Energy Conservation Program: Energy Conservation Standards for Commercial Prerinse Spray Valves

Federal RegisterJan 27, 2016

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2014-BT-STD-0027]

RIN 1904-AD31

Energy Conservation Program: Energy Conservation Standards for Commercial Prerinse Spray Valves

AGENCY:

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

ACTION:

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 commercial prerinse spray valves (CPSVs). EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent 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 commercial prerinse spray valves because DOE 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 28, 2016. Compliance with the amended standards established for commercial prerinse spray valves in this final rule is required on and after January 28, 2019.

ADDRESSES:

The docket, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

www.regulations.gov

. All documents in the docket are listed in the

www.regulations.gov

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

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

www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100

. The

www.regulations.gov

Web page contains 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. James Raba, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-8654. Email:

commercial_pre-rinse_spray_valves@ee.doe.gov

Mr. Peter Cochran, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9496. Email:

Peter.Cochran@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 and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Commercial Prerinse Spray Valves

C. General Rulemaking Comments

III. General Discussion

A. Product Classes and Scope of Coverage

B. Test Procedure

C. Certification, Compliance, Enforcement and Labeling

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. 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 and Water Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Market Assessment

2. Product Classes

a. Spray Force

b. Number of Classes

c. Other Comments

3. Technology Assessment

B. Screening Analysis

C. Engineering Analysis

1. Engineering Approach

2. Linear Relationship Spray Force and Flow Rate

3. Baseline and Max-Tech Models

4. Proposed CPSV NOPR Standard Levels

a. Availability of Products

b. Standard Levels

5. Manufacturing Cost Analysis

D. Markups Analysis

E. Energy and Water Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

3. Annual Energy and Water Consumption

4. Energy Prices

5. Water and Wastewater Prices

6. Maintenance and Repair Costs

7. Product Lifetime

8. Discount Rates

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

10. Payback Period Analysis

11. Rebuttable-Presumption Payback Period

G. Shipments Analysis

1. Sensitivity Cases

H. National Impact Analysis

1. National Energy and Water Savings

2. Net Present Value Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. GRIM Key Inputs

b. GRIM Scenarios

3. Discussion of 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

3. Comments

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash Flow Analysis Results

b. Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on 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 TSLs Considered for Commercial Prerinse Spray Valve Standards

2. Summary of Annualized Benefits and Costs of the Amended Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

1. Statement of the Need for, and Objectives of, the Rule

2. Statement of the Significant Issues Raised by Public Comments

3. Response to Comments Submitted by the Small Business Administration

4. Description on Estimated Number of Small Entities Regulated

5. Description and Estimate of Compliance Requirements

6. Description of Steps To Minimize Impacts to Small Businesses

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

Title III of the Energy Policy and Conservation Act of 1975 (EPCA),

sets forth a variety of provisions designed to improve energy efficiency. Part B of title III established the “Energy Conservation Program for Consumer Products Other Than Automobiles.” These products include commercial prerinse spray valves (CPSVs), the subject of this document.

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

Because Congress included commercial prerinse spray valves in Part B of Title III of EPCA, the consumer product provisions of Part B (not the industrial equipment provisions of Part C) apply to commercial prerinse spray valves. However, because commercial prerinse spray valves are commonly considered to be commercial equipment, as a matter of administrative convenience and to minimize confusion among interested parties, DOE placed the requirements for commercial prerinse spray valves into subpart O of 10 CFR part 431. Part 431 contains DOE regulations for commercial and industrial equipment.

Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that 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 significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) Not later than 2 years after such a document is issued, DOE must publish a final rule amending the standard for the product. (42 U.S.C. 6295(m)(3)

In accordance with these and other statutory provisions discussed in this document, DOE is adopting amended energy conservation standards for commercial prerinse spray valves. The amended standards, which are expressed in terms of the flow rate (in gallons per minute, gpm) for each product class (defined by spray force in ounce-force, ozf), are shown in Table I.1. The amended standards will apply to all classes of commercial prerinse spray valves listed in Table I.1 that are manufactured in, or imported into, the United States on or after January 28, 2019.

Table I.1—Amended Energy Conservation Standards for Commercial Prerinse Spray Valves

Product class

Maximum

flow rate

(gpm)

1. Product Class 1 (≤5.0 ozf)

1.00

2. Product Class 2 (>5.0 ozf and ≤8.0 ozf)

1.20

3. Product Class 3 (>8.0 ozf)

1.28

A. Benefits and Costs to Consumers

Table I.2 presents DOE's evaluation of the economic impacts of the amended standards on commercial prerinse spray valves, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).

The average LCC savings are non-negative for all product classes. The PBP for all product classes is also less than the projected average CPSV lifetime of approximately 5 years.

The average LCC savings are measured relative to the no-new-standards case efficiency distribution, which depicts the CPSV market in the compliance year (see section IV.F). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline CPSV model (see section IV.C.1).

Table I.2—Impacts of Amended Energy Conservation Standards on Consumers of Commercial Prerinse Spray Valves

Product class

Average

LCC savings

(2014$) *

Simple

payback

period

(years) **

1. Product Class 1 (≤5.0 ozf)

0.0

2. Product Class 2 (>5.0 ozf and ≤8.0 ozf)

0.0

3. Product Class 3 (>8.0 ozf)

547

0.0

* Product classes 1 and 2 have zero LCC savings because the no-new-standards case efficiency distribution (see section IV.F.9) shows the entire CPSV market at or above the amended standard for these product classes.

** For product classes 1 and 2, because there is no change in the market resulting from the standard, DOE represented these PBPs as zero. Additionally, in all product classes, because more efficient units do not cost more up front, consumers begin saving money as soon as a more efficient product is installed (the payback is immediate).

DOE's analysis of the impacts of the amended standards on consumers is described in more detail 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 (2015 through 2048). Using a real discount rate of 6.9 percent,

DOE estimates that the INPV for manufacturers of commercial prerinse spray valves in the case without amended standards (referred to as the

no-new-standards case) is $8.6 million in 2014$. Under the amended standards adopted in this final rule, DOE expects that manufacturers may lose up to 13.1 percent of this INPV, which is equivalent to approximately $1.1 million. Additionally, based on its analysis of available information, DOE does not expect significant impacts on manufacturing capacity or loss of employment.

The discount rate is an industry average discount rate, which was estimated using publically available industry financial data for companies that sell CPSVs in the U.S. Data sources are listed in section IV.J.

DOE's analysis of the impacts of the amended standards on manufacturers is described in more detail in section IV.J of this document.

C. National Benefits and Costs

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

DOE's analyses indicate that the amended energy conservation standards for commercial prerinse spray valves would save a significant amount of energy and water. Relative to the no-new-standards case, the lifetime energy savings for commercial prerinse spray valves purchased in the 30-year period that begins in the compliance year (2019-2048) amounts to 0.10 quadrillion Btu (quads)

and 119.57 billion gallons of water. This represents a savings of 8 percent relative to the energy use of these products in the no-new-standards case. This also represents a savings of 8 percent relative to the water use of these products in 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.1.

The cumulative net present value (NPV) of total consumer costs and savings of the standards for commercial prerinse spray valves ranges from $0.72 billion (at a 7-percent discount rate) to $1.48 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for commercial prerinse spray valves purchased in 2019-2048.

In addition, the standards for commercial prerinse spray valves are projected to yield significant environmental benefits. DOE estimates that the standards will result in cumulative emission reductions (from 2019-2048) of 5.87 million metric tons (Mt)

of carbon dioxide (CO

), 1.79 thousand tons of sulfur dioxide (SO

), 14.70 thousand tons of nitrogen oxides (NO

), 47.37 thousand tons of methane (CH

), 0.04 thousand tons of nitrous oxide (N

O), and 0.01 tons of mercury (Hg).

The cumulative reduction in CO

emissions through 2030 amounts to 1.86 Mt, which is equivalent to the emissions resulting from the annual electricity use of about 255,000 homes.

A metric ton is equivalent to 1.1 short tons. Results for NO

and Hg 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

(

AEO2015)

Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014.

The value of the CO

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

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

The derivation of the SCC values is discussed in section IV.L of this document. 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) is between $0.04 billion and $0.59 billion. DOE also estimates that the net present monetary value of the NO

emissions reduction is between $24 and $53 million at a 7-percent discount rate, and between $52 and $117 million 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:

http://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 SO

and Hg emissions.

Table I.3 summarizes the national economic benefits and costs expected to result from the amended standards for commercial prerinse spray valves.

Table I.3—Summary of National Economic Benefits and Costs of Amended Energy Conservation Standards for Commercial Prerinse Spray Valves *

Category

Present value

(million 2014$)

Discount rate

(%)

Benefits

Operating Cost Savings

718

1,476

Reduction Monetized Value ($12.2/metric ton case) **

Reduction Monetized Value ($40.0/metric ton case) **

195

Reduction Monetized Value ($62.3/metric ton case) **

308

2.5

Reduction Monetized Value ($117/metric ton case) **

594

Reduction Monetized Value †

Total Benefits ††

937

1,724

Costs

Manufacturer Conversion Costs †

1 to 2

N/A

Total Net Benefits

††

Including Emissions Reduction Monetized Value

937

1,724

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

** The CO

values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.

† 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

). See section IV.L.2 for further discussion. DOE 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). 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 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 amended standards, for commercial prerinse spray valves sold in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of: (1) The annualized national economic value of the benefits from consumer operation of products that meet the amended standards (consisting primarily of operating cost savings from using less energy and water, minus increases in product purchase and installation costs, which is another way of representing consumer NPV); and (2) the annualized monetary value of the benefits of CO

and NO

emission reductions.

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.,

2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO

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

Although 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 commercial prerinse spray valves shipped in 2019-2048. 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, “Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' ”

J. Geophys. Res.

110. pp. D14105 (2005).

Estimates of annualized benefits and costs of the amended standards are shown in Table I.4. Using a 7-percent discount rate for benefits and costs other than CO

reduction (for which DOE used a 3-percent discount rate, along with the average SCC series that has a value of $40.0 per metric ton in 2015), there are no increased product costs associated with the standards adopted in this final rule. The benefits under the 7% discount rate case are $71 million per year in reduced product operating costs, $11 million per year in CO

reductions, and $2 million to $5 million per year in reduced NO

emissions. In this case, the net benefit amounts to approximately $84 million per year. Using a 3-percent discount rate for all benefits and costs as well as the average SCC series that has a value of $40.0 per metric ton in 2015, there are still no increased product costs associated with the amended standards in this rule, while the benefits are $82 million per year in reduced operating costs, $11 million in CO

reductions, and $3 million to $7 million in reduced NO

emissions. In this case (3% discount rate), the net benefit amounts to approximately $96 million per year.

Table I.4—Annualized Benefits and Costs of Amended Standards for Commercial Prerinse Spray Valves *

Discount rate

Million 2014$/year

Primary

estimate *

Low net

benefits

estimate *

High net

benefits

estimate *

Benefits

Consumer Operating Cost Savings

Reduction at $12.2/t **

Reduction at $40.0/t **

Reduction at $62.3/t **

2.5%

Reduction at $117/t **

Reduction Monetized Value †

Total Benefits ††

7% plus CO

range

77 to 106

71 to 101

82 to 112

3% plus CO

range

89 to 118

82 to 112

96 to 126

104

Costs

Manufacturer Conversion Costs †††

0.08 to 0.13

0.05 to 0.08

Total Net Benefits

Total ††††

7% plus CO

range

77 to 106

71 to 101

82 to 112

3% plus CO

range

89 to 118

82 to 112

96 to 126

104

* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the amended standard, some of which may be incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the Annual Energy Outlook 2015 (

AEO2015)

reference case, low estimate, and high estimate, respectively.

** The CO

values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3 percent discount rate.

† The $/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

) See section IV.L.2 for further discussion. 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-percent and 7-percent cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.0/metric ton 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.

††† The lower value of the range represents costs associated with the Sourced Components conversion cost scenario. The upper value represents costs for the Fabricated Components scenario.

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

benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. Manufacturer Conversion Costs are not included in the net benefits calculations.

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

D. Conclusion

Based on the analyses conducted for this final rule, DOE found the benefits to the nation of the standards (energy and water savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV). 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.

II. Introduction

The following sections 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 commercial prerinse spray valves.

A. Authority

Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. As part of this program, EPCA prescribed energy conservation standards for commercial prerinse spray valves, which are the subject of this rulemaking. (42 U.S.C. 6292(dd)) Under 42 U.S.C. 6295(m), DOE 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 the product. After publishing a notice of proposed rulemaking (NOPR) including new proposed standards, DOE must publish a final rule amending the standard for the product no later than 2 years after the NOPR is issued. (42 U.S.C. 6295(m)(3)(A) This final rule fulfills this statutory requirement.

Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Secretary of Energy (Secretary) or the Federal Trade Commission (FTC), as appropriate, may prescribe labeling requirements for commercial prerinse spray valves. (42 U.S.C. 6294(a)(5)(A))

Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293(b)(3)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for commercial prerinse spray valves appears at title 10 of the Code of Federal Regulations (CFR) part 431, subpart O. DOE released a pre-publication notice of the test procedure final rule for commercial prerinse spray valves (CPSV TP final rule) on December 18, 2015.

The pre-publication

Federal Register

notice of the CPSV TP final rule issued by DOE is available on DOE's Web site at

http://energy.gov/sites/prod/files/2015/12/f27/CPSV%20TP%20Final%20Rule.pdf

. Following publication in the

Federal Register

, the CPSV TP final rule will be available at

www.regulations.gov

under Docket # EERE-2014.BT-TP-0055.

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including commercial prerinse spray valves. 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)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) Moreover, DOE may not prescribe a standard for certain products, including commercial prerinse spray valves, if no test procedure has been established for the product (42 U.S.C. 6295(o)(3)(A)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven 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 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 and water savings the consumer will receive during the first year that the standard applies, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))

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 at the time of the Secretary's finding. (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 products that has the same function or intended use if DOE determines that products within such group: (1) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (2) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE shall consider such factors as the utility to the consumer of 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)) California, however, has a statutory exemption to preemption for commercial prerinse spray valve standards adopted by the California Energy Commission before January 1, 2005. (42 U.S.C. 6297(c)(7)) As a result, while federal commercial prerinse spray valve standards, including any amended standards that may result from this rulemaking, apply in California, California's commercial prerinse spray valve standards also apply as they are exempt from preemption. DOE may also grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).

Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's recently updated test procedures for commercial prerinse spray valves do not address standby mode and off mode energy use, because they are not applicable for this product. Accordingly, in this rulemaking, DOE only addresses active mode energy consumption because commercial prerinse spray valves only consume energy and water in active mode.

B. Background

1. Current Standards

In a final rule published on October 18, 2005 (2005 CPSV final rule), DOE codified the current energy conservation standard for commercial prerinse spray valves that was prescribed by the Energy Policy Act of 2005 (EPAct 2005), Public Law 109-58 (August 8, 2005). 70 FR 60407, 60410. The 2005 CPSV final rule established that all commercial prerinse spray valves manufactured on or after January 1, 2006, must have a flow rate of not more than 1.6 gpm.

Id.

2. History of Standards Rulemaking for Commercial Prerinse Spray Valves

DOE initiated the current rulemaking on September 11, 2014, by issuing an analytical Framework document (2014 CPSV Framework document) that explained the issues, analyses, and analytical approaches that DOE anticipated using to develop energy conservation standards for commercial prerinse spray valves. 79 FR 54213. DOE held a public meeting on September 30, 2014 to discuss the 2014 CPSV Framework document, and solicited comments from interested parties regarding DOE's analytical approach. DOE received comments that helped identify and resolve issues pertaining to the 2014 CPSV Framework document relevant to this rulemaking.

DOE published a NOPR for the CPSV energy conservation standards rulemaking on July 9, 2015 (CPSV NOPR). 80 FR 39486. DOE held a public meeting on July 28, 2015 to present the CPSV NOPR, which included the engineering analysis, downstream economic analyses, manufacturer impact analysis, and proposed standards. In the public meeting, DOE also sought comments from interested parties on these subjects, and facilitated interested parties' involvement in the rulemaking. At the public meeting, and during the comment period, DOE received comments that helped DOE identify issues and refine the analyses presented in the CPSV NOPR for this final rule.

Based on the issues raised in response to the CPSV NOPR, DOE published a notice of data availability (NODA) for the CPSV energy conservation standards rulemaking on November 20, 2015 (CPSV NODA).

80 FR 72608. In the CPSV NODA, DOE described revisions to its analyses of commercial prerinse spray valves in the following areas: (1) Engineering, (2) manufacturer impacts, (3) LCC and PBP, and (4) national impacts. DOE also presented updated trial standard level (TSL) combinations. DOE sought comments on all aspects of the updated analyses. During the CPSV NODA comment period, DOE received comments in response to issues raised in the CPSV NODA.

DOE initially published the CPSV NODA on November 12, 2015. 80 FR 69888. Due to errors in the CPSV NODA, DOE withdrew the document and published a corrected NODA on November 20, 2015. 80 FR 72608.

This final rule responds to issues raised by commenters in response to the 2014 CPSV Framework document, CPSV NOPR, and CPSV NODA.

C. General Rulemaking Comments

In response to the CPSV NOPR, Alliance for Water Efficiency (AWE) recommended that this rulemaking be postponed until the stakeholders develop and agree upon a cleaning performance test that mimics “real world” performance. (AWE, No. 28 at p. 6)

As discussed previously, under 42 U.S.C. 6295(m), the agency must periodically review its already established energy conservation standards for a covered product. DOE codified the current energy conservation standard for commercial prerinse spray valves in the 2005 CPSV final rule. Therefore, DOE is required to conduct a review of CPSV energy conservation standards, and cannot postpone this rulemaking further. A discussion of the CPSV test procedure is provided in section III.B of this document.

A notation in this form provides a reference for information that is in the docket of DOE's rulemaking to amend energy conservation standards for commercial prerinse spray valves. (Docket No. EERE-2014-BT-STD-0027, which is maintained at

www.regulations.gov

). This particular notation refers to a comment: (1) Submitted by AWE; (2) appearing in document number 28 of the docket; and (3) appearing on page 6 of that document.

In response to the CPSV NODA, DOE received a comment from the Plumbing Manufacturers Institute (PMI) requesting the comment period for the CPSV NODA be extended. PMI cited the short duration of the comment period, as well as the Thanksgiving holiday to support their request for an extension. (PMI, No. 41 at p. 1) DOE chose to maintain the comment period at 14 days, which DOE believes is sufficient time to review the updated analyses and provide comment. Additionally, while input data was updated in response to comments received, the analytical framework remained unchanged.

PMI further commented that the process by which DOE obtained data to develop energy conservation standards lacked transparency. PMI stated that DOE should have formed a working group. (PMI, No. 43 at p. 1) DOE disagrees with PMI's comment that DOE's regular notice-and-comment rulemaking process lacks transparency with regards to data collection. DOE solicited comments and data from interested parties in response to the 2014 CPSV Framework document, the CPSV NOPR, and the CPSV NODA. Based on data obtained during these public comment periods, DOE revised its analyses and proposed standards.

III. General Discussion

A. Product Classes and Scope of Coverage

EPCA defines the term “commercial prerinse spray valve” as a “handheld device designed and marketed for use with commercial dishwashing and ware washing equipment that sprays water on dishes, flatware, and other food service items for the purpose of removing food residue before cleaning the items.” (42 U.S.C. 6291(33)(A) In the CPSV TP final rule, DOE modified the CPSV definition to clarify the scope of coverage, and adopted the following definition: “Commercial prerinse spray valve” is defined as a handheld device that has a release to close valve and is suitable for removing food residue from food service items before cleaning them in commercial dishwashing and ware washing equipment. The analyses conducted for this final rule were based on the scope of coverage provided by this amended definition.

When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used, or by

capacity or other performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE considers such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))

Currently, all covered commercial prerinse spray valves are included in a single product class that is subject to a 1.6-gpm standard for maximum flow rate. 10 CFR 431.266. In the CPSV NOPR, DOE proposed three separate product classes based on spray force. DOE believes that spray force is a performance-related feature of commercial prerinse spray valves, and that each of the defined spray force ranges is associated with unique consumer utility for specific CPSV applications. (42 U.S.C. 6295(q)) DOE also requested comments from interested parties. See section IV.A.2 for more discussion on the product classes addressed in this final rule.

B. Test Procedure

In addition to establishing the current maximum flow rate for commercial prerinse spray valves, EPCA also prescribed that the test procedure for measuring flow rate for commercial prerinse spray valves be based on American Society for Testing and Materials (ASTM) Standard F2324, “Standard Test Method for Pre-Rinse Spray Valves.” (42 U.S.C. 6293(b)(14)) In a final rule published December 8, 2006, DOE incorporated by reference ASTM Standard F2324-03 as the DOE test procedure for commercial prerinse spray valves. 71 FR 71340, 71374. In a final rule published on October 23, 2013, DOE incorporated by reference ASTM Standard F2324-03 (2009) for testing commercial prerinse spray valves, which reaffirmed the 2003 version. 78 FR 62970, 62980.

In 2013, ASTM amended Standard F2324-03 (2009) to replace the cleanability test with a spray force test, based on research conducted by the U.S. Environmental Protection Agency's (EPA) WaterSense® program.

The most current version of the ASTM industry standard is the version published in 2013, ASTM Standard F2324-13.

EPA WaterSense program,

WaterSense Specification for Commercial Prerinse Spray Valves Supporting Statement.

Version 1.0 (Sept. 19, 2013). Available at:

www.epa.gov/watersense/partners/prsv_final.html

DOE published the NOPR for the CPSV test procedure on June 23, 2015 (CPSV TP NOPR). 80 FR 35874. In the CPSV TP NOPR, DOE proposed to incorporate by reference relevant portions of the amended ASTM Standard F2324-13, requiring spray force and flow rate to be measured in accordance with the industry standard. Additionally, DOE proposed a clarification to the definition of “commercial prerinse spray valve” as well as adding a new definition for “spray force.” For commercial prerinse spray valves with multiple spray settings, DOE proposed that both flow rate and spray force be measured for each available spray setting. DOE also proposed modifications to the rounding requirements for flow rate and added rounding requirements for spray force. Finally, DOE proposed modification of the sampling plan to remove the provisions related to determining representative values where customers would favor higher values. DOE presented the CPSV TP NOPR in the public meeting on July 28, 2015.

DOE issued a pre-publication notice for the final rule for the CPSV TP on December 18, 2015. The final rule incorporates by reference relevant portions of the latest version of the industry testing standard from the ASTM Standard F2324-13, including the procedure for measuring spray force, revises the definitions of “commercial prerinse spray valve” and “basic model,” clarifies the test procedure for products with multiple spray settings, establishes rounding requirements for flow rate and spray force measurements, and removes irrelevant portions of the statistical methods for certification, compliance, and enforcement of commercial prerinse spray valves. The amended standards adopted in this final rule were based on testing conducted in accordance with the amended test procedure adopted in the CPSV TP final rule.

C. Certification, Compliance, Enforcement and Labeling

This final rule establishes three separate product classes for commercial prerinse spray valves based on spray force. DOE recognizes that some commercial prerinse spray valves contain multiple spray settings and may fall into more than one product class. If the spray settings on a CPSV unit fall into multiple product classes, manufacturers must certify separate basic models for each product class and may only group individual spray settings into basic models within each product class. The tested spray force for each spray setting determines which product class definition applies to each spray setting. Therefore, a commercial prerinse spray valve that contains multiple spray settings, or is sold with multiple spray faces, may be classified as more than one product class. In this case, the commercial prerinse spray valve is required to meet the appropriate energy conservation standard for each product class.

With regards to labeling, in the CPSV NOPR public meeting, the Natural Resource Defense Council (NRDC) questioned whether the institution of product classes for commercial prerinse spray valves will affect product labeling, and more specifically, whether the product class in which a commercial prerinse spray valve is categorized needs to be represented on product literature. (NRDC, Public Meeting Transcript, No. 23 at p. 110) NRDC also requested guidance on how commercial prerinse spray valves will be labeled if the proposal of multiple product classes were adopted. (NRDC, Public Meeting Transcript, No. 23 at p. 110)

This final rule does not include labeling requirements for commercial prerinse spray valves. Accordingly, this final rule does not require manufacturers to include product class information on product labels. However, DOE notes that any representations of flow rate are required to be determined in accordance with the DOE test procedure and applicable sampling plans.

D. 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 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 (EL). Section IV.B of this document discusses the results of the screening analysis for commercial prerinse spray valves, particularly the technology options DOE considered, those it screened out, and those that are the basis for the standards considered 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 adopts 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 efficiency for commercial prerinse spray valves using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.3 of this document and in chapter 5 of the final rule TSD.

E. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the application of the TSL to commercial prerinse spray valves purchased in the 30-year period that begins in the year of compliance with any amended standards (2019-2048).

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.

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

DOE used its national impact analysis (NIA) spreadsheet models to estimate energy savings from amended standards for commercial prerinse spray valves. The NIA spreadsheet model (described in section IV.H of this document) calculates savings in site energy, which is the energy directly consumed by products at the locations where they are used. DOE calculates national energy savings (NES) in terms of primary energy savings, which is the savings in energy that is used to generate and transmit the site energy, and also in terms of full-fuel-cycle (FFC) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy conservation standards.

DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products. For more information on FFC energy savings, see section IV.H.1 of this document. For natural gas, the primary energy savings are considered to be equal to the site energy savings.

The FFC metric is discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012).

2. Significance of Savings

To adopt more stringent standards for commercial prerinse spray valves, DOE must determine that such action would result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in EPCA, the U.S. Court of Appeals for the District of Columbia Circuit in

Natural Resources Defense Council

Herrington,

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

F. Economic Justification

1. Specific Criteria

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

For individual consumers, measures of economic impact include the changes in LCC and PBP associated with amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national NPV 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 water, 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 and water consumption; energy and water and wastewater 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 and Water 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 and water savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section III.E, DOE uses the NIA spreadsheet models to project national energy and water savings.

d. Lessening of Utility or Performance of Products

In determining whether a proposed standard is economically justified, DOE evaluates any lessening of the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this final rule would not reduce the utility or performance of the products under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General of the United States (Attorney General), that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE transmitted a copy of its proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)). On September 4, 2015, DOJ provided its determination to DOE that the amended standards for commercial prerinse spray valves are unlikely to have a significant adverse impact on competition. DOE has included this determination from DOJ 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 amended 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 amended standards are also likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases (GHGs) associated with energy production and use. DOE conducts an emissions analysis to estimate how standards may affect these emissions, as discussed in section IV.K. 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)) No other factors were considered in this analysis.

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 and water 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 the amended energy conservation standards would have on the PBP for consumers. These analyses include, but are not limited to, the 3-year PBP contemplated under the rebuttable-presumption test. 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 an amended standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F.11 of this document.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to commercial prerinse spray valves. 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 savings and PBP of the amended energy conservation standards. The NIA uses a second spreadsheet set that provides shipments forecasts and calculates NES and NPV of total consumer costs and savings expected to result from amended energy conservation standards. DOE uses a third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of amended standards. These three spreadsheet tools are available on the DOE Web site for this rulemaking:

https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100

Additionally, DOE used a version of the Energy Information Administration's (EIA) National Energy Modeling System (NEMS) for the emission and utility impact analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare the

AEO,

a widely-known baseline energy forecast for the United States.

For more information on NEMS, refer to

The National Energy Modeling System: An Overview 2009,

DOE/EIA-0581 (Oct. 2009) (Available at:

https://www.eia.gov/forecasts/aeo/info_nems_archive.cfm

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

AEO

version, is called NEMS-BT.

NEMS-

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

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

AEO

version of the model without

any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from

AEO

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

A. Market and Technology Assessment

DOE develops information in the market and technology assessment that provides an overall picture of the market for commercial prerinse spray valves, 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) Market assessment, (2) product classes, (3) technology assessment, and (4) impact on compliance, certification and enforcement. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.

1. Market Assessment

As part of the market assessment, DOE examined manufacturers, trade associations, and the quantities and types of products sold and offered in the market. DOE reviewed relevant literature to develop an understanding of the CPSV industry in the United States, including market research data, government databases, retail listings, and industry publications (

e.g.,

manufacturer catalogs). Using this information, DOE assessed the overall state of the industry, CPSV manufacturer model-based market shares, shipments, general technical information on commercial prerinse spray valves, and industry trends.

In comments to the CPSV NOPR, T&S Brass suggested that information and data acquired through the WaterSense program be considered, as the program set a reasonable efficiency goal and established the groundwork for a viable CPSV efficiency program. (T&S Brass, No. 33 at p. 3) AWE stated that the WaterSense research seems to be ignored by DOE. (AWE, No. 28 at p. 7)

For this rulemaking, DOE performed market research using various reports and databases, including the WaterSense database that lists the spray force of WaterSense labeled products. DOE used the spray force results from the WaterSense labeled products as input to the engineering analysis (see chapter 5 of the final rule TSD). Also, DOE used the WaterSense field study report: (1) To characterize the CPSV market; (2) to perform a sensitivity analysis of water pressure for testing commercial prerinse spray valves as part of the CPSV test procedure rulemaking;

and (3) as inputs to the energy and water use analysis (see chapter 7 of the final rule TSD).

The water pressure sensitivity analysis is available at

www.regulations.gov

under docket number EERE-2014-BT-TP-0055.

To characterize the market, DOE analyzed the model-based market shares of major manufacturers based on the number of basic models

observed through the DOE Compliance Certification Management System (CCMS) database, WaterSense database, and Web searches.

DOE concluded that the CPSV market includes 46 basic models from 13 manufacturers. Chapter 3 of the final rule TSD provides more details on the CPSV market.

Basic model means all units of a given type of covered product (or class thereof) manufactured by one manufacturer, having the same primary energy source, and having essentially identical electrical, physical, and functional (or hydraulic) characteristics that affect energy use, energy efficiency, water use, or water efficiency. 10 CFR 431.262.

U.S. Department of Energy. Compliance Certification Database (available at

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

); U.S. EPA, Water Sense (available at

www.epa.gov/watersense/product_search.html

Additionally, DOE also characterized the efficiency (flow rate) distribution of commercial prerinse spray valves currently on the market. DOE performed this analysis in the CPSV NOPR, and presented it during the CPSV NOPR public meeting. DOE's analysis indicated a wide range of CPSV flow rates on the market with rated flow rates between 0.59 and 1.60 gpm. DOE received a comment during the CPSV NOPR public meeting regarding the efficiency distribution. T&S Brass stated that consumer satisfaction was not represented in DOE's analysis, and that consumer satisfaction is very high at the upper range of the market flow rate distribution. (T&S Brass, Public Meeting Transcript, No. 23 at p. 31) T&S Brass further commented that the showerhead-type commercial prerinse spray valves represent the majority of the market and highest level of customer satisfaction because these units prevent splash-back. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 42-43)

While consumer satisfaction is not directly referenced in the efficiency distribution graph presented by DOE in the CPSV NOPR, DOE has acknowledged consumer satisfaction and consumer utility as important aspects to consider when establishing product classes for commercial prerinse spray valves. This is described further in the product class section of this document (section IV.A.2). Additionally, in response to comments from interested parties, DOE updated both its engineering analysis and downstream analysis to account for the shower-type commercial prerinse spray valves and its majority market shipments. The updated engineering analysis is presented in section IV.C of this document, and the updated shipments analysis is presented in section IV.G of this document.

2. Product Classes

When evaluating and establishing energy conservation standards, DOE considers dividing covered products into classes by (a) the type of energy used, (b) the capacity of the product, or (c) other performance-related features that justify different standard levels. (42 U.S.C. 6295(q)) Currently, DOE regulates all covered commercial prerinse spray valves as a single product class that is subject to a 1.6-gpm standard for flow rate. 10 CFR 431.266. DOE, however, has determined that spray force is a performance-related feature that justifies different standard levels. Consequently, this final rule establishes three product classes based on spray force ranges: (1) Product class 1 (less than or equal to 5.0 ounce-force, or ozf), (2) product class 2 (greater than 5.0 ozf but less than or equal to 8.0 ozf), and (3) product class 3 (greater than 8.0 ozf). These are the same product classes that were proposed in the CPSV NOPR, but with a different naming convention.

a. Spray Force

In the CPSV NOPR and public meeting, DOE presented data indicating a strong correlation between spray force and flow rate, as described further in section IV.C.2 of this final rule and in chapter 5 of the TSD. Specifically, units with higher spray force have inherently higher flow rates, and units with lower spray force have inherently lower flow rates. This direct relationship provided justification for creating multiple product classes defined by ranges of spray force.

In the CPSV NOPR, DOE cited a WaterSense field study that found that low water pressure, or spray force, can be a source of user dissatisfaction for some applications.

DOE also received

multiple comments in response to the 2014 CPSV Framework document stating that spray force is a performance related feature that could be used to define product classes. The Advocates commented that product classes must be considered to distinguish commercial prerinse spray valves, and that DOE could consider using spray force as one way to delineate separate product classes. (Advocates, No. 11 at p. 2) The CA IOUs urged DOE to consider user satisfaction when considering the efficiency metric, as some field surveys have shown that users that are dissatisfied with efficient commercial prerinse spray valves will substitute them with those that likely increase overall water consumption. Therefore, CA IOUs suggested either incorporating spray force into the efficiency metric, or alternatively, using spray force to establish product classes as a way to account for differentiating products. (CA IOUs, No. 14 at p. 1) T&S Brass commented that the applications of commercial prerinse spray valves could vary from rinsing to cleaning baked-on food, and that the different applications might require different spray forces. T&S Brass stated that it offers a variety of prerinse spray valves that have different design features based on end users' applications. (T&S Brass, Public Meeting Transcript, No. 6 at p. 40) In response to the CPSV NOPR, Chicago Faucets commented that spray force is useful for predicting customer satisfaction. (Chicago Faucets, No. 26 at p. 2)

EPA WaterSense,

Prerinse Spray Valves Field Study Report,

at 24-25 (Mar. 31, 2011) (Available at:

www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf

Furthermore, DOE market research indicates three distinct categories of end-user applications for commercial prerinse spray valves, which require different levels of spray force: (1) Cleaning delicate glassware and removing loose food particles from dishware (which requires the least amount of spray force); (2) cleaning wet foods; and (3) cleaning baked-on foods (which requires the greatest amount of spray force).

DOE also received general comments regarding the use of spray force to define separate product classes for commercial prerinse spray valves. T&S Brass recommended that the DOE establish the CPSV efficiency goal based only upon maximum flow rate, as this is directly related to water conservation. (T&S Brass, No. 33 at p. 3) Chicago Faucets commented that the addition of the spray force test into mandated Federal law is unnecessary and counterproductive. Chicago Faucets believes that the focus should be on water conservation. Chicago Faucets stated that the spray force test method has no bearing on water conservation and that it was intended as a tool for marketing and selling spray valves, and nothing more. (Chicago Faucets, No. 26 at p. 2) The North American Association of Food Equipment Manufacturers (NAFEM) stated that it appears to them that DOE is requiring manufacturers to design commercial prerinse spray valves to meet the classification system and spray force requirements which have been pre-determined by DOE. (NAFEM, PMI, No. 31 at p. 1)

AWE commented in response to the CPSV NOPR that there is no evidence that spray force is the only factor for consumer satisfaction and performance in cleaning dishware. (AWE, No. 28 at p. 3) AWE further commented that spray force should be excluded from the proposed rule as it is irrelevant to efficiency, and that the only measure of valve water efficiency is a volumetric measure, stated in gallons per minute. (AWE, No. 28 at p. 3) AWE also stated that high spray force can be a hindrance to performance for some operations due to excessive splash and aerosolizing water. (AWE, No. 28 at p. 4)

In comments received during the CPSV NOPR public meeting and through written submissions, the majority of the interested parties opposed DOE's product class structure based on spray force, and recommended that DOE maintain a single product class. (Chicago Faucets, No. 26 at pp. 1-2; PMI, No. 27 at p. 1; Fisher, No. 30 at p. 1; Appliance Standards Awareness Project (ASAP), Northwest Energy Efficiency Alliance (NEEA), NRDC, No. 32 at p. 1; Pacific Gas and Electric (PG&E), Southern California Edison (SCE), Southern California Gas Company (SCGC), San Diego Gas and Electric (SDG&E), No. 34 at pp. 1-2; AWE, No. 28 at p. 7; T&S Brass, No. 33 at p. 2) PMI, PG&E, SCE, SCGC, and SDG&E (collectively, the “CA IOUs”) and, ASAP and NRDC reiterated their comments in favor of a single product class in response to the CPSV NODA. (PMI, No. 43 at p. 1; CA IOUs, No. 44 at pp. 1-2; ASAP and NRDC, No. 45 at p. 1)

On the other hand, several interested parties supported the consideration of spray force for the standard. Fisher stated that the standard should focus on flow rate and spray force, but allow the consumer to determine which of these performance factors will satisfy their requirements. (Fisher, No. 30 at p. 1) ASAP, NEEA, and NRDC (collectively, the “Advocates”) and the CA IOUs commented that they support the proposal to add a requirement to measure and report spray force. The Advocates and CA IOUs believe that the addition of spray force will help stakeholders to better understand CPSV product performance and help inform the incorporation of this metric into a future rulemaking. Additionally, the Advocates stated that the collection of spray force product data will also inform the EPA WaterSense program and other efforts to improve water and energy efficiency in commercial kitchens. (Advocates, No. 32 at p. 2; CA IOUs, No. 34 at p. 3).

DOE acknowledges that some interested parties generally oppose the use of spray force to define separate product classes for commercial prerinse spray valves. However, DOE received no comments contradicting its conclusion that spray force is a performance-related feature related to consumer utility. DOE also acknowledges that there are other features that could also affect consumer utility of commercial prerinse spray valves, including spray shape and amount of splash back; however, these metrics are not as easily quantifiable as spray force, nor can they be easily tested or defined. Based on the WaterSense studies, the totality of comments received in response to the 2014 CPSV Framework document and CPSV NOPR, and additional market research, DOE concludes that spray force is a performance-related feature that justifies different standard levels. DOE is not establishing a minimum spray force requirement in this final rule; rather, spray force is used only to define the boundaries between the three product classes.

b. Number of Classes

To determine the number of product classes, DOE tested and analyzed a wide range of CPSV units on the market, spanning multiple manufacturers, flow rates, and spray shapes. DOE believes that the units analyzed for this rulemaking are representative of the entire CPSV market. DOE's test data and additional market research indicated three clusters of spray force data points, which DOE used as the basis for proposing three separate product classes. Additional details regarding this test data is provided in chapter 5 of the final rule TSD.

Product class 1 included units with spray force less than or equal to 5.0 ounce-force (ozf), product class 2 included units with spray force greater than 5.0 ozf but less than or equal to 8.0 ozf, and product class 3 included units with spray force greater than 8.0 ozf.

DOE received comments regarding the method behind how the product classes were established. Specifically, AWE stated that using a scatter graph of spray force from different models, then dividing into thirds, is not a scientific

method to classify products. (AWE, No. 28 at p. 3) AWE recommended that the classification system not be implemented and believes that it is arbitrary, unjustified, and its effect on water use is unknown. (AWE, No. 28 at p. 6)

DOE selected 5.0 ozf as the spray force cut-off between product class 1 and product class 2 based on DOE's test data and market research, which clearly showed a cluster of CPSV units above and below that threshold. One cluster of CPSV units had spray force ranges between 4.1 and 4.8 ozf, and the other cluster was between 5.5 and 7.7 ozf. Additionally, in comments to the 2014 CPSV Framework document, T&S Brass suggested a flow rate cut-off of 0.80 gpm between the “ultra-low-flow” and “low-flow” commercial prerinse spray valves. (T&S Brass, No. 12 at p. 3) A flow rate of 0.80 gpm equates to 5.3 ozf using the flow rate-spray force linear relationship determined by DOE. Based on these considerations, DOE established the threshold between the two classes at 5.0 ozf.

DOE selected 8.0 ozf as the spray force cut-off between product class 2 and product class 3 based on test results of commercial prerinse spray valves with shower-type spray shapes. Shower-type spray shapes provide the distinct utility of minimizing “splash back” which can be associated with nozzle-type designs at higher flow rates. In addition to the three clusters of data points in the flow rate-spray force plot, DOE testing showed that the upper range of the market, in terms of flow rate, predominantly includes shower-type units. DOE found that the lowest tested spray force of any shower-type unit was 8.1 ozf. Additionally, in comments to the 2014 CPSV Framework document, T&S Brass suggested a flow rate cut-off of 1.28 gpm between the “low-flow” and “standard” commercial prerinse spray valves. (T&S Brass, No. 12 at p. 3) A flow rate of 1.28 gpm equates to 8.5 ozf using the flow rate-spray force linear relationship determined by DOE. Based on these considerations, DOE selected 8.0 ozf to differentiate product class 3 units from other commercial prerinse spray valves available on the market.

As described in the CPSV NOPR, DOE believed that each of these defined spray force ranges is associated with unique consumer utility for specific CPSV applications. Specifically, product class 1 provides distinct utility for cleaning delicate glassware and removing loose food particles from dishware, product class 2 provides distinct utility for cleaning wet foods, and product class 3 provides distinct utility for cleaning baked-on foods. DOE believes that these categorizations appropriately reflect the various end uses of commercial prereinse spray valves and has defined the three product classes accordingly.

c. Other Comments

In response to the NOPR, interested parties commented that the proposed product classes would limit manufacturers' product designs and innovation, and create confusion to consumers. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 51-52; Chicago Faucets, Public Meeting Transcript, No. 23 at pp. 49-51; NAFEM, PMI, No. 31 at p. 1; PMI, No. 27 at p. 1; Chicago Faucets, No. 26 at p. 2; T&S Brass, No. 33 at p. 2; AWE, No. 28 at p. 6; CA IOUs, No. 44 at p. 2) Specifically, AWE stated that the classifications could alter the market in a manner that deters the use of more efficient and better performing products. (AWE, No. 28 at p. 4)

By maintaining flow rate as the regulated efficiency metric and creating three product classes, DOE believes the product class structure would not prescribe or limit any particular design options for CPSV manufacturers. DOE's technology assessment and screening analysis identified multiple possible design options that manufacturers could implement to achieve reductions in flow rate, which apply to both shower-type and nozzle-type commercial prerinse spray valves. In addition, manufacturers would not be precluded from implementing other innovative design options that may be developed in the future.

Additionally, DOE does not expect the product class structure to create confusion for the consumer, because DOE market research indicates that CPSV marketing materials predominantly highlight the spray pattern shape (

e.g.,

solid stream, shower, fan) and flow rate of CPSV models. The product class structure does not prescribe any changes to the type of information manufacturers can provide in CPSV marketing materials.

CA IOUs stated that different product classes are not marketed to consumers that would necessitate three different product standards based on spray force. According to the CA IOUs, commercial prerinse spray valves are marketed based on physical dimensions, and in some cases flow rate. (CA IOUs, No. 34 at pp. 1-2; CA IOUs, No. 44 at p. 2)

DOE also has not specified any labeling requirements in this final rule. DOE only requires that manufacturers provide the information contained in the certification reports when certifying that all applicable CPSV models are compliant with the standard. DOE is not requiring that the product classes be used to market commercial prerinse spray valves; the product classes are used to determine the applicable standard, and are used for certification, compliance, and enforcement purposes. See section III.C for more details on compliance, certification and enforcement. Therefore, DOE does not expect that the product class structure would alter the market and deter the use of higher-efficiency and better performing products, as the representation of the commercial prerinse spray valves will continue to be in terms of flow rate.

AWE commented that there is no evidence presented as to how a consumer should choose between the different classifications, and that consumer choice tends to gravitate towards “heavy-duty” under the false premise that bigger is better. (AWE, No. 28 at pp. 3-4) The Advocates stated that if DOE creates the three product classes, then it would drive the market to the “heavy-duty” class. The Advocates expressed concern that without the benefit of the current distribution of CPSV market shares based on flow rate, creating three product classes could increase the average flow rate of products sold in the market. (Advocates, No. 32 at p. 2; ASAP and NRDC, No. 45 at p. 1)

DOE realizes that consumers may switch between product classes, and the flow rate of commercial prerinse spray valves used by some consumers may increase instead of decrease due to energy conservation standards. DOE analyzed the effects of product class switching in the downstream analyses and evaluated the results of product class switching when setting a standard in section V.C.1. A detailed description of DOE's method to model product class switching is contained in chapter 9 of the final rule TSD.

DOE received comments on the naming convention used for the proposed product classes in the CPSV NOPR. T&S Brass recommended changing the product class names because the “heavy-duty” term is already widely used in the industry to represent products that last long. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 110-111) During the public meeting, DOE requested that stakeholders provide an alternate naming convention for the product classes. Chicago Faucets stated that the proposed product class names, especially “light duty,” may prevent customers from choosing the lower flow products. Users prefer durable, heavy duty products, particularly in

commercial applications where commercial prerinse spray valves are most commonly used. Therefore, Chicago Faucets suggested using “Level 1”, “Level 2”, and “Level 3” instead. (Chicago Faucets, No. 26 at p. 3) Fisher stated that the terms “heavy duty”, “standard duty”, and “light duty” should not be used as the terminology for the different product classes. (Fisher, No. 30 at p. 1)

Based on feedback from interested parties, DOE has renamed the product classes in this final rule as product class 1, product class 2, and product class 3 instead of “light-duty,” “standard-duty,” and “heavy-duty,” respectively. DOE also notes that the product class names defined by DOE do not restrict how manufacturers may refer to their products in marketing literature, provided that such products meet the appropriate standard based on DOE's defined product classes.

Finally, DOE also received comments regarding potential other product classes that could be considered in future rulemakings. The Advocates commented that there is some market differentiation between commercial prerinse spray valves intended for cleaning dishware before sanitizing in a commercial dishwasher, and commercial prerinse spray valves intended for pot and pan cleaning. The Advocates recommended that DOE may wish to consider product classes based on such existing market differentiation during the next update to the standards. (Advocates, No. 32 at p. 2) CA IOUs stated that the market appears to be moving towards different usage type, such as dining and pot cleaning spray valves. CA IOUs recommended when DOE begins the process of a new energy conservation standard in a future rulemaking, that DOE should consider separate standards for dining and pot and pan cleaning. (CA IOUs, No. 34 at p. 2; CA IOUs, No. 44 at p. 2)

3. Technology Assessment

In the CPSV NOPR technology assessment, DOE identified six technology options that would improve the efficiency of commercial prerinse spray valves, as measured by the CPSV DOE test procedure. These include the following: (1) Addition of flow control insert, (2) smaller spray hole area, (3) aerators, (4) additional valves, (5) changing spray hole shape, and (6) venturi meter to orifice plate nozzle geometries.

DOE received one comment in support of the venturi meter to orifice plate nozzle geometry technology option. CA IOUs supported DOE's consideration of implementing an orifice plate nozzle design to produce a lower flow rather than a venturi meter nozzle with similar inlet and outlet dimensions. (CA IOUs, No. 34 at pp. 2-3) AWE, on the other hand, opposed design‐restrictive requirements in a specification unless health and/or safety are at risk. Instead, AWE stated that it is appropriate to mandate an outcome (

e.g.,

gallons per minute) directly related to water and energy efficiency, rather than pre‐determine design parameters. Once the desired outcome is defined, manufacturers will innovate and develop products that yield the mandated outcomes. (AWE, No. 28, p. 7)

As part of its rulemaking analysis process, DOE analyzes technology options that can be implemented to improve the efficiency of a covered product. The technology options identified for commercial prerinse spray valves provide feasible means for decreasing flow rate (or increasing efficiency) to meet the amended standard. However, DOE does not mandate any technology options that can be used to meet the amended standard. Manufacturers can use all technologies available to them to meet the amended energy conservation standard. In addition, manufacturers would also not be precluded from implementing other innovative design options that may be developed in the future.

For this final rule, DOE analyzed the same six technology options that were described in the CPSV NOPR. Chapter 3 of the final rule TSD provides additional details on all the technology options identified by DOE as part of the technology assessment.

B. Screening Analysis

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

(1)

Technological feasibility.

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

(2)

Practicability to manufacture, install, and service.

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

(3)

Impacts on product utility or product availability.

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

(4)

Adverse impacts on health or safety.

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

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

If DOE determines that a technology, or a combination of technologies, fails to meet one or more of the previously mentioned four criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the following sections.

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.

In the CPSV NOPR, DOE screened out the following technology options: The addition of a flow control insert, aerators, and additional valves. DOE did not receive any comments regarding the design options that were screened out. The remaining technology options listed in section IV.A.3 met all four screening criteria and were analyzed in the CPSV NOPR. DOE did not receive any additional comments regarding these technology options. Therefore, DOE did not screen out the following technology options for the final rule analysis: (1) Smaller spray hole area, (2) changing spray hole shape, and (3) venturi meter to orifice plate nozzle geometries.

DOE determined that these technology options are technologically feasible because they are being used or have previously been used in commercially available products or working prototypes. DOE also finds that all of the remaining technology options meet the other screening criteria (

i.e.,

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

C. Engineering Analysis

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

For this analysis, DOE structured its engineering analysis for commercial prerinse spray valves using a combination of the design option approach and the reverse-engineering approach. The analysis is performed in terms of incremental increases in efficiency (decreases in flow rate) due to the implementation of selected design options, while the estimated MPCs for each successive design option are based on product teardowns and a bottom-up manufacturing cost assessment. Using this hybrid approach, DOE developed the relationship between MPC and CPSV efficiency.

Chapter 5 of the final rule TSD discusses the baseline efficiencies for each product class (in terms of flow rate), the design options DOE considered, the methodology used to develop manufacturing production costs, and the cost-efficiency relationships. The LCC and PBP analysis uses the cost-efficiency relationships developed in the engineering analysis.

1. Engineering Approach

For each of the three adopted product classes, DOE selected a baseline efficiency (in terms of flow rate) as a reference point from which to measure changes resulting from each design option. DOE then developed separate cost-efficiency relationships for each product class analyzed. The following is a summary of the method DOE used to determine the cost-efficiency relationship for commercial prerinse spray valves:

(1) Perform flow rate and spray force tests on a representative sample of commercial prerinse spray valves in every product class.

(2) Develop a detailed BOM for the tested commercial prerinse spray valves through product teardowns, and construct a commercial prerinse spray valve cost model.

(3) Use the test data and cost model to calculate the incremental increase in efficiency (

i.e.,

decrease in flow rate) and cost increase of adding specific design options to a baseline model.

In response to the CPSV NOPR, NAFEM stated that DOE has not tested commercial prerinse spray valves in real life foodservice settings. NAFEM believes that consumer satisfaction is essential for the companies selling these products. (NAFEM, No. 31 at p. 1)

DOE has not performed testing in foodservice settings because DOE test procedures, not field performance, must be used to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) Instead, DOE conducted multiple commercial prerinse spray valve tests according to the amended DOE test procedure.

2. Linear Relationship Spray Force and Flow Rate

In the CPSV NOPR public meeting, DOE presented the relationship between spray force and flow rate. This relationship was determined using DOE test data for spray force and flow rate for a wide range of commercial prerinse valves. The tested units included the entire spectrum of available spray patterns and flow rates that DOE was aware of at the time of the analysis. In addition, DOE collected supplementary data from DOE's CCMS, the U.S. EPA WaterSense program, and FSTC reports. DOE analyzed the collected data and found a strong linear relationship between flow rate and spray force.

DOE received several comments related to the spray force and flow rate relationship. NRDC requested that DOE consider identifying the configuration of the commercial prerinse spray valves in the spray force-flow rate relationship without revealing the individual model. (NRDC, Public Meeting Transcript, No. 23 at p. 45) DOE updated the flow rate-spray force plot in this final rule to identify commercial prerinse spray valves that have shower-type spray patterns. The updated relationship can be found in chapter 5 of the final rule TSD.

T&S Brass stated that the relationship between spray force and flow rate does not address consumer satisfaction. Instead, the relationship assumes that consumers are satisfied with all products. (T&S Brass, Public Meeting Transcript, No. 23 at p. 47)

DOE acknowledges that different CPSV products may provide different levels of consumer satisfaction. DOE believes, however, that the amended standards promulgated in this final rule for the three defined product classes will maintain the same variety of product features on the market as under the current standard. DOE's analysis indicates that the amended standards will not result in a loss of consumer utility compared to the current standards.

T&S Brass stated that while the flow rate values for the basic models are included in the relationship between spray force and flow rate, the impact of market share is not included. Therefore, if market share was included, there will be more data points on the higher end of flow rate. However, T&S Brass also commented that even with the additional data points, the linear relationship will not change. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 48-49) Since publishing the CSPV NOPR, DOE tested additional units from product class 3, and added the test results for the units that were compliant with DOE's current CPSV standard (1.6 gpm) to the relationship shown in chapter 5 of the final rule TSD. The relationship continues to show flow rate varies linearly with spray force, irrespective of market share. However, based on the comment from T&S Brass, DOE has updated the assumption in the shipments analysis to account for more shipments in product class 3. This is presented in section IV.G of this document.

3. Baseline and Max-Tech Models

To analyze design options for energy efficiency improvements, DOE defined a baseline model for each product class. Typically, the baseline model is a model that meets current energy conservation standards. DOE defined the baseline efficiency for all product classes as the current Federal standard of 1.6 gpm.

DOE defined the market baseline for product classes 1 and 2 as the greater of (1) the highest flow rate in the class that meets the Federal standard, or (2) the flow rate at the upper spray force bound of the product class as predicted by the spray force-flow rate linear relationship described in chapter 5 of the TSD. The most consumptive unit that was tested in product class 1 had a flow rate of 0.97 gpm, which exceeds the 0.75 gpm predicted by the linear relationship between spray force and flow rate for

the product class 1 upper spray force bound of 5.0 ozf. DOE rounded the market baseline flow rate of product class 1 to 1.00 gpm. The market baseline for product class 2, predicted by the spray force-flow rate linear relationship, is 1.20 gpm at the upper spray force bound of 8.0 ozf. DOE did not find any commercial prerinse spray valves in product class 2 that exceed this flow rate. For product class 3, the market baseline equals the Federal flow rate standard of 1.60 gpm.

The analysis also identified the lowest flow rate that is commercially available within each product class (

i.e.,

the max-tech model). DOE determined the max-tech level as the least consumptive tested commercial prerinse spray valve in each product class. The max-tech levels for product classes 1, 2, and 3 are 0.62, 0.73, and 1.13 gpm, respectively. Finally, DOE also defined intermediate efficiency levels between the baseline and max-tech levels for each product class. Further information about DOE's efficiency level definitions is provided in chapter 5 of the final rule TSD. Table IV.1 through Table IV.3 provide the updated efficiency levels for all three product classes.

Table IV.1—Efficiency Levels for CPSV Product Class 1

[Spray force ≤ 5.0

ozf

]

Efficiency level

Description

Flow rate

(gpm)

Baseline

Current Federal standard

1.60

Level 1

Market minimum

1.00

Level 2

15% improvement over market minimum

0.85

Level 3

25% improvement over market minimum

0.75

Level 4

Maximum technologically-feasible (max-tech)

0.62

Table IV.2—Efficiency Levels for CPSV Product Class 2

[5.0 ozf < spray force ≤ 8.0

ozf

]

Efficiency level

Description

Flow rate

(gpm)

Baseline

Current Federal standard

1.60

Level 1

Market minimum

1.20

Level 2

15% improvement over market minimum

1.02

Level 3

25% improvement over market minimum

0.90

Level 4

Maximum technologically-feasible (max-tech)

0.73

Table IV.3—Efficiency Levels for CPSV Product Class 3

[Spray force > 8.0

ozf

]

Efficiency level

Description

Flow rate

(gpm)

Baseline

Current Federal standard

1.60

Level 1

10% improvement over baseline

1.44

Level 2

WaterSense level; 20% improvement over baseline

1.28

Level 3

Maximum technologically-feasible (max-tech)

1.13

In response to the updates to the engineering analysis in the CPSV NODA, CA IOUs stated that DOE should provide a reason for changing the efficiency level 2 for product class 3 from 1.24 gpm to 1.28 gpm. (CA IOUs, No. 44 at p. 2)

DOE notes that the flow rate for efficiency level 2 for product class 3 remains unchanged at 1.28 gpm since the CPSV NOPR. Instead, DOE has only updated the max-tech level of product class 3 since the CPSV NOPR. In the CPSV NOPR, the max-tech level for product class 3 was set at 1.24 gpm based on test results. After the CPSV NOPR, DOE performed additional testing and based on these test results, DOE identified a new max-tech level for product class 3. Therefore, DOE revised the max-tech level in product class 3 from 1.24 gpm to 1.13 gpm.

4. Proposed CPSV NOPR Standard Levels

In the CPSV NOPR, DOE proposed the standard levels to be 0.65, 0.97, and 1.24 gpm for light, standard, and heavy-duty product classes, respectively. 80 FR 39487. DOE received comments on the loss of product availability regarding the proposed standards as well as several other comments about the standard levels, which are addressed in the following sections.

a. Availability of Products

AWE commented that the CPSV NOPR proposal has design-restrictive requirements and will likely lead to less diverse products on the market. (AWE, No. 28 at pp. 6-7) AWE recommended that the rule include the use of WaterSense test criteria to determine compliance to any Federal minimum standard. (AWE, No. 28 at p. 4) AWE also stated that the proposed spray force criteria are in direct conflict with WaterSense criteria, and that only 3 of the 22 prerinse spray valves currently meeting WaterSense specifications also meet the minimum requirements proposed in this rulemaking. AWE commented that the remaining 19 products, together with the new WaterSense products about to be released, would no longer be compliant with the DOE standard. (AWE, No. 28 at p. 5)

Chicago Faucets expressed a similar concern that the levels proposed in the CPSV NOPR are too stringent, stating

that 86 percent of the products certified to voluntary Federal EPA WaterSense requirements will be obsolete and the investments in the WaterSense program will not be recovered. Chicago Faucets stated that this might lead to limited resources in the future for this product. Additionally, Chicago Faucets stated that 60 percent of the models in the spray force and flow rate graph presented in the CPSV NOPR would not pass the new requirement. Chicago Faucets believes that the more stringent requirements could easily disrupt the free market, eliminating the majority of the products offered today and restricting competition by reducing the number of manufacturers of CPSV products. (Chicago Faucets, No. 26 at pp. 2-3) NAFEM also commented that the proposed standard will require the manufacturers to abandon current products and the investment they made. (NAFEM, No. 28 at p. 1)

T&S Brass commented that the proposed standard would eliminate multi-orifice showerhead-type spray valves. Single-orifice type spray valves could have applications where there is a lot of splash back. Therefore, customers will be forced into products that they will not be satisfied with. (T&S Brass, Public Meeting Transcript, No. 23 at p. 40)

CA IOUs disagreed with T&S Brass and stated that commercial prerinse spray valves with single orifice, multi orifice, or venturi meter nozzle designs would be able to meet the 1.24 gpm standard, based on their own testing results. Additionally, CA IOUs did not observe any splash back issues with a single orifice nozzle design, nor did they observe any concerns about splash back based upon customer interviews. (CA IOUs, No. 34 at pp. 2-3)

EPCA establishes that DOE may not prescribe an amended 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)) In this final rule, DOE revised the efficiency level definitions and the analysis of the trial standard levels (TSL) based on feedback from interested parties. The amended standards adopted in this final rule are less stringent than those proposed in the CPSV NOPR for all three product classes. DOE notes that the amended standards adopted in this final rule are set at the market minimum for product class 1 and product class 2 at 1.00 gpm and 1.20 gpm respectively. The amended standards for these product classes have no impact on the current CPSV market, because all CPSV models in those product classes already meet the market minimum level. In product class 3, the amended standard is set at the WaterSense level of 1.28 gpm, and approximately 55 percent of CPSV units in product class 3 already meet this level. The 1.28 gpm level maintains the availability of multi-orifice shower-type units on the market, as described further in the following section. More discussion on the amended standard and the discussion on the TSL selections are provided in section IV.C.4.b, and section V.C.1 respectively.

b. Standard Levels

DOE also received comments about the standard levels that were proposed in the CPSV NOPR. Chicago Faucets expressed concern with the flow rate levels proposed in the CPSV NOPR and noted that the proposed flow rates are only hundredths of one gallon per minute lower than the common flow rates used in the plumbing industry of 1.00 gpm and 1.25 gpm. (Chicago Faucets, No. 26 at p. 3) Chicago Faucets also commented that if DOE were to move forward with the CPSV NOPR approach, DOE should use standard levels of 0.65 gpm, 1.00 gpm, and 1.25 gpm for light duty, standard duty, and heavy duty, respectively. (Chicago Faucets, No. 26 at p. 3)

The Advocates and CA IOUs recommended that DOE amend the standard to be a maximum flow rate of 1.24 gpm for all commercial prerinse spray valves. The Advocates and the CA IOUs recommended this flow rate, because they believe that 1.24 gpm is a technologically feasible efficiency level, and would realize significant water and energy savings and still maintain a positive LCC. (Advocates, No. 11 at p. 2) Additionally, CA IOUs stated that based on their testing, the 1.24 gpm level was feasible for equipment from different manufacturers, while also maintaining product performance. (CA IOUs, No. 34 at p. 2) In response to the CPSV NODA, the CA IOUs, ASAP and NRDC reiterated that DOE should adopt a single 1.24 gpm level for all product classes. (CA IOUs, No. 44 at p. 2; ASAP and NRDC, No. 45 at p. 2).

PMI recommended that DOE replace the proposed three product classes with a single product class that contains the 1.28 gpm WaterSense level. (PMI, No. 43 at p. 1) AWE stated that setting a Federal maximum at 1.28 gpm would prevent WaterSense from establishing a commercial prerinse spray valve program with a significantly lower water use threshold. (AWE, No. 28 at p. 7) T&S Brass stated if DOE ultimately decides to adopt the current EPA WaterSense specification at 1.28 gpm for commercial prerinse spray valves, that a reasonable transition period from the voluntary to mandatory status would be an effective date of January 2020. (T&S Brass, No. 12 at p. 3) Similarly, AWE urged DOE to postpone this rulemaking process for at least 2 years to prevent an industry-wide backlash against water efficiency. (AWE, No. 28 at pp. 7-8) AWE further recommended that DOE postpone this rulemaking by at least 2 years until additional data can be obtained through the WaterSense reporting process. (AWE, No. 28 at pp. 7-8)

As presented in section I, DOE is adopting standard levels of 1.00 gpm, 1.20 gpm and 1.28 gpm for product classes 1, 2 and 3, respectively. The adopted standards are set at the market minimum level for product classes 1 and 2, and at the WaterSense level for product class 3. DOE believes that these flow rates are the minimum flow rates for each product class that would not induce consumers to switch product classes. DOE also notes that the 1.28 gpm standard for product class 3 alleviates many of the concerns expressed by interested parties because (1) the engineering analysis shows that the 1.28 gpm level is technologically feasible; (2) interested parties, including the trade organization PMI, certain efficiency advocates and a manufacturer, commented that 1.28 gpm would be an appropriate standard level that would not negatively impact consumer utility for the highest-flow product class, and (3) the 1.28 gpm level represents the WaterSense Program criteria, which was developed in a collaborative process between EPA and interested parties, including manufacturers. In addition, the amended standard standards for product classes 1 and 2 have no impact on the current CPSV market, because all CPSV models in those product classes already meet the market minimum level.

More discussion on this standard level is in sections V.A and V.C.1 of this document.

Regarding the compliance date of the amended standards, EPCA states that a manufacturer shall not be required to apply new standards to a product with respect to which other new standards have been required during the prior 6 year period. (EPCA U.S.C. 6295(m)(4)(B)) As described earlier in this document, the current standard became effective January 1, 2006. Manufacturers will have 3 years to

comply with the amended standards after publication of this final rule. DOE believes that 3 years is sufficient time for manufacturers to transition products to the amended standard level. DOE also notes that the effective date of the amended standards in this final rule will be more than 6 years after the voluntary WaterSense specification date of September 19, 2013.

The standard levels set in this final rule also alleviate the concern about product class switching that was raised by CA IOUs. CA IOUs suggested using one product class, because one of the benefits is that it would not result in product class switching. (CA IOUs, No. 34 at p. 2) DOE does not expect product class switching to occur under the amended standards promulgated by this final rule, as the standard levels for product classes 1 and 2 do not move consumers from the current market minimums. A detailed description of DOE's method to model product class switching is contained in chapter 9 of the final rule TSD.

5. Manufacturing Cost Analysis

DOE estimated the manufacturing costs using a reverse-engineering approach, which involves a bottom-up manufacturing cost assessment based on a detailed BOM derived from teardowns of the product being analyzed. The detailed BOM includes labor costs, depreciation costs, utilities, maintenance, tax, and insurance costs, in addition to the individual component costs. These manufacturing costs are developed to be an industry average and do not take into account how efficiently a particular manufacturing facility operates.

To develop the relationship between cost and performance for commercial prerinse spray valves, DOE used a reverse-engineering analysis, or teardown analysis. DOE purchased off-the-shelf commercial prerinse spray valves available on the market and dismantled them component by component to determine what technologies and designs manufacturers use to decrease CPSV flow rate. DOE then used independent costing methods, along with component-supplier data, to estimate the costs of the components.

DOE derived detailed manufacturing cost estimate data based on its reverse engineering analysis, which included the cost of the product components, labor, purchased parts and materials, and investment.

A portion of DOE's test sample included four product series from four different manufacturers. Through testing, DOE found that the flow rates of the units varied within each series. However, based on the reverse-engineering analysis, the manufacturing costs for the units within each series were the same. Therefore, DOE concluded that there is no manufacturing cost difference for incremental efficiency improvements between models within the same series from the same manufacturer.

DOE also tested and performed a teardown analysis on commercial prerinse spray valves from additional manufacturers. These commercial prerinse spray valves represented a range of market baseline to max-tech units in each class. The testing and teardown results indicated that the manufacturing costs between different units from different manufacturers can vary based on the type of material, amount of material, and/or process used. However, DOE determined that these factors do not affect the efficiency of a commercial prerinse spray valve. Therefore, DOE did not include these cost differences in the engineering analysis. Chapter 5 of the final rule TSD provides further details on the teardown analysis, component costs, and costs that were developed as part of the cost-efficiency curves.

D. Markups Analysis

The purpose of the markups analysis is to translate the MPC derived from the engineering analysis into the final consumer purchase price by applying the appropriate markups. The first step in this process is converting the MPC into the manufacturer selling price (MSP) by applying the manufacturer markup. The manufacturer markup accounts for cost of sales, general and administrative expenses, research and development costs, other corporate expenses, and profit. As described further in chapter 6 of the final rule TSD, the manufacturer markup of 1.30 was calculated as the market share weighted average value for the industry. DOE developed this manufacturer markup by examining several major CPSV manufacturers' gross margin information from annual reports and Securities and Exchange Commission 10-K reports. Because the 10-K reports do not provide gross margin information at the subsidiary level, the estimated markups represent the average markups that the parent company applies over its entire range of product offerings, and does not necessarily represent the manufacturer markup of the subsidiary. Both the MPC and the MSP values are used in the MIA.

Next, DOE uses manufacturer-to-consumer markups to convert the MSP into a consumer purchase price, which is then used in the LCC and PBP analysis, as well as the NIA. Consumer purchase prices are necessary for the baseline efficiency level and all other efficiency levels under consideration.

DOE recognizes that the consumer purchase price depends on the distribution channel (

i.e.,

how the product is distributed from the manufacturer to the consumer) the consumer uses to purchase the product. DOE identified the following distribution channels for commercial prerinse spray valves:

A. Manufacturer → Final Consumer (Direct Sales)

B. Manufacturer → Authorized Distributor → Final Consumer

C. Manufacturer → Retailer → Final Consumer

D. Manufacturer → Service Company → Final Consumer

Baseline markups are multipliers that convert the MSP of products at the baseline efficiency level to consumer purchase price. Incremental markups are multipliers that convert the incremental increase in MSP for products at each higher efficiency level (compared to the MSP at the baseline efficiency level) to corresponding incremental increases in the consumer purchase price. Consistent with the CPSV NOPR, in the analysis in this final rule, DOE used only baseline markups to convert the MSP of products to the consumer purchase price. This is due to the fact that the engineering analysis indicated that there is no price increase with improvements in efficiency for commercial prerinse spray valves. Thus, incremental markups were not required. Chapter 6 of the final rule TSD provides further details on the distribution channels and calculated markups. No comments regarding the markups analysis or distribution chains were received from interested parties.

E. Energy and Water Use Analysis

The purpose of the energy and water use analysis is to determine the annual energy and water consumption of commercial prerinse spray valves to assess the associated energy and water savings potential of different product efficiencies. The energy and water use analysis estimates the range of energy and water use of commercial prerinse spray valves in the field (

i.e.,

as they are actually used by consumers). To this end, DOE performed an energy and water use analysis that calculated energy and water use of commercial prerinse spray valves for each product class and efficiency level identified in the engineering analysis. The energy and water use analysis provides the basis for other analyses DOE performed,

particularly assessments of the energy and water savings and the savings in consumer operating costs that could result from adoption of the amended standards.

In the CPSV NOPR analysis, DOE calculated the energy and water use by determining the representative daily operating time of the product by major building types that contain commercial kitchens found in the Commercial Building Energy Consumption Survey (CBECS).

The daily CPSV operating time was annualized based on operating schedules for each building type. Annual water use for each product class was determined by multiplying the annual operating time by the flow rate at an operating pressure of 60 psi, in accordance with the amended DOE test procedure, for each efficiency level.

Survey data available at

www.eia.gov/consumption/commercial/data/2003/index.cfm

Annual site energy use was calculated by multiplying the annual water use in gallons by the energy required to heat each gallon of water to an end-use temperature of 108 °F.

Cold water supply temperatures used in this calculation were derived for the nine U.S. census regions based on ambient air temperatures and the hot water supply temperature was assumed to be 140 °F based on American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 12-2000 regarding the appropriate hot water temperatures necessary to prevent legionellosis and other bacterial diseases.

The proportion of buildings which used natural gas or electricity for water heating found in the CBECS database were multiplied by the energy consumption of each kind of water heater, taking into account the efficiency level of the product, to obtain the total energy consumption of each product class and efficiency level of commercial prerinse spray valves.

End-use temperature was determined based on a review of several field studies. See chapter 7 of the CPSV NOPR TSD for a list of the field studies reviewed.

ASHRAE Standard 12-2000: Minimizing the Risk of Legionellosis Associated with Building Water Systems,

(February 2000).

In response to the CPSV NOPR, DOE received several comments related to the energy and water use analysis. Specifically, NRDC questioned how DOE derived the hot water ratio used in the energy and water use and why the hot water ratio was not consistent throughout the U.S. NRDC further inquired if the end use temperature of 108 °F was consistent throughout the analysis. (NRDC, Public Meeting Transcript, No. 23 at pp. 61-63)

The hot water ratio used in the CPSV NOPR and the final rule energy and water use analysis(see chapter 7 of the final rule TSD) calculates the proportion of hot water from the water heater that mixes with the incoming cold water from the local mains water at the commercial prerinse spray valve to deliver water at 108 °F. The cold water is derived regionally for each census division and building type where commercial prerinse spray valves are installed. The hot water ratio is not consistent throughout the United States because the mains water temperature is not consistent throughout the United States. As noted previously, end use temperature was calculated using data from the average end use temperature from CPSV field studies.

DOE also received comments in response to the CPSV NOPR related to the water pressure used in the energy and water use analysis. AWE commented that the representative range of water pressures in commercial kitchens should be determined in order to determine a reasonable range of both flow rate and spray force to be maintained by the valves. (AWE, No. 28 at p. 5) ASAP was concerned that not testing at different water pressures could affect the definition of the product classes, and make it difficult to ensure customer satisfaction. (ASAP, No. 23 at p. 27) AWE commented that spray force is largely dependent upon water pressure, and that the supplied water pressure can vary by at least 70 psi between different service areas. AWE stated that this can cause models to be classified differently in varying locales, and is not addressed in the proposal. (AWE, No. 28 at p. 3) AWE further stated that mandatory requirements demand a higher level of scrutiny, and recommended that DOE postpone the rulemaking until further research data is available on how water pressure affects performance in real life settings. (AWE, No. 28 at p. 5)

DOE is not establishing spray force requirements in this final rule; instead, spray force is used only to define the boundaries between product classes. DOE understands that the measured flow rate of commercial prerinse spray valves will vary as a function of water pressure. In evaluating the representative water pressure used in the CPSV test procedure, DOE performed a sensitivity analysis to determine typical water pressure values and their impact on measured flow rate, titled “Analysis of Water Pressure for Testing Commercial Prerinse Spray Valves Final Report.”

DOE concluded, as part of this analysis, that the representative water pressure for evaluating the energy and water use of commercial prerinse spray valves was 60 psi.

The water pressure sensitivity analysis is available at regulations.gov under docket number EERE-2014-BT-TP-0055.

Chapter 7 of the final rule TSD provides details and the results of DOE's energy use analysis for commercial prerinse spray valves.

F. Life-Cycle Cost and Payback Period Analysis

DOE conducted the LCC and PBP analysis to evaluate the economic impacts on individual consumers of the amended energy conservation standards for commercial prerinse spray valves. The LCC is the total consumer expense over the life of the product, consisting of purchase and installation costs plus operating costs (expenses for energy and water use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. The PBP is the estimated amount of time (in years) it takes consumers to recover the potential increased purchase cost (including installation) of more efficient products through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the first year the amended standards are in effect (2019).

As compliance with the amended standards will be required at the very end of 2018, DOE used 2019 as the first year in the analysis period.

For any given efficiency level, DOE measures the change in LCC relative to an estimate of the no-new-standards case product efficiency distribution. The no-new-standards case estimate reflects the market in the absence of amended energy conservation standards, including the market for products that exceed the current energy conservation standard. In contrast, the PBP for a given efficiency level is measured relative to the baseline product.

Inputs to the calculation of total installed cost include the cost of the product—which includes MSPs, distribution channel markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy and water consumption, energy prices and price projections, combined water prices (which include water and wastewater prices) and price projections, repair and maintenance costs, product lifetimes, and discount rates. DOE created

distributions of values for product lifetime, discount rates, energy and combined water prices, and sales taxes, with probabilities attached to each value to account for their uncertainty and variability.

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

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

DOE calculated the LCC and PBP for all consumers as if each were to purchase a new commercial prerinse spray valve in 2019, the first year of the analysis period.

Table IV.4 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 and its appendices of the final rule TSD.

Table IV.4—Summary of Inputs and Methods for the LCC and PBP Analysis *

Inputs

Source/method

Product Cost

Derived by multiplying MSPs by distribution channel markups and sales tax, as appropriate.

Installation Costs

Baseline installation cost determined with data from U.S. Department of Labor. Assumed no change with efficiency level.

Annual Energy and Water Use

Determined from the energy required to heat a gallon of water used at the prerinse spray valve multiplied by the average annual operating time and flow rate of each product class. Variability: By census region.

Energy, Water and Wastewater Prices

Energy: Based on EIA's Form 826 data for 2014. Variability: By State. Water: Based on 2012 AWWA Survey. Variability: By State.

Energy and Water Price Trends

Energy: Forecasted using

AEO2015

price forecasts. Water: Forecasted using Bureau of Labor Statistics (BLS) historic water price index information.

Maintenance and Repair Costs

Assumed no change with efficiency level.

Product Lifetime

DOE assumed an average lifetime of 5 years. Variability: Characterized using modified Weibull probability distributions.

Discount Rates

Estimated using the average cost of capital to commercial prerinse spray valve consumers. Cost of capital was found using information from the Federal reserve and from Damodaran online data.

First Year of Analysis Period

2019.

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

1. Product Cost

To calculate consumer product costs, DOE multiplied the MSPs developed from the engineering analysis by the distribution channel markups described in section IV.D (along with sales taxes). DOE used baseline markups, but did not apply incremental markups, because the engineering analysis indicated that there is no price increase with improvements in efficiency for commercial prerinse spray valves. Product costs are assumed to remain constant over the analysis period.

2. Installation Cost

Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE used data from the U.S. Department of Labor to estimate the baseline installation cost for commercial prerinse spray valves.

DOE found no evidence and received no comments in the NOPR stage of this rulemaking that indicate installation costs will be impacted with increased efficiency levels.

U.S. Department of Labor—Wage and Hour Division.

Minimum Wage. http://www.dol.gov/whd/minimumwage.htm

. Washington, DC.

3. Annual Energy and Water Consumption

Chapter 7 of the final rule TSD details DOE's analysis of CPSV annual energy and water use at various efficiency levels. For each sampled building type, DOE determined the energy and water consumption for a commercial prerinse spray valve at different efficiency levels using the approach described in section IV.E of this document.

4. Energy Prices

DOE derived energy prices from the EIA regional average energy price data for the commercial sectors. DOE used projections of these energy prices for commercial consumers to estimate future energy prices in the LCC and PBP analysis.

AEO2015

was used as the default source of projections for future energy prices.

DOE developed estimates of commercial electricity and natural gas prices for each state and the District of Columbia (DC). DOE derived average regional energy prices from data that are published annually based on EIA Form 826.

DOE then used

AEO2015

price projections to estimate commercial electricity and natural gas prices in future years.

AEO2015

price projections have an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2030 to 2040. DOE assumed that 100 percent of installations were in commercial locations.

U.S. Department of Energy—Energy Information Administration.

Form EIA-826 Database Monthly Electric Utility Sales and Revenue Data (EIA-826 Sales and Revenue Spreadsheets).

2015.

http://www.eia.gov/electricity/data/eia826/

. Washington, DC.

5. Water and Wastewater Prices

DOE obtained data on water and wastewater prices from the 2012 American Water Works Association (AWWA) surveys for this document.

For each state and the District of Columbia, DOE combined all individual utility observations within the state to develop one value for water and wastewater service. Because water and wastewater charges are frequently tied to the same metered commodity values, DOE combined the prices for water and wastewater into one total dollar per thousand gallons figure. This figure is

referred to as the combined water price. DOE used the consumer price index (CPI) data for water related consumption (1970-2013) in developing a real growth rate for combined water price forecasts.

American Water Works Association.

AWWA 2012 Water and Wastewater Rate Survey. http://www.awwa.org/resources-tools/water-and-wastewater-utility-management/water-wastewater-rates.aspx

U.S. Department of Labor—Bureau of Labor Statistics,

1970-2014 Tables 3A, 24.

2014.

http://www.bls.gov/cpi/cpid1401.pdf

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

6. Maintenance and Repair Costs

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

Throughout this rulemaking process, DOE has requested information as to whether maintenance and repair costs are a function of efficiency level and product class. DOE did not receive comments during the CPSV NOPR public meeting or comment period regarding these costs. Thus, consistent with the analysis conducted at the NOPR stage of this rulemaking, DOE assumed that consumers would replace the commercial prerinse spray valve upon failure rather than repairing the product. Additionally, DOE modeled no changes in maintenance or repair costs between different efficiency levels.

7. Product Lifetime

Because product lifetime varies depending on utilization and other factors, DOE developed a distribution of product lifetimes. The use of a lifetime distribution helps account for the variability of product lifetimes.

DOE considered—but did not implement—the use of factors such as usage, water temperature, and pressure as means of determining the distribution of lifetimes of commercial prerinse spray valves in the analysis for this document. DOE developed a Weibull distribution with an average lifetime of 5 years and a maximum lifetime of 10 years. In the CPSV NOPR analysis, DOE modified the Weibull distribution to reflect 10 percent of commercial prerinse spray valves failing within the first year after installation, and maintained that characteristic for the final rule analysis. See chapter 8 of the final rule TSD for further details on the method and sources DOE used to develop CPSV lifetimes.

8. Discount Rates

In the calculation of LCC, DOE developed discount rates by estimating the average cost of capital to commercial prerinse spray valve consumers. DOE applies discount rates to commercial consumers to estimate the present value of future cash flows derived from a project or investment. Most companies use both debt and equity capital to fund investments, so the cost of capital is the weighted-average cost to the firm of equity and debt financing. See chapter 8 in the final rule TSD for further details on the development of consumer discount rates.

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

To accurately estimate the share of consumers that will be affected by the amended energy conservation standard at a particular efficiency level, DOE's LCC and PBP analysis considered the projected distribution of product efficiencies that consumers purchase under the no-new-standards case. DOE refers to this distribution of product efficiencies as a no-new-standards case efficiency distribution.

To estimate the no-new-standards case efficiency distribution of commercial prerinse spray valves in 2019 (the first year of the analysis period), DOE relied on data from the Food Service Technology Center and DOE's CCMS Database for commercial prerinse spray valves.

Additionally, DOE conducted general internet searches and examined manufacturer literature to understand the characteristics of the spray valves currently offered on the market. DOE assumed that the no-new-standards case percentages in 2019 would stay the same through the analysis period. The no-new-standards case efficiency distribution is described in chapter 8 of the final rule TSD.

The Food Service Technology Center test data for prerinse spray valves is available at

www.fishnick.com/equipment/sprayvalves/

. The DOE compliance certification data for commercial prerinse spray valves is available at

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

The estimated shares for the no-new-standards case efficiency distribution for commercial prerinse spray valves are shown in Table IV.5.

Table IV.5—Commercial Prerinse Spray Valve No-New-Standards Case Efficiency Distribution by Product Class in 2019

Efficiency level

Product class 1

(% of

shipments)

Product class 2

(% of

shipments)

Product class 3

(% of

shipments)

N/A

10. Payback Period Analysis

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

The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed. As explained in the engineering analysis (section IV.C) there are no additional installed costs for more efficient commercial prerinse spray valves, making the PBPs in this analysis zero.

11. Rebuttable-Presumption Payback Period

EPCA, as amended, establishes a rebuttable presumption that a standard

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

G. Shipments Analysis

DOE uses projections of product shipments to calculate the national impacts of amended energy conservation standards on energy and water use, NPV, and future manufacturer cash flows. DOE develops shipment projections based on historic economic figures and an analysis of key market drivers for commercial prerinse spray valves. In DOE's shipments model, CPSV shipments are driven by both new construction and stock replacements. The shipments model takes an accounting approach, tracking market shares of each product class and the vintage of units in the existing stock. Stock accounting uses product shipments as inputs to estimate the age distribution of in-service product stocks for all years. The age distribution of in-service products is a key input to calculations of the NES, national water savings, and NPV, because operating costs for any year depend on the age distribution of the stock.

In the shipments analysis for this final rule, DOE gathered information pertaining to commercial prerinse spray valves for many building types besides restaurants from the Puget Sound Energy Program, EPA WaterSense Field Study, and other industry reports.

35 36

U.S. Environmental Protection Agency WaterSense. Pre-Rinse Spray Valve Field Study Report. March 2011. Washington DC. Available at:

http://www.epa.gov/watersense/partners/prsv_background.html#study

SBW Consulting, Inc. and Koeller and Company. Pre-Rinse Spray Valve Programs: How Are They Really Doing? December 2005. Seattle, WA. Available at:

http://www.allianceforwaterefficiency.org/Commercial_Food_Service_Introduction.aspx

In the CPSV NOPR analysis, DOE disaggregated total industry shipments into the three product classes. At the CPSV NOPR public meeting, T&S Brass commented that more shipments should be allocated to product class 3, which was the “heavy duty” product class in the CPSV NOPR. (T&S Brass, Public Meeting Transcript, No. 23 at p. 80) After considering the comment from T&S Brass, and with further study into the CPSV market, DOE updated the allocation of total shipments by product class for the final rule, as shown in Table IV.6.

Table IV.6—NOPR vs. Final Rule Shipments Allocations by Product Class

Product class 1

(%)

Product class 2

(%)

Product class 3

(%)

NOPR

Final Rule

DOE based the retirement function (the time at which the product fails and is replaced) on the probability distribution for product lifetime that was developed in the LCC and PBP analysis. The shipments model assumes that no units are retired below a minimum product lifetime (one year of service) and that all units are retired before exceeding a maximum product lifetime (10 years of service).

DOE determined that a roll-up scenario is most appropriate to establish the distribution of efficiencies in the first year of compliance with the amended standards. Under the “roll-up” scenario, DOE assumes: (1) Product efficiencies in the no-new-standards case that do not meet the standard level “roll-up” to meet the required standard levels for each standards case; and (2) product efficiencies above the standard level are not affected. The details of DOE's approach to forecast efficiency trends are described in chapter 8 of the final rule TSD.

The nature of the market for commercial prerinse spray valves makes it possible that consumers may, under examined TSLs and product classes, opt to switch product classes to a commercial prerinse spray valve that consumes more water and energy than their current product. In particular, if current choices of product flow rate correspond to consumers' optimal choice under the current regulatory environment, it is probable that some consumers would switch from product class 1 to product class 2, and from product class 2 to product class 3, in response to amended standards, given the lack of restrictions on doing so. DOE implemented a mechanism in the shipments model to estimate such consumer choices. The economics resulting from product class switching may result in lower optimal efficiency levels and reduced estimates of water and energy savings, as compared to the case without class switching. A detailed description of DOE's method to model product class switching is contained in chapter 9 of the final rule TSD.

1. Sensitivity Cases

In addition to a standard shipments scenario, DOE also developed two alternative shipments scenarios to help examine potential impacts in specific situations.

The first alternative shipments scenario, introduced in the CPSV NODA, alters standards-case shipments for product class 3. 80 FR 72608. In this shipments scenario, some consumers exit the CPSV market rather than comply with amended standards. Since the utility of single-orifice CPSV models may not be equivalent in some applications that previously used shower-type CPSV models, this alternative shipments scenario enables analysis of the case where, rather than accepting the decreased usability of a compliant CPSV model, consumers of shower-type units instead exit the CPSV market and purchase faucets that have a maximum flow rate of 2.2 gpm under the current Federal standard. Thus, shipments of compliant CPSV models are much lower under this scenario. With this scenario, DOE is able to account for the energy and water use of CPSV models that remain within the scope of this rule and also for the change in energy and water use for consumers that chose to exit the CPSV

market, and instead purchase faucets, as a result of the standard.

The second alternative shipments scenario modifies the no-new-standards case for product classes 1 and 2. In the case of the first two product classes, EL 1 represents the market minimum level, while EL 0 represents a baseline at the Federal standard level of 1.6 gpm, as described in section IV.C.3. Although DOE did not observe any models at the baseline, DOE recognizes that it is possible that some shipments could occur at this level. In order to better understand the implications of moving the standard from EL 0 to EL 1, for this sensitivity case, 1 percent of no-new-standards case shipments in each of the first two product classes are assumed to fall into EL 0. These shipments were originally located at EL 1 in the default shipments scenario. Although additional product-class switching would possibly occur as a result of standards impacting these consumers, somewhat reducing any incremental savings, it was not considered in this sensitivity case.

Specific analyses undertaken with these alternative shipments scenarios are discussed in section V.A. Results of those analyses are provided in sections V.B.2 and V.B.3.

H. National Impact Analysis

The NIA assesses the NES, national water savings, and NPV of total consumer costs and savings that are expected to result from amended standards at specific efficiency levels. DOE calculates the NES, national water savings, and NPV based on projections of annual CPSV shipments, along with the annual energy and water consumption and total installed cost data from the energy and water use analysis, as well as the LCC and PBP analysis. DOE forecasted the energy and water savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of commercial prerinse spray valves sold from 2019 through 2048.

DOE evaluates the impacts of amended standards by comparing a no-new-standards case with standards-case projections. The no-new-standards case characterizes energy and water use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each product class if DOE adopted new or amended standards at specific efficiency levels (

i.e.,

the TSLs or standards cases) for that class. For the standards cases, DOE considers how a given standard would likely affect the market shares of products with efficiencies greater than the standard.

DOE uses a spreadsheet model to calculate the energy and water savings, and the national consumer costs and savings for each TSL. Chapter 10 of the final rule TSD describes the models and how to use them; interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical or weighted-average mean values (as opposed to probability distributions) as inputs.

DOE used projections of energy and combined water prices as described in section IV.F.4 and IV.F.5, as well as chapter 8 of the final rule TSD. As part of the NIA, DOE analyzed scenarios that used inputs from the

AEO2015

Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the reference case. NIA results based on these cases are available via the NIA analysis spreadsheet.

Table IV.7 summarizes the inputs and methods DOE used for the NIA analysis for the final rule. Discussion of these inputs and methods follows the table. See chapter 10 of the final rule TSD for further details.

Table IV.7—Summary of Inputs and Methods for the National Impact Analysis

Inputs

Method

Shipments

Annual shipments from shipments model.

First Year of Analysis Period

2019.

No-Standards Case Forecasted Efficiencies

Efficiency distributions are forecasted based on historical efficiency data.

Standards Case Forecasted Efficiencies

Used a “roll-up” scenario.

Annual Energy and Water Consumption per Unit

Annual weighted-average values are a function of energy and water use at each TSL.

Total Installed Cost per Unit

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

Incorporates forecast of future product prices based on historical data.

Annual Energy and Combined Water Cost per Unit

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

Energy Prices

AEO2015

forecasts (to 2040) and extrapolation through 2058.

Energy Site-to-Source Conversion Factors

Varies yearly and is generated by NEMS-BT.

Discount Rate

3 and 7 percent real.

Present Year

Future expenses discounted to 2015, when the final rule will be published.

1. National Energy and Water Savings

The NES analysis involves a comparison of national energy and water consumption of the considered products in each TSL with consumption in the no-new-standards case with no amended energy and water conservation standards. DOE calculated the national energy and water consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy and water consumption (also by vintage). DOE calculated annual NES and national water savings based on the difference in national energy and water consumption for the no-new-standards case and for each higher efficiency standard. DOE estimated energy consumption and savings based on site energy and converted the electricity consumption and savings to primary energy (

i.e.,

the energy consumed by power plants to generate site electricity) using annual conversion factors derived from

AEO2015.

Cumulative energy and water savings are the sum of the NES and national water savings for each year over the timeframe of the analysis. DOE has historically presented NES in terms of primary energy savings. In the case of electricity use and savings, this quantity includes the energy consumed by power plants to generate delivered (site) electricity.

In 2011, in response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy

Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use FFC measures of energy use and GHG and other emissions in the NIAs and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the approaches discussed in the August 18, 2011 document, DOE published a statement of amended policy in which DOE explained its determination that EIA's NEMS is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector

that EIA uses to prepare its

Annual Energy Outlook.

The approach used for deriving FFC measures of energy use and emissions is described in appendix 10B of the final rule TSD.

For more information on NEMS, refer to the Energy Information Administration.

The National Energy Modeling System: An Overview 2009.

October 2009. DOE/EIA-0581.

https://www.eia.gov/forecasts/aeo/nems/overview/pdf/0581(2009).pdf.

In response to the CPSV NOPR, ASAP asked if DOE considered the energy required to treat and transport the water used by commercial prerinse spray valves in its energy analysis. (ASAP, Public Meeting Transcript, No. 23 at pp. 63-64)

DOE recognizes the important relationship between water and energy use. In June 2014, a DOE working group published a report on this relationship, which acknowledged the need for a more interconnected approach to energy and water use analysis.

The report also identified the need for data and an integrated water-energy analytical platform, which remains under development.

U.S. Department of Energy,

The Water-Energy Nexus: Challenges and Opportunities

(June 2014) (Available at:

www.energy.gov/sites/prod/files/2014/06/f16/Water%20Energy%20Nexus%20Report%20June%202014.pdf

2. Net Present Value Analysis

The inputs for determining the NPV of the total costs and benefits experienced by consumers are (1) total annual installed cost, (2) total annual savings in operating costs, and (3) a discount factor to calculate the present value of costs and savings. DOE calculates net savings each year as the difference between the no-new-standards case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculates operating cost savings over the lifetime of each product shipped during the forecast period. The operating cost savings are energy and combined water cost savings.

In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. For this final rule, DOE estimated the NPV of consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses these discount rates in accordance with guidance provided by the Office of Management and Budget

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