and installation costs plus operating costs (expenses for energy and water use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. The PBP is the estimated amount of time (in years) it takes consumers to recover the potential increased purchase cost (including installation) of more efficient products through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the year that new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC relative to an estimate of the no-new-standards case product efficiency distribution. The no-new-standards case estimate reflects the market in the absence of amended energy conservation standards, including the market for products that exceeds the current energy conservation standard. In contrast, the PBP is measured relative to the baseline product.
Inputs to the calculation of total installed cost include the cost of the product—which includes MSPs, distribution channel markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy and water consumption, energy prices and price projections, combined water prices (which include water and wastewater prices) and price projections, repair and maintenance costs, product lifetimes, discount rates. DOE created distributions of values for product lifetime, discount rates, energy and combined water prices, and sales taxes, with probabilities attached to each value to account for their uncertainty and variability.
The computer model DOE used to calculate the LCC and PBP, which incorporates Crystal Ball
TM
(a commercially available software program), relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and CPSV user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 CPSV users per simulation run.
DOE calculated the LCC and PBP for all consumers as if each were to purchase a new commercial prerinse spray valve in the first year of the analysis period. For this rulemaking, DOE anticipates any amended standards would apply to commercial prerinse spray valves manufactured 3 years after the date on which any final amended standard is published. For this rulemaking, DOE anticipates publication of any final standards in late 2015 and compliance in late 2018. However, for the purposes of this analysis, DOE used 2019 instead of 2018 as the beginning of the analysis period for the LCC and PBP analysis, due to the anticipated compliance date being late in the year 2018.
Table IV.2 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 and its appendices of the NOPR TSD.
Table IV.2—Summary of Inputs and Methods for the LCC and PBP Analysis *
Inputs
Source/method
Product Cost
Derived by multiplying MSPs by distribution channel markups and sales tax, as appropriate.
Installation Costs
Baseline installation cost determined with data from U.S. Department of Labor. Assumed no change with efficiency level.
Annual Energy and Water Use
Determined from the energy required to heat a gallon of water used at the prerinse spray valve multiplied by the average annual operating time and flow rate of each product class.
Variability: By census region
Energy, Water and Wastewater Prices
Energy: Based on EIA's Form 826 data for 2013. Variability: By State
Water: Based on 2012 AWWA Survey.
Variability: By State
Energy and Water Price Trends
Energy: Forecasted using
AEO2014
price forecasts.
Water: Forecasted using BLS historic water price index information.
Maintenance and Repair Costs
Assumed no change with efficiency level.
Product Lifetime
DOE assumed an average lifetime of 5 years.
Variability: Characterized using modified Weibull probability distributions.
Discount Rates
Estimated using the average cost of capital to commercial prerinse spray valve consumers. Cost of capital was found using information from the federal reserve and from Damodaran online data.
First Year of Analysis Period
2019
* References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the NOPR TSD.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MSPs developed in the engineering analysis by the distribution channel markups described in section IV.D (along with sales taxes). As stated earlier in this notice, DOE used baseline markups, but did not apply incremental markups, because the engineering analysis indicated that there is no price increase with improvements in efficiency for commercial prerinse spray valves. Product costs are assumed to remain constant over the analysis period.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE received the following comments to the 2014 Framework document regarding installation costs of commercial prerinse spray valves.
T&S Brass commented that installation costs typically did not increase with higher-efficiency prerinse spray valves due to this process being a simple swap out. Under certain circumstances, depending on the manufacturer, additional materials may be necessary. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 83-85) T&S Brass also commented that depending upon the manufacturer, dealer, or installer, the initial installation costs of new products may or may not change for higher-efficiency models. The valve is typically a pre-assembled component of a prerinse unit installed into new facilities, but is usually provided separately for pre-existing installations. For retrofit applications where an existing valve is replaced with a higher-efficiency valve, the cost may increase depending upon the degree of design change required to manufacture the commercial valve to the higher-efficiency requirement. This may require additional components, or revised upstream components, that are needed for proper installation and/or performance. This again is dependent upon the various manufacturers, dealers, or installers. (T&S Brass, No. 12 at p. 7)
DOE has not received any specific data or other comments regarding installation cost as a function of product efficiency. Given the relatively simple nature of installing spray valves, and because there are no substantial differences in size, shape, or function of more efficient units relative to baseline efficiency units, DOE assumes that installation costs for more efficient units are the same as the costs for baseline products.
3. Annual Energy and Water Consumption
Chapter 7 of the NOPR TSD details DOE's analysis of CPSV annual energy and water use at various efficiency levels. For each sampled building type, DOE determined the energy and water consumption for a commercial prerinse spray valve at different efficiency levels using the approach described in section IV.E of this notice.
4. Energy Prices
DOE derived energy prices from the EIA regional average energy price data for the commercial sectors. DOE used projections of these energy prices for commercial consumers to estimate future energy prices in the LCC and PBP analysis. EIA's
Annual Energy Outlook
(
AEO2014
) was used as the default source of projections for future energy prices.
DOE developed estimates of commercial electricity and natural gas prices for each state and the District of Columbia (DC). DOE derived average regional energy prices from data that are published annually based on EIA Form 826. DOE then used EIA's
AEO2014
price projections to estimate commercial electricity and natural gas prices in future years. EIA's
AEO2014
price projections have an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2030 to 2040. DOE assumed that 100 percent of installations were in commercial locations. DOE did not receive any comments to the 2014 Framework document regarding its method for determining energy prices.
5. Water and Wastewater Prices
In the 2014 Framework document, DOE indicated that it would determine marginal water and wastewater rates in the U.S. that would be used in the LCC and PBP analysis, as well as the NIA. It further stated that it would investigate American Water Works Association's (AWWA's) biannual water and wastewater rate survey when modeling water and wastewater marginal pricing and projected future rate escalations. DOE received the following comments regarding the determination of the appropriate water prices for applicable analyses.
T&S Brass recommended using AWWA as a source for water prices. (T&S Brass, Public Meeting Transcript, No. 6 at p. 88) T&S Brass also commented that it recognized the relationship between wastewater discharge and water usage. The impact of wastewater discharge is dependent upon municipal wastewater charges, such as sewer rate. Therefore, similar to the costs of municipal water, wastewater charges are based upon the location across the nation. (T&S Brass, No. 12 at p. 7) T&S Brass suggested that DOE should contact AWWA to determine marginal water and wastewater rates and methods to break out water and wastewater rates across different pricing segments, such as regionally or by state, as well as future trends in water and wastewater rate escalations. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 94-96)
In response to T&S Brass's comments, and consistent with the 2014 Framework document, DOE obtained
data on water and wastewater prices from the 2012 AWWA surveys for this notice. For each state and DC, DOE combined all individual utility observations within the state to develop one value for water and wastewater service. Because water and wastewater charges are frequently tied to the same metered commodity values, DOE combined the prices for water and wastewater into one total dollar per thousand gallons figure. This figure is referred to as the combined water price. DOE used the consumer price index (CPI) data for water related consumption (1970-2013) in developing a real growth rate for combined water price forecasts.
Chapter 8 of the NOPR TSD provides more detail about DOE's approach to developing water and wastewater prices.
6. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing components that have failed in the product; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in product efficiency produce no changes, or only minor changes, in repair and maintenance costs compared to baseline efficiency product.
In the 2014 Framework document, DOE requested information as to whether maintenance and repair costs are a function of efficiency level and product class. T&S Brass commented that determining whether repair costs may change for more efficient products, or whether commercial prerinse spray valves were typically replaced upon failure or repaired, depends on how the manufacturer markets their products. Some manufacturers and distributors place a premium on their more efficient products. Others view it as doing a service to the environment and to consumers by offering the same price. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 94-96). T&S Brass also commented that some manufacturers offer repair kits. Some manufacturers view commercial prerinse spray valves as “throwaway” items, but T&S Brass does not, and stated that it could document that some of its original spray valves had been in use for over 60 years. (T&S Brass, Public Meeting Transcript, No. 6 at p. 86) Additionally T&S Brass commented that although its products can last longer than 5 years, end users decide whether to replace the entire unit or repair the unit in the field. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 96-97) T&S Brass also stated that it offers an array of repair kits for commercial prerinse spray valves. (T&S Brass, No. 12 at pp. 7-8)
DOE acknowledges T&S Brass's comments. But, based on the lack of data regarding repair rates in the industry, DOE assumed that consumers would replace the commercial prerinse spray valve upon failure rather than repairing the product. DOE assumed that there are no changes in maintenance or repair costs between different efficiency levels.
7. Product Lifetime
Because product lifetime varies depending on utilization and other factors, DOE developed a distribution of product lifetimes. In the 2014 Framework document, DOE assumed an average CPSV lifetime of 5 years.
T&S Brass commented that water temperature and pressure, as well as frequency and duration of usage, were key considerations when determining the life expectancy of a unit. (T&S Brass, No. 12 at p. 3) T&S Brass also commented that they do not know of a correlation between spray valve usage and life expectancy. (T&S Brass, No. 12 at p. 3) T&S Brass pointed out that life-cycle testing for mechanical endurance is a prerequisite for third-party certification of commercial prerinse spray valves. (T&S Brass, No. 12 at p. 3)
DOE did not find sufficient data to support the use of factors such as usage, or water temperature and pressure, as a way to determine the distribution of lifetimes of commercial prerinse spray valves in the analysis for this notice.
T&S Brass commented that lifetime values cannot be accurately quantified because of the range and number of variables, as well as the various end-user applications that must be considered. (T&S, No. 12 at p. 3)
DOE developed a Weibull distribution with an average lifetime of 5 years and a maximum lifetime of 10 years. The use of a lifetime distribution for this analysis helps account for the variability of product lifetimes.
However, NEEA commented that it expected the actual lifetime to be reduced due to an observed 10 percent attrition after 1 year because of events such as businesses closing, the unit being replaced, or rinsing stations being removed in Northwest utility programs. Additionally, NEEA pointed out that SBW Consulting's evaluation report estimated that CPSV lifetimes might be as low as 2 years based on reported sales volume and the estimated population of commercial prerinse spray valves. (NEEA, No. 13 at pp. 1-2)
In consideration of NEEA's comment regarding the lifetime distributions used for commercial prerinse spray valves, in the NOPR analysis DOE modified the Weibull distribution to reflect 10 percent of commercial prerinse spray valves failing within the first year after installation. See chapter 8 of the NOPR TSD for further details on the method and sources DOE used to develop CPSV lifetimes.
8. Discount Rates
In the calculation of LCC, DOE developed discount rates by estimating the average cost of capital to commercial prerinse spray valve consumers. DOE applies discount rates to commercial consumers to estimate the present value of future cash flows derived from a project or investment. Most companies use both debt and equity capital to fund investments, so the cost of capital is the weighted-average cost to the firm of equity and debt financing. See chapter 8 in the NOPR TSD for further details on the development of consumer discount rates.
9. No-New-Standards Case Efficiency Distribution
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC and PBP analysis considered the projected distribution of product efficiencies that consumers purchase under the no-new-standards case. DOE refers to this distribution of product efficiencies as a no-new-standards case efficiency distribution.
To estimate the no-new-standards case efficiency distribution of commercial prerinse spray valves in 2019 (the first year of the analysis period), DOE relied on data from the Food Service Technology Center and DOE's CCMS Database for commercial prerinse spray valves.
34
Additionally, DOE conducted general internet searches and examined manufacturer literature to understand the characteristics of the spray valves currently offered on the market. DOE assumed that the no-standards case percentages in 2019 would stay the same through the analysis period. The no-standards case efficiency distribution is described in chapter 8 of the NOPR TSD.
34
The Food Service Technology Center test data for prerinse spray valves is available at
www.fishnick.com/equipment/sprayvalves/
. The DOE compliance certification data for commercial prerinse spray valves is available at
www.regulations.doe.gov/certification-data/
.
The estimated shares for the no-standards case efficiency distribution
for commercial prerinse spray valves are shown in Table IV.3.
Table IV.3—Commercial Prerinse Spray Valve No-Standards Case Efficiency Distribution by Product Class in 2019
Efficiency level
Light duty
(% of shipments)
Standard duty
(% of shipments)
Heavy duty
(% of shipments)
Baseline
15
40
40
1
35
50
50
2
0
0
5
3
50
10
5
10. Payback Period Analysis
The payback period is the amount of time it takes the consumer to recover the additional installed cost of more efficient products, compared to baseline product, through energy and water cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the product mean that the increased total installed cost is not completely recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed. As explained in the engineering analysis of this notice (IV.C) there are no additional installed costs for more efficient commercial prerinse spray valves, making the PBP zero.
11. Rebuttable-Presumption Payback Period
EPCA, as amended, establishes a rebuttable presumption that a standard is economically justified if DOE 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 first year's energy (and, as applicable, water) savings resulting from the standard, as calculated under the test procedure in place for that standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the first year's energy and water savings by calculating the quantity of those savings in accordance with the applicable DOE test procedure, and multiplying that amount by the average energy and combined water price forecast for the year in which compliance with the amended standard would be required. The results are summarized in section V.B.1.c of this notice.
G. Shipments
DOE uses projections of product shipments to calculate the national impacts of potential amended energy conservation standards on energy and water use, NPV, and future manufacturer cash flows. DOE develops shipment projections based on historic economic figures and an analysis of key market drivers for commercial prerinse spray valves. In DOE's shipments model, CPSV shipments are driven by both new construction and stock replacements. The shipments model takes an accounting approach, tracking market shares of each product class and the vintage of units in the existing stock. Stock accounting uses product shipments as inputs to estimate the age distribution of in-service product stocks for all years. The age distribution in-service product is a key input to calculations of both the national energy savings (NES), national water savings, and NPV, because operating costs for any year depend on the age distribution of the stock. DOE also considers the impacts on shipments from changes in product purchase price and operating cost associated with higher efficiency levels.
In the 2014 Framework document, DOE stated its intention to use historical shipment data for commercial prerinse spray valves obtained from trade organization surveys and commercial floor space growth data to characterize CPSV shipments. In response, NEEA recommended including a broader mix of building types beyond just restaurants, such as grocery stores and institutional facilities, to estimate total shipments. (NEEA, No. 13 at p. 1)
In the shipments analysis for this notice, DOE gathered information pertaining to commercial prerinse spray valves for many building types besides just restaurants from the National Restaurant Association, Puget Sound Energy Program, EPA WaterSense Field Study, and other industry reports.
DOE did not receive any shipments data from interested parties in response to the 2014 Framework document. DOE based the retirement function (the time at which the product fails and is replaced) on the probability distribution for product lifetime that was developed in the LCC and PBP analysis. The shipments model assumes that no units are retired below a minimum product lifetime (one year of service) and that all units are retired before exceeding a maximum product lifetime (ten years of service).
In the 2014 Framework document, DOE indicated that it intended to derive standards case shipments projections using the same data used in the development of the base case projections. DOE assumed that any potential amended energy conservation standards for commercial prerinse spray valves would not impact the total volume of shipments over the analysis period. Rather, in response to the proposed standards, product shipments may move from one efficiency level to another, but the total number of units shipped remains the same between the base and standards cases.
DOE determined that a roll-up scenario is most appropriate to establish the distribution of efficiencies for the year that compliance with amended CPSV standards would be required. Under the “roll-up” scenario, DOE assumes: (1) Product efficiencies in the no-standards case that do not meet the standard level under consideration would “roll-up” to meet the new standard level; and (2) product efficiencies above the standard level under consideration would not be affected. The details of DOE's approach to forecast efficiency trends are described in chapter 8 of the NOPR TSD.
The nature of the market for commercial prerinse spray valves makes it possible that consumers may, under examined TSLs and product classes, opt to switch product classes to a commercial prerinse spray valve that consumes more water and energy than their current product. In particular, if current choices of product correspond to consumers' optimal product under
the current regulatory environment, it is probable that some consumers would switch from the standard-duty product class to the heavy-duty product class in response to proposed standards, given the lack of restrictions on doing so. DOE implemented a mechanism in the shipments model to estimate such consumer choices. The economics resulting from product-class switching may result in lower optimal efficiency levels and reduced estimates of water and energy savings, as compared to the case without class switching. A detailed description of DOE's method to model product-class switching is contained in chapter 9 of the NOPR TSD.
H. National Impact Analysis
The NIA assesses the NES, national water savings, and NPV of total consumer costs and savings that would be expected to result from amended standards at specific efficiency levels. DOE calculates the NES, national water savings, and NPV based on projections of annual CPSV shipments, along with the annual energy and water consumption and total installed cost data from the energy and water use analysis, as well as the LCC and PBP analysis. DOE forecasted the energy and water savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of products sold from 2019 through 2048.
DOE evaluates the impacts of new and amended standards by comparing a base-case projection with standards-case projections. The base-case projection characterizes energy and water use and consumer costs for each product class in the absence of new or amended energy conservation standards. For the base-case projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the base-case projection with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (
i.e.,
the TSLs or standards cases) for that class. For the standards cases, DOE considers how a given standard would likely affect the market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy and water savings, and the national consumer costs and savings for each TSL. Chapter 10 of the NOPR TSD describes the models and how to use them; interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical or weighted-average mean values (as opposed to probability distributions) as inputs.
DOE used projections of energy and combined water prices as described in section IV.F.4 and IV.F.5, as well as chapter 8 of the NOPR TSD. As part of the NIA, DOE analyzed scenarios that used inputs from the
AEO2014
Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the reference case. NIA results based on these cases are presented in appendix 10A of the NOPR TSD.
Table IV.4 summarizes the inputs and methods DOE used for the NIA analysis. Discussion of these inputs and methods follows the table. See chapter 10 of the NOPR TSD for further details.
Table IV.4—Summary of Inputs and Methods for the National Impact Analysis
Inputs
Method
Shipments
Annual shipments from shipments model.
First Year of Analysis Period
2019
No-Standards Case Forecasted Efficiencies
Efficiency distributions are forecasted based on historical efficiency data.
Standards Case Forecasted Efficiencies
Used a “roll-up” scenario.
Annual Energy and Water Consumption per Unit
Annual weighted-average values are a function of energy and water use at each TSL.
Total Installed Cost per Unit
Annual weighted-average values are a function of cost at each TSL.
Incorporates forecast of future product prices based on historical data.
Annual Energy and Combined Water Cost per Unit
Annual weighted-average values as a function of the annual energy and water consumption per unit, and energy, and combined water treatment prices.
Energy Prices
AEO2014
forecasts (to 2040) and extrapolation through 2058.
Energy Site-to-Source Conversion Factors
Varies yearly and is generated by NEMS-BT.
Discount Rate
3 and 7 percent real.
Present Year
Future expenses discounted to 2015, when the NOPR will be published.
1. National Energy and Water Savings
The national energy and water savings analysis involves a comparison of national energy and water consumption of the considered product in each potential standards case (TSL) with consumption in the no-standards case with no amended energy and water conservation standards. DOE calculated the national energy and water consumption by multiplying the number of units (stock) of each product unit (by vintage or age) by the unit energy and water consumption (also by vintage). Then, DOE calculated annual NES and national water savings based on the difference in national energy and water consumption for the no-standards case (without amended efficiency standards) and for each higher efficiency standard. DOE estimated energy consumption and savings based on site energy, and converted the electricity consumption and savings to primary energy using annual conversion factors derived from the
AEO2014
version of NEMS. Cumulative energy and water savings are the sum of the annual NES and national water savings for each year over the timeframe of the analysis. DOE has historically presented NES in terms of primary energy savings. In the case of electricity use and savings, this quantity includes the energy consumed by power plants to generate delivered (site) electricity.
In response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use FFC measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 proposed statement of policy, DOE published a statement of amended policy in the
Federal Register
in which DOE explained its determination that NEMS is the most appropriate tool for
its FFC analysis, as well as its intention to use NEMS for that purpose. 77 FR 49701 (Aug. 17, 2012).
2. Forecasted Efficiency in the No-Standards Case and Standards Cases
A key component of the NIA is the trend in energy efficiency projected for the no-standards case (without new or amended standards) and the standards case. Section IV.F.9 of this notice describes how DOE developed a no-standards case energy efficiency distribution (which yields a shipment-weighted average efficiency) for each of the considered product classes for the first year of the forecast period.
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits experienced by consumers are: (1) Total annual installed cost, (2) total annual savings in operating costs, and (3) a discount factor to calculate the present value of costs and savings. DOE calculates net savings each year as the difference between the no-standards case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculates operating cost savings over the lifetime of each product unit shipped during the forecast period. The operating cost savings are energy and combined water cost savings.
In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. DOE estimated the NPV of consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses these discount rates in accordance with guidance provided by the Office of Management and Budget (OMB) to Federal agencies on the development of regulatory analysis.
35
The discount rates for the determination of NPV are in contrast to the discount rates used in the LCC and PBP analysis, which are designed to reflect an individual consumer's perspective. The 7-percent real value is an estimate of the average before-tax rate of return to private capital in the U.S. economy. The 3-percent real value represents the “social rate of time preference,” which is the rate at which society discounts future consumption flows to their present value.
35
OMB Circular A-4, section E (Sept. 17, 2003) (Available at:
www.whitehouse.gov/omb/memoranda/m03-21.html
.).
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by an amended national standard. DOE evaluated impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this rulemaking, DOE analyzed the impacts of the considered standard levels on single entities and limited service establishment end users.
In general, the higher the cost of capital and the lower the cost of energy and water, the more likely it is that an entity would be disproportionately affected by the requirement to purchase higher efficiency product. In this analysis, a single entity would be a small, independent, or family-owned business that operates in a single location. Compared to large corporations and franchises, these single entities might be subjected to higher costs of capital. For the purpose of the subgroup analysis, a limited service establishment is a consumer that is likely to have a significantly lower operating time than the average consumer. A lower operating time would lead to lower operating cost savings over the lifetime of the product, making this subgroup of consumers disproportionately affected by amended efficiency standards. Chapter 11 in the NOPR TSD describes the consumer subgroup analysis in greater detail.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of commercial prerinse spray valves and to estimate the potential impacts of such standards on employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of forecasted industry cash flows, the INPV, investments in research and development (R&D) and manufacturing capital, and domestic manufacturing employment. Additionally, the MIA seeks to determine how amended energy conservation standards might affect manufacturing employment, capacity, and competition, as well as how standards contribute to overall regulatory burden. Finally, the MIA serves to identify any disproportionate impacts on manufacturer subgroups, including small business manufacturers.
The quantitative elements of the MIA rely on the Government Regulatory Impact Model (GRIM), an industry cash-flow model customized for this rulemaking. See section IV.J.2 for details on the GRIM. The qualitative parts of the MIA address factors such as product characteristics, characteristics of particular firms, and market trends. The complete MIA is discussed in chapter 12 of the NOPR TSD. DOE conducted the MIA in the three phases.
In Phase 1 of the MIA, DOE prepared a profile of the commercial prerinse spray valve manufacturing industry based on the market and technology assessment, information on the present and past market structure and characteristics of the industry, product attributes, product shipments, manufacturer markups, and the cost structure for various manufacturers.
The profile also included an analysis of manufacturers in the industry using Security and Exchange Commission 10-K filings, Standard & Poor's stock reports, and corporate annual reports released by publicly held companies.
36
DOE used this and other publicly available information to derive preliminary financial inputs for the GRIM, including an industry discount rate, manufacturer markup, cost of goods sold and depreciation, selling, general, and administrative (SG&A) expenses, and research and development (R&D) expenses.
36
SEC Form 10-K filings are available at
www.sec.gov/edgar.shtml
. Stock reports are available at
www.standardandpoors.com
.
Phase 2 focused on the financial impacts of potential amended energy conservation standards on the industry as a whole. Amended energy conservation standards can affect manufacturer cash flows in three distinct ways: (1) Create a need for increased investment, (2) raise per-unit production costs, and (3) alter manufacturer revenue due to possible changes in sales volumes and/or manufacturer's per-unit gross margins. DOE used the GRIM to model these effects in a cash-flow analysis of the commercial prerinse spray valve manufacturing industry. In performing this analysis, DOE used the financial parameters developed in Phase 1, the cost-efficiency curves from the engineering analysis, and the shipment assumptions from the NIA.
In phase 3, DOE evaluated subgroups of manufacturers that may be disproportionately impacted by standards or that may not be accurately represented by the average cost assumptions used to develop the industry cash-flow analysis. For example, small businesses, manufacturers of niche products, or companies exhibiting a cost structure that differs significantly from the
industry average could be more negatively affected. While DOE did not identify any other subgroup of manufacturers of commercial prerinse spray valves that would warrant a separate analysis, DOE specifically investigated impacts on small business manufacturers. See section V.B.2.d and section VI.B of this notice for more information.
The MIA also addresses the direct impact on employment tied to the manufacturing of commercial prerinse spray valves. Using the GRIM and census data, DOE estimated the domestic labor expenditures and number of domestic production workers in the no-standards case and at each TSL from 2015 to 2048. See section V.B.2.b of this notice and chapter 12 of the NOPR TSD for more information on direct employment impacts.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow that result in a higher or lower industry value due to energy conservation standards. The GRIM is a standard, discounted cash-flow model that incorporates manufacturer costs, markups, shipments, and industry financial information as inputs, and models changes in manufacturing costs, shipments, investments, and margins that may result from amended energy conservation standards. The GRIM uses these inputs to arrive at a series of annual cash flows, beginning with the base year of the analysis, 2015, and continuing to 2048. DOE uses the industry-average weighted average cost of capital (WACC) of 6.9 percent, as this represents the minimum rate of return necessary to cover the debt and equity obligations manufacturers use to finance operations.
DOE used the GRIM to compare INPV in the no-standards case with INPV at each TSL (the standards case). The difference in INPV between the base and standards cases represents the financial impact of the amended standard on manufacturers. Additional details about the GRIM can be found in chapter 12 of the NOPR
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