Energy Conservation Program: Energy Conservation Standards for Consumer Pool Heaters

Federal RegisterApr 15, 2022

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[EERE-2021-BT-STD-0020]

RIN 1904-AD49

Energy Conservation Program: Energy Conservation Standards for Consumer Pool Heaters

AGENCY:

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

ACTION:

Notice of proposed rulemaking and announcement of public meeting.

SUMMARY:

The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer pool heaters. 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 result in significant energy savings. In this notice of proposed rulemaking (“NOPR”), DOE proposes definitions for the different classes of pool heaters, amended energy conservation standards for gas-fired pool heaters, new energy conservation standards for electric pool heaters, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

Meeting:

DOE will hold a public meeting via webinar on this NOPR on Wednesday, May 4, 2022, from 1 p.m. to 4 p.m. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

Comments:

Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the

ADDRESSES

section on or before May 16, 2022.

DOE will accept comments, data, and information regarding this NOPR no later than June 14, 2022.

ADDRESSES:

Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at

www.regulations.gov.

Follow the instructions for submitting comments. Alternatively, interested persons may submit comments by email to the following address:

PoolHeaters2021STD0020@ee.doe.gov.

Include “Energy Conservation Standards for Consumer Pool Heaters” and the docket number EERE-2021-BT-STD-0020 and/or RIN number 1904-AD49 in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.

Although DOE has routinely accepted public comment submissions through a variety of mechanisms, including postal mail and hand delivery/courier, the Department has found it necessary to make temporary modifications to the comment submission process in light of the ongoing Covid-19 pandemic. DOE is currently suspending receipt of public comments via postal mail and hand delivery/courier. If a commenter finds that this change poses an undue hardship, please contact Appliance Standards Program staff at (202) 586-1445 to discuss the need for alternative arrangements. Once the Covid-19 pandemic health emergency is resolved, DOE anticipates resuming all of its regular options for public comment submission, including postal mail and hand delivery/courier.

No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section VII of this document.

Docket:

The docket for this activity, which includes

Federal Register

notices, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

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

The docket web page can be found at

www.regulations.gov/#!docketDetail;D=EERE-2021-BT-STD-0020.

The docket web page contains instructions on how to access all documents, including public comments, in the docket. See section VII for information on how to submit comments through

www.regulations.gov.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to the Office of Energy Efficiency and Renewable Energy following the instructions at

www.regulations.gov.

EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at

energy.standards@usdoj.gov

on or before the date specified in the

DATES

section. Please indicate in the “Subject” line of your email the title and Docket Number of this proposed rulemaking.

FOR FURTHER INFORMATION CONTACT:

Ms. Julia Hegarty, 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: (240) 597-6737. Email:

ApplianceStandardsQuestions@ee.doe.gov.

Ms. Kathryn McIntosh, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC, 20585-0121. Telephone: (202) 586-2002. Email:

Kathryn.McIntosh@hq.doe.gov.

For further information on how to submit a comment, review other public comments and the docket, or participate in the webinar, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:

ApplianceStandardsQuestions@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemakings for Consumer Pool Heaters

C. Deviation From Appendix A

III. General Discussion

A. Product Classes and Scope of Coverage

B. Test Procedure

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

2. Rebuttable Presumption

F. Other Issues

1. Regulatory Approach For Consumer Pool Heaters

2. Certification and Enforcement

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Scope of Coverage and Product Classes

2. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency analysis

2. Cost Analysis

D. Markups Analysis

E. Energy Use Analysis

1. Pool Heater Consumer Samples

2. Energy Use Estimation

3. Energy Use Results

F. Life-Cycle Cost and Payback Period Analysis

1. Product Cost

2. Installation Cost

3. Annual Energy Consumption

4. Energy Prices

5. Repair and Maintenance Costs

6. Product Lifetime

7. Discount Rates

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

9. Payback Period Analysis

G. Shipments Analysis

H. National Impact Analysis

1. Product Efficiency Trends

2. National Energy Savings

3. Net Present Value Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model and Key Inputs

3. Manufacturer Interviews

K. Emissions Analysis

1. Air Quality Regulations Incorporated in DOE's Analysis

L. Monetizing Emissions Impacts

1. Monetization of Greenhouse Gas Emissions

2. Monetization of Other Air Pollutants

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

2. Economic Impacts on Manufacturers

3. National Impact Analysis

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Conclusion

1. Benefits and Burdens of TSLs Considered for Consumer Pool Heater Standards

2. Annualized Benefits and Costs of the Proposed Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

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. Information Quality

M. Description of Materials Incorporated by Reference

VII. Public Participation

A. Participation in the Webinar

B. Procedure for Submitting Prepared General Statements for Distribution

C. Conduct of the Webinar

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

Title III, Part B

of EPCA,

established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These products include consumer pool heaters, the subject of this rulemaking. (42 U.S.C. 6292(a)(11))

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

All references to EPCA in this document refer to the statute as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 27, 2020).

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

In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for gas-fired pool heaters and new energy conservation standards for electric pool heaters. In addition, the proposed new and amended standards are expressed in terms of the integrated thermal efficiency (TE

) metric, which replaces the thermal efficiency (TE) metric for gas-fired pool heaters, and are shown in Table I.1. The proposed TE

standards are expressed as a function of the active mode electrical input power (PE) in British thermal units per hour (Btu/h) for electric pool heaters and the gas input rating (Q

) in Btu/h for gas-fired pool heaters. These proposed standards, if adopted, would apply to all consumer pool heaters listed in Table I.1 manufactured in, or imported into, the United States starting on the date 5 years after the publication of the final rule for this rulemaking. (42 U.S.C. 6295(m)(4)(A)(ii))

EP15AP22.000

A. Benefits and Costs to Consumers

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

The average LCC savings are positive for electric pool heaters and gas-fired pool heaters, and the PBP is less than the average lifetime of electric pool heaters and gas-fired pool heaters, which is estimated to be 11.2 years (

see

section IV.F.6 of this NOPR).

The average LCC savings refer to consumers that are affected by a standard and are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of new or amended standards (

see

section IV.F.9 of this NOPR). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline product (

see

section IV.C of this NOPR).

Table I.2—Impacts of Proposed Energy Conservation Standards on Consumers of Pool Heaters

Product class

Average LCC savings

2020$

Simple payback period

years

Electric Pool Heater

1,029

0.7

Gas-fired Pool Heater

1.5

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

B. Impact on Manufacturers

The industry net present value (“INPV”) is the sum of the discounted cash flows to the industry from the reference year through the end of the analysis period (2021-2057). Using a real discount rate of 7.4 percent,

DOE estimates that the INPV for manufacturers of consumer pool heaters in the case without new and amended energy conservation standards is $188.7 million in 2020$. Under the proposed standards, the change in INPV is estimated to range from −14.7 percent to −7.7 percent, which is approximately −$27.7 million to −$14.4 million. In order to bring products into compliance with the proposed standards, it is estimated that the consumer pool heater industry would incur conversion costs of approximately $38.8 million.

The discount rate was derived from industry financials from publicly traded companies and then modified according to feedback received during manufacturer interviews.

DOE's analysis of the impacts of the proposed standards on manufacturers is described in section IV.J of this document. The analytic results of the manufacturer impact analysis (“MIA”) are presented in section V.B.2 of this document.

C. National Benefits and Costs

All monetary values in this document are expressed in 2020 dollars.

DOE's analyses indicate that the proposed energy conservation standards for consumer pool heaters would save a significant amount of energy. Relative to the case without new or amended standards, the lifetime energy savings for consumer pool heaters purchased in the 30-year period that begins in the anticipated first full year of compliance with the new or amended standards (2028-2057) amount to 0.49 quadrillion British thermal units (“Btu”), or quads.

This represents a savings of 5.3 percent relative to the energy use of electric and gas-fired pool heaters in the case without amended standards (referred to as the “no-new-standards case”).

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 of this document.

The cumulative net present value (“NPV”) of total consumer benefits of the proposed standards for consumer pool heaters ranges from $0.95 billion (at a 7-percent discount rate) to $2.39 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for consumer pool heaters purchased in 2028-2057.

In addition, the proposed standards for consumer pool heaters are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission reductions (over the same period as for energy savings) of 19 million metric tons (“Mt”)

of carbon dioxide (“CO

”), 5.5 thousand tons of sulfur dioxide (“SO

”), 90 thousand tons of nitrogen oxides

(“NO

”), 161 thousand tons of methane (“CH

”), 0.15 thousand tons of nitrous oxide (“N

O”), and 0.03 tons of mercury (“Hg”).

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

are presented in short tons.

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

Annual Energy Outlook 2021

(“

AEO2021

represents current federal and state legislation and final implementation of regulations as of the time of its preparation. See section IV.K for further discussion of

AEO2021

assumptions that effect air pollutant emissions.

DOE estimates the value of climate benefits from a reduction in greenhouse gases using four different estimates of the social cost of CO

(“SC-CO

”), the social cost of methane (“SC-CH

”), and the social cost of nitrous oxide (“SC-N

O”). Together these represent the social cost of greenhouse gases (SC-GHG). DOE used interim SC-GHG values developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).

The derivation of these values is discussed in section IV.L of this document. For presentational purposes, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are estimated to be $0.9 billion. DOE does not have a single central SC-GHG point estimate and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates.

See Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide. Interim Estimates Under Executive Order 13990, Washington, DC, February 2021. Available at:

www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf

(last accessed March 17, 2022).

DOE also estimates health benefits from SO

and NO

emissions reductions.

DOE estimates the present value of the health benefits would be $0.1 billion using a 7-percent discount rate, and $0.3 billion using a 3-percent discount rate.

DOE is currently only monetizing (for SO

and NO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions

12 13

DOE estimated the monetized value of SO

and NO

emissions reductions associated with site and electricity savings using benefit per ton estimates from the scientific literature. See section IV.L.2 of this document for further discussion.

DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of Executive Order 12866.

DOE plans to update its methodology to reflect the Environmental Protection Agency's recent updates to benefit-per-ton values in a future impact analysis if DOE issues a final rule and generally for forthcoming rulemakings, but DOE does not have time to fully vet the new methods for this impact analysis.

On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from “adopting, employing, treating as binding, or relying upon” the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will revert to its approach prior to the injunction and present monetized benefits where appropriate and permissible under law.

Table I.3 summarizes the economic benefits and costs expected to result from the proposed standards for consumer pool heaters. In the table, total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate. DOE does not have a single central SC-GHG point estimate and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. The estimated total net benefits using each of the four SC-GHG estimates are presented in section V.B.8. of this document.

Table I.3—Summary of Monetized Economic Benefits and Costs of Proposed Energy Conservation Standards for Consumer Pool Heaters

[TSL 5]

Billion 2020$

3% discount rate

Consumer Operating Cost Savings

3.2

Climate Benefits *

0.9

Health Benefits **

0.3

Total Benefits †

4.4

Consumer Incremental Product Costs ‡

0.8

Net Benefits

3.6

7% discount rate

Consumer Operating Cost Savings

1.4

Climate Benefits *

0.9

Health Benefits **

0.1

Total Benefits †

2.4

Consumer Incremental Product costs ‡

0.4

Net Benefits

2.0

Note:

This table presents the costs and benefits associated with consumer pool heaters shipped in 2028-2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.

* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate), as shown in Table V.17 through Table V.19. Together these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more details

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing PM

2.5

and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details.

† Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table V.22 for net benefits using all four SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

‡ Costs include incremental equipment costs as well as installation costs.

The benefits and costs of the proposed standards, for consumer pool heaters sold in 2028-2057, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increase in product purchase prices and installation costs, plus (3) the value of the benefits of GHGs, SO

and NO

emission reductions, all annualized.

To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2028, 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.,

2030), and then discounted the present value from each year to 2028. The calculation uses discount rates of 3 and 7 percent for all costs and benefits. 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.

The national operating savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of consumer pool heaters shipped in 2028-2057. The climate and health benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of consumer pool heaters shipped in 2028-2057.

Estimates of annualized benefits and costs of the proposed standards are shown in Table I.4. The results under the primary estimate are as follows.

Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced SO

and NO

emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the standards proposed in this rule is $49.0 million per year in increased equipment costs, while the estimated annual benefits are $164 million in reduced equipment operating costs, $54.5 million in climate benefits, and $15.6 million in health benefits. In this case, the net benefit would amount to $185 million per year.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards is $49.3 million per year in increased equipment costs, while the estimated annual benefits are $195 million in reduced operating costs, $54.5 million in climate benefits, and $19.6 million in health benefits. In this case, the net benefit would amount to $220 million per year.

Table I.4—Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for Consumer Pool Heaters

[TSL 5]

Million 2020$/year

Primary

estimate

Low-net-

benefits

estimate

High-net-

benefits

estimate

3% discount rate

Consumer Operating Cost Savings

194.9

179.0

212.8

Climate Benefits *

54.5

52.4

56.6

Health Benefits **

19.6

18.9

20.4

Total Benefits †

269

250

290

Consumer Incremental Product Costs ‡

49.3

51.4

49.4

Net Benefits

220

199

240

7% discount rate

Consumer Operating Cost Savings

164.2

152.7

177.7

Climate Benefits *

54.5

52.4

56.6

Health Benefits **

15.6

15.0

16.1

Total Benefits †

234

220

250

Consumer Incremental Product Costs ‡

49.0

50.7

49.2

Net Benefits

185

169

201

Note:

* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). Together these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. See section. IV.L of this document for more details.

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing PM

2.5

and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details.

† Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in

Louisiana

Biden,

‡ Costs include incremental equipment costs as well as installation costs.

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

D. Conclusion

DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified and would result in the significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for all product classes covered by this proposal. Based on the analyses described previously, DOE has tentatively concluded that the benefits of the proposed standards to the Nation (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers and LCC increases for some consumers).

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

Based on consideration of the public comments DOE received in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.

II. Introduction

The following section briefly discusses the statutory authority underlying this proposed rule, as well as some of the relevant historical background related to the establishment of standards for consumer pool heaters.

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include consumer pool heaters, the subject of this document. (42 U.S.C. 6292(a)(11)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(e)(2)) and directs DOE to conduct two cycles rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(e)(4)) EPCA further provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))

The energy conservation program for covered products under EPCA consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

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

See

42 U.S.C. 6297(d))

Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for consumer pool heaters appear at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix P (“appendix P”).

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including consumer pool heaters. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))

Moreover, DOE may not prescribe a standard: (1) For certain products, including consumer pool heaters, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, 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 of Energy (“Secretary”) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

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

EPCA also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of product that has the same function or intended use, if DOE determines that products within such group: (A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature 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 must consider such factors as the utility to the consumer of the feature and other factors DOE deems appropriate.

Id.

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

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

B. Background

1. Current Standards

The current energy conservation standard for gas-fired pool heaters is set forth in DOE's regulations at 10 CFR 430.32(k) and is repeated in Table II.1 of this document. The current energy conservation standard for gas-fired pool heaters is in terms of thermal efficiency, which measures only active mode efficiency. Electric pool heaters are a covered product under EPCA, but there is currently no Federal energy conservation standard.

Table II.1—Federal Energy Conservation Standards for Consumer Pool Heaters

Product class

Minimum

thermal

efficiency

(percent)

Gas-Fired Pool Heaters

2. History of Standards Rulemakings for Consumer Pool Heaters

On April 16, 2010, DOE published a final rule in which it concluded the first round of rulemaking required under EPCA and established an amended energy conservation standard for consumer pool heaters. 75 FR 20112 (“April 2010 final rule”).

In relevant part, the April 2010 final rule amended the statutorily prescribed standards for gas-fired pool heaters with a compliance date of April 16, 2013, on and after which gas-fired pool heaters were required to achieve a thermal efficiency of 82 percent.

A correction notice was published on April 27, 2010, correcting a reference to the compliance date for the energy conservation standard. 75 FR 21981.

On December 17, 2012, DOE published a final rule in the

Federal Register

that established a new efficiency metric for gas-fired pool heaters, “integrated thermal efficiency.” 77 FR 74559, 74565 (“December 2012 TP final rule”). The integrated thermal efficiency (TE

) metric built on the existing thermal efficiency metric for measuring active mode energy efficiency, and also accounts for the energy consumption during standby mode and off mode operation. DOE stated in the December 2012 TP final rule that for purposes of compliance with the energy conservation standard, the test procedure amendments related to standby mode and off mode (

i.e.,

integrated thermal efficiency) are not required until the compliance date of the next standards final rule, which addresses standby and off mode. 77 FR 74559, 74559.

On January 6, 2015, DOE published a final rule pertaining to its test procedures for direct heating equipment (“DHE”) and consumer pool heaters. 80 FR 792 (“January 2015 TP final rule”). In that final rule, DOE established test methods for measuring the integrated thermal efficiency of electric resistance and electric heat pump pool heaters.

To evaluate whether to propose amendments to the energy conservation standard for consumer pool heaters, DOE issued a request for information (“RFI”) in the

Federal Register

on March 26, 2015. 80 FR 15922 (“March

2015 RFI”). Through the March 2015 RFI, DOE requested data and information pertaining to its planned technical and economic analyses for DHE and consumer pool heaters. Among other topics, the March 2015 RFI sought data and information pertaining to electric pool heaters. 80 FR 15922, 15924-15925. Although the March 2015 RFI and the previous energy conservation standards rulemaking (concluding with the April 2010 final rule) included both DHE and consumer pool heaters, DOE has elected to review its energy conservation standards for each of these products separately.

The rulemaking docket for DHE can be found at:

www.regulations.gov/#!docketDetail;D=EERE-2016-BT-STD-0007.

DOE subsequently published a notice of data availability (“NODA”) in the

Federal Register

on October 26, 2015, which announced the availability of its analyses for electric pool heaters. 80 FR 65169 (“October 2015 NODA”). The purpose of the October 2015 NODA was to make publicly available the initial technical and economic analyses conducted for electric pool heaters, and present initial results of those analyses to seek further input from stakeholders. DOE did not propose new or amended standards for consumer pool heaters at that time. The initial technical support document (“TSD”) and accompanying analytical spreadsheets for the October 2015 NODA provided the analyses DOE undertook to examine the potential for establishing energy conservation standards for electric pool heaters and provided preliminary discussions in response to a number of issues raised by comments to the March 2015 RFI. It described the analytical methodology that DOE used and each analysis DOE had performed.

In response to the publication of the March 2015 RFI, DOE received seven comments from interested parties regarding DOE's analytical approach pertaining to both electric and gas-fired pool heaters. The March 2015 RFI comments relating to electric pool heaters were addressed in chapter 2 of the October 2015 NODA TSD. DOE received nine comments in response to the October 2015 NODA. Commenters on the March 2015 RFI and October 2015 NODA are listed in Table II.2 of this document. The comments received in response to October 2015 NODA, as well as those comments received in response to the March 2015 RFI not previously addressed in the October 2015 NODA, are discussed in the appropriate sections of this document.

Table II.2—Interested Parties Providing Written Comment in Response to the March 2015 RFI and/or October 2015 NODA

Name(s)

Commenter type *

Acronym

Association of Pool and Spa Professionals and International Hot Tub Association (Joint Comment)

APSP and IHTA.

Appliance Standard Awareness Project and Natural Resources Defense Council (Joint Comment)

ASAP and NRDC.

Appliance Standard Awareness Project, Natural Resources Defense Council, Alliance to Save Energy, American Council for an Energy-Efficient Economy, and National Consumer Law Center (Joint Comment)

ASAP et al.

Laclede Group

Laclede.

National Propane Gas Association

NPGA.

Air-Conditioning, Heating and Refrigeration Institute

AHRI.

Edison Electric Institute

EEI.

California Investor Owned Utilities

CA IOUs.

Adriana Murray

Murray.

Jeffery Tawney

Tawney.

Raypak, Inc

Raypak.

Lochinvar, LLC

Lochinvar.

Coates Heater Manufacturing Co., Inc

Coates.

* EA: Efficiency/Environmental Advocate; I: Individual; M: Manufacturer; TA: Trade Association; U: Utility or Utility Trade Association.

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

The parenthetical reference provides a reference for information located in the docket of DOE's rulemaking to develop energy conservation standards for pool heaters. (Docket No. EERE-2021-BT-STD-0020, which is maintained at

www.regulations.gov

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

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C, appendix A (“appendix A”), DOE notes that it is deviating from the provision in appendix A regarding the pre-NOPR stages for an energy conservation standards rulemaking. Section 6(d)(2) of appendix A specifies that the length of the public comment period for a NOPR will vary depending upon the circumstances of the particular rulemaking, but will not be less than 75 calendar days. For this NOPR, DOE has opted to instead provide a 60-day comment period. As stated, DOE requested comment in the March 2015 RFI on the technical and economic analyses and provided stakeholders a 30-day comment period. 80 FR 15922. Additionally, DOE provided a 45-day comment period for the October 2015 notice of data availability 80 FR 65169. DOE has relied on many of the same analytical assumptions and approaches as used in the preliminary assessment presented in the notice of data availability and has determined that a 60-day comment period in conjunction with the prior comment periods provides sufficient time for interested parties to review the proposed rule and develop comments.

III. General Discussion

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

A. Product Classes and Scope of Coverage

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 differing standards. In determining whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)(1))

This NOPR covers consumer “pool heaters” defined as an appliance designed for heating nonpotable water contained at atmospheric pressure, including heating water in swimming pools, spas, hot tubs and similar applications. 10 CFR 430.2. The scope of coverage and product classes for this NOPR are discussed in further detail in section IV.A.1 of this NOPR.

B. Test Procedure

EPCA sets forth generally applicable criteria and procedures for DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. DOE's current energy conservation standards for consumer pool heaters are expressed in terms of thermal efficiency. See 10 CFR 430.32(k)(2). As stated in section II.A, DOE's test procedure for consumer pool heaters is found at appendix P.

As discussed in section II of this document, EISA 2007 amended EPCA to require DOE to amend its test procedures for covered consumer products generally to include measurement of standby mode and off mode energy consumption. (42 U.S.C. 6295(gg)(2)(A)) The test procedure applicable to fossil fuel-fired pool heaters, as amended in the December 2012 TP final rule, relies on the TE

metric, which accounts for energy consumption during active mode operation (sections 2.1.1, 3.1.1, and 4.1.1 of appendix P) and standby mode (sections 2.2, 3.2, and 4.2 of appendix P) and off mode operation (sections 2.3, 3.2, and 4.3 of appendix P), as required by EISA 2007. 77 FR 74559, 74572.

See

also, 77 FR 74559, 74564-74565.

The DOE test procedure for electric resistance and electric heat pump pool heaters incorporates by reference Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”) Standard 1160-2009, “Performance Rating of Heat Pump Pool Heaters” (“AHRI 1160”) and American National Standards Institute (“ANSI”)/American Society of Heating, Refrigerating, and Air-Conditioning Engineers (“ASHRAE”) Standard 146-2011, “Method of Testing and Rating Pool Heaters” (“ASHRAE 146”). The procedures referenced in AHRI 1160 and ASHRAE 146 are used to determine the active mode energy use for electric resistance (sections 2.1.2, 3.1.2, and 4.1.2 of appendix P) and electric heat pump pool heaters (sections 2.1.3, 3.1.3, and 4.1.3 of appendix P). Standby mode and off mode energy use are also recorded using the same procedures used for fossil-fuel fired pool heaters (sections 2.2, 3.2, and 4.2 and 2.3, 3.2, and 4.3 of appendix P, respectively). The active mode, standby mode, and off mode energy use is then combined into the TE

metric (section 5 of appendix P).

In this document, DOE is proposing new and amended energy conservation standards for consumer pool heaters. To the extent DOE is also proposing amendments to the test procedure, such proposed amendments are limited to those necessary to accommodate the proposed definitions and the proposed product classes. As discussed further in sections III.F.2 and IV.A.1 of this document, DOE is proposing to amend appendix P to add definitions for active electrical power, input capacity, and output capacity, add a calculation to determine the output capacity for electric pool heaters, and clarify the calculation of input capacity for fossil fuel-fired pool heaters. The proposed amendments to appendix P, if made final, would not impact how the test procedure is conducted in terms of the measurements taken, but rather the additional provisions use existing measurements to calculate the values necessary for comparing product efficiency to the proposed standards.

In response to the March 2015 RFI and October 2015 NODA, DOE received several comments from stakeholders relating to the consumer pool heater test procedure, which DOE will consider further in the next revision of its consumer pool heater test procedure.

C. Technological Feasibility

1. General

In evaluating potential amendments to energy conservation standards, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. Sections 6(c)(1), (2) of 10 CFR part 430, subpart C, appendix A. 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. Sections 6(b)(3)(i) and 7(b)(1) of appendix A to part 430, subpart C.

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; (3) adverse impacts on health or safety, and (4) unique-pathway proprietary technologies. Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of appendix A to part 430 subpart C. Section IV.B of this document discusses the results of the screening analysis for consumer pool heaters, particularly the designs 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 NOPR TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for consumer pool heaters, 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.1.c of this document and in chapter 5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings

For each trial standard level (“TSL”), DOE projected energy savings from application of the TSL to consumer pool heaters purchased in the 30-year period that begins in the first full year of compliance with the proposed standards (2028-2057).

The savings

are measured over the entire lifetime of consumer pool heaters purchased in the previous 30-year 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 new or amended energy conservation standards.

Each TSL is composed of specific efficiency levels for each product class. The TSLs considered for this NOPR are described in section V.A of this document. DOE conducted a sensitivity analysis

that considers impacts for products shipped in a 9-year period.

DOE used its national impact analysis (“NIA”) spreadsheet model to estimate national energy savings (“NES”) from potential amended or new standards for consumer pool heaters. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. For natural gas, the primary energy savings are considered to be equal to the site energy savings. DOE also calculates NES 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 or equipment. For more information on FFC energy savings, see section IV.H.1 of this document.

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 standards for a covered product, DOE must determine that such action would result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B))) Although the term “significant” is not defined in the 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), opined that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.”

The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.

For example, the United States has now rejoined the Paris Agreement and will exert leadership in confronting the climate crisis. Additionally, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. In evaluating the significance of energy savings, DOE considers differences in primary energy and full-fuel-cycle (“FFC”) effects for different covered products and equipment when determining whether energy savings are significant. Primary energy and FFC effects include the energy consumed in electricity production (depending on load shape), in distribution and transmission, and in extracting, processing, and transporting primary fuels (

i.e.,

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

A numeric threshold for determining the significance of energy savings was established in a final rule published on February 14, 2020 (85 FR 8626, 8670), but was subsequently eliminated in a final rule published on December 13, 2021 (86 FR 70892).

Accordingly, DOE evaluated the significance of energy savings on a case-by-case basis. As discussed in section V.C of this document, DOE is proposing to adopt TSL 5, which would save an estimated 0.49 quads of energy (FFC). DOE has initially determined the energy savings for the TSL proposed in this proposed rulemaking are nontrivial, and, therefore, DOE considers them “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria

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

a. Economic Impact on Manufacturers and Consumers

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

For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a 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 expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and 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 full year of compliance with new or 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 new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.

c. Energy Savings

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

d. Lessening of Utility or Performance of Products

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

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a proposed standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (“DOJ”) provide its determination on this issue. DOE will publish and respond to the Attorney General's determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the

ADDRESSES

section for information to send comments to DOJ.

f. Need for National Energy Conservation

DOE also considers the need for national energy and water conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the proposed standards are likely to provide improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity 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 of this document.

DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The proposed standards are 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. As part of the analysis of the need for national energy and water conservation, DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document; the estimated emissions impacts are reported in section V.B.7 of this document.

g. Other Factors

In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described previously, DOE could consider such information under “other factors.” 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 savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F.9 of this document.

F. Other Issues

1. Regulatory Approach for Consumer Pool Heaters

In response to the March 2015 RFI, EEI stated that if DOE intends to establish new energy efficiency standards for electric resistance pool heaters and electric heat pump pool heaters, it must follow the process used by DOE when considering whether to include a product as a covered product under EPCA. (EEI, No. 6 at p. 2) In response, DOE notes that the December 11, 2009 NOPR that preceded the April 2010 final rule explained in detail that the definition of “pool heater” in EPCA covers both gas-fired pool heaters and electric pool heaters, including heat pump pool heaters. 74 FR 65852, 65866-65867. And, as noted previously, DOE has established a test procedure for electric pool heaters and is now proposing standards in this document.

In the October 2015 NODA, DOE requested comment on its determination

to forgo a preliminary analysis for gas-fired pool heaters and noted that interested parties will have the opportunity to comment on DOE's analyses for gas-fired pool heaters during the next phase of the analysis. 80 FR 65169, 65171. In response, NPGA and EEI argued that DOE should publish a NODA for gas-fired pool heaters in order to provide the public with equal opportunities to provide comments for both products. (NPGA, No. 15 at p. 2; EEI, No. 21 at p. 2)

In response to these comments, DOE notes that the analysis conducted for gas-fired pool heaters in this proposed rulemaking follows similar methodologies to those presented and used in the April 2010 final rule. Stakeholders were informed that the analysis methodology employed in this proposed determination would be based on the prior rulemaking. As such, DOE determined that a preliminary analysis was not necessary for gas-fired pool heaters. Interested parties have an opportunity to comment on the analysis during the course of this proposed rulemaking.

Laclede stated that it opposes any limitation of minimum efficiency standards for consumer pool heaters to those fueled by natural gas and propane. (Laclede Group, No. 17 at p. 3) As noted previously, DOE is proposing to adopt the TE

metric for gas-fired pool heater standard, as well as proposing to establish a new standard for electric pool heaters, in this document.

The CA IOUs encouraged DOE to establish standards for standby and off mode energy consumption separately from thermal efficiency, because establishing a requirement for an integrated thermal efficiency metric may lead to the standby and off mode energy consumption not being considered by manufacturers, as they are small relative to overall consumer pool heater energy consumption. The CA IOUs added that establishing separate standby and off mode requirements and thermal efficiency requirements will ensure that seasonal off switches remain on most consumer pool heaters. (CA IOUs, No. 20 at p. 3) In response, DOE notes that it is required by EISA 2007 to include the standby and off mode energy consumption in the test procedure of all covered products unless such an integrated test procedure is technically infeasible for a covered product. (42 U.S.C. 6295(gg)(2)(A)) DOE must prescribe separate standby mode and off mode energy use test procedure if an integrated test procedure is deemed technically infeasible. (42 U.S.C. 6295(gg)(2)(A)(ii)) DOE notes that such determinations are based on the technical characteristics of a product and, as such, are product specific. In the case of consumer pool heaters, in the December 2012 TP final rule DOE determined that the inclusion of the standby and off mode energy use into an integrated metric would provide a measurable performance differentiation and concluded that an integrated metric is technically feasible. 77 FR 74559, 74564 (December 17, 2012). DOE disagrees with the CA IOUs' assertion that the integrated thermal efficiency may lead to standby and off mode energy consumption not being considered by manufacturers. DOE has initially found that the presence of a seasonal off switch improves the integrated thermal efficiency and has included it as a technology option in its analysis. Standby and off mode energy consumption may have a large impact on the integrated thermal efficiency, primarily due to the large number of operational hours in standby and off modes as compared to active mode. For instance, the standby fuel consumption of a pilot light on a gas-fired pool heater has a dramatic impact on its integrated thermal efficiency. Likewise, DOE estimates that for a heat pump pool heater inclusion of the standby and off mode energy consumption can reduce the overall efficiency by as much as 8 percent.

2. Certification and Enforcement

DOE reviewed its certification and enforcement provisions as they pertain to consumer pool heaters and proposes several provisions to clarify its procedures for gas-fired pool heaters.

DOE proposes to harmonize its terminology related to the capacity of consumer pool heaters as it relates to certification. For gas-fired pool heaters, DOE proposes to use the term “input capacity” in its provisions. DOE notes that input capacity is already certified for basic models of gas-fired pool heaters and DOE's proposed revisions to its regulations are a clarification only. If standards for gas-fired pool heaters are adopted via this proposed rulemaking, DOE would consider requirements for reporting and certifying to TE

in lieu of TE in a separate rulemaking.

If standards for electric pool heaters are adopted via this rulemaking, DOE would consider requirements for reporting and certifying active electrical power (as applicable) along with the representative value for integrated thermal efficiency in a separate rulemaking.

To provide clarity on how values would be determined for certification, DOE also proposes clarifications in its test procedure found in appendix P by adding definitions for the terms “input capacity” (Q

), “active electrical power” (PE), and “output capacity” (Q

OUT

) and identifying which measured variables in the test procedure represent these characteristics. Specifically, DOE proposes to: Use values measured during the active mode test described in Section 2.10.1 of ANSI Z21.56 (

i.e.,

heating value times correction factor times the quantity of fossil-fuel used divided by the length of the test) to determine the input capacity of a fossil fuel-fired water heater, as this calculation was not stated clearly within appendix P; to clarify that active electrical power is represented by the variable PE; and to provide a calculation for output capacity so the product class for an electric pool heater can be appropriately determined.

Also, DOE proposes that for enforcement testing, the input capacity or active electrical power (as applicable) would be measured pursuant to appendix P and compared against the rated value certified by the manufacturer. If the measured input capacity or active electrical power (as applicable) is within ±2 percent of the certified value, then DOE would use the certified value when determining the applicable standard. The ±2 percent threshold is already used

within the DOE enforcement provisions and test procedures as a reasonable range for input capacity to account for manufacturing variations that may affect the input capacity.

For example, the enforcement provisions for commercial water heating equipment, at 10 CFR 429.134(n), requires that the tested input rate be within 2 percent of the certified rated input.

During enforcement testing for a gas-fired pool heater, if the measured input capacity is not within ±2 percent of the certified value, then DOE would follow these steps to attempt to bring the fuel input rate to within ±2 percent of the certified value. First, DOE would attempt to adjust the gas pressure in order to increase or decrease the input capacity as necessary. If the input capacity is still not within ±2 percent of the certified value, DOE would then attempt to modify the gas inlet orifice (

i.e.,

drill) if the unit is equipped with one. Finally, if these measures do not bring the input capacity to within ±2 percent of the certified value, DOE would use the mean measured input capacity (either for a single unit sample or the average for a multiple unit sample) when determining the applicable standard for the basic model.

For an electric pool heater, DOE would not take any steps to modify the unit to bring the active electrical power of the unit within the ±2 percent threshold. Rather, if the active electrical power is not within ±2 percent of the certified value, DOE would use the measured active electrical power (either for a single unit sample or the average for a multiple unit sample) when determining the applicable standard for the basic model. DOE proposes this verification process to provide manufacturers with additional information about how DOE will evaluate compliance.

DOE requests comment on the proposal to add to its enforcement provisions to use a ±2 percent threshold on the certified value of input capacity or active electrical power (as applicable) when determining the applicable energy conservation standard for the basic model.

In response to the October 2015 NODA, AHRI expressed concern regarding the representation of the integrated thermal efficiency values. AHRI acknowledged that the inclusion of the standby and off mode consumptions in the TE

calculation results in percentages that are lower than the coefficient of performance (“COP”) equivalent, but suggested that the relative scale of the ratings has been lost in this process. AHRI suggested that for products where the efficiency ratings are less than 100 percent, a change of one or two percentage points may make a difference. However, for products such as heat pump pool heaters with efficiency ratings that exceed 300 percent,

a difference of 1 or 2 points is inconsequential. (AHRI, No. 16 at p. 3)

Heat pump pool heaters move heat from the ambient air and to the pool water instead of heating the pool water directly, as is done with electric resistance pool heaters. Heat pumps move heat as opposed to generating heat, so a relatively small amount of energy is required to provide a large amount of heat.

In response, in the context of an initial analysis, DOE used the test procedure equations in appendix P to arrive at the analyzed efficiency levels examined in the NODA. See chapter 5 of the NODA TSD. For this NOPR, however, DOE proposes capacity-dependent standards as described in section IV.C.1 of this document. It is important to preserve a higher level of precision in the test procedure and certification criteria because the evaluated standards are continuous functions that vary greatly dependent on capacity of the pool heater (input capacity or active electrical power, as applicable). In order to clarify this precision, DOE would consider rounding requirements for consumer pool heater in a separate rulemaking addressing certification reports.

In response to the March 2015 RFI, Lochinvar and Raypak expressed concern that the use of the integrated thermal efficiency metric would reduce the efficiency ratings for consumer pool heaters. (Lochinvar, No. 2 at p. 2; Raypak, No. 4 at p. 2) Lochinvar highlighted that the small reduction in the efficiency rating would impose a significant burden on manufacturers who will be required to assign new model numbers to all products due to the efficiency reduction. (Lochinvar, No. 2 at p. 2) AHRI requested that DOE clarify whether manufacturers will be required to change model numbers when implementing the new efficiency metric. (AHRI, No. 7 at p. 2) Raypak requested clarification on how DOE will address products that currently meet the minimum 82% thermal efficiency requirement but would no longer meet the minimum standard. (Raypak, No. 4 at p. 2)

In response, DOE first clarifies that specifying amended energy conservation standards for consumer pool heaters in terms of TE

rather than in terms of TE would not require new basic model numbers. Were certification to TE

required, pursuant to 10 CFR 429.12(b)(7), manufacturers may submit updated or corrected certification information for basic models. Therefore, at such time as certification were required using TE

manufacturers could submit an updated certification report with the TE

for a given basic model rather than assign a new basic model number upon the compliance date of amended energy conservation standards.

Regarding the reduction in efficiency ratings for models rated using the TE

metric relative to the TE metric, DOE accounted for the differences between the metrics in its analysis. DOE examined efficiency levels, including the baseline efficiency level corresponding to the current energy conservation standards, in terms of TE

that account for to the inclusion of standby mode and off mode energy consumption and electrical energy consumption that will cause the TE

value to be lower than the TE value of a given model. See section IV.C.1 for discussion of the TE

efficiency levels analyzed. Furthermore, EPCA requires that when a test procedure amendment changes the measured energy efficiency, models in use before the date on which the amended energy conservation standard becomes effective that comply with the energy conservation standard applicable to such covered products on the day before such date shall be deemed to comply with the amended energy conservation standard. (42 U.S.C. 6293(e)(3))

DOE seeks comment on its proposed certification and enforcement provisions and clarifications.

IV. Methodology and Discussion of Related Comments

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

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

www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=44&action=viewcurrent.

Additionally, DOE used output from the latest version of the Energy Information Administration's (“EIA's”)

Annual Energy Outlook

(“

AEO”

) 2020, a widely known energy projection for the United States, for the emissions and utility impact analyses.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include (1) a determination of the scope of the rulemaking and product classes, (2) manufacturers and industry structure, (3) existing efficiency programs, (4) shipments information, (5) market and industry trends; and (6) technologies or design options that could improve the energy efficiency of consumer pool heaters. The

findings of the market assessment inform downstream analyses, such as the engineering analysis and LCC analysis, and are presented in detail in chapter 3 of the NOPR TSD. In addition, chapter 3 of the TSD includes a detailed discussion of technology options for improving the energy efficiency of consumer pool heaters; the key findings and updates to the technology assessment are summarized in the following section.

1. Scope of Coverage and Product Classes

Under EPCA, pool heaters (which include electric pool heaters, and gas-fired pool heaters, and oil-fired pool heaters) are covered products. (42 U.S.C. 6292(a)(11)) EPCA defines “pool heater” as an “appliance designed for heating nonpotable water contained at atmospheric pressure, including heating water in swimming pools, spas, hot tubs and similar applications.” (42 U.S.C. 6291(25)) However, energy conservation standards have only been established for gas-fired pool heaters.

For this proposed rulemaking, DOE proposes to establish additional product classes for electric pool heaters, establish energy conservation standards for electric pool heaters, and for gas-fired pool heaters, to translate the existing standard from the TE metric to an equivalent level in terms of the TE

metric and to amend the energy conservation standards. DOE has tentatively determined not to analyze potential standards for oil-fired pool heaters based on the understanding that such standards would result in minimal energy savings. DOE also did not perform energy conservation standards analysis for electric spa heaters as DOE was unable to identify technology options available to improve the efficiency of such products. Accordingly, DOE is not proposing amended standards for these products in this NOPR.

EPCA prescribed a minimum thermal efficiency of pool heaters and initially only defined thermal efficiency of pool heaters in the context of test conditions for gas-fired pool heaters. (

See

42 U.S.C. 6295(e)(2) and 42 U.S.C. 6291(26))

In the March 2015 RFI, DOE noted that oil-fired pool heaters have an extremely small market share and requested comment on the potential energy savings that could result from energy conservation standards for oil-fired pool heaters. 80 FR 15922, 15925. In response, Raypak and AHRI indicated that there is little opportunity for savings. (Raypak, No. 4 at p. 3; AHRI, No. 7 at p. 3) AHRI noted that they only knew of one oil-fired pool heater on the market currently. (AHRI, No. 7 at p. 3) EEI suggested that DOE should analyze oil-fired pool heaters if they have significant market share (

i.e.,

greater than 2%) in order to maintain fuel and market neutrality. (EEI, No. 6 at p. 4) For this NOPR, DOE tentatively determined not to analyze potential standards for oil-fired pool heaters based on its previous understanding that the market for oil-fired pool heaters is extremely limited and, thus, any standards would be unlikely to result in significant energy savings. DOE's market research and the comments from AHRI and Raypak indicate that oil-fired pool heaters comprise a very small share of the consumer pool heater market. DOE does not anticipate a significant number of consumers would choose an oil-fired pool heater as a substitute for a gas-fired or electric pool heater due to the high first cost associated with installing a fuel oil tank, and the ongoing cost of fuel oil for pool heating.

In response to the March 2015 RFI, AHRI suggested that DOE limit the scope to less than 400,000 Btu/h for gas- and oil-fired pool heaters and less than or equal to 140,000 Btu/h for heat pump pool heaters to make a clear distinction between residential and commercial products. (AHRI, No. 7 at p. 2) Raypak stated that gas-fired pool heaters typically range from 50,000 Btu/h to 400,000 Btu/h for residential pools and commercial pool heaters typically range from 200,000 Btu/h to 4,000,000 Btu/hr. Raypak also stated that it is not uncommon to see multiple smaller pool heaters used together instead of utilizing a larger pool heater(s). (Raypak, No. 4 at p. 4)

EPCA places no capacity limit on the pool heaters it covers in terms of its definition of “pool heater.” (42 U.S.C. 6291(25)) Furthermore, EPCA covers pool heaters as a “consumer product,” (42 U.S.C. 6291(2), 42 U.S.C. 6292(a)(11)) and defines “consumer product,” in part, as an article that “to any significant extent, is distributed in commerce for personal use or consumption by individuals.” (42 U.S.C. 6291(1)) Standards established for pool heaters as a consumer product under EPCA apply to any pool heater distributed to any significant extent as a consumer product for residential use, regardless of input capacity and including consumer pool heater models that may also be installed in commercial applications. DOE has initially concluded that further delineation by adding an input capacity limit is not necessary. As discussed in the April 2010 final rule, pool heaters marketed as commercial equipment contain additional design modifications related to safety requirements for installation in commercial buildings. 75 FR 20112, 20127. In that final rule, DOE noted that this would include pool heating systems that are designed to meet a high volume flow and are matched with a pump from the point of manufacture to accommodate the needs of commercial facilities.

Id.

DOE stated that manufacturers can distinguish those units from pool heaters distributed to any significant extent as a consumer product for residential use, regardless of input capacity.

Id.

at 75 FR 20127-20128. Moreover, standards for gas-fired pool heaters regardless of size have been in place since 1990, and to place a capacity limit on standards now would result in backsliding for products over the capacity limit, which would be contrary to the anti-backsliding provision in EPCA. (42 U.S.C. 6295(o)(1))

In response to the March 2015 RFI, AHRI suggested that DOE consider atmospheric gas-fired heaters separately from fan-assist gas-fired heaters. Similarly, AHRI suggested that DOE consider condensing and non-condensing products separately as well. (AHRI, No. 7 at p. 4)

EPCA requires that a rule prescribing an energy conservation standard for a type (or class) of covered products must specify a level of energy use higher or efficiency lower, than that which applies (or would apply) for such type (or class) for any group of covered products which have the same function or intended use, if the Secretary determines that covered products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class). (42 U.S.C. 6295(q)(1)) In making a determination concerning whether a performance-related feature justifies the establishment of a higher or lower standard, the Secretary shall consider such factors as the utility to the consumer of such a feature, and such other factors as the Secretary deems appropriate. (

Id.

) DOE is not proposing to increase the stringency of the standard for gas-fired pool heaters to a level that would be unachievable by the gas-fired pool heaters described by AHRI. The gas-fired pool heaters described by AHRI are subject to the current standard and presently there are atmospheric, fan-assist, non-condensing, and condensing models on the market in compliance with that

standard. As such, there is no need to evaluate in the present document whether atmospheric, fan-assist, non-condensing, and/or condensing gas-fired pool heaters provide a unique feature and if so whether such feature justifies a different standard for gas-fired pool heaters.

In the March 2015 RFI, DOE requested comment on whether capacity or other performance related features that may affect efficiency would justify the establishment of consumer pool heater product classes that would be subject to different energy conservation standards. 80 FR 15922, 15925. Specifically, DOE sought comment on whether heat pump technology was a viable design for applications which typically utilize electric resistance pool heaters.

The CA IOUs and ASAP et al. both encouraged DOE to regulate electric pool heaters under a single product class, and to consider heat pump technology as a design option for electric pool heaters. (CA IOUs, No. 5 at p. 5 and No. 20 at p. 5; ASAP et al., No. 3 at p. 1-2) Murray stated support for a uniform homogenous standard for all consumer pool heaters. (Murray, No. 14 at p. 1) The CA IOUs further noted that in DOE's residential water heater standard, electric resistance and heat pump water heaters are combined into one product class and are not treated separately. (CA IOUs, No. 5 at p. 5) The CA IOUs encouraged DOE to investigate the national savings potential from water heating in portable electric spas which is almost entirely provided by electric resistance heating. (CA IOUs, No. 5 at p. 5)

EEI suggested that separate product classes should be established for electric resistance pool heaters and heat pump pool heaters in DOE's analysis, and AHRI recommended that each fuel type (gas, electric, and heat pump) be analyzed separately. (EEI, No. 6 at p. 2; AHRI, No. 7 at p. 2) EEI asserted that electric resistance pool heaters and heat pump pool heaters are distinct products with different characteristics and as such require different product classes. EEI stated that key differences include space constraints and operational considerations. (EEI, No. 6 at pp. 2-3)

AHRI and Raypak stated that heat pump technology is not a viable design for all applications in which electric resistance pool heaters are found. (AHRI, No. 7 at p. 3; Raypak, No. 4 at p. 2) The electric resistance-type units are typically installed as a component into a larger, more complex piece of equipment such as a spa or hot tub. AHRI stated that heat pumps could not typically be installed in the same housing. They further asserted that electric resistance pool heaters are typically installed in indoor applications where heat pump technology is not a cost-effective substitution. (AHRI, No. 7 at p. 3)

Coates stated that heat pump pool heaters have proven ineffective in climates that do not have high temperature and high humidity, being expensive and unable to perform as needed. Coates indicated that electric resistance spa heaters range from 1.5 kW to 11 kW. Coates added that heat pump pool heaters are usually not acceptable for spas due to their slow heat-up time, high cost, and inability to heat during the cool or cold months in northern climates. (Coates, No. 8 at p. 2)

In response to Murray's comment, DOE notes that, in evaluating and establishing energy conservation standards, EPCA directs DOE to divide covered products into classes based on the type of energy used. EPCA also directs DOE to divide covered products into classes based on capacity or other performance-related feature if such feature justifies a different standard. (42 U.S.C. 6295(q))

DOE considered comments raised by stakeholders when considering whether separate product classes should be evaluated in its analysis of potential standards for electric resistance pool heaters and electric heat pump pool heaters. DOE recognizes that that the performance of a heat pump is dependent upon the air temperature and air humidity at which it operates. However, DOE disagrees with Coates's assertion that heat pump pool heaters are ineffective in colder climates. Although heat pump pool heaters perform best when operating within an environment with high air temperature and high air humidity, they are nonetheless capable of operating effectively in cooler climates during the swimming season. DOE is aware of consumer heat pump pool heaters currently on the market with the capability of operating at below-freezing temperatures. DOE recognizes that heat pump pool heaters may have difficulty providing adequate heat to pools if operating during the colder months in northern climates. Rare cases such as these could be accommodated through the use of heat pump pool heaters that incorporate electric resistance backup in their designs (as is done in the case of some heat pump water heater designs

). Therefore, DOE proposes to maintain a single product class for electric pool heaters.

DOE gave similar consideration to establishing a separate product class for heat pump water heaters and consistent with the proposal in this document, DOE determined that heat pump electric water heaters do not warrant a separate product class.

See,

75 FR 20112, 20135 (April 16, 2010).

For this analysis, DOE has tentatively determined to separate certain electric pool heaters into an “electric spa heaters” product class. ANSI/APSP/International Code Council (“ICC”) Standard 6-2013, “American National Standard for Residential Portable Spas and Swim Spas” (ANSI 6) provides recommended minimum guidelines for the design, equipment, installation, and use of residential portable spas and swim spas. Spas and hot tubs come in many different configurations but are distinguished in section 1 of ANSI 6 based on whether they are portable or built-in and within the portable distinction whether they are self-contained or non-self-contained. Lower capacity electric heaters used to heat water in spas are a covered product by virtue of being within EPCA's definition of pool heater. (42 U.S.C. 6291(25)) Electric spa heaters are often incorporated into the construction of a self-contained spa or hot tub, resulting in the heater performing its major function (heating spa water) in a space constrained environment. These space constraints preclude the use of higher efficiency technologies (heat pump) and manufacturers instead rely on electric resistance heating elements. DOE has initially determined that heat pump technology is not a viable option for electric spa heaters designed for use within a self-contained portable electric spa because the space required for a heat pump impedes its incorporation into the construction of a spa or hot tub. DOE has also initially determined that heat pump technology is a viable option for heating a spa or hot tub if the heater is separate from the construction of the hot tub or spa (

i.e.,

non-self-contained as defined in section 1 of ANSI 6). As a result, DOE has separated electric spa heaters from the analysis of electric pool heaters. The proposed definition of “electric spa heater” distinguishes this product based on capacity and whether the product is designed to be installed within a portable electric spa. The proposed definitions for “electric spa heater” and “portable electric spa” are presented later in this section.

Electric spa heaters rely on electric heating elements for which there is currently negligible opportunity for efficiency gains. Consequently, DOE did not perform energy conservation standards analysis for electric spa heaters as DOE did not initially identify technology options that could be implemented to improve the efficiency of these products.

For the October 2015 NODA analysis, DOE defined electric spa heaters to be

heaters that: (1) Have a rated output capacity of 11 kW (37,534 Btu/h) or less; and (2) are factory- or field-assembled within the envelope of a spa, hot tub, or pool as defined by 10 CFR 430.2. See chapter 3 of the October 2015 NODA TSD. In the October 2015 NODA, DOE identified the 11 kW threshold as being a typical output capacity below which electric resistance heaters are integrated in spas.

Id.

DOE tentatively used this threshold in the October 2015 NODA analysis based on its assessment of the market. The threshold was also suggested in response to the March 2015 RFI by Coates, a manufacturer of electric resistance spa and pool heaters. (Coates, No. 8 at p. 2) Table IV.1 lists the product classes for consumer pool heaters outlined in Table 2.4.1 of the October 2015 NODA TSD.

Table IV.1—October 2015 NODA Product Classes for Consumer Pool Heaters

Product class

Additional description

Analyzed in October 2015 NODA?

Gas-fired Pool Heater

No.

Electric Pool Heater

Yes.

Electric Spa Heater

Output Capacity ≤11 kW; Assembled within spa, hot tub, or pool envelope

No.

In response to the scope of coverage presented in the October 2015 NODA, AHRI stated that the analysis appears not to consider the market segment

that may require capacities much higher than the largest heat pump pool heaters available on the market. AHRI stated that the analysis must consider the entire current market for electric pool heaters and should not establish an efficiency standard that will make products unavailable for some segments of that market. AHRI recommended DOE establish separate product classes for electric pool heaters based on a capacity breakpoint. (AHRI, No. 16 at p. 1)

Very large pools or pool in colder climates. (AHRI, No. 16, at p. 1)

DOE's review of the heat pump pool heater market found that most models have output capacities less than 200,000 Btu/h, however, DOE did find electric heat pump pool heaters with output capacities up to 500,000 Btu/h. Whereas gas-fired pool heaters are available with output capacities approaching 4,100,000 Btu/h. Therefore, DOE agrees with AHRI's comment that heat pump technology is not currently utilized to a significant extent in the high capacity pool heater market segment. As discussed in section IV.C.1 of this document, DOE is proposing capacity dependent energy conservation standards for gas-fired and electric pool heaters. Further, the estimated TE

values for the high capacity heat pump pool heaters available on the market are greater than the proposed efficiency levels discussed in section V.C, therefore, there DOE has tentatively determined that it is not currently necessary to establish separate product classes for electric pool heaters based on a capacity breakpoint.

DOE requested comment regarding whether the product classes outlined in the October 2015 NODA adequately describes the electric pool heater market. See chapter 3 of the October 2015 NODA.

Several commenters agreed with DOE's position to exclude electric spa heaters from the analysis. (CA IOUs, No. 20 at p. 6; APSP and IHTA No. 18 at p. 1) APSP and AHRI agreed with DOE's assumption that heat pump technology could not be implemented within a spa heater. (APSP and IHTA No. 18 at p. 1; AHRI, No. 16 at p. 2) The CA IOUs encouraged DOE to explore the energy savings potential from portable electric spas in another rulemaking. (CA IOUs, No. 20 at p. 6)

AHRI agreed that the basic concept of the product classes is adequate for the consumer pool heater market but suggested further development be made to the electric spa heater definition. AHRI agreed with the specification of a maximum output capacity as part of the definition of the electric spa heater product class, noting that the 11 kW limit is reasonable for spa heaters. However, AHRI stated that the second part of the definition (assembled within spa, hot tub, or pool envelope) is not clear enough. AHRI noted that the definition appears to exclude spa heaters that may be physically separate from the spa, hot tub, or pool but which are required to heat water for those units. AHRI suggested that either the specification of an “envelope” needs to be described in greater detail, or such specification should be reconsidered. (AHRI, No. 16 at p. 2)

DOE has considered AHRI's comment and agrees that the criterion that an electric spa heater is shipped within the spa envelope may cause confusion and issues for replacement electric spa heaters intended for existing portable electric spas. Due to these concerns, DOE has amended the envelope criterion in the definition of an electric spa heater to include electric spa heaters that are designed to be installed within a portable electric spa, which does not preclude electric spa heaters that are sold and shipped outside of the envelope of a spa, hot tub, or pool. The updated proposed definition is presented later in this section of this document.

In response to the product classes presented in the October 2015 NODA, Tawney suggested that DOE set separate standards for electric pool heaters that have both heating and cooling capabilities. Tawney stated that the addition of reversing components creates a diminished performance for all other components (

i.e.,

the compressor, evaporator, and condenser) and, therefore, requiring the minimum efficiency level to be set equal for these two different types of products would create design issues for the manufacturer and consumers. (Tawney, No. 13 at p. 1)

DOE recognizes that heat/cool heat pumps have reverse cycle capabilities to provide the cooling function, and, theoretically, manufacturers could design products intended for heating and cooling differently from those intended for heating only (

i.e.,

different size heat exchanger coils). However, based on DOE's review of products currently on the market, DOE does not expect the reverse cycle capability would negatively impact the integrated thermal efficiency of heat/cool heat pumps in heating mode. DOE examined parts diagrams found in manufacturer literature of traditional heat pump pool heaters and heat/cool heat pump models within the same product family which revealed the addition of a reversing valve as the only differentiator between the two products. DOE then compared the rated heating efficiency of both models and found them to be identical in the majority of cases, indicating that the presence of the reversing valve and reverse cycle capability does not inherently reduce heating performance. Therefore, DOE has tentatively determined that the creation of a separate product classes for heat pump

pool heaters with cooling capability is not necessary.

DOE requests comment on its assumption that electric pool heaters that have both heating and cooling capabilities do not suffer diminished efficiency performance in heating mode.

DOE analyzed new and amended standards for gas-fired pool heaters and electric pool heaters but did not analyze energy conservation standards for electric spa heaters (

i.e.,

electric pool heaters with output capacity ≤ 11 kW that are designed to be installed in a portable electric spa).

DOE requests comment on the product classes analyzed for this proposed rulemaking.

DOE is proposing definitions for electric pool heaters, electric spa heaters, gas-fired pool heaters, oil-fired pool heaters, and portable electric spas to clarify its regulations as they apply to consumer pool heaters. Based on comments received in response to the October 2015 NODA, DOE refined its definition for electric spa heaters. The proposed definitions are as follows:

Electric pool heater

means a pool heater other than an electric spa heater that uses electricity as its primary energy source.

Electric spa heater

means a pool heater that (1) uses electricity as its primary energy source; (2) has an output capacity (as measured according to appendix P to subpart B of part 430) of 11 kW or less; and (3) is designed to be installed within a portable electric spa.

Gas-fired pool heater

means a pool heater that uses gas as its primary energy source.

Oil-fired pool heater

means a pool heater that uses oil as its primary energy source.

Portable electric spa

means a self-contained, factory-built spa or hot tub in which all control, water heating and water circulating equipment is an integral part of the product. Self-contained spas may be permanently wired or cord connected.

DOE requests comment on the proposed definitions for electric pool heater, electric spa heater, gas-fired pool heater, oil-fired pool heater, and portable electric spa.

DOE also proposes to define output capacity and provide equations for its calculation for electric pool and spa heaters in its test procedure at appendix P. As described in section III.B of this document, appendix P incorporates by reference ASHRAE 146. DOE's proposed calculation for output capacity for an electric pool or spa heater utilizes measurements already taken for other calculations in appendix P and therefore DOE does not consider this provision to result in any additional test procedure burden. DOE proposes to define the output capacity for electric pool heaters and spa heaters as follows:

Output capacity

for an electric pool or spa heater means the maximum rate at which energy is transferred to the water.

DOE proposes separate equations for the calculation of output capacity of an electric resistance pool heater and electric heat pump pool heater. For electric pool heaters that rely on electric resistance heating elements, DOE proposes that the output capacity be calculated as:

OUT,ER

= k * W * (T

− T

) * (60/30)

where k is the specific heat of water, W is the mass of water collected during the test, T

is the average outlet water temperature recorded during the primary test, T

is the average inlet water temperature record during the primary test, all as defined in Section 11.1 of ASHRAE 146, and (60/30) is the conversion factor to convert unit from per 30 minutes to per hour.

DOE proposes that the output capacity of an electric pool heater that uses heat pump technology be calculated as:

OUT,HP

= k * W * (T

ohp

− T

ihp

) * (60/t

)

where k is the specific heat of water, W is the mass of water collected during the test, T

ohp

is the average outlet water temperature during the standard rating test, T

ihp

is the average inlet water temperature during the standard rating test, all as defined in Section 11.2 of ASHRAE 146, and t

is the elapsed time of data recording during the thermal efficiency test on electric heat pump pool heater, as defined in Section 9.1 of ASHRAE 146, in minutes.

DOE requests comment on its proposed definition for output capacity, as well as its proposed calculations for determining the output capacity of electric pool heaters.

2. Technology Options

In response to the March 2015 RFI, Coates stated their concern that DOE used the term “less efficient products, such as electric resistance pool heaters” and that the efficiency of electric pool and spa heaters is very high (98 percent or higher). (Coates, No. 8 at p. 5) DOE agrees that electric resistance pool heaters have efficiencies around 98 percent. However, the statement DOE made compares the efficiency of electric resistance pool heaters to heat pump pool heaters which have efficiencies greater than 100 percent. 80 FR 15922, 15929 (March 26, 2015). Therefore, electric resistance pool heaters are less efficient than heat pump pool heaters.

In the October 2015 NODA market and technology analysis for electric pool heaters, DOE identified eight technology options that would be expected to improve the efficiency of electric pool heaters, as measured by the DOE test procedure: Insulation improvements; control improvements; heat pump technology; heat exchanger improvements (heat pump); compressor improvements (heat pump); expansion valve improvements (heat pump); fan improvements (heat pump); and off switch. See section 3.3 of chapter 3 of the October 2015 NODA TSD.

DOE received no comments suggesting technology options be added to those listed in the October 2015 NODA analysis for electric pool heaters. In this NOPR analysis, DOE added switching mode power supply to the list of technology options for electric pool heaters.

In the March 2015 RFI, DOE identified five technology options that it expected to improve the efficiency of gas-fired pool heaters, as measured by the DOE test procedure: Insulation improvements; control improvements; improved heat exchanger design; condensing heat exchanger technology; and electronic ignition systems. 80 FR 15922, 15925.

In response to the potential technology options identified for gas-fired pool heaters in the March 2015 RFI, Raypak stated that improved insulation, improved controls, and improved ignition systems are currently widely used and have little opportunity to provide improvements in thermal efficiency. (Raypak, No. at 4 at p. 3) AHRI stated that improved controls are expected to have minimal or negative impact on efficiency due to the large size of pools as modulating heat is not an effective way to heat up pools. AHRI stated that most gas-fired pool heaters on the market currently are equipped with electronic ignition systems and the pilot light only comes on when heat is called. AHRI also opined that condensing heat exchanger technology is not an economically feasible option for gas-fired pool heaters due to the relatively short burner operating hours. (AHRI, No. 7 at p. 3)

In response, DOE notes that in its review of the market and during the engineering analysis (

see

section IV.C of this document), DOE generally identifies technologies that are commonly incorporated at the baseline efficiency level, as well as those typically implemented to achieve higher efficiencies. In the technology assessment DOE identifies all

technologies that are possibilities for improving efficiency, in the event that any models do not already utilize them. DOE's engineering analysis is based on the typical technology or combination of technologies used to achieve each efficiency level, as observed in products on the market.

For this NOPR analysis, DOE identified three more technology options that would be expected to improve the integrated thermal efficiency of gas-fired pool heaters as measured by the test procedure, which were not listed in the March 2015 RFI. These technologies include: Condensing pulse combustion, switch mode power supply, and seasonal off switch.

After identifying all potential technology options for improving the efficiency of consumer pool heaters, DOE performed the screening analysis (

see

section IV.B of this document or chapter 4 of the TSD) on these technologies to determine which could be considered further in the analysis and which should be eliminated.

B. Screening Analysis

DOE uses the following five 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 a significant adverse impact on the utility of the product for 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.

(5)

Unique-Pathway Proprietary Technologies.

If a design option utilizes proprietary technology that represents a unique pathway to achieving a given efficiency level, that technology will not be considered further, due to the potential for monopolistic concerns.

10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).

In summary, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the listed five criteria, it will be excluded from further consideration in the engineering analysis.

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. DOE did not receive any comments from interested parties related to the screening analysis.

1. Screened-Out Technologies

DOE eliminated condensing pulse combustion from its analysis having tentatively determined that it is not technologically feasible and not practical to manufacture, install, and service. Although condensing pulse combustion technology shows promising results in increasing efficiency, it has not yet penetrated the consumer pool heater market, and similar efficiencies are achievable with other technologies that have already been introduced on the market.

2. Remaining Technologies

Through a review of each technology, DOE tentatively concludes that all of the other identified technologies listed in section IV.A.2 met all five screening criteria to be examined further as design options in DOE's NOPR analysis. In summary, DOE did not screen out the technology options shown in Table IV.2 of this document and considers them as design options in the engineering analysis.

Table IV.2—Technology Options Which Passed Screening Criteria

Technology option

Electric pool heater

Gas-fired pool heater

Insulation improvements

Control improvements

Heat pump technology

Heat exchanger improvements

Expansion valve improvements

Fan improvements

Condensing heat exchanger

Electronic ignition systems

Switch mode power supply

Seasonal off switch

DOE has initially determined that these technology options are technologically feasible because they are being used or have previously been used in commercially-available products or commercially viable, existing 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, unique-pathway proprietary technologies). For additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of consumer pool heaters. There are two elements to consider in the engineering analysis; the selection of efficiency levels to analyze (

i.e.,

the “efficiency analysis”) and the determination of product cost at each efficiency level (

i.e.,

the “cost analysis”). In determining the performance of higher-efficiency products, DOE considers technologies and design option combinations not

eliminated by the screening analysis. For each product class, DOE estimates the baseline cost, as well as the incremental cost for the product at efficiency levels above the baseline. The output of the engineering analysis is a set of cost-efficiency “curves” that are used in downstream analyses (

i.e.,

the LCC and PBP analyses and the NIA).

1. Efficiency Analysis

DOE typically uses one of two approaches to develop energy efficiency levels for the engineering analysis: (1) Relying on observed efficiency levels in the market (

i.e.,

the efficiency-level approach), or (2) determining the incremental efficiency improvements associated with incorporating specific design options to a baseline model (

i.e.,

the design-option approach). Using the efficiency-level approach, the efficiency levels established for the analysis are determined based on the market distribution of existing products (in other words, based on the range of efficiencies and efficiency level “clusters” that already exist on the market). Using the design option approach, the efficiency levels established for the analysis are determined through detailed engineering calculations and/or computer simulations of the efficiency improvements from implementing specific design options that have been identified in the technology assessment. DOE may also rely on a combination of these two approaches. For example, the efficiency-level approach (based on actual products on the market) may be extended using the design option approach to “gap fill” levels (to bridge large gaps between other identified efficiency levels) and/or to extrapolate to the max-tech level (particularly in cases where the max-tech level exceeds the maximum efficiency level currently available on the market).

In this proposed rulemaking, DOE relies on the efficiency-level approach. For the October 2015 NODA, DOE identified the efficiency levels for analysis based on a review of products on the market and then, as described in section IV.C.2 of this document, used a cost-assessment approach which includes product teardowns to determine the technologies used at each efficiency level and the associated manufacturing costs at those levels. See section 5.7 of chapter 5 of the October 2015 NODA TSD.

DOE continued to use the same analytical approaches for this NOPR. DOE received specific comments from interested parties on certain aspects of the engineering analysis in response to the October 2015 NODA. A brief overview of the methodology, a discussion of the comments DOE received, DOE's response to those comments, and any adjustments made to the engineering analysis methodology or assumptions as a result of those comments is presented in the sections below. See chapter 5 of the NOPR TSD for additional details about the engineering analysis.

a. Efficiency Levels

As noted previously, for analysis of consumer pool heater standards, DOE used an efficiency-level approach to identify incremental improvements in efficiency for each product class. An efficiency-level approach enabled DOE to identify incremental improvements in efficiency for efficiency-improving technologies that consumer pool heater manufacturers already incorporate in commercially available models. After identifying efficiency levels for analysis, DOE used a cost-assessment approach (section IV.C.2 of this document) to determine the manufacturer production cost (“MPC”) at each efficiency level identified for analysis.

Integrated thermal efficiency accounts for the fuel and electricity consumption in active, standby, and off modes. However, at the time the engineering analysis for this NOPR was performed, manufacturers had not yet begun publishing the integrated thermal efficiency of their products (there are no existing standards for electric pool heaters, and standards for gas-fired pool heaters are currently in terms of thermal efficiency as described in section III.B of this document). Therefore, in the gathering of information to inform the engineering analysis, DOE was limited to thermal efficiency in the case of gas-fired pool heaters, and coefficients of performance (“COP”) (set equal to thermal efficiency by the test procedure) in the case of heat pump pool heaters. DOE then calculated the integrated thermal efficiency by combining the thermal efficiency (as defined in section 5.1 of the DOE test procedure) of the product, with typical values for active mode, standby mode, and off mode energy consumption. DOE derived these typical values from test data and sought manufacturer feedback during confidential manufacturer interviews to confirm that the values were appropriate.

The energy consumption rate measurements that contribute to the integrated thermal efficiency metric are presented in Table IV.3 of this document, and vary by consumer pool heater type (

i.e.,

electric resistance, electric heat pump, and gas-fired). DOE notes that these measurements also vary by efficiency level. The “typical case” energy use assumptions used to determine the efficiency levels are presented in greater detail in sections IV.C.1.b and IV.C.1.c of this document.

Table IV.3—Inputs to Integrated Thermal Efficiency by Consumer Pool Heater Type

Consumer pool heater type

Inputs to TE

Description

Electric Resistance Pool Heater

Thermal efficiency (11.1 of ASHRAE 146).

Average annual electrical energy consumption.

Electrical consumption in Btu per 30 mins.

W,SB

Standby power consumption rate.

W,OFF

Off power consumption rate.

Heat Pump Pool Heater

Thermal efficiency (11.1 of ASHRAE 146).

Average annual electrical energy consumption.

c,hp

Electrical consumption during test time.

Test time.

W,SB

Standby power consumption rate.

W,OFF

Off power consumption rate.

Gas-Fired Pool Heater

Thermal efficiency (2.10 of ANSI Z21.56).

Electrical consumption in Btu per 30 mins.

Consumption rate of pilot.

off,R

Off mode fuel consumption rate.

W,SB

Standby power consumption rate.

W,OFF

Off Power consumption rate.

The integrated thermal efficiency metric is the ratio of the seasonal useful output of the consumer pool heater divided by the annual input to the consumer pool heater. Based on manufacturer interviews, DOE has tentatively determined that standby and off mode electricity consumption do not increase as capacity increases. This causes differences in the resulting integrated thermal efficiencies for units at different capacities that have the same thermal efficiency and same standby and off mode energy consumption. Lower capacity units will have lower integrated thermal efficiency ratings due to standby and off mode energy use comprising a larger share of the total energy use of the product than for larger capacity units. To account for this, instead of standards that are fixed integrated thermal efficiency levels as presented in section 5.3 of chapter 5 of the October 2015 NODA TSD, DOE is proposing equation-based efficiency levels in which the integrated thermal efficiency level is a function of the capacity of the unit.

DOE developed these integrated thermal efficiency equations using a similar methodology to the one used to develop the integrated thermal efficiency levels in the October 2015 NODA analysis for electric pool heaters. See section 5.3 of chapter 5 of the October 2015 NODA. Specifically, DOE selected the efficiency levels based on thermal efficiency, and then determined the typical values for all other energy consumption rate values that contribute to the integrated thermal efficiency metric (

i.e.,

standby mode, off mode). DOE then calculated the integrated thermal efficiency as a function of capacity by utilizing these typical values for all efficiency levels other than the max-tech level. As discussed further in section IV.C.1.c of this document, the max-tech level is the maximum efficiency theoretically possible and uses technologies (

i.e.,

seasonal off switch and switch mode power supply) that result in energy consumption rate values that are lower than the typical values used for the other efficiency levels.

Additional information regarding the selection of efficiency levels is provided in the following sections and in chapter 5 of the NOPR TSD.

b. Baseline Levels

For each product class, DOE generally selects a baseline model as a reference point for each class, and measures changes resulting from potential energy conservation standards against the baseline. The baseline model in each product class represents the characteristics of a product typical of that class (

e.g.,

capacity, physical size). Generally, a baseline model is one that just meets current energy conservation standards, or, if no standards are in place, the baseline is typically the most common or least efficient unit on the market.

DOE uses the baseline model for comparison in several phases of the analyses, including the engineering analysis, LCC analysis, PBP analysis, and NIA. To determine energy savings that will result from a new or amended energy conservation standard, DOE compares energy use at each of the higher energy efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the changes in price to the consumer that will result from an amended energy conservation standard, DOE compares the price of a baseline unit to the price of a unit at each higher efficiency level. In the March 2015 RFI, DOE requested information regarding typical energy use (fossil fuel and electricity) in all modes, including standby and off modes for all consumer pool heater types. 80 FR 15992, 15924.

Raypak responded that the typical fossil fuel energy use in standby and off modes is zero because gas-fired pool heaters only fire when there is a call for heat to maintain a set temperature. Raypak commented that the electricity consumption is limited to standby and off mode for all types of consumer pool heaters and that the magnitude of these electricity consumption values may change slightly based on the input capacity of the unit. (Raypak, No. 4 at p. 2)

DOE has found several consumer pool heaters on the market which utilize standing pilots. These pilot lights operate when the consumer pool heater is not in use and contribute to fossil fuel energy use in standby mode. DOE does not disagree that electricity consumption may change slightly based on input capacity but has tentatively determined to use a single typical value for the various types of electrical energy consumption based on feedback received during confidential manufacturer interviews. Table IV.4 of this document presents the baseline efficiency level identified for gas-fired pool heaters.

EP15AP22.001

Table IV.5 of this document presents the baseline efficiency level identified for electric pool heaters. No comments were received in response to the October 2015 NODA in regard to the baseline efficiency level for electric pool heaters.

EP15AP22.002

Additional details on the selection of baseline models and the development of the baseline efficiency equations may be found in chapter 5 of the NOPR TSD.

c. Other Efficiency Levels

As part of DOE's analysis, the maximum available efficiency level is the highest efficiency model currently available on the market. DOE also defines a “max-tech” efficiency level to represent the maximum possible efficiency for a given product.

Table IV.6 of this document shows the efficiency levels DOE selected for the October 2015 NODA analysis. See section 5.3 of chapter 5 of the October 2015 NODA. As described previously in this section, all else being equal, the integrated thermal efficiency metric is expected to vary depending on a consumer pool heater's capacity. The integrated thermal efficiencies listed in Table IV.6 are based on an output capacity of 110,000 Btu/h. (Note, the large increase in integrated thermal efficiency between EL 0 and EL 1 is the result of a technology option change from electric resistance elements as the heat source to a heat pump.)

Table IV.6—October 2015 NODA Efficiency Level for Electric Pool Heaters at Output Capacity of 110,000 Btu/h

Efficiency level

(percent)

W,SB

(W) *

W,OFF

(W) *

(percent)

EL 0

1.2

EL 1

360

5.2

344

EL 2

520

5.2

486

EL 3

580

5.2

538

EL 4

600

5.2

556

EL 5

610

5.2

564

* Presented in terms of Btu/h in appendix P.

** Values are based on E

and assumptions for P

W,SB

and P

W,OFF

at left, and uses equation 5.4.3 in the DOE test procedure found in appendix P.

DOE requested comment on the efficiency levels presented in the October 2015 NODA analysis, including the typical standby and off mode energy consumption of electric pool heaters.

In response to the October 2015 NODA analysis, AHRI stated that many manufacturers have not measured the standby and off mode consumption for many of their consumer pool heater models. Therefore, AHRI stated that they are not able to address the “typical” values used in the preliminary analysis. AHRI also stated that the efficiency levels presented in the October 2015 NODA analysis were acceptable. (AHRI, No. 16 at p. 2, 3)

In response to the efficiency levels presented in the October 2015 NODA for electric pool heaters ASAP and NRDC and CA IOUs encouraged DOE to re-evaluate the max-tech level for electric pool heaters. The commenters stated that the AHRI database includes models that exceed a COP of 6.1, the level presented as max-tech in the October 2015 NODA. The commenters stated that those units with a COP greater than 6.1 are smaller in capacity than the representative unit size of 110,000 Btu/h. (CA IOUs, No. 20 at p. 5; ASAP and NRDC, No. 19 at p. 2) CA IOUs stated their belief that larger capacity units could achieve similarly high COP levels. (CA IOUs, No. 20, at p. 5)

DOE recognizes that there are models on the market with higher COP ratings than the assumed COP rating used in the max-tech energy level. However, as noted by commenters, these units have a lower capacity than DOE's representative capacity. DOE has not identified larger residential heat pump pool heaters with a COP rating greater than 6.1 on the market or in prototypes. Smaller heat pump pool heaters with a COP greater than 6.1 may not be representative of efficiency improvements of which larger heat pump pool heaters are capable. Therefore, DOE maintained the same COP max-tech level used in the October 2015 NODA as an input to the integrated thermal efficiency equation for this analysis.

ASAP and NRDC urged DOE to evaluate a level that incorporates technology options presented in the October 2015 NODA TSD that may not be present in currently available consumer pool heaters including electronically commutated motor (“ECM”) fan motors (

i.e.,

brushless permanent magnet (“BPM”) motors),

toroidal transformers, and an off switch. (ASAP and NRDC, No. 19 at p. 3)

“ECM” refers to the constant-airflow BPM offerings of a specific motor manufacturer. DOE refers to this technology using the generic term, “BPM motor.”

In response to these comments, DOE has incorporated standby and off mode technology options at the max-tech level to decrease the standby and off mode electricity consumption and thereby increase the integrated thermal efficiency at that level. These technology options include: Transformer improvements, switching mode power supply, and a seasonal off switch.

As was noted in chapter 3 of the October 2015 NODA TSD, the efficiency

of permanent split capacitor (“PSC”) motors is highest at a single speed, with significant diminishing operation efficiency at other speeds, whereas BPM motors are capable of maintaining a high operating efficiency at multiple speeds. However, the energy savings associated with this technology may be limited as heat pump pool heaters operate at full capacity to satisfy the call for heat. As noted by ASAP and NRDC, heat pump pool heaters on the market do not currently utilize BPM fan motors. Therefore, DOE has not been able to test products in order to determine the magnitude of efficiency improvement, if any, that could be expected due to the incorporation of BPM motors.

DOE requests comment on the efficiency improvement expected from replacing a PSC fan motor with a BPM fan motor in heat pump pool heater.

AHRI stated that the use of straight (EL 1) or twisted (EL 2) titanium tube coils are two different ways to get to the same end. AHRI further commented that the two different design features described for EL 1 and EL 2, respectively, do not inherently result in the significantly different efficiencies estimated in the analysis. AHRI stated that the efficiency that will result from the use of straight or twisted titanium tubing will be based on the effectiveness of the overall design of the heat exchanger; the twisted tube provides no significant efficiency improvement of itself. (AHRI, No. 16 at pp. 3-4)

In response to AHRI's assertions, DOE notes that for electric pool heaters it selected efficiency levels and units for teardown based on the published coefficients of performance of models currently on the market (as integrated thermal efficiency data were not yet available). As shown in Table IV.7, the heat exchanger design of the model DOE analyzed at EL 1 in the October 2015 NODA included two straight titanium tube coils in submerged water tanks; at EL2, the model that was analyzed had a heat exchanger consisting of a single twisted titanium tube coil in concentric counter-flow PVC pipe. These models were included in the engineering analysis described in chapter 5 of the October 2015 NODA TSD. DOE did not assume

a priori

that the concentric/counter-flow PVC heat exchanger design would result in a certain efficiency increase compared to the submerged coil design, but rather found that these were the design paths for units with such rated efficiencies on the market. Upon further review of the models on the market, DOE has tentatively determined that consideration of two straight titanium tube coils in submerged water tanks as a design option for EL 1, as presented in the October 2015 NODA, does not represent a typical design for the lowest efficiency heat pump pool heater and, as discussed later in section IV.C.2.c of this document, this design option is more expensive than other designs that are similar to those used at the other ELs. As such, DOE has amended the design option for EL 1 to a heat pump with a heat exchanger consisting of a single twisted titanium tube coil in concentric counter-flow PVC pipe as this design better resembles the lowest efficiency heat pump pool heater on the market.

Table IV.7 provides a description of the typical technological change at each efficiency level for electric pool heaters.

Table IV.7—Technology Description by Efficiency Level for Electric Pool Heaters

Efficiency level

Technology

EL 0

Electric Resistance.

EL 1

Heat Pump, twisted Titanium tube coil in concentric/counter flow PVC Pipe.

EL 2

EL1 + increased evaporator surface area.

EL 3

EL2 + increased evaporator surface area.

EL 4

EL3 + increased evaporator surface area.

EL 5

EL4 + condenser coil length + seasonal off switch + switch mode power supply.

The EL 1 design option has been updated from that presented in the October 2015 NODA. The description in the October 2015 NODA was, “Heat Pump, two straight Titanium tube coils in submerged water tanks.”

Table IV.8 shows the efficiency levels DOE selected for the NOPR analysis for electric pool heaters based on application of the design options presented in Table IV.7.

BILLING CODE 6450-01-P

EP15AP22.003

In the March 2015 RFI, DOE also requested information on the max-tech efficiency levels for gas-fired pool heaters. 80 FR 15922, 15926. In response, Raypak stated that the max-tech efficiency level for gas-fired pool heaters would be in the range of 94 to 96-percent thermal efficiency. Raypak stated that the selection of heat exchanger materials for gas-fired pool heaters restricts the max-tech efficiency from being higher because the materials used have to be resistant to the chemicals used in pools, particularly when the pool chemistry is not properly maintained. (Raypak, No. 4 at p. 3)

DOE analyzed a max-tech efficiency level of 95-percent thermal efficiency in this NOPR analysis based on its review of the gas-fired pool heater market. At the time of the analysis, 95-percent thermal efficiency represented the highest level available on the market.

Table IV.9 shows the efficiency levels DOE analyzed for this NOPR with respect to gas-fired pool heaters. DOE selected the thermal efficiency levels based on its review of the gas-fired pool heaters market.

EP15AP22.004

BILLING CODE 6450-01-C

DOE seeks comment from interested parties regarding the efficiency levels selected for the NOPR analysis.

Table IV.10 provides a description of the typical technological change(s) at each efficiency level for gas-fired pool heaters.

Table IV.10—Technology Description by Efficiency Level for Gas-Fired Pool Heaters

Efficiency level

Technology

EL 0

Standing Pilot + Cu or CuNi Finned Tube + Atmospheric.

EL 1

Electronic Ignition + Cu or CuNi Finned Tube + Atmospheric.

EL 2

Electronic Ignition + Cu or CuNi Finned Tube + Blower Driven Gas/Air Mix.

EL 3

Condensing + CuNi and Cu Finned Tube + seasonal off switch + switch mode power supply.

DOE seeks comment from interested parties regarding the typical technological changes associated with each efficiency level.

See section VII.E for a list of issues on which DOE seeks comment.

2. Cost Analysis

The cost analysis portion of the engineering analysis is conducted using one or a combination of cost approaches. The selection of cost approach depends on a suite of factors, including the availability and reliability of public information, characteristics of the regulated product, the availability and timeliness of purchasing the product on the market. The cost approaches are summarized as follows:

•

Physical teardowns:

Under this approach, DOE physically dismantles a commercially available product, component-by-component, to develop a detailed bill of materials for the product.

•

Catalog teardowns:

In lieu of physically deconstructing a product, DOE identifies each component using parts diagrams (available from manufacturer websites or appliance repair websites, for example) to develop the bill of materials for the product.

•

Price surveys:

If neither a physical nor catalog teardown is feasible (for example, for tightly integrated products such as fluorescent lamps, which are infeasible to disassemble and for which parts diagrams are unavailable) or cost-prohibitive and otherwise impractical (

e.g.

large commercial boilers), DOE conducts price surveys using publicly available pricing data published on major online retailer websites and/or by soliciting prices from distributors and other commercial channels.

At the start of the engineering analysis, DOE identified the energy efficiency levels associated with consumer pool heaters on the market using data gathered in the market assessment. DOE also identified the technologies and features that are typically incorporated into products at the baseline level and at the various energy efficiency levels analyzed above the baseline. Next, DOE selected products for the physical teardown analysis having characteristics of typical products on the market at the representative capacity. DOE gathered information from performing a physical teardown analysis (see section IV.C.2.a of this document) to create detailed bill of materials (BOMs), which included all components and processes used to manufacture the products. DOE used the BOMs from the teardowns as inputs to calculate the MPC for products at various efficiency levels spanning the full range of efficiencies from the baseline to the maximum technology available. DOE reexamined and revised its cost assessment performed for the October 2015 NODA analysis.

During the development of the analysis for the NOPR, DOE held interviews with manufacturers to gain insight into the consumer pool heater industry, and to request feedback on the engineering analysis. DOE used the information gathered from these interviews, along with the information obtained through the teardown analysis and public comments, to refine its MPC estimates for this rulemaking. Next, DOE derived manufacturer markups using publicly-available consumer pool heater industry financial data in conjunction with manufacturers' feedback. The markups were used to convert the MPCs into manufacturer sales prices (MSPs). Further information on comments received and the analytical methodology is presented in the following subsections. For additional detail, see chapter 5 of the NOPR TSD.

a. Teardown Analysis

To assemble BOMs and to calculate the manufacturing costs for the different components in consumer pool heaters, DOE disassembled multiple units into their base components and estimated the materials, processes, and labor required for the manufacture of each individual component, a process referred to as a “physical teardown.”

Using the data gathered from the physical teardowns, DOE characterized each component according to its weight, dimensions, material, quantity, and the manufacturing processes used to fabricate and assemble it.

DOE also used a supplementary method, called a “virtual teardown,” which examines published manufacturer catalogs and supplementary component data to estimate the major physical differences between a product that was physically disassembled and a similar product that was not. For supplementary virtual teardowns, DOE gathered product data such as dimensions, weight, and design features from publicly-available information, such as manufacturer catalogs.

The teardown analysis allowed DOE to identify the technologies that manufacturers typically incorporate into their products, along with the efficiency levels associated with each technology or combination of technologies. The BOMs from the teardown analysis were then used as inputs to calculate the MPC for each product that was torn down. The MPC's resulting from the teardowns were used to develop an industry average MPC for each efficiency level of each product class analyzed.

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

b. Cost Estimation Method

The costs of individual models are estimated using the content of the BOMs (

i.e.,

materials, fabrication, labor, and all other aspects that make up a production facility) to generate the MPCs. For example, these MPCs include overhead and depreciation. DOE collected information on labor rates, tooling costs, raw material prices, and other factors as inputs into the cost estimates. For purchased parts, DOE estimates the purchase price based on volume-variable price quotations and detailed discussions with manufacturers and component suppliers. For fabricated parts, the prices of raw metal materials

(

i.e.,

tube, sheet metal) are estimated using the average of the most recent 5-year period. The cost of transforming the intermediate materials into finished parts was estimated based on current industry pricing at the time of analysis.

American Metals Market, available at

www.amm.com/.

U.S. Department of Labor, Bureau of Labor Statistics, Producer Price Indices, available at

www.bls.gov/ppi/.

c. Manufacturing Production Costs

DOE estimated the MPC at each efficiency level considered for each product class, from the baseline through the max-tech and then calculated the percentages attributable to each cost category (

i.e.,

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

DOE's analysis focused on a single representative capacity for each product class analyzed. DOE selected a representative output capacity of 110,000 Btu/h for electric pool heaters and a representative input capacity of 250,000 Btu/h for gas-fired pool heaters.

DOE selected these representative capacities based on the number of available models on the market and by referencing a number of sources, including information collected for the market and technology assessment, as well as information obtained from product literature. DOE then sought feedback on the representative capacities during confidential manufacturer interviews.

For gas-fired pool heaters, manufacturers are currently required to certify input capacity pursuant to 10 CFR 429.12. For electric heat pump pool heaters, manufacturers currently use output capacity in order to represent the capacity of a unit. DOE used a combination of the AHRI directory data (

www.ahridirectory.org/)

and product literature to obtain data regarding electric heat pump pool heater output capacity.

AHRI stated that the MPC estimates for electric pool heaters presented in the October 2015 NODA analysis are significantly flawed. AHRI stated that the relationship of manufacturing cost to efficiency for heat pump pool heaters is relatively linear and proportional, similar to other consumer products. AHRI suggested that the design features assumed for EL 1 and EL 2 mischaracterize how those respective efficiency levels are achieved and provide an unrealistic estimate of MPC,

i.e.,

a 40% improvement in the EL 1 efficiency cannot be achieved for only a $1 increase in MPC. (AHRI, No. 16 at p. 3-4)

As discussed in section IV.C.1.c, the electric pool heaters selected for teardown and to represent each efficiency level were based on the published coefficients of performance of models currently on the market (as integrated thermal efficiency data were not yet available). DOE did not assume

a priori

that the concentric/counter-flow PVC heat exchanger design would result in a certain efficiency increase compared to the submerged coil design, but rather found that these were the design paths for units with such rated efficiencies on the market. Further, as demonstrated by DOE's cost-efficiency curves, although the design at EL 2 provides a large improvement in efficiency as compared to the design evaluated at EL 1 in the October 2015 NODA, DOE's estimate of the MPC based on its teardown analysis indicated that the cost to manufacture the product with a heat exchanger as designed at EL 2 was not substantially more than that at EL 1. For the analysis conducted for this NOPR, as discussed in section IV.C.1.c, DOE has tentatively determined to change the design option for the electric pool heater EL 1 to be more similar to the design options at the other ELs (

i.e.,

twisted Titanium tube coil in concentric/counter flow PVC Pipe).

For this NOPR analysis, DOE revised the cost analysis assumptions it used for the October 2015 NODA analysis based on updated pricing information (for raw materials and purchased parts) and additional manufacturer feedback. This resulted in refined MPCs and production cost percentages.

Table IV.11 presents DOE's estimates of the MPC's by efficiency level for electric pool heaters in the NOPR analysis. The integrated thermal efficiencies and MPCs listed in Table IV.11 are based on an output capacity of 110,000 Btu/h.

Table IV.11—Manufacturing Production Cost for Electric Pool Heaters at Representative Output Capacity of 110,000 Btu/h

Efficiency level

(percent)

MPC

($2020)

EL 0

893

EL 1

387

1,093

EL 2

483

1,144

EL 3

534

1,188

EL 4

551

1,220

EL 5

595

1,304

In developing the MPCs for gas-fired pool heaters for this NOPR, DOE considered the heat exchanger material and whether a model would utilize a cupronickel or copper heat exchanger at a given efficiency level. DOE surveyed the market and found that the percentage of models at each efficiency level that currently utilize copper or cupronickel heat exchangers and assumed that, under an amended standard, the percentage would remain unchanged.

For example, assume that at EL 1, 60 percent of the market currently uses copper heat exchangers and 40 percent of the market currently uses cupronickel heat exchangers. Then, if EL 1 was chosen as the amended standard level, DOE assumes that 60 percent of the market would continue to use copper heat exchangers and 40 percent of the market would continue to use cupronickel heat exchangers.

DOE requests comment on its assumption that the fraction of shipments which utilize cupronickel heat exchangers would not change as a result of amended standards.

Table IV.12 presents DOE's estimates of the MPCs by efficiency level for gas-fired pool heaters in the NOPR analysis. The integrated thermal efficiencies and MPCs listed in Table IV.12 are based on an input capacity of 250,000 Btu/h.

Table IV.12—Manufacturing Production Cost for Gas-Fired Pool Heaters at Representative Input Capacity of 250,000 Btu/h

Efficiency level

(percent)

MPC

($2020)

EL 0

61.1

659

EL 1

81.3

665

EL 2

83.3

827

EL 3

94.8

1,157

Chapter 5 of the NOPR TSD presents additional detail regarding the development of DOE's estimates of the MPCs for consumer pool heaters.

d. Manufacturer Markups

To account for manufacturers' non-production costs and profit margin, DOE applies a non-production cost multiplier (the manufacturer markup) to the MPC. The resulting MSP is the price that DOE research suggests the manufacturer can sell a given unit into the marketplace under a standards scenario. To meet new or amended energy conservation standards, manufacturers typically redesign their baseline products. These design changes typically increase MPCs relative to those of previous baseline MPCs. Depending on the competitive environment for these particular products, some or all of the increased production costs may be passed from manufacturers to retailers and eventually to customers in the form of higher purchase prices. As production costs increase, manufacturers may also incur additional overhead (

e.g.,

warranty costs).

The manufacturer markup has an important bearing on profitability. A high markup under a standards scenario suggests manufacturers can readily pass along the increased variable costs and some of the capital and product conversion costs (the one-time expenditures) to consumers. A low markup suggests that manufacturers will have greater difficulty recovering their investments, product conversion costs, and/or incremental MPCs.

DOE estimated manufacturer markups based on publicly available financial information for consumer pool heater manufacturers, and information obtained during manufacturer interviews, DOE assumed the non-production cost markup—which includes selling, general, and administrative (“SG&A”) expenses, research and development (“R&D”) expenses, interest, and profit—to be 1.33 for gas-fired pool heaters and 1.28 for electric pool heaters. See chapter 5 of the NOPR TSD for more details about the manufacturer markup calculation.

e. Manufacturer Interviews

Throughout the rulemaking process, DOE has sought and continues to seek feedback and insight from interested parties that would improve the information used in its analyses. DOE interviewed manufacturers as a part of the NOPR manufacturer impact analysis (

see

section IV.J.3 of this document). During the interviews, DOE sought feedback on all aspects of its analyses for consumer pool heaters. For the engineering analysis, DOE discussed the analytical assumptions and estimates, cost analysis, and cost-efficiency curves with consumer pool heater manufacturers. DOE considered all the information manufacturers provided when refining the cost analysis and assumptions. DOE incorporated equipment and manufacturing process figures into the analysis as averages to avoid disclosing sensitive information about individual manufacturers' products or manufacturing processes. More details about the manufacturer interviews are contained in chapter 12 of the NOPR TSD.

D. Markups Analysis

The markups analysis develops appropriate markups (

e.g.,

wholesaler and distributors, pool contractors, pool retailers, pool builders) in the distribution chain and sales taxes to convert the MSP estimates derived in the engineering analysis to consumer prices, which are then used in the LCC and PBP analysis. At each step in the distribution channel, companies add markup to the price of the product to cover business costs and profit margin.

For consumer pool heaters, the main parties in the distribution chain are: (1) Manufacturers; (2) wholesalers or distributors; (3) pool contractors; (4) pool retailers; (5) buying groups;

and (6) pool builders. For each actor in the distribution chain except for manufacturers, DOE developed baseline and incremental markups. Baseline markups are applied to the price of products with baseline efficiency, while incremental markups are applied to the difference in price between baseline and higher-efficiency models (the incremental cost increase). The incremental markup is typically less than the baseline markup and is designed to maintain similar per-unit operating profit before and after new or amended standards.

Buying groups are intermediaries between the pool heater manufacturers and contractors. A buying group is a coalition of companies within a

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