Energy Conservation Program: Energy Conservation Standards for Residential Boilers

Federal RegisterJan 15, 2016

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DEPARTMENT OF ENERGY

10 CFR Part 430

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

RIN 1904-AC88

Energy Conservation Program: Energy Conservation Standards for Residential Boilers

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential boilers. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting more-stringent energy conservation standards for residential boilers. It has determined that the amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.

DATES:

The effective date of this rule is March 15, 2016. Compliance with the amended standards established for residential boilers in this final rule is required on and after January 15, 2021.

ADDRESSES:

The docket for this rulemaking, 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, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.

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

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

The

www.regulations.gov

Web page contains simple instructions on how to access all documents, including public comments, in the docket.

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

Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:

Mr. John Cymbalsky, 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) 287-1692. Email:

residential_furnaces_and_boilers@ee.doe.gov.

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

Eric.Stas@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits

D. Standby Mode and Off Mode

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Residential Boilers

III. General Discussion

A. Product Classes and Scope of Coverage

B. Test Procedure

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

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

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

F. General Comments

1. Proposed Standard Levels

2. Simultaneous Changes in Test Procedures and Energy Conservation Standards

3. Safety Issues

4. Other

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Scope of Coverage

2. Product Classes

3. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Levels

a. Baseline Efficiency Level and Product Characteristics

b. Other Energy Efficiency Levels

2. Cost-Assessment Methodology

a. Teardown Analysis

b. Cost Model

c. Manufacturing Production Costs

d. Cost-Efficiency Relationship

e. Manufacturer Markup

f. Manufacturer Interviews

D. Markups Analysis

E. Energy Use Analysis

1. Building Sample

2. Space Heating Energy Use

a. Impact of Return Water Temperature on Efficiency

b. Impact of Automatic Means for Adjusting Water Temperature on Energy Use

c. Impact of Jacket Losses on Energy Use

3. Water Heating Energy Use

a. Idle Loss

4. Electricity Use

a. Standby Mode and Off Mode Losses

b. Air Conditioner Electricity Use

5. Standby Mode and Off Mode

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

a. Basic Installation Cost

b. Replacement Installations

c. New Construction Installations

d. Total Installation Cost

3. Annual Energy Consumption

4. Energy Prices

5. Maintenance and Repair Costs

6. Product Lifetime

7. Discount Rates

8. Efficiency Distribution in the No-New-Standards Case

9. Payback Period Analysis

G. Shipments Analysis

H. National Impact Analysis

1. Product Efficiency Trends

2. National Energy Savings

3. Net Present Value Analysis

a. Total Annual Installed Cost

b. Total Annual Operating Cost Savings

c. Net Benefit

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Manufacturer Interviews

4. Discussion of MIA Comments

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Social Cost of Other Air Pollutants

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

1. TSLs for AFUE Standards

2. TSLs for Standby Mode and Off Mode Standards

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback Period

2. Economic Impacts on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Direct Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Conclusion

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

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

3. Annualized Benefits and Costs of the Adopted 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 of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

Title III, Part B

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

These products include residential boilers, the subject of this document.

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

All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015 (EEIA 2015), Public Law 114-11 (April 30, 2015).

Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE must conduct a second round of energy conservation standards rulemaking for residential boilers. (42 U.S.C. 6295(f)(4)(C)) The statute also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)) DOE initiated this rulemaking as required by 42 U.S.C. 6295(f)(4)(C), but once complete, this rulemaking will also satisfy the 6-year review provision under 42 U.S.C. 6295(m).

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

In accordance with these and other statutory provisions discussed in this document, DOE is adopting amended annual fuel utilization efficiency (AFUE) energy conservation standards and adopting new standby mode off mode electrical energy conservation standards for residential boilers. The AFUE standards for residential boilers are expressed as minimum AFUE, as determined by the DOE test method (described in section III.B), and are shown in Table I.1, as are the design requirements. Table I.2 shows the standards for standby mode and off mode. These standards apply to all residential boilers listed in Table I.1 and Table I.2 and manufactured in, or imported into, the United States starting on the date five years after January 15, 2021.

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

[Compliance starting January 15, 2021]

Product class *

AFUE **

(%)

Design requirement

Gas-fired hot water boiler

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

Gas-fired steam boiler

Constant-burning pilot not permitted.

Oil-fired hot water boiler

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

Oil-fired steam boiler

None.

Electric hot water boiler

None

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

Electric steam boiler

None

None.

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

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

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

Product class

Standard: P

W,SB

(watts)

Standard: P

W,OFF

(watts)

Gas-fired hot water boiler

Gas-fired steam boiler

Oil-fired hot water boiler

Oil-fired steam boiler

Electric hot water boiler

Electric steam boiler

A. Benefits and Costs to Consumers

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

Table I.4 presents the same results for standby mode and off mode. The average LCC savings are positive for all product classes, and the PBP is less than the average boiler lifetime, which is estimated to be 26.6 years for gas-fired hot water boilers and electric hot water boilers, 23.6 years for gas-fired steam boilers and electric steam boilers, 24.7 for oil-fired hot water boilers, and 19.3 years for oil-fired steam boilers.

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

The average LCC savings are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of standards (see section IV.F.8). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline model (see section IV.C.1.a and chapter 5 of the final rule TSD).

DOE used a distribution of boiler lifetimes that ranges from 1 to 60 years. See appendix 8F of the final rule TSD for details of the derivation of the average boiler lifetime.

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

Product class

Average LCC savings

(2014$)

Simple payback period

(years)

Gas-fired Hot Water Boiler

364

1.2

Gas-fired Steam Boiler

333

2.7

Oil-fired Hot Water Boiler

626

5.8

Oil-fired Steam Boiler

434

6.7

Electric Hot Water Boiler

(*)

Electric Steam Boiler

(*)

* N/A (No Standard).

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

Product class

Average LCC savings

(2014$)

Simple payback period

(years)

Gas-fired Hot Water Boiler

6.7

Gas-fired Steam Boiler

6.4

Oil-fired Hot Water Boiler

6.2

Oil-fired Steam Boiler

6.1

Electric Hot Water Boiler

8.9

Electric Steam Boiler

8.8

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

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

Product class

Average LCC savings

(2014$)

Simple payback period

(years)

Gas-Fired Hot Water Boiler

379

2.3

Gas-Fired Steam Boiler

351

4.2

Oil-Fired Hot Water Boiler

646

6.6

Oil-Fired Steam Boiler

447

7.4

Electric Hot Water Boiler

8.9

Electric Steam Boiler

8.8

DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2014 to 2050). Using a real discount rate of 8.0 percent, DOE estimates that the (INPV) for manufacturers of residential boilers in the base case without amended standards is $367.83 million in 2014$.

DOE analyzed the impacts of AFUE energy conservation standards and standby/off mode electrical energy consumption energy conservation standards on manufacturers separately. Under the adopted AFUE standards, DOE expects that the change in INPV will range from −0.71 to 0.44 percent, which is approximately equivalent to a reduction of −$2.63 million to an increase of $1.62 million. DOE estimates industry conversion costs from the amended AFUE standards to total $2.27 million.

Under the adopted standby mode and off mode standards, DOE expects the change in INPV will range from −0.46 to 0.12 percent, which is approximately equivalent to a decrease of $1.71 million to an increase of $0.45 million. DOE estimates industry conversion costs from the standby mode and off mode standards to total $0.21 million.

DOE's analysis of the impacts of the adopted standards on manufacturers is described in section IV.J of this final rule.

C. National Benefits

All monetary values in this document are expressed in 2014 dollars and, where appropriate, are discounted to 2015 unless explicitly stated otherwise. Energy savings in this section refer to full-fuel-cycle savings (see section IV.H for discussion).

DOE's analyses indicate that the adopted AFUE energy conservation standards for residential boilers are expected to save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for residential boilers purchased in the 30-year period that begins in the first full year of compliance with the amended standards (2021-2050) amount to 0.16 quadrillion Btu (quads).

This represents a savings of 0.6 percent relative to the energy use of these products in the case without amended standards (referred to as the “no-new-standards case”).

A quad is equal to 10

British thermal units (Btu). The quantity refers to full-fuel-cycle (FFC) energy savings. FFC energy savings 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. For more information on the FFC metric, see section IV.H.2.

The cumulative net present value (NPV) of total consumer costs and savings for the amended residential boilers AFUE standards ranges from $0.35 billion to $1.20 billion at 7-percent and 3-percent discount rates, respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for residential boilers purchased in 2021-2050.

In addition, the amended AFUE standards for residential boilers are expected to have significant environmental benefits. DOE estimates that the AFUE standards would result in cumulative emission reductions (over the same period as for energy savings) of 9.33 million metric tons (Mt)

of carbon dioxide (CO

), 2.075 thousand tons of sulfur dioxide (SO

), 122.3 tons of nitrogen oxides (NO

), 71.9 thousand tons of methane (CH

), 0.09 thousand tons of nitrous oxide (N

O), and 0.45 pounds of mercury (Hg).

The cumulative reduction in CO

emissions through 2030 amounts to 0.77 Mt, which is equivalent to the emissions resulting from the annual electricity use of more than 70,000 homes.

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

are presented in short tons.

DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the

Annual Energy Outlook 2015

(

AEO 2015)

Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014. DOE notes that the amended AFUE standards are estimated to cause a very slight increase in mercury emissions due to associated increase in boiler electricity use.

The value of the CO

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

(otherwise known as the “Social Cost of Carbon”, or SCC) developed by a Federal interagency working group (IWG).

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

emissions reduction (not including CO

-equivalent emissions of other gases with global warming potential) from residential boiler AFUE standards is between $0.053 billion and $0.802 billion, with a value of $0.263 billion using the central SCC case represented by $40.0/t in 2015. DOE also estimates that the net present monetary value of the NO

emissions reduction to be $0.109 billion at a 7-percent discount rate, and $0.328 billion at a 3-percent discount rate.

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

Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised July 2015) (Available at:

https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf

DOE estimated the monetized value of NO

emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis titled, “Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants,” published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at:

http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

) See section IV.L.2 for further discussion. Note that the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. Note that DOE is currently investigating valuation of avoided and SO

and Hg emissions.

Table I.6 summarizes the national economic benefits and costs expected to result from the adopted AFUE standards for residential boilers.

Table I.6—Summary of National Economic Benefits and Costs of Amended AFUE Energy Conservation Standards for Residential Boilers (TSL 3) *

Category

Present value

(billion 2014$)

Discount rate

(%)

Benefits

Consumer Operating Cost Savings

0.007

0.022

Reduction Value ($12.2/t case) **

0.001

Reduction Value ($40.0/t case) **

0.004

Reduction Value ($62.3/t case) **

0.007

2.5

Reduction Value ($117/t case) **

0.013

Reduction Value †

0.0002

0.0007

Total Benefits ††

0.012

0.027

Costs

Consumer Incremental Installed Costs

0.004

0.008

Total Net Benefits

Including Emissions Reduction Value ††

0.008

0.019

** The CO

† The $/ton values used for NO

are described in section IV.L.2. DOE estimated the monetized value of NO

http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

et al.,

2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele

et al.,

2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.

†† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case).

The benefits and costs of the adopted energy conservation standards, for residential boiler products sold in 2021-2050, can also be expressed in terms of annualized values. Benefits and costs for the AFUE standards are considered separately from benefits and costs for the standby mode and off mode electrical consumption standards, because for the reasons explained in section I.D below, it was not technically feasible to develop a single, integrated standard. The monetary values for the total annualized net benefits are the sum of: (1) The national economic value of the benefits in reduced consumer operating cost, minus (2) the increases in product purchase price and installation costs, plus (3) the value of the benefits of CO

and NO

emission reductions, all annualized.

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 consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (

e.g.,

2021 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

reductions, for which DOE used case-specific discount rates, as shown in Table I.7. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.

Although the value of operating cost savings and CO

emission reductions are both important, two issues are relevant. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas the value of CO

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

savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of residential boilers shipped in 2021-2050. Because CO

emissions have a very long residence time in the atmosphere,

the SCC values in future years reflect future CO

-emissions impacts that continue beyond 2100.

The atmospheric lifetime of CO

is estimated of the order of 30-95 years. Jacobson, MZ (2005), “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.

Estimates of annualized benefits and costs of the adopted AFUE standards for residential boilers are shown in Table I.8.

The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015),

the estimated cost of the AFUE standards in this rule is $17.0 million per year in increased equipment costs, while the estimated annual benefits are $56.5 million in reduced equipment operating costs, $15.5 million in CO

reductions, and $12.3 million in reduced NO

emissions. In this case, the net benefit amounts to $67.4 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.0/t in 2015, the estimated cost of the AFUE standards is $15.9 million per year in increased equipment costs, while the estimated annual benefits are $86.8 million in reduced operating costs, $15.5 million in CO

reductions, and $19.4 million in reduced NO

emissions. In this case, the net benefit amounts to $105.8 million per year.

DOE used a 3-percent discount rate because the SCC values for the series used in the calculation were derived using a 3-percent discount rate (see section IV.L).

Table I.8—Annualized Benefits and Costs of Amended AFUE Energy Conservation Standards for Residential Boilers (TSL 3) *

Discount rate

(Million 2014$/year)

Primary estimate *

Low net benefits

estimate *

High net benefits estimate *

Benefits

Consumer Operating Cost Savings

56.5

53.5

60.1

86.8

81.6

92.8

Reduction Value ($12.2/t case) **

4.4

4.3

4.5

Reduction Value ($40.0/t case) **

15.5

15.3

15.8

Reduction Value ($62.3/t case) **

2.5

23.0

22.7

23.4

Reduction Value ($117/t case) **

47.5

46.8

48.3

Reduction Value †

12.3

12.2

28.0

19.4

19.2

43.2

Total Benefits ††

7 plus CO

range

73 to 116

70 to 112

93 to 136

84.4

81.0

104.0

3 plus CO

range

111 to 154

105 to 148

141 to 184

121.7

116.1

151.9

Costs

Consumer Incremental Installed Costs

17.0

19.9

14.7

15.9

19.2

13.4

Net Benefits

Total ††

7 plus CO

range

56 to 99

50 to 93

78 to 122

67.4

61.1

89.3

3 plus CO

range

95 to 138

86 to 128

127 to 171

105.8

96.9

138.5

This table presents the annualized costs and benefits associated with residential boilers shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the

AEO 2015

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

** The CO

† The $/ton values used for NO

are described in section IV.L. DOE estimated the monetized value of NO

http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.

†† Total benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with the 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

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

values.

Estimates of annualized benefits and costs of the adopted standby mode and off mode standards are shown in Table I.9. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015), the estimated cost of the residential boiler standby mode and off mode standards in this rule is $0.46 million per year in increased equipment costs, while the estimated annual benefits are $0.84 million in reduced equipment operating costs, $0.25 million in CO

reductions, and $0.03 million in reduced NO

emissions. In this case, the net benefit amounts to $0.66 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.0/t in 2015, the estimated cost of the AFUE standards is $0.46 million per year in increased equipment costs, while the estimated annual benefits are $1.28 million in reduced operating costs, $0.25 million in CO

reductions, and $0.04 million in reduced NO

emissions. In this case, the net benefit amounts to $1.11 million per year.

Table I.9—Annualized Benefits and Costs of Adopted Standby Mode and Off Mode Energy Conservation Standards for Residential Boilers (TSL 3)*

Discount rate

(%)

(Million 2014$/year)

Primary

estimate *

Low net benefits estimate *

High net benefits estimate *

Benefits

Consumer Operating Cost Savings

0.84

0.81

0.89

1.28

1.25

1.38

Reduction Value ($12.2/t case) **

0.07

Reduction Value ($40.0/t case) **

0.25

0.26

Reduction Value ($62.3/t case) **

2.5

0.37

0.36

0.38

Reduction Value ($117/t case) **

0.77

0.75

0.79

Reduction Value †

0.03

0.06

0.04

0.10

Total Benefits ††

7 plus CO

range

0.94 to 1.63

0.91 to 1.59

1.02 to 1.74

1.12

1.09

1.21

3 plus CO

range

1.40 to 2.09

1.36 to 2.04

1.54 to 2.26

1.58

1.54

1.73

Costs

Consumer Incremental Installed Costs

0.46

0.45

0.47

0.46

0.45

0.47

Net Benefits

Total ††

7 plus CO

range

0.48 to 1.17

0.46 to 1.14

0.55 to 1.26

0.66

0.63

0.73

3 plus CO

range

0.93 to 1.63

0.91 to 1.59

1.07 to 1.78

1.11

1.09

1.25

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2021-2050. These results include benefits to consumers which accrue after 2050 from the products purchased in 2021-2050. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the

AEO 2015

Reference case, Low Economic Growth case, and High Economic Growth case, respectively.

** The CO

† The $/ton values used for NO

are described in section IV.L. DOE estimated the monetized value of NO

http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

†† Total benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with the 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

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

values.

DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this notice.

Based on the analyses culminating in this final rule, DOE found the benefits to the Nation of the standards (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) for both AFUE as well as standby mode and off would outweigh the burdens (loss of INPV for manufacturers and LCC increases for some consumers). DOE has concluded that the standards in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy.

DOE also added the annualized benefits and costs from the individual annualized tables to provide a combined benefit and cost estimate of the adopted AFUE and standby mode and off mode standards, as shown in Table I.10.

The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015), the estimated cost of the residential boiler AFUE and standby mode and off mode standards in this rule is $17.4 million per year in increased equipment costs, while the estimated annual benefits are $57.4 million in reduced equipment operating costs, $15.8 million in CO

reductions, and $12.4 million in reduced NO

emissions. In this case, the net benefit amounts to $68.1 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.0/t in 2015, the estimated cost of the residential boiler AFUE and standby mode and off mode standards in this rule is $16.4 million per year in increased equipment costs, while the estimated annual benefits are $88.1 million in reduced equipment operating costs, $15.8 million in CO

reductions, and $19.4 million in reduced NO

emissions. In this case, the net benefit amounts to $106.9 million per year.

To obtain the combined results, DOE added the results for the AFUE standards in Table I.8 with the results for the standby standards in Table I.9.

Table I.10—Annualized Benefits and Costs of Adopted AFUE and Standby Mode and Off Mode Energy Conservation Standards for Residential Boilers (TSL 3) *

Discount rate

(Million 2014$/year)

Primary

estimate *

Low net benefits estimate *

High net benefits estimate *

Benefits

Consumer Operating Cost Savings

57.4

54.3

61.0.

88.1

82.8

94.2.

Reduction Value ($12.2/t case) **

4.5

4.4

4.6.

Reduction Value ($40.0/t case) **

15.8

15.6

16.1.

Reduction Value ($62.3/t case) **

2.5%

23.4

23.0

23.8.

Reduction Value ($117/t case) **

48.2

47.5

49.1.

Reduction Value †

12.4

12.2

28.0.

19.4

19.2

43.3.

Total Benefits ††

7% plus CO

range

74.2 to 117.9

70.9 to 114

93.6 to 138.

85.5

82.1

105.

3% plus CO

range

112 to 156

106 to 150

142 to 187.

123.3

117.6

153.6.

Costs

Consumer Incremental Product Costs

17.4

20.3

15.1.

16.4

19.6

13.9.

Net Benefits

Total ††

7% plus CO

range

56.8 to 100

50.6 to 93.7

78.5 to 123.

68.1

61.8

90.0.

3% plus CO

range

95.6 to 139

86.8 to 130

128 to 173.

106.9

98.0

139.7.

AEO 2015

** The CO

† The $/ton values used for NO

are described in section IV.L. DOE estimated the monetized value of NO

http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

†† Total benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with the 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

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

values.

D. Standby Mode and Off Mode

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

AFUE, the statutory metric for residential boilers, does not incorporate standby mode or off mode use of electricity, although it already fully addresses use in these modes of fossil fuels by gas-fired and oil-fired boilers. In the October 2010 test procedure final rule for residential furnaces and boilers, DOE determined that incorporating standby mode and off mode electricity consumption into a single standard for residential furnaces and boilers is not technically feasible. 75 FR 64621, 64626-27 (Oct. 20, 2010). DOE concluded that a metric that integrates standby mode and off mode electricity consumption into AFUE is not technically feasible, because the standby mode and off mode energy usage, when measured, is essentially lost in practical terms due to rounding conventions for certifying furnace and boiler compliance with Federal energy conservation standards.

Id.

Therefore, in this final

rule, DOE is adopting amended boiler standards that are AFUE levels, which exclude standby mode and off mode electricity use; furthermore, DOE is adopting separate standards that are maximum wattage (W) levels to address the standby mode (P

W,SB

) and off mode (P

W,OFF

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

DOE is using the metrics just described—AFUE, P

W,SB

, and P

W,OFF

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

II. Introduction

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

A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Pub. L. 94-163 (codified as 42 U.S.C. 6291-6309) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”). These products include the residential boilers that are the subject of this rulemaking. (42 U.S.C. 6292(a)(5)) EPCA, as amended, prescribed energy conservation standards for these products (42 U.S.C. 6295(f)(1) and (3)), and directed DOE to conduct future rulemakings to determine whether to amend these standards (42 U.S.C. 6295(f)(4)). Under 42 U.S.C. 6295(m), the agency must periodically review its already-established energy conservation standards for a covered product no later than 6 years from the issuance of a final rule establishing or amending a standard for a covered product. This rulemaking satisfies both statutory provisions (42 U.S.C. 6295(f)(4) and (m)).

Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for residential boilers appears at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix N. In 2012, DOE initiated a rulemaking to review the residential furnaces and boilers test procedure. In March 2015, DOE published a notice of proposed rulemaking (NOPR) outlining the proposed changes to the test procedure. 80 FR 12876 (March 11, 2015). In January 2016, DOE published a final rule outlining the final changes made to the test procedure. (See EERE-2012-BT-TP-0024). Details regarding this rulemaking are discussed in section III.B.

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including residential boilers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including residential boilers, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, after receiving comments on the proposed standard, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination by, to the greatest extent practicable, considering the following seven statutory factors:

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

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

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

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

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

(6) The need for national energy and water conservation; and

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

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))

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 in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of product that has the same function or intended use, if DOE determines that products within such group: (A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature that other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate.

Id.

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

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

Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (EISA 2007), Pub. L. 110-140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)). DOE's current test procedures for residential boilers address standby mode and off mode energy use. In this rulemaking, DOE adopts separate energy conservation standards to address standby mode and off mode energy use.

B. Background

1. Current Standards

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

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

Product class

Minimum

annual fuel

utilization

efficiency

(

)

Design requirements

Gas-fired Hot Water Boiler

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

Gas-fired Steam Boiler

No Constant-Burning Pilot.

Oil-fired Hot Water Boiler

Automatic Means for Adjusting Temperature.*

Oil-fired Steam Boiler

None.

Electric Hot Water Boiler

None

Automatic Means for Adjusting Temperature.*

Electric Steam Boiler**

None

None.

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

** Although the “Electric steam boiler” product class is not included in the table at 10 CFR 430.32(e)(2)(ii), according to 42 U.S.C. 6295(f), there are no minimum AFUE or design requirements for these products. In order to clarify their status, DOE is including these products in both the AFUE and standby/off standards tables as part of this final rule.

2. History of Standards Rulemaking for Residential Boilers

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

Federal Register

(November 2007 final rule) revising the energy conservation standards for furnaces and boilers, which addressed the first required review of standards for boilers under 42 U.S.C. 6295(f)(4)(B). 72 FR 65136. Compliance with the standards in the November 2007 final rule would have been required by November 19, 2015. However, on December 19, 2007, EISA 2007, Pub. L. 110-140, was signed into law, which further revised the energy conservation standards for residential boilers. More specifically, EISA 2007 amended EPCA to revise the AFUE requirements for residential boilers and set design requirements for most product classes. (42 U.S.C. 6295(f)(3)) EISA 2007 required compliance with the amended energy conservation standards for residential boilers beginning on September 1, 2012.

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

Federal Register

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

DOE initiated this rulemaking pursuant to 42 U.S.C. 6295(f)(4)(C), which requires DOE to conduct a second round of amended standards rulemaking for residential boilers. EPCA, as amended by EISA 2007, also

requires that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of the determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)) This rulemaking will satisfy both statutory provisions.

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

Federal Register

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

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

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

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

Federal Register

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

Id.

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

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

A PDF copy of the supporting documentation is available at

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

The comment period closed on March 13, 2014.

On March 31, 2015, DOE published a notice of proposed rulemaking in the

Federal Register

(March 2015 NOPR). 80 FR 17222. In the March 2015 NOPR, DOE addressed in detail the comments received in earlier stages of the rulemaking, and proposed amended energy conservation standards for residential boilers. In conjunction with the March 2015 NOPR, DOE also published on its Web site the complete technical support document (TSD) for the proposed rule, which incorporated the analysis DOE conducted and technical documentation for each analysis. Also published on DOE's Web site were the LCC analysis spreadsheet and the national impact analysis standard spreadsheet. These materials are available at:

https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx?productid=89.

In the March 2015 NOPR, DOE identified twenty four issues on which it was particularly interested in receiving comments and views of interested parties. 80 FR 17222, 17303-17304 (March 31, 2015). The comment period was initially set to end June 1, 2015, but it was subsequently extended to July 1, 2015 in a

Federal Register

notice published on May 20, 2015. 80 FR 28852. After the publication of the March 2015 NOPR, DOE received written comments on these and other issues. DOE also held a public meeting in Washington, DC, on April 30, 2015 to discuss and receive comments regarding the tools and methods DOE used in the NOPR analysis, as well as the results of that analysis. DOE also invited written comments and announced the availability of a NOPR analysis technical support document (NOPR TSD). The NOPR TSD is available at:

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0047-0036.

The NOPR TSD described in detail DOE's analysis of potential standard levels for residential boilers. The document also described the analytical framework used in considering standard levels, including a description of the methodology, the analytical tools, and the relationships between the various analyses. In addition, the NOPR TSD presented each analysis that DOE performed to evaluate residential boilers, including descriptions of inputs, sources, methodologies, and results. DOE included the same analyses that were conducted at the preliminary analysis stage, with revisions based on comments received and additional research.

Statements received after publication of the Framework Document, at the Framework public meeting, and comments received after the publication of the NODA and NOPR have helped identify issues involved in this rulemaking and have provided information that has contributed to DOE's resolution of these issues. The Department considered these statements and comments in developing revised engineering and other analyses for this final rule.

III. General Discussion

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

DOE received 21 comments in response to the March 2015 NOPR. These commenters include: A joint comment from the American Council for an Energy-Efficient Economy (ACEEE), the Appliance Standards Awareness Project (ASAP), the Alliance to Save Energy (ASE), the Consumer Federation of America (CFA), the National Consumer Law Center (NCLC), the Natural Resources Defense Council (NRDC), and the Northeast Energy Efficiency Partnerships (NEEP); four comments from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI); a comment from the Air Conditioning Contractors of America (ACCA); a comment from the Plumbing-Heating-Cooling Contractors National Association (PHCC); a comment from U.S. Chamber of Commerce; a comment from the Cato Institute; a comment from Oilheat Manufacturers Association; a comment from Exquisite Heat; and an anonymous comment. Manufacturers submitting written comments include: Energy Kinetics, Weil-McLain, Burnham

Holdings (Burnham), and Lochinvar. Gas utilities and associations who submitted written comments include: A joint comment from the American Gas Association (AGA) and the American Public Gas Association (APGA); Philadelphia Gas Works (PGW); National Propane Gas Association (NPGA); the Laclede Group; and the Laclede Gas Company. This final rule summarizes and responds to the issues raised in these comments. A parenthetical reference

at the end of a comment quotation or paraphrase provides the location of the item in the public record.

The parenthetical reference provides a reference for information located in the docket of DOE's rulemaking to develop energy conservation standards for residential boilers. (Docket No. EERE-2012-BT-0047, which is maintained at

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

). The references are arranged as follows: (commenter name, comment docket ID number, page of that document).

A. Product Classes and Scope of Coverage

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

i.e.,

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

i.e.,

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

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

B. Test Procedure

DOE's current energy conservation standards for residential boilers are expressed in terms of AFUE (

see

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

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

(1993). 62 FR 26140, 26157.

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

Federal Register

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

Federal Register

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

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

Federal Register

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

Id.

EPCA, as amended by EISA 2007, requires that DOE must review test procedures for all covered products at least once every 7 years. (42 U.S.C 6293(b)(1)(A)) Accordingly, on March 11, 2015, DOE published a NOPR for the test procedure in the

Federal Register

(March 2015 test procedure NOPR), a necessary step toward fulfillment of the requirement under 42 U.S.C. 6293(b)(1)(A) for residential furnaces and boilers. 80 FR 12876. After a stakeholder comment and review period, DOE published a final rule for the test procedure in January 2016 (January 2016 test procedure final rule). (See EERE-2012-BT-TP-0024). DOE must base the analysis of amended energy conservation standards on the most recent version of its test procedures, and accordingly, DOE used the amended test procedure when considering product efficiencies, energy use, and efficiency improvements in its analyses. Major changes adopted in the January 2016 test procedure final rule included:

• Clarifying the definition of the electrical power term PE;

• Adopting a smoke stick test for determining the use of minimum default draft factors;

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

• Referencing the manufacturer's installation and operations (I&O) manual and providing clarification if the I&O manual does not specify test set up;

• Specifying ductwork for units installed without a return duct;

• Specifying testing requirements for units with multiposition configurations; and

• Revising the required reporting precision for AFUE.

• Adopting a verification method for determining whether a boiler incorporates an automatic means for adjusting water temperature and whether this design requirement functions as required.

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

C. Technological Feasibility

1. General

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

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. Section IV.B of this notice discusses the results of the screening analysis for residential boilers, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule technical support document (TSD).

2. Maximum Technologically Feasible Levels

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

D. Energy Savings

1. Determination of Savings

For each trial standard level (TSL), DOE projected energy savings from application of the TSL to residential boilers purchased in the 30-year period that begins in the year of compliance with any amended standards (2021-2050).

16 17

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

DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for a product would likely evolve in the absence of amended energy conservation standards, and it considers market forces and policies that affect demand for more-efficient products.

The expected compliance year at the time of the NOPR was 2020. For the final rule, the expected compliance year is 2021.

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

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

DOE used its national impact analysis (NIA) spreadsheet model to estimate national energy savings (NES) from potential amended standards for residential boilers. The NIA spreadsheet model (described in section IV.H of this final rule) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE calculates NES on an annual basis 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 from site electricity savings, DOE derived annual conversion factors from the model used to prepare the Energy Information Administration (EIA)'s

AEO 2015.

For natural gas and oil, the primary energy savings are considered equal to the site energy savings because they are supplied to the user without transformation from another form of energy.

Primary energy consumption refers to the direct use at source, or supply to users without transformation, of crude energy; that is, energy that has not been subjected to any conversion or transformation process.

In addition to primary energy savings, 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 (

e.g.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy conservation 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 equipment. For more information on FFC energy savings, see section IV.H.2 of this notice. For natural gas, the primary energy savings are considered to be equal to the site energy savings.

U.S. Energy Information Administration/Annual Energy Review 2011, Glossary, p.365 (Available at:

http://www.eia.gov/totalenergy/data/annual/pdf/sec18.pdf

2. Significance of Savings

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

Natural Resources Defense

Council

Herrington,

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

E. Economic Justification

1. Specific Criteria

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

a. Economic Impact on Manufacturers and Consumers

In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include: (1) Industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

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

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

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

The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. 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.

The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.

For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F.

c. Energy Savings

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

d. Lessening of Utility or Performance of Products

In establishing product classes and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this final rule will not reduce the utility or performance of the products under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (DOJ) in making such a determination, DOE transmitted copies of both its proposed rule and NOPR TSD to the Attorney General for review, with a request that DOJ provide its determination on this issue. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for residential boilers are unlikely to have a significant adverse impact on competition. DOE is publishing the Attorney General's assessment at the end of this final rule.

f. 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 adopted standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity, as discussed in section IV.M.

The adopted 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 impacts analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K; the emissions impacts are reported in section V.B.6 of this final rule. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L.

g. Other Factors

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

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1 of this final rule.

F. General Comments

During the April 30, 2015 public meeting, and in subsequent written comments in response to the March 2015 NOPR, stakeholders provided input regarding general issues pertinent to the rulemaking, such as issues regarding the proposed standard levels, as well as issues related to changes made to the test procedure. These issues are discussed in this section.

1. Proposed Standard Levels

In response to the levels proposed in the NOPR (TSL 3), the joint efficiency commenters stated their support for the proposed standard levels and encouraged DOE to evaluate condensing levels for hot water boilers, noting that the national energy savings at TSL 4 would be more than five times greater than the savings at TSL 3. (The joint efficiency commenters, No. 62 at pp. 1-2)

AHRI, Burnham, Lochinvar, Weil-McLain, and PHCC stated their opposition to the proposed standards at TSL 3 based on their concerns about several areas within the analysis. (AHRI, No. 64 at p. 1; Burnham, No. 60 at p. 1; Lochinvar, No. 63 at p. 1; Weil-McLain, No. 55 at p. 1; PHCC, No. 61 at p. 1) Lochinvar encouraged DOE to consider adopting TSL 2, and PHCC suggested that DOE make minimal increases (one percentage point) to standards. (Lochinvar, No. 63 at p. 5; PHCC, No. 61 at p. 1) AHRI and Lochinvar also suggested that the efficiency levels presented in the NOPR at TSL 4 are not economically justified as minimum standards. (AHRI, No. 64 at p. 1; Lochinvar, No. 63 at p. 5)

Burnham stated that under the proposed standards, tens of thousands of consumers will lose choice, be effectively required to retain and repair old, inefficient units, or be forced into costly and even dangerous retrofits. (Burnham, No. 60 at p. 1) Burnham stated that DOE's proposed standards are based in part on energy use characterizations, installation costs, operating costs, and lifecycle costs which are flawed and tend to overstate the benefit of the proposed standards, and thereby, they do not meet EPCA's requirements of maximum improvements in energy efficiency that are technologically feasible and economically justified. Burnham stated that after correcting for the various technical issues, the LCC savings for 85-percent AFUE and higher gas-fired hot water boilers decrease substantially, even becoming negative. (Burnham, No. 60 at pp. 2, 4) Burnham stated that the DOE analysis either needs to be reanalyzed or that DOE needs to set standards for gas-fired hot water boilers at a level below 85-percent AFUE. (Burnham, No. 60 at p. 20)

Weil-McLain stated that significant additional costs will be imposed on consumers to achieve a hypothetical increase in energy savings by installing an 85-percent AFUE gas hot water boiler rather than an 82- or 83-percent AFUE boiler that would not entail all of these additional costs. (Weil-McLain, No. 55 at p. 3)

U.S. Boiler stated that a better alternative to the proposed rule would be to set a minimum efficiency level of 83 percent AFUE, which would allow most existing chimneys to stay in use without alteration. U.S. Boiler stated that such a standard gives homeowners choices regarding installation of higher-efficiency boilers. (U.S. Boiler, Public Meeting Transcript, No. 50 at p. 291)

ACCA stated that, if not properly addressed, the issues with the analysis can lead to unintended consequences, such as driving some homeowners to repair and maintain older systems instead of replacing their equipment. (ACCA, No. 65 at p. 3)

The Department appreciates stakeholder comments with regard to the TSL selection and notes that DOE is required to set a standard that achieves the maximum energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE must consider, to the extent practicable, the benefits and burdens based on the seven criteria described in EPCA (see 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)). DOE's weighing of the benefits and burdens based on the final rule analysis and rationale for the TSL selection is discussed in section V. DOE notes that much of the commentary regarding the selection of TSL levels for the standards is based on more detailed comments regarding specific portions of the final rule analysis. These comments related to specific analyses are addressed within the specific analysis section to which they pertain. However, as a general matter, DOE notes that in light of the comments and data provided by stakeholders, the agency carefully reexamined its data and analyses for residential boilers, ultimately reassessing the appropriate efficiency levels for some product classes. Specifically, DOE determined to adopt a standard level at 84-percent AFUE for gas-fired hot water boilers and 85-percent AFUE for oil-fired steam boilers, which DOE determined meet the criteria for TSL 3 without causing harms described by the stakeholders. Regarding safety issues at 84-percent

AFUE for gas-fired hot water boilers, DOE determined that at this efficiency, there is no difference in terms of their ability to meet minimum NFGC safety requirements, as compared to 82-percent and 83-percent AFUE models. Section III.F.3 further discusses the 84-percent efficiency level safety considerations. In regards to 85-percent AFUE for oil-fired steam boilers, such efficiency level results in oil-fired steam boilers being one AFUE point lower than the oil-fired hot water boilers standards, which is at 86-percent AFUE. This addresses stakeholder concerns about manufacturing burden associated with having separate tooling for oil-fired steam models and for oil-fired hot water models, because as AHRI noted, an oil-fired steam boiler will operate slightly less efficiently than an oil-fired hot water boiler of the same design. (AHRI No. 67, at p. 2) DOE reviewed the oil-fired boiler market, and found that a 1-percent AFUE difference between oil-fired steam and hot water boilers is typical, so the adopted standards of 86-percent AFUE for oil-fired hot water boilers and 85-percent AFUE for oil-fired steam boilers will allow manufacturers to maintain one design for both oil-fired steam and oil-fired hot water boilers. Results are discussed further in section V of this document and in the final rule TSD.

2. Simultaneous Changes in Test Procedures and Energy Conservation Standards

Several stakeholders expressed legal, procedural, and practical concerns regarding the timing of the proposed test procedures and energy conservation standards revisions for residential boilers. Several stakeholders requested that DOE delay any further work on the rulemakings to amend efficiency standards for residential boilers until after the finalization of the test procedure. (AHRI, No. 64 at p. 2; Lochinvar, No. 63 at p. 1; Burnham, No. 60 at p. 5; AGA/APGA, No. 54 at p. 11; ACCA, No. 65 at p. 1) Specifically, AHRI requested that DOE reopen the docket for the March 2015 residential boiler standards NOPR once the test procedure has been finalized. (AHRI, No. 64 at p. 2) AHRI argued that the non-final status of the test procedure inhibits stakeholders' fair evaluation of the proposed standards and stressed the importance of having a known efficiency test procedure. AHRI commented that when a test procedure is in flux, manufacturers must spend resources collecting potentially unusable data which undermines their ability to effectively provide input on the proposed efficiency standards. Similarly, AHRI added that when a test procedure is not finalized, a manufacturer has no way of determining whether the test procedure will affect its ability to comply with a proposed revised standard. (AHRI, No. 64 at p. 2)

Many of these commenters were concerned about the timing of the energy conservation standards and test procedures rulemakings, given their expectation that the proposed changes to the test procedures for residential boilers would result in changes to the AFUE rating metric. Specifically, AHRI, Burnham, and Weil-McLain stated that the changes to the test procedure presented in the March 2015 TP NOPR would result in significant changes to the AFUE measurement. (AHRI, No. 64 at p. 1; Burnham, No. 60 at p. 6; Weil-McLain, No. 55 at p. 7) Burnham noted that the fact that the test procedure rulemaking is ongoing makes it impossible to gauge the effects of its final rule on proposed energy conservation standards. (Burnham, No. 60 at p. 6) AHRI stated that the proposed test procedure, if finalized, is not neutral and will require an adjustment of the AFUE standard to accommodate for the test effects. AHRI disagreed with DOE's tentative determination in the March 2015 TP NOPR that the proposed updates to the AFUE test method would not affect the AFUE ratings. AHRI stated that test data it is collecting shows that the proposed test procedure changes the resulting AFUE measurement. AHRI noted that one such change affecting AFUE is the proposed change to the procedure for burner set-up. (AHRI, No. 64 at p. 3)

Several stakeholders also contended that the timing of the test procedures and standards rulemakings violated certain procedural requirements, or DOE's own procedural policies. Burnham asserted that the simultaneous test procedure and standards rulemaking raises concerns under the Data Quality Act, and stated that the law and OMB guidelines require agency actions aimed at “maximizing the quality, objectivity, utility, and integrity of information (including statistical information) disseminated by the agency.” Burnham commented that DOE has considerable work ahead to comply with this requirement, and cited section 515 of the Treasury and General Government Appropriations Act for Fiscal Year 2001 (Pub. L. 106-554; HR 5658) at section 515(b)(2)(a). (Burnham, No. 60 at pp. 3, 6) AHRI, ACCA, and Burnham stated that by publishing the March 2015 TP NOPR within weeks of the proposed efficiency standards, DOE has failed to abide by its codified procedures at 10 CFR part 430, subpart C, appendix A(7)(c). (AHRI, No. 64 at p. 2; ACCA, No. 65 at p. 1; Burnham, No. 60 at p. 6) AHRI stated that The Administrative Procedure Act (APA) requires agencies to abide by their policies and procedures, especially where those rules have a substantive effect, and that the non-final test procedure has the substantive effect of increasing costs to stakeholders and diminishing their ability to comment on the efficiency standards. (AHRI, No. 64 at p. 2) AHRI noted that DOE is required to give stakeholders the opportunity to provide meaningful comments (see 42 U.S.C. 6295(p)(2), 6306(a)), and asserted that the close timing of the test procedures and standards NOPRs diminishes that opportunity. (AHRI, No. 64 at p. 2)

DOE does not believe that the timing of the test procedure and standards rulemakings has negatively impacted stakeholder's ability to provide comment. DOE has afforded interested parties an opportunity to provide comment on both the residential boiler standards rulemaking and the residential furnace and boiler test procedure rulemaking, consistent with the requirements of EPCA and all other relevant statutory provisions. Further, given the publication of the boilers test procedure final rule and the fact that none of the adopted changes will impact AFUE, DOE has determined it is not necessary to delay this standards rulemaking.

With regard to the specific concerns raised by stakeholders regarding changes to the AFUE metric, DOE determined in the March 2015 TP NOPR that the proposed test procedure amendments would have a

de minimis

impact on products' measured efficiency. 80 FR 12876, 12878 (March 11, 2015). However, as discussed above, DOE received comments from stakeholders both in response to the March 2015 test procedure NOPR and to the March 2015 standards NOPR suggesting that several provisions within the March 2015 test procedure NOPR would significantly impact AFUE ratings. In the January 2016 test procedure final rule, DOE responded to each of these comments and ultimately did not adopt those provisions which were suggested to cause changes to the AFUE ratings. The specific comments and proposals that were and were not adopted are discussed in detail in the January 2016 TP final rule. As discussed in the January 2016 TP final rule, because DOE ultimately did not adopt the proposed changes that were suggested to impact the AFUE ratings, the Department has concluded that all of the recent updates to the test

procedure will have a

de minimis

impact on AFUE ratings. Furthermore, DOE is adopting its amended and new standards for residential boilers based upon use of the revised test procedures, so any changes to the test procedure that could affect measured energy efficiency were fully taken into account in those standards.

Second, with regard to Burnham's assertion that DOE has not met the requirements of the Data Quality Act (DQA), DOE does not believe that the timing of the test procedure and standards rulemakings are matters within the Department's guidelines implementing the DQA. DOE has concluded that the data, analysis, and models it has used in this rulemaking adhered to the requirements of the Data Quality Act. Further, DOE strived to maximize the quality, objectivity, utility, and integrity of the information disseminated in this rulemaking (see section VI.J for more information on these requirements and DOE's determination). As noted above, the January 2016 test procedure final rule removed all of the provisions within the March 2015 test procedure NOPR that could significantly impact AFUE ratings.

Finally, with regard to the comments stating that DOE has failed to abide by its codified procedures at 10 CFR 430, subpart C, appendix A (7)(c), Appendix A establishes procedures, interpretations, and policies to guide DOE in the consideration and promulgation of new or revised appliance efficiency standards under EPCA. (See section 1 of 10 CFR 430 subpart C, appendix A) Those procedures are a general guide to the steps DOE typically follows in promulgating energy conservation standards. The guidance recognizes that DOE can and will, on occasion, deviate from the typical process. Accordingly, DOE has concluded that there is no basis to delay the final rule adopting standards for residential boilers.

3. Safety Issues

Lochinvar stated that the DOE analysis does not account for the impact of the proposed residential boiler standards on public safety. Specifically, Lochinvar stated that if 85-percent AFUE becomes the standard for gas-fired hot water boilers, the likelihood that the boilers will consistently have proper product installations and venting system design diminishes. (Lochinvar, No. 63 at p. 5) AHRI stated that the consumer safety impacts should eliminate consideration of a minimum efficiency standard appreciably above the current minimum standards for gas-fired and oil-fired boilers. (AHRI, No. 64 at pp. 3-4) Burnham stated that consumer safety hazards, along with the imposition of liability on manufacturers concordant with such safety hazards, alone justify the exclusion of Category I gas boilers at the 85-percent and 84-percent efficiency levels. (Burnham, No. 60 at p. 13)

Burnham stated that an 85-percent AFUE standard will risk hazards associated with old products being left in service long after it should be replaced due to higher replacement costs, and old boilers being replaced by less safe alternatives such as kerosene heaters. (Burnham, No. 60 at p. 3) Burnham stated that for 85-percent AFUE boilers, there are too many potential installations which breach acceptable safety levels. Furthermore, low-income consumers who do not have the resources to afford the necessary venting system upgrades required with condensing or near-condensing products will be imperiled. (Burnham, No. 60 at p. 7)

Burnham also stated that by selecting an 85-percent AFUE standard for gas-fired hot water boilers, DOE is risking carbon monoxide poisoning in situations where there are venting approaches used that meet building codes but which may not be adequate for full safety. (Burnham, No. 60 at pp. 3-4) Lochinvar stated that the condensation of flue gasses in venting will corrode conventional venting and may lead to spilling carbon monoxide into occupied spaces and death. (Lochinvar, No. 63 at p. 3)

Weil-McLain stated that the issues associated with the proposed retrofit venting requirements also create a potential safety hazard because positive pressure venting could push flue gases into the building. (Weil-McLain, No. 55 at p. 3) ACCA and Weil-McLain stated that there will be some less-skilled installers or do-it-yourselfers who may install the higher efficiency models incorrectly, resulting in safety problems. (ACCA, No. 65 at pp. 2-3; Weil-McLain, No. 55 at p. 3)

AHRI stated that the results of the analysis done by Gas Technology Institute (GTI), as contained in a report prepared for AHRI using a Vent-II tool, show that at an 84-percent or 85-percent AFUE level, the potential for excessive wetting in the vent system increases. As explained in the report, the “wet time” limits are values that have been used to establish the coverage for properly sized and configured vent systems for atmospheric gas-fired boilers in the National Fuel Gas Code (NFGC). When the Vent-II analysis shows wet times exceeding these limits, it is an indication of excessive condensation which increases the potential for condensate-induced corrosion and subsequent vent system failure, resulting in safety problems. (AHRI, No. 67 at p. 1)

In response, DOE has concluded that manufacturers will provide adequate guidance for installers to ensure that the venting system is safe. Furthermore, DOE assumed that 85-percent AFUE boilers would either be Category I or Category III appliances, and DOE accounted for a fraction of installations that would require a stainless steel vent connector or stainless steel venting to mitigate the dangers of potential corrosion issues. In any case, DOE is not adopting a standard at 85-percent AFUE for gas-fired boilers, so the potential problems raised by the stakeholders will not be an issue.

Regarding safety issues at to 84-percent AFUE, based on Burnham's data, AHRI's contractors' survey, and models available in the AHRI directory, DOE determined that the fraction of shipments and model availability with mechanical draft for the 82-percent to 84-percent AFUE boilers is about the same. In addition, AHRI's Vent-II analysis showed that for all 21 different scenario cases, 82-percent to 84-percent AFUE boilers demonstrated no difference in terms of their ability to meet the dryout wet times required to achieve the minimum NFGC safety requirements.

National Fire Protection Association,

NFPA 54 (ANSI Z223.1): National Fuel Gas Code

(2015) (Available at:

http://www.nfpa.org/codes-and-standards/document-information-pages?mode=code&code=54

4. Other

The Laclede group stated that DOE is not adhering to the process transparency and scientific integrity policies as set forth in 1996 “Process Improvement Rule” and outlined in 10 CFR 430, subpart C, appendix A (7)(g). 61 FR 36974 (July 15, 1996). Laclede also asserted that through the inconsistent application of the process improvement rule, DOE is not adhering to the consistency and transparency requirements outlined in the Treasury and General Government Appropriations Act of 2001, the Paperwork Reduction Act of 1995 (primarily Section 515), and the “Presidential Scientific Integrity Memorandum” issued on March 9, 2009, which was further clarified by the Director of the Office of Science and Technology Policy “Memorandum to the Heads of Departments and Agencies” of December 17, 2010. (Laclede, No. 58 at pp. 7-9)

As discussed in sections VI.C, J, and L and illustrated elsewhere in this document, DOE has developed analytical processes and data that ensure the quality of its information and the transparency of its analytical processes. In furtherance of these objectives and requirements, DOE has offered several opportunities for public comment on multiple documents, including documents made available prior to proposing any rule, and addressed stakeholder concerns at the April 30, 2015 public meeting, providing clarifications in an open and transparent fashion.

The Laclede group also stated that DOE failed to meet the requirements of Executive Order 12866, “Regulatory Planning and Review,” through the refusal to consider the alternative of not regulating. (Laclede, No. 58 at p. 7) DOE considered alternatives to regulating, including no new regulatory action. A full discussion of the non-regulatory alternatives considered by DOE is presented in the regulatory impact analysis found in chapter 17 of the final rule TSD.

As discussed previously, DOE believes it is in compliance with the requirements of 515 of the Treasury and Gen. Government Appropriations Act for fiscal year 2001 (Public Law 106-554; HR 5658) at section 515(b)(2)(a). (See section VI.J of this document.) For the final rule stage, DOE has incorporated feedback from interested parties, as appropriate, related to the energy use characterization, installation costs, operating costs, and lifecycle costs, leading to revisions in this analysis as compared to the analysis presented for the March 2015 NOPR. The specific comments and any related revisions are discussed in more detail in the applicable subsections of section IV of this document.

AHRI stated that DOE bears the burden, on the basis of substantial evidence, to demonstrate that the proposed standards are technologically feasible and economically justified. AHRI claimed that the DOE has attempted to impermissibly shift its statutory burden of data production onto stakeholders by forcing them to disprove several unreasonable assumptions including the price elasticity of boilers, as well as the lifetime of condensing boilers. AHRI stated that at a minimum, DOE has the responsibility to explain the basis for its assumptions. (AHRI, No. 64 at p. 4)

In response to AHRI, DOE notes that it conducts its analyses with the best available information that it is aware of, and seeks comment from interested parties as a way to ensure analytical robustness and verify the accuracy of the assumptions and information used in the rulemaking process. DOE then revises its analyses based on comments, information, and data collected through additional research and presented by stakeholders, as applicable, in later rulemaking stages. In some cases, additional relevant but unpublished data may reside with the regulated community and can be considered by DOE only if provided by those regulated parties. DOE has provided detailed comment responses regarding the specific assumptions outlined by AHRI in sections IV.F.2.d and IV.G.

In response to the NOPR, Weil-McLain stated that DOE had changed its position outlined in the NODA to not amend energy conservation standards for residential boilers. Weil-McLain added that DOE did so without explanation for the change in recommendation. (Weil-McLain, No. 55 at p.8)

In response, DOE emphasizes that the 2014 NODA was not a determination on whether to amend standards for residential boilers. Rather, it was a publication of the analysis and results at a preliminary stage (

i.e.,

before the NOPR) so that stakeholders could review and comment on the analytical output, the underlining assumptions, and the calculations that may ultimately be used to support amended standards. The DOE statement to which Weil-McLain refers is correct in that the 2014 NODA did not propose any amendments to the standards because at that early stage, DOE was not prepared to do so. It was not a statement that it had determined not to propose standards. Therefore, DOE did not change its position from the publication of the 2014 NODA to the publication of the 2015 NOPR.

IV. Methodology and Discussion of Related Comments

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

DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC and PBP of potential amended or new energy conservation standards. The national impact analysis uses a second spreadsheet set that provides shipments forecasts and calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential standards. These spreadsheet tools are available on the DOE Web site for this rulemaking at:

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

. Additionally, DOE used output from the latest version of EIA's

Annual Energy Outlook

(

AEO

), a widely known energy forecast for the United States for the emissions and utility impact analyses.

A. Market and Technology Assessment

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

1. Scope of Coverage

In the NOPR, DOE proposed to maintain the scope of coverage as defined by its current regulations for this analysis of new and amended standards, which includes six product classes of residential boilers: (1) Gas-fired hot water boilers, (2) gas-fired steam boilers, (3) oil-fired hot water boilers, (4) oil-fired steam boilers, (5) electric hot water boilers, and (6) electric steam boilers. As discussed in further detail in the paragraphs below, DOE excluded several types of residential boilers from the analysis in both the March 2015 NOPR and, subsequently, in this final rule.

DOE did not consider combination space and water heating appliances for this final rule. Combination appliances provide both space heating and domestic hot water to a residence. These products are available on the market in two major configurations, including a water heater fan-coil combination unit and a boiler tankless coil combination unit. Currently, manufacturers certify

combination appliances by rating the efficiency of the unit when performing their primary function (

i.e.,

space heating for boiler tankless coil combination units or water heating for water heater fan-coil units). As explained in the March 2015 NOPR, DOE proposed to exclude such products from the analysis conducted for this rulemaking. 80 FR 17222, 17238 (March 31, 2015). DOE did not receive any comments related to the coverage of combination appliances, and, thus, has not include them in this final rule.

DOE did not include electric boilers in the analysis of amended AFUE standards. (However, DOE has considered standby mode and off mode standards for electric boilers.) Electric boilers do not currently have an AFUE requirement under 10 CFR 430.32(e)(2)(ii). Electric boilers typically use electric resistance coils as their heating elements, which are highly efficient. Furthermore, the current DOE test procedure for determining AFUE classifies boilers as indoor units and, thus, considers jacket losses to be usable heat, because those losses would go to the conditioned space. The efficiency of these products already approaches 100 percent AFUE. Therefore, there are no options for increasing the rated AFUE of this product, and the impact of setting AFUE energy conservation standards for these products would be negligible. DOE proposed not to analyze amended AFUE standards for electric boilers in the March 2015 NOPR and did not receive any comments relating to this proposal. 80 FR 17222, 17238 (March 31, 2015).

DOE also did not include boilers that are manufactured to operate without the need for electricity in the analysis of amended AFUE standards. As was noted in the March 2015 NOPR, an exception already exists for boilers which are manufactured to operate without any need for electricity. (42 U.S.C. 6295(f)(3)(C); 10 CFR 430.32(e)(2)(iv)) 80 FR 17222, 17238 (March 31, 2015). Thus, DOE did not consider such products in the course of this analysis, and such products are not covered by the amended standards. DOE did not receive any comments in response to its proposal to exclude these products in the March 2015 NOPR.

In summary, DOE did not receive any comments in response to the NOPR regarding scope of coverage. Therefore, the scope used for the analysis of this final rule is the same as the scope used for the NOPR analysis.

2. Product Classes

When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) For this rulemaking, as discussed in the preceding section, DOE proposes to maintain the scope of coverage as defined by its current regulations for this analysis of standards, which includes six product classes of boilers. Table IV.1 lists the six product classes examined in the final rule.

Table IV.1—Product Classes for Residential Boilers

Boiler by fuel type

Heat transfer medium

Gas-fired Boiler

Steam.

Hot Water.

Oil-fired Boiler

Steam.

Hot Water.

Electric Boiler

Steam.

Hot Water.

In response to the proposed product classes included in the March 2015 NOPR, AGA, APGA, and PGW requested that DOE establish separate product classes for residential condensing and non-condensing boilers. (AGA, No. 54 at p. 11; PGW, No. 57 at p. 2) AGA stated that non-condensing boilers provide customers unique performance-related characteristics and consumer utility due to distinct venting characteristics and building constraints on installations. AGA stated that failure to adopt separate product classes would be inconsistent with DOE precedent. (AGA, No. 54 at p. 6)

Burnham stated that loss of the ability to use Category I venting (suitable for non-condensing boilers) is a loss in utility because the circumstances of many real world installations offer no practical alternatives to Category I venting, particularly in urban areas with closely-spaced residences. Burnham argued that providing heat and hot water are not the only utility functions, features, and performance characteristics of boilers, and that designs that allow proper installation in a variety of dwellings are a critical aspect of utility so that such products can be installed and used safely. Burnham stated limited exterior wall space and building or safety code or physical restrictions on where exhaust terminals can be located can cause venting issues, and that these constraints can be a particular problem in urban areas with homes that are either closely spaced or conjoined. Burnham gave the example of older “row homes” found in Northeastern cities, which Burnham asserted represent a large part of the U.S. residential boiler market. (Burnham, No. 60 at p. 14) In addition, Burnham stated that there is a point at which increasing installation costs become large enough to effectively create a “loss of utility,” and this situation in the real world is as likely to “result in the unavailability” of appropriate non‐condensing boilers as a pure design issue. Burnham stated that this is a direct violation of the “safe harbor rule” in 42 U.S.C. 6295(o)(4), among other provisions. (Burnham, No. 60 at pp. 4-16)

DOE received similar comments in response to the February 11, 2014 NODA and preliminary analysis, and addressed the comments in the March 31, 2015 NOPR. 79 FR 8122; 80 FR 17222. DOE maintains its position from the NOPR and reiterates that the utility derived by consumers from boilers is in the form of the space heating function that a boiler performs, rather than the type of venting the boiler uses. Condensing and non-condensing boilers perform equally well in providing this heating function. Likewise, a boiler requiring Category I venting and a boiler requiring Category IV venting are capable of providing the same heating function to the consumer, and, thus, provide virtually the same utility with respect to their primary function. DOE does not consider reduced costs associated with Category I venting in certain installations as a special utility, but rather, as was done in the March 2015 NOPR, the costs were considered as an economic impact on consumers that is considered in the rulemaking's cost-benefit analysis. DOE does not agree with Burnham's assertion that costs can become so prohibitively expensive that they should be considered a loss of utility of the product. Rather, the larger expense should be considered as an economic impact on consumers in the rulemaking's cost-benefit analysis and ultimately the analysis will determine if a cost is economically prohibitive. DOE considered the additional cost of adding vent length required to change the vent location to avoid the code limitations outlined by Burnham. Details regarding installation costs can be located in section IV.F.2. DOE maintains that this final rule is not in violation of the 42 U.S.C. 6295(o)(4), because it does not result in the unavailability of any covered product class of performance

characteristics, features, sizes, capacities and volumes. DOE does not consider the type of venting to be a “feature” that would provide utility to consumers, other than the economic benefits of the venting type which are properly considered in the economic analysis.

3. Technology Options

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

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

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

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

B. Screening Analysis

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

Technological feasibility.

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

Practicability to manufacture, install, and service.

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

Impacts on product utility or product availability.

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

Adverse impacts on health or safety.

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

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

In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the above four criteria, it will be excluded from further consideration in the engineering analysis. Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. The reasons for eliminating any technology are discussed below.

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

1. Screened-Out Technologies

During the NODA and NOPR phases, DOE screened out pulse combustion as a technology option for improving AFUE and screened out control relay for boiler models with brushless permanent magnet motors as a technology option for reducing standby electric losses. DOE decided to screen out pulse combustion based on manufacturer feedback during the Framework public meeting indicating that pulse combustion boilers have had reliability issues in the past, and therefore, manufacturers do not consider this a viable option to improve efficiency. Further, manufacturers indicated that similar or greater efficiencies than those of pulse combustion boilers can be achieved using alternative technologies. DOE did not receive any comments related to screening out pulse combustion and maintained this position for the final rule, and accordingly, maintained its position from the NOPR to screen out pulse combustion as a technology option.

In the NODA and NOPR analysis, DOE decided to screen out the option of using a control relay to depower BPM motors due to feedback received during the residential furnace rulemaking (which was reconfirmed during manufacturer interviews for the residential boiler rulemaking), which indicated that using a control relay to depower brushless permanent magnet motors could reduce the lifetime of the motors. The result of such a design would likely be excessively frequent repair and maintenance of the boiler to replace the motor.

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

The efficiency advocates recommended that DOE assess whether the de-powering could be done in a manner to minimize the number of power cycles to address concerns regarding potential product life impacts, for example by only disconnecting when the boiler has been inactive for more than 24 hours. The efficiency advocates suggested that this approach would achieve the desired results during long periods of inactivity, such as during the summer, without cycling on and off during periods of regular activity. (Efficiency Advocates, No. 62 at p. 2)

DOE has not found any residential boilers which utilize control relays to completely depower the BPM motors. The feedback received from the residential furnace rulemaking indicated that it was not only the number of power cycles which could reduce product utility but the potential for large current upon start up. Therefore, DOE has maintained its position from the NOPR in this final

rule and screened out control relays for models with brushless permanent magnet motors as a technology option, as it would reduce consumer utility. However, DOE will continue to evaluate this technology further in future rulemakings if motor technology develops that would allow for the inclusion of such a design.

2. Remaining Technologies

Through a review of each technology, DOE found that all of the other identified technologies met all four screening criteria and consequently, are suitable for further examination in DOE's analysis. In summary, DOE did not screen out the following technology options to improve AFUE: (1) heat exchanger improvements; (2) modulating operation; (3) direct vent; (4) premix burners; (5) low-pressure air-atomized oil burner; and (6) delayed-action oil pump solenoid valve. DOE also maintained the following technology options to improve standby mode and off mode energy consumption: (1) transformer improvements; and (2) switching mode power supply. All of these technology options are technologically feasible, given that the evaluated technologies are being used (or have been used) in commercially-available products or working prototypes. Therefore, all of the trial standard levels evaluated in this notice are technologically feasible. DOE also finds that all of the remaining technology options also meet the other screening criteria (

i.e.,

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

C. Engineering Analysis

In the engineering analysis (corresponding to chapter 5 of the final rule TSD), DOE establishes the relationship between the manufacturer selling price (MSP) and improved residential boiler energy efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) design option; (2) efficiency level; or (3) reverse engineering (or cost-assessment). The design-option approach involves adding the estimated cost and efficiency of various efficiency-improving design changes to the baseline to model different levels of energy efficiency. The efficiency-level approach uses estimates of cost and efficiency at distinct levels of efficiency from publicly-available information, and information gathered in manufacturer interviews that is supplemented and verified through technology reviews. The reverse-engineering approach involves testing products for efficiency and determining cost from a detailed bill of materials (BOM) derived from the reverse-engineering of representative products. The efficiency values under consideration range from that of a least-efficient boiler sold today (

i.e.,

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

As noted in section III.B, the AFUE metric fully accounts for the fossil-fuel energy consumption in active, standby and off modes, whereas the electrical energy consumption in standby mode and off mode is accounted for with separate metrics that measure the power drawn during standby mode and off mode (P

W,SB

and P

W,OFF

for standby mode and off mode, respectively). In analyzing the technologies that would likely be employed to effect changes in these metrics, DOE found that the changes that would be implemented to increase AFUE were mostly independent from the changes that would be implemented to reduce the electrical standby mode and off mode energy consumption (P

W,SB

and P

W,OFF

). For example, the primary means of improving AFUE is to improve the heat exchanger design, which DOE expects would have little or no impact on standby mode and off mode electrical energy consumption. Similarly, the design options considered likely to be implemented for reducing standby mode and off mode electrical energy consumption are not expected to impact the AFUE. Therefore, DOE conducted separate engineering and cost-benefit analyses for the AFUE metric and the standby mode and off mode metrics and their associated systems (fuel and electrical). In order to account for the total impacts of both considered standards, DOE added the monetized impacts from these two separate analyses in the NIA, LCC, and MIA as a means of providing a cumulative impact of both residential boilers standards. For the PBP, to estimate the cumulative impact for both standards, DOE determined the combined installed cost to the consumer and the first-year operating costs for each household.

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

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

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

1. Efficiency Levels

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

a. Baseline Efficiency Level and Product Characteristics

In its analysis, DOE selected baseline units typical of the least-efficient commercially-available residential boilers. DOE selected baseline units as

reference points for each product class, against which it measured changes resulting from potential amended energy conservation standards. The baseline efficiency level in each product class represents the basic characteristics of products in that class. A baseline unit is a unit that just meets current Federal energy conservation standards and provides basic consumer utility.

DOE uses the baseline unit for comparison in several phases of the analyses, including the engineering analysis, LCC analysis, PBP analysis, and the NIA. To determine energy savings that will result from an amended energy conservation standard, DOE compares energy use at each of the higher energy efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the changes in price to the consumer that will result from an amended energy conservation standard, DOE compares the price of a baseline unit to the price of a unit at each higher efficiency level.

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

Table IV.2—Baseline AFUE Efficiency Levels

Product class

AFUE

(%)

Gas-Fired Hot Water Boilers

Gas-Fired Steam Boilers

Oil-Fired Hot Water Boilers

Oil-Fired Steam Boilers

The input capacity is a factor that influences the MPC of a residential boiler. The impact of efficiency ratings on residential boiler prices can be captured by calculating the incremental price for each efficiency level higher than the baseline at a given input capacity. To provide a singular set of incremental price results for the engineering analysis, DOE selected a single input capacity for each product class analyzed for AFUE standards. DOE selected these input capacities by referencing a number of sources, including information obtained during manufacturer interviews, information collected for the market and technology assessment, as well as information obtained from product literature.

In response to the representative input capacities selected in the engineering analysis from each product class, Burnham presented shipment information of their aggregated subsidiaries indicating the average input capacity sold in for each product class. Based upon this data, Burnham suggested that the representative input capacity for gas-fired hot water boilers should be changed to 120 kBtu/hr. (Burnham, No. 60 at p. 20)

In response, DOE notes that the representative input capacity is meant to describe the most typical boiler sold. Therefore, DOE believes that although the average of all shipments sold may be 120 kBtu/hr, the most often sold would be 100 kBtu/hr. AHRI stated that the analysis does not adequately evaluate the effect of revised efficiency standards on larger input boilers. AHRI stated that boilers are a very small segment of the U.S. residential heating market and commented that larger input boilers are the smallest segment of the residential boiler market. For these larger input models, AHRI argued that there is no economy of scale, and because relatively so few are manufactured, the costs of components are higher. The units are physically larger and weigh more so their shipping costs are larger. Accordingly, AHRI asserted that the information developed by the tear down analysis cannot be validly scaled up to these models which have input rates 2 to 2.5 times higher than the baseline models. (AHRI, No. 64 at p. 14) Similarly, Burnham stated that due to the size of the residential boiler market, the manufacturing costs for a 250,000 Btu/hr boiler may not be a simple linear scale. (Burnham, public meeting transcript, No. 50 at p. 34)

In response to these comments, DOE examined the parts catalogs of various manufacturers for a variety of boiler types within each product class. From this examination, DOE determined that the same materials, as well as purchase parts are utilized in the manufacture of both representative and larger capacity boilers. For example, a representative capacity heat exchanger may be comprised of four cast iron sections, including two end sections with two intermediate sections. A larger capacity unit would generally be comprised of a larger number of the same sections, typically two end sections with six intermediate sections for a 250 kBtu/hr boiler. Although the amount of material used increases as capacity increases, DOE has not found reason to believe that the cost of the material would increase due to a lack of economy of scale.

In addition, DOE found that the large majority of components used for larger-capacity boilers were identical to those used in lower capacity boilers, although larger quantities of those components may be necessary in the manufacturing of higher-capacity boilers. For example, a larger-capacity burner may require a larger number of burner tubes. In several cases, the cost of the higher-capacity unit could be expected to be less than the result of a linear scaling upward of the cost, due to the need for only one component per unit regardless of capacity. In other words, there are certain fixed production costs that are present no matter the size of the boiler and only the variable costs increase with boiler size. For instance, a larger boiler would utilize the same controls and wiring harness as a smaller boiler, the cost of which would remain fixed regardless of the input capacity. DOE did find one relevant example, a higher-capacity premix burner, which may be purchased at a higher cost due to a lack of economy of scale. However, DOE believes that the potential increase in price of this purchase part would be offset by the many instances in which the production costs remain fixed regardless of capacity.

DOE notes that shipping costs are considered a sales expense and not a production cost. As discussed in section IV.C.2.e, when translating MPCs to MSPs, DOE applies a manufacturer mark-up to the MPC. This mark-up, based on an analysis of manufacturer SEC 10-K reports, includes outbound freight costs. Therefore, any increase in MPC would account for larger shipping costs via a higher MSP.

“Standby mode” and “off mode” power consumption are defined in the DOE test procedure for residential furnaces and boilers. DOE defines “standby mode” as “any mode in which the furnace or boiler is connected to a mains power source and offers one or more of the following space heating functions that may persist: a.) To facilitate the activation of other modes (including activation or deactivation of active mode) by remote switch (including thermostat or remote control), internal or external sensors, or timer; b.) Continuous functions, including information or status displays or sensor based functions.” 10 CFR part 430, subpart B, appendix N, section 2.12. “Off mode” is defined as “a mode in which the furnace or boiler is connected to a mains power source and is not providing any active mode or standby mode function, and where the mode may persist for an indefinite time.

The existence of an off switch in off position (a disconnected circuit) is included within the classification of off mode.” 10 CFR part 430, subpart B, appendix N, section 2.9. Finally, an “off switch” is defined as “the switch on the furnace or boiler that, when activated, results in a measurable change in energy consumption between the standby and off modes.” 10 CFR part 430, subpart B, appendix N, section 2.10.

Through review of product literature and discussions with manufacturers, DOE has found that boilers typically do not have an off switch. Manufacturers stated that if a switch is included with a product, it is primarily used as a service/repair switch, not for turning off the product during the off season. However, these switches could possibly be used as off switches by the consumer. In cases where no off switch is present, no separate measurement for off mode is taken during testing, and the DOE test procedure sets off mode power equal to standby mode power (P

W,OFF

= P

W,SB

). In the case where an off switch is present, a measurement for off mode is required. 10 CFR part 430, subpart B, appendix N, section 8.11.2. Because DOE's review of product literature and discussions with manufacturers revealed that most boilers do not have seasonal off switches, DOE assumed that the standby mode and the off mode power consumption are equal for its analysis.

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

Table IV.3—Baseline Standby Mode and Off Mode Power Consumption

Component

Standby mode and off mode power consumption (watts)

Gas-fired hot water

Oil-fired hot water

Gas-fired steam

Oil-fired steam

Electric hot water

Electric steam

Transformer

ECM Burner Motor

N/A

Controls

2.5

Display

Oil Burner

N/A

Total (watts)

11.5

13.5

10.5

13.5

10.5

In response to the NOPR standby mode and off mode analysis, Lochinvar suggested DOE should not regulate standby electricity consumption, because the standby electrical power consumption releases useful heat inside the home. Lochinvar highlighted that DOE's test method for residential boilers affirms its position by assigning a jacket loss factor of 0 for “boilers intended to be installed indoors.” However, Lochinvar agreed that DOE should regulate off mode power consumption. Lochinvar also agreed with DOE's assumption that most consumers do not turn off power to their boilers seasonally and suggested that DOE should invest effort into promoting turning off power to the boiler when there is no need for heating. Lochinvar stated that baseline power consumption predicted by DOE is reasonable, but that the assumption that the standby mode energy consumption is the same as the off mode energy consumption is erroneous. (Lochinvar, No. 63 at pp. 1-4)

In response to the suggestion that DOE not regulate standby mode, DOE notes that it is statutorily required to consider both standby mode and off mode electrical power consumption under EPCA at 42 U.S.C. 6295(gg)(3). As outlined in section III.B, the DOE test procedure references two industry standards, ASHRAE 103-1993, which is used to determine the heating efficiency of a residential boiler, and IEC 62301, which is used to determine the standby mode and off mode energy consumption of a residential boiler. As noted by Lochinvar, ASHRAE 103 considers the jacket losses as usable heat for boilers intended to be installed indoors. However, the power consumption as measured by IEC Standard 62301 is a consumption metric and not an efficiency metric and is considered separately from the AFUE. The DOE test procedure for standby mode does not treat those boilers intended to be installed indoors any differently than those intended to be installed outdoors or in other unconditioned spaces, where the heat produced by the standby mode use would be a loss. While the majority of residential boilers may be installed indoors (as is assumed by the DOE test procedure), there are boilers available on the market that are designed for installation in unconditioned spaces or outdoors where any heat released by standby electrical power consumption would not be useful. Therefore, DOE has concluded it is appropriate to regulate the standby mode power consumption.

In response to the assertion that standby mode and off mode consumption are not equal, DOE agrees that standby mode energy consumption and off mode energy consumption are not equal in all cases (

i.e.,

if there is an off switch present). However, DOE notes that in cases where no off switch is present (which based on DOE's review of the market and information obtained during manufacturer interviews is the most comm

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