# Energy Conservation Program: Energy Conservation Standards for Consumer Water Heaters > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-15306 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** July 28, 2023 - **Citation:** 88 FR 49058 ## Text DEPARTMENT OF ENERGY 10 CFR Parts 429 and 430 [EERE-2017-BT-STD-0019] RIN 1904-AD91 Energy Conservation Program: Energy Conservation Standards for Consumer Water 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 water heaters. EPCA also requires the U.S. Department of Energy (“DOE” or “the Department”) 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 amended energy conservation standards for consumer water heaters, and also announces a public meeting to receive comments on these proposed standards and associated analyses and results. DATES: Comments: DOE will accept comments, data, and information regarding this NOPR no later than September 26, 2023. 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 August 28, 2023. Meeting: DOE will hold a public meeting via webinar on September 13, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants. ADDRESSES: Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at www.regulations.gov under docket number EERE-2017-BT-STD-0019. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE-2017-BT-STD-0019, by any of the following methods: (1) Email: ConsumerWaterHeaters2017STD0019@ee.doe.gov. Include the docket number EERE-2017-BT-STD-0019 in the subject line of the message. (2) Postal Mail: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 287-1445. If possible, please submit all items on a compact disc (“CD”), in which case it is not necessary to include printed copies. (3) Hand Delivery/Courier: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies. No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section IV 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/docket/EERE-2017-BT-STD-0019. The docket web page contains instructions on how to access all documents, including public comments, in the docket. See section VII of this document for information on how to submit comments through www.regulations.gov . EPCA requires the Attorney General to provide to 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. Email: ApplianceStandardsQuestions@ee.doe.gov . Ms. Melanie Lampton, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 751-5157. Email: Melanie.Lampton@hq.doe.gov. For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact 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 the Current Standards Rulemaking for Consumer Water Heaters C. Deviation From Appendix A III. General Discussion A. Scope of Coverage B. Test Procedure C. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels D. Energy Savings 1. Determination of Savings 2. Significance of Savings E. Economic Justification 1. Specific Criteria a. Economic Impact on Manufacturers and Consumers b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) c. Energy Savings d. Lessening of Utility or Performance of Products e. Impact of Any Lessening of Competition f. Need for National Energy Conservation g. Other Factors 2. Rebuttable Presumption F. Interested Party Recommendations IV. Methodology and Discussion of Related Comments A. Market and Technology Assessment 1. Product Classes a. Circulating Water Heater and Low-Temperature Water Heaters b. Storage-Type and Instantaneous-Type Product Classes c. Gas-Fired Water Heaters d. Electric Storage Water Heaters 2. Technology Options B. Screening Analysis 1. Screened-Out Technologies 2. Remaining Technologies C. Engineering Analysis 1. Product Classes With Current UEF-Based Standards a. Efficiency Analysis b. Design Options c. Cost Analysis d. Shipping Costs e. Cost-Efficiency Results 2. Product Classes Without Current UEF-Based Standards 3. Manufacturer Selling Price D. Markups Analysis E. Energy Use Analysis 1. Building Sample 2. Consumer Water Heater Sizing and Draw Pattern 3. Consumer Water Heater Energy Use Determination 4. Heat Pump Water Heater Energy Use Determination F. Life-Cycle Cost and Payback Period Analysis 1. Product Cost 2. Installation Cost a. Basic Installation Costs and Inputs b. Gas-Fired and Oil-Fired Water Heater Installation Costs c. Condensate Withdrawal for Higher Efficiency Design Options d. Heat Pump Water Heater Installation Costs 3. Annual Energy Consumption 4. Energy Prices 5. Maintenance and Repair Costs 6. Product Lifetime 7. Discount Rates 8. Energy Efficiency Distribution in the No-New-Standards Case 9. Accounting for Product Switching Under Potential Standards 10. Payback Period Analysis G. Shipments Analysis 1. Impact of Potential Standards on Shipments a. Impact of Consumer Choice for Electric Storage Water Heaters b. Impact of Repair vs. Replace H. National Impact Analysis 1. Product Efficiency Trends 2. National Energy Savings 3. Net Present Value Analysis I. Consumer Subgroup Analysis 1. Low-Income Households J. Manufacturer Impact Analysis 1. Overview 2. Government Regulatory Impact Model and Key Inputs a. Manufacturer Production Costs b. Shipments Projections c. Product and Capital Conversion Costs d. Manufacturer Markup Scenarios 3. Manufacturer Interviews a. Level of Investment Associated With Concurrent Technology Shifts b. Lowboy Electric Storage Water Heaters 4. Discussion of MIA Comments K. Emissions Analysis 1. Air Quality Regulations Incorporated in DOE's Analysis L. Monetizing Emissions Impacts 1. Monetization of Greenhouse Gas Emissions a. Social Cost of Carbon b. Social Cost of Methane and Nitrous Oxide 2. Monetization of Other Emissions Impacts M. Trial Standard Levels N. Utility Impact Analysis O. Employment Impact Analysis V. Analytical Results and Conclusions A. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers a. Life-Cycle Cost and Payback Period b. Consumer Subgroup Analysis c. Rebuttable Presumption Payback 2. Economic Impacts on Manufacturers a. Industry Cash Flow Analysis Results b. Direct Impacts on Employment c. Impacts on Manufacturing Capacity d. Impacts on Subgroups of Manufacturers e. Cumulative Regulatory Burden 3. National Impact Analysis a. Significance of Energy Savings b. Net Present Value of Consumer Costs and Benefits c. Indirect Impacts on Employment 4. Impact on Utility or Performance of Products 5. Impact of Any Lessening of Competition 6. Need of the Nation To Conserve Energy 7. Other Factors 8. Summary of Economic Impacts B. Conclusion 1. Benefits and Burdens of TSLs Considered for Consumer Water Heater Standards 2. Annualized Benefits and Costs of the Proposed Standards C. Test Procedure Applicability 1. Efficiency Determinations Using High Temperature Testing 2. Circulating Water Heaters a. Storage Tank for Circulating Heat Pump Water Heaters b. Product-Specific Enforcement Provisions for Circulating Water Heaters 3. Determination of Storage Volume for Water Heaters Less Than 2 Gallons VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866, 13563 and 14094 B. Review Under the Regulatory Flexibility Act 1. Description of Reasons Why Action Is Being Considered 2. Objectives of, and Legal Basis for, Rule 3. Description on Estimated Number of Small Entities Regulated 4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities 5. Duplication, Overlap, and Conflict With Other Rules and Regulations 6. Significant Alternatives to the Rule C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Information Quality VII. Public Participation A. Attendance at the Public Meeting B. Procedure for Submitting Prepared General Statements for Distribution C. Conduct of the Public Meeting 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 The Energy Policy and Conservation Act, 1 as amended, Public Law 94-163 (42 U.S.C. 6291-6317, as codified) authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA 2 established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These products include consumer water heaters, the subject of this proposed rulemaking. 1 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), which reflect the last statutory amendments that impact Parts A and A-1 of EPCA. 2 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. 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)) In accordance with these and other statutory provisions discussed in this document, DOE proposes new and amended energy conservation standards for consumer water heaters. The proposed standards, which are expressed in terms of uniform energy factor (“UEF”), are shown in Table I.1. These proposed standards, if adopted, would apply to all consumer water 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 proposed rulemaking. Table I.1—Proposed Energy Conservation Standards for Consumer Water Heaters Product class Effective storage volume and input rating * (if applicable) Draw pattern Uniform energy factor Gas-fired Storage Water Heater 55 gal and ≤100 gal Very Small 0.6470−(0.0006 × V eff ) Low 0.7689−(0.0005 × V eff ) Medium 0.7897−(0.0004 × V eff ) High 0.8072−(0.0003 × V eff ) >100 gal Very Small 0.1482−(0.0007 × V eff ) Low 0.4342−(0.0017 × V eff ) Medium 0.5596−(0.0020 × V eff ) High 0.6658−(0.0019 × V eff ) Oil-fired Storage Water Heater ≤50 gal Very Small 0.2909−(0.0012 × V eff ) Low 0.5730−(0.0016 × V eff ) Medium 0.6478−(0.0016 × V eff ) High 0.7215−(0.0014 × V eff ) >50 gal Very Small 0.1580−(0.0009 × V eff ) Low 0.4390−(0.0020 × V eff ) Medium 0.5389−(0.0021 × V eff ) High 0.6172−(0.0018 × V eff ) Very Small Electric Storage Water Heater 20 and ≤55 gal (excluding small electric storage water heaters) Very Small Low 2.30 2.30 Medium 2.30 High 2.30 >55 gal and ≤120 gal Very Small 2.50 Low 2.50 Medium 2.50 High 2.50 >120 gal Very Small 0.3574−(0.0012 × V eff ) Low 0.7897−(0.0019 × V eff ) Medium 0.8884−(0.0017 × V eff ) High 0.9575−(0.0013 × V eff ) Tabletop Water Heater 50,000 Btu/h Very Small 0.89 Low 0.91 Medium 0.91 High 0.93 ≥2 gal and ≤200,000 Btu/h Very Small 0.2534−(0.0018 × V eff ) Low 0.5226−(0.0022 × V eff ) Medium 0.5919−(0.0020 × V eff ) High 0.6540−(0.0017 × V eff ) Instantaneous Oil-fired Water Heater 75 gal Very Small 1.0136−(0.0028 × V eff ) Low 0.9984−(0.0014 × V eff ) Medium 0.9853−(0.0010 × V eff ) High 0.9720−(0.0007 × V eff ) Gas-fired Circulating Water Heater ≤200,000 Btu/h Very Small 0.8000−(0.0011 × V eff ) Low 0.8100−(0.0011 × V eff ) Medium 0.8100−(0.0011 × V eff ) High 0.8100−(0.0011 × V eff ) Oil-fired Circulating Water Heater ≤210,000 Btu/h Very Small 0.6100−(0.0011 × V eff ) Low 0.6100−(0.0011 × V eff ) Medium 0.6100−(0.0011 × V eff ) High 0.6100−(0.0011 × V eff ) Electric Circulating Water Heater ≤12 kW; for heat pump type units ≤24 A at ≤250 V Very Small 0.9100−(0.0011 × V eff ) Low 0.9100−(0.0011 × V eff ) Medium 0.9100−(0.0011 × V eff ) High 0.9200−(0.0011 × V eff ) * Effective storage volume is the representative value of storage volume as determined in accordance with the DOE test procedure at appendix E to subpart B of 10 CFR part 430 and applicable sampling plans. 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 water heaters, as measured by the average life-cycle cost (“LCC”) savings and the simple payback period (“PBP”). 3 The average LCC savings are positive for all product classes, and the PBP is less than the average lifetime of consumer water heaters, which is estimated to be 15 years for storage and 20 years for instantaneous water heaters (see section IV.F of this document). 3 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.8 of this document). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline product (see section IV.F.9 of this document). Table I.2—Impacts of Proposed Energy Conservation Standards on Consumers of Consumer Water Heaters Product class Effective storage volume and input rating (if applicable) Average LCC savings (2022$) Simple payback (years) Gas-fired Storage Water Heater ≥20 gal and ≤55 gal 52 7.9 Oil-fired Storage Water Heater ≤50 gal 165 6.4 Electric Storage Water Heaters * ≥20 gal and ≤55 gal (excluding Small ESWHs) 1,868 3.0 >55 gal and ≤120 gal 501 0.2 Instantaneous Gas-fired Water Heater 50,000 Btu/h and 55 gal and ≤100 gal Very Small 0.6470−(0.0006 × V r ) Low 0.7689−(0.0005 × V r ) Medium 0.7897−(0.0004 × V r ) High 0.8072−(0.0003 × V r ) Oil-fired Storage Water Heater ≤50 gal Very Small 0.2509−(0.0012 × V r ) Low 0.5330−(0.0016 × V r ) Medium 0.6078−(0.0016 × V r ) High 0.6815−(0.0014 × V r ) Electric Storage Water Heaters ≥20 gal and ≤55 gal Very Small 0.8808−(0.0008 × V r ) Low 0.9254−(0.0003 × V r ) Medium 0.9307−(0.0002 × V r ) High 0.9349−(0.0001 × V r ) >55 gal and ≤120 gal Very Small 1.9236−(0.0011 × V r ) Low 2.0440−(0.0011 × V r ) Medium 2.1171−(0.0011 × V r ) High 2.2418−(0.0011 × V r ) Tabletop Water Heater ≥20 gal and ≤120 gal Very Small 0.6323−(0.0058 × V r ) Low 0.9188−(0.0031 × V r ) Medium 0.9577−(0.0023 × V r ) High 0.9884−(0.0016 × V r ) Instantaneous Gas-fired Water Heater 50,000 Btu/h Very Small 0.80 Low 0.81 Medium 0.81 High 0.81 Instantaneous Electric Water Heater 75 gal Very Small 1.0136−(0.0028 × V r ) Low 0.9984−(0.0014 × V r ) Medium 0.9853−(0.0010 × V r ) High 0.9720−(0.0007 × V r ) * The draw pattern dictates the frequency and duration of hot water draws during the 24-hour simulated use test, and is an indicator of delivery capacity of the water heater. Draw patterns are assigned based on the first hour rating (“FHR”), for non-flow-activated water heaters, or maximum GPM rating (“Max GPM”), for flow-activated water heaters. For the specific FHR and Max GPM ranges which correspond to each draw pattern, see section 5.4.1 of appendix E to subpart B of 10 CFR part 430. ** V r is the rated storage volume (in gallons), as determined pursuant to 10 CFR 429.17. In the December 2016 Conversion Factor Final Rule, DOE declined to develop conversion factors and UEF-based standards for consumer water heaters of certain sizes (by rated storage volume or input rating) and of certain types ( i.e., oil-fired instantaneous water heaters) where models did not exist on the market at the time to inform the analysis of the standards conversion. 81 FR 96204, 96210-96211. For consumer water heaters that did not receive converted UEF-based standards, DOE provided its interpretation that the original statutory standards—found at 42 U.S.C. 6295(e)(1) and expressed in terms of the EF metric—still applied; however, DOE would not enforce those statutorily-prescribed standards until such a time conversion factors are developed for these products and they can be converted to UEF. Id. Thus, the EF-based standards specified by EPCA apply to any consumer water heaters which do not have UEF-based standards found at 10 CFR 430.32(d). These EF-based standards are set forth at 42 U.S.C. 6295(e)(1) and are repeated in Table II.2. Table II.2—EF-Based Federal Energy Conservation Standards for Consumer Water Heaters Product class Energy factor * Gas water heaters 0.62−(0.0019 × V r ) Oil water heaters 0.59−(0.0019 × V r ) Electric water heaters 0.95−(0.00132 × V r ) * V r is the rated storage volume (in gallons), as determined pursuant to 10 CFR 429.17. 2. History of the Current Standards Rulemaking for Consumer Water Heaters On May 21, 2020, DOE initiated the current rulemaking by publishing in the Federal Register a request for information (“May 2020 RFI”), soliciting public comment on various aspects of DOE's planned analyses to help DOE determine whether to amend energy conservation standards for consumer water heaters. 85 FR 30853 (May 21, 2020). DOE subsequently published a notice requesting feedback on its preliminary analysis and technical support document (“preliminary TSD”) on March 1, 2022 (the “March 2022 Preliminary Analysis”) with a 60-day comment period. 87 FR 11327 (Mar. 1, 2022). The comment period was extended by 14 days in a notice published on May 4, 2022. 87 FR 26303. DOE received comments in response to the preliminary analysis notice and accompanying technical support document from the interested parties listed in Table II.3. On October 21, 2022, DOE received a set of recommendations on amended energy conservation standards for consumer water heaters from a coalition of public- and private-sector organizations, including water heater manufacturers, energy efficiency organizations, environmental groups, and consumer organizations—collectively the Joint Stakeholders. This coalition's submission is herein referred to as the “Joint Recommendation.” The Joint Recommendation addressed standards for electric storage water heaters, gas-fired storage water heaters, and gas-fired instantaneous water heaters and is discussed in further detail in section III.F of this document. Table II.3—Preliminary Analysis and Joint Recommendation Comments Commenter(s) Abbreviation Comment No. in the docket * Commenter type American Council for an Energy-Efficient Economy, Appliance Standards Awareness Project, Bradford White Corporation, Consumer Federation of America, Natural Resources Defense Council, Northwest Energy Efficiency Alliance, Rheem Manufacturing Company Joint Stakeholders 49 Efficiency Organizations, Manufacturers, Consumer Advocacy Organization. Air-Conditioning, Heating and Refrigeration Institute AHRI 20, 31, 42 Trade Association. Anonymous Anonymous 19 Individual. Atmos Energy Corporation Atmos 27, 38 Utility. Bradford White Corporation BWC 32 Manufacturer. California Investor-Owned Utilities (Pacific Gas and Electric Company, Southern California Edison, San Diego Gas & Electric Company) CA IOUs 31, 39, 52 Utility Association. Center for Energy and Environment CEE 50 Efficiency Organization. Benjamin Cirker Cirker 30 Individual. Edison Electric Institute EEI 31, 43 Utility Association. The American Gas Association, American Public Gas Association, National Propane Gas Association, Spire Inc., Spire Missouri Inc., and Spire Alabama Inc. Gas Association Commenters 26, 41, 54 Utility Association. GE Appliances GEA 46 Manufacturer. Gas End-Use Advocacy Group GEAG 36 Utility Association. Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy, California Energy Commission, Consumer Federation of America, National Consumer Law Center, Natural Resources Defense Council and Northeast Energy Efficiency Partnerships Joint Advocates 34 Efficiency Organization. Northwest Energy Efficiency Alliance, American Council for an Energy-Efficient Economy, Northwest Power and Conservation Council NEEA, ACEEE, and NWPCC 47 Efficiency Organization. Northwest Energy Efficiency Alliance NEEA 31 Efficiency Organization. Natural Resources Defense Council and Rocky Mountain Institute NRDC and RMI 37 Efficiency Organization. National Rural Electric Cooperative Association NRECA 33 Utility Association. New York State Energy Research and Development Authority NYSERDA 35, 51 Efficiency Organization. ONE Gas Inc ONE Gas 28, 44 Utility. Plumbing-Heating-Cooling Contractors Association PHCC 40 Trade Association. Rheem Manufacturing Company Rheem 45 Manufacturer. Rinnai America Corporation Rinnai 55 Manufacturer. Southern Company Southern Company 31 Manufacturer. Southwest Energy Efficiency Project SWEEP 53 Efficiency Organization. Eriks Mota Vasquez Vasquez 17 Individual. *Comment No. 31 denotes comments recorded in the transcript of the public meeting held on April 12, 2022. A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record. 15 To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the April 12, 2022 public meeting, DOE cites the written comments throughout this final rule. Any oral comments provided during the webinar that are not substantively addressed by written comments are summarized and cited separately throughout this final rule. 15 The parenthetical reference provides a reference for information located in the docket of DOE's rulemaking to develop energy conservation standards for consumer water heaters. (Docket No. EERE-2017-BT-STD-0019, 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 has deviated from the provision in appendix A regarding the pre-NOPR stages for an energy conservation standards rulemaking (specifically, the publication of a framework document). As initially discussed in the March 2022 Preliminary Analysis, DOE opted to deviate from this step by publishing a preliminary analysis without a framework document. A framework document is intended to introduce and summarize the various analyses DOE conducts during the rulemaking process and requests initial feedback from interested parties. Prior to the notification of the preliminary analysis DOE published an RFI in which DOE identified and sought comment on the analyses conducted in support of the most recent energy conservation standards rulemakings for water heaters. 87 FR 11327, 11330. For this NOPR, DOE further notes that it is deviating from the provision in appendix A regarding the NOPR stage for an energy conservation standards rulemaking. Section 6(f)(2) of appendix A specifies that the length of the public comment period for a NOPR will be not less than 75 calendar. For this NOPR, DOE has opted instead to provide a 60-day comment period. DOE is opting to deviate from the 75-day comment period because stakeholders have already been afforded multiple opportunities to provide comments on this rulemaking. As noted previously, DOE requested comment on its planned technical and economic analyses in the May 2020 RFI and provided stakeholders with a 45-day comment period. 85 FR 30853. Additionally, DOE initially provided a 60-day comment period for stakeholders to provide input on the analyses presented in the preliminary TSD. 87 FR 11327. Subsequently, in response to requests from stakeholders, DOE re-opened the comment period for an additional 14 days to provide additional time for stakeholders to provide input on the preliminary analysis. 87 FR 26303 (May 4, 2022). The analytical assumptions and approaches used for the analyses conducted for this NOPR are similar to those used for the preliminary analysis. Therefore, DOE believes a 60-day comment period is appropriate and will provide interested parties with a meaningful opportunity to comment on the proposed rule. Section 8(d)(1) of appendix A requires that new or amended test procedures which impact measured energy use or efficiency are finalized at least 180 days prior to the close of comment period for a NOPR proposing new or amended energy conservation standards. However, in a final rule published on December 13, 2021, discussing the provisions of appendix A, DOE noted that this 180-day period may not always be necessary. 86 FR 70892, 70896. The comment period for this NOPR will close on September 26, 2023, which is X days after the date of finalization of the most recent consumer and residential-duty commercial water heaters test procedure final rule, June 21, 2023 (this test procedure final rule is discussed in section III.B of this document). As described in that test procedure final rule, the amendments adopted therein will not alter the measured efficiency of consumer water heaters, or require retesting or recertification solely as a result of DOE's adoption of the amendments to the test procedures. 88 FR 40406, 40412. As such, the test provisions required by the most recent test procedure final rule are expected to be generally understood by stakeholders and would not impact the analysis of this standards rulemaking. III. General Discussion DOE developed this proposal after considering oral and written comments, data, and information from interested parties that represent a variety of interests. The following discussion provides a general overview of the approach taken to develop this proposal, with specific discussion of the methodology and comments received in section IV of this document. A. Scope of Coverage This NOPR covers those consumer products that meet the definition of “water heater,” as codified at 10 CFR 430.2 and as described by EPCA at 42 U.S.C. 6291(27). Generally, DOE defines a “water heater,” consistent with EPCA's definition, as a product which utilizes oil, gas, or electricity to heat potable water for use outside the heater upon demand, including: (a) Storage type units which heat and store water at a thermostatically controlled temperature, including gas storage water heaters with an input of 75,000 Btu per hour or less, oil storage water heaters with an input of 105,000 Btu per hour or less, and electric storage water heaters with an input of 12 kilowatts or less; (b) Instantaneous type units which heat water but contain no more than one gallon of water per 4,000 Btu per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less, oil instantaneous water heaters with an input of 210,000 Btu per hour or less, and electric instantaneous water heaters with an input of 12 kilowatts or less; and (c) Heat pump type units, with a maximum current rating of 24 amperes at a voltage no greater than 250 volts, which are products designed to transfer thermal energy from one temperature level to a higher temperature level for the purpose of heating water, including all ancillary equipment such as fans, storage tanks, pumps, or controls necessary for the device to perform its function. 10 CFR 430.2; (42 U.S.C. 6291(27)) In addition, at 10 CFR 430.2, DOE further defines several specific categories of consumer water heaters, as follows: • “Electric instantaneous water heater” means a water heater that uses electricity as the energy source, has a nameplate input rating of 12 kW or less, and contains no more than one gallon of water per 4,000 Btu per hour of input. • “Electric storage water heater” means a water heater that uses electricity as the energy source, has a nameplate input rating of 12 kW or less, and contains more than one gallon of water per 4,000 Btu per hour of input. • “Gas-fired instantaneous water heater” means a water heater that uses gas as the main energy source, has a nameplate input rating less than 200,000 Btu per hour, and contains no more than one gallon of water per 4,000 Btu per hour of input. • “Gas-fired storage water heater” means a water heater that uses gas as the main energy source, has a nameplate input rating of 75,000 Btu per hour or less, and contains more than one gallon of water per 4,000 Btu per hour of input. • “Grid-enabled water heater” means an electric resistance water heater that— ⚬ Has a rated storage tank volume of more than 75 gallons; ⚬ Is manufactured on or after April 16, 2015; ⚬ Is equipped at the point of manufacture with an activation lock; and ⚬ Bears a permanent label applied by the manufacturer that— Is made of material not adversely affected by water; Is attached by means of non-water-soluble adhesive; and Advises purchasers and end-users of the intended and appropriate use of the product with the following notice printed in 16.5 point Arial Narrow Bold font: “IMPORTANT INFORMATION: This water heater is intended only for use as part of an electric thermal storage or demand response program. It will not provide adequate hot water unless enrolled in such a program and activated by your utility company or another program operator. Confirm the availability of a program in your local area before purchasing or installing this product.” • “Oil-fired instantaneous water heater” means a water heater that uses oil as the main energy source, has a nameplate input rating of 210,000 Btu/h or less, and contains no more than one gallon of water per 4,000 Btu per hour of input. • “Oil-fired storage water heater” means a water heater that uses oil as the main energy source, has a nameplate input rating of 105,000 Btu/h or less, and contains more than one gallon of water per 4,000 Btu per hour of input. In the June 2023 Test Procedure Final Rule, DOE amended 10 CFR 430.2 (effective on July 21, 2023), adding the following definitions for circulating, low-temperature, and tabletop water heaters: • “Circulating water heater” means an instantaneous or heat pump-type water heater that does not have an operational scheme in which the burner, heating element, or compressor initiates and/or terminates heating based on sensing flow; has a water temperature sensor located at the inlet or the outlet of the water heater or in a separate storage tank that is the primary means of initiating and terminating heating; and must be used in combination with a recirculating pump and either a separate storage tank or water circulation loop in order to achieve the water flow and temperature conditions recommended in the manufacturer's installation and operation instructions. • “Low-temperature water heater” means an electric instantaneous water heater that is not a circulating water heater and cannot deliver water at a temperature greater than or equal to the set point temperature specified in section 2.5 of appendix E to subpart B of this part when supplied with water at the supply water temperature specified in section 2.3 of appendix E to subpart B of part 430 and the flow rate specified in section 5.2.2.1 of appendix E to subpart B of part 430. • “Tabletop water heater” means a water heater in a rectangular box enclosure designed to slide into a kitchen countertop space with typical dimensions of 36 inches high, 25 inches deep, and 24 inches wide. As stated in section I of this NOPR, EPCA prescribed energy conservation standards for all consumer water heaters ( i.e., those that meet the definition of “water heater” above). For the purposes of this NOPR, DOE is considering all consumer water heaters, as defined by EPCA. This includes consumer water heaters for which there are no current UEF-based standards codified at 10 CFR 430.32(d). However, during this rulemaking, DOE has received inquiries from interested parties regarding the coverage, under current energy conservation standards, of hot water dispensing products. These products are generally used for food preparation ( e.g., brewing tea) and are installed in place of portable kettles. A small water-heating tank is connected to a sink's cold water supply to heat the water up to near-boiling temperatures. The hot water is piped out of the tank through a separate hot water faucet 16 specifically for use with this product. These products have very limited storage volume—often less than one gallon. All of the models that DOE has identified are all electric and run on less than 2 kilowatts of power. Note that these products are not to be confused with low-temperature electric instantaneous water heaters or point-of-use electric storage water heaters, both of which generally provide temperatures near or below 125 °F, the nominal delivery temperature in the appendix E test procedure that corresponds to normal household hot water temperatures for washing applications. Hot water dispensing products provide water at scalding-hot temperatures such as 160 °F to 210 °F. 16 “Low-pressure water dispenser” means a terminal fitting that dispenses drinking water at a pressure of 105 kPA (15 psi) or less. (10 CFR 430.2) Low-pressure water dispensers operate at lower water pressures than conventional kitchen faucets (by definition) and are used for the purpose of gently filling a relatively small vessel ( e.g., a glass). DOE does not currently have energy conservation standards that cover hot water dispensing products and DOE's test procedure is not representative of an average use cycle for these products. Hot water dispensing products operate in a unique manner compared to the other consumer water heaters such as much higher temperatures, have smaller storage capacities, and can provide hot potable water at lower flow rates than typical consumer electric water heaters. While DOE has the authority to set standards for products that meet the definition of a consumer water heater (42 U.S.C. 6292(a)(4)), this rulemaking is not currently considering standards for hot water dispensing products. See section IV.A.1 of this document for discussion of the product classes analyzed in 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 water heaters are expressed in terms of UEF. ( See 10 CFR 430.32(d)). DOE recently amended the test procedure for these products at appendix E to subpart B of 10 CFR 430 in the consumer and residential-duty commercial water heater test procedure final rule published on June 21, 2023 (“June 2023 TP Final Rule”) pursuant to the 7-year review requirement as specified by EPCA. (42 U.S.C. 6293(b)(1)(A) and 42 U.S.C. 6314(a)(1)(A)) In the June 2023 TP Final Rule, DOE added definitions and where necessary additional test procedure provisions for circulating water heaters, low-temperature water heaters, and tabletop water heaters, as well as provisions for high temperature testing. DOE also established effective storage volume as a metric and provided additional optional ambient test conditions for heat pump water heaters. The test procedure for consumer water heaters incorporates by reference current versions of industry standards ASHRAE 41.1, ASHRAE 41.6, ASHRAE 118.2, ASTM D2156, and ASTM E97 and harmonizes various aspects of the test procedure with industry test procedures ASHRAE 118.2-2022 and NEEA Advanced Water Heating Specification v8.0. The effective date of the June 2023 TP Final Rule is July 21, 2023, 30 days after the date of its publication in the Federal Register. Changes to the test procedure made by the June 2023 TP Final Rule are mandatory for consumer water heater testing starting December 18, 2023, 180 days after publication. Subsequent references in this NOPR to the “appendix E test procedure” refer to the test procedure which will go in effect on July 21, 2023. DOE received comments in response to the March 2022 Preliminary Analysis regarding the consumer water heater test procedure that were relevant to the test procedure rulemaking. Cirker provided comments suggesting that, based on personal in-home monitoring of three heat pump water heaters, different designs exhibit different performance ( i.e., delivery temperature, delivery capacity, and energy consumption) under winter conditions, when the consumer uses a higher setpoint temperature, has a lower ambient temperature, and a lower supply water temperature. Cirker suggested that DOE include a method to determine the efficiency and first hour rating of heat pump water heaters under cold climate conditions. (Cirker, No. 30 at pp. 1-2) In the June 2023 TP Final Rule, DOE adopted additional test conditions—including those simulating cold climates—for manufacturers to be able to make voluntary optional representations for heat pump water heaters. 88 FR 40406. NYSERDA commented that rated storage volume is no longer an appropriate representation of the capacity of a storage water heater volume due to the use of mixing valves and higher tank temperatures, suggesting that first hour rating (“FHR”) be used instead. (NYSERDA, No. 35 at p. 6) DOE agreed that increasing the temperature of the water stored in a water heater above the nominal delivery temperature is a way to increase the capacity of the water heater, as the hotter water can be tempered with cool water using a mixing valve to provide a larger volume of hot water than when the water is stored at the relatively cooler nominal temperature. For water heaters that are capable of storing water at such an elevated temperature, the effective storage volume metric represents a measure of the true storage capacity of the water heater based on the maximum temperature at which it can store water, as compared to storing water at the nominal temperature of 125 degrees Fahrenheit (“°F”) specified in appendix E. DOE agreed, therefore, that rated storage volume alone is not an adequate representation of the storage capacity of water heaters that are capable of heating and storing water at high temperatures ( i.e., at a temperature well above the typical setpoint temperature of 125 °F), and established effective storage volume to better represent the storage capacity of such water heaters in the June 2023 TP Final Rule. 88 FR 40406. DOE specified in appendix E that effective storage volume is determined by multiplying the measured storage volume by a scaling factor which represents the ratio of the thermal energy stored in the tank when at its maximum storage temperature as compared to the thermal energy stored in the tank when at the nominal temperature of 125 °F. Id. The appendix E test procedure, as amended by the June 2023 TP Final Rule, does not require water heaters to test in the highest heat mode ( i.e., the high temperature test method). In the June 2023 TP Final Rule, DOE deferred the implementation of high temperature testing provisions to this energy conservation standards rulemaking. 88 FR 40406, 40448. DOE further agrees with NYSERDA that storage volume is not an adequate representation of the storage capacity of water heaters that are capable of heating and storing water at high temperatures ( i.e., at a temperature well above the typical setpoint temperature of 125 °F). In the June 2023 TP Final Rule, DOE established effective storage volume as a metric to better represent the storage capacity of such water heaters. 88 FR 40406. Consequently, DOE is now addressing the implementation of effective storage volume provisions in this NOPR. In this NOPR, DOE is proposing that high temperature test provisions be required for electric storage water heaters that have a permanent ( i.e., non-temporary) mode or setting to heat and store water above 135 °F and that do not meet the definition of “heat pump-type” water heater ( i.e., this proposal applies to storage water heaters utilizing only electric resistance technology). Further, these provisions would not apply to water heaters that either store water at an elevated temperature only for a temporary period or to water heaters that are capable of storing at elevated temperatures only in response to instructions from a utility or third-party demand response program. DOE expects that, especially in the case of small electric storage water heaters, these products will be installed at an elevated temperature setpoint with a mixing valve in order to match the performance of larger water heaters. The high temperature test provisions are therefore expected to be representative of the average use cycle of electric resistance water heaters. DOE's proposal is detailed further in section V.C.1 of this document. BWC commented in response to the March 2022 Preliminary Analysis regarding product classes for products that do not currently have UEF-based standards, stating that DOE refrain from considering them until the test procedure rulemaking is finalized and DOE determines whether these product classes will be necessary. BWC also noted that a study of the simulated use test completed by Davis Energy Group, Inc. suggests that EF ratings for instantaneous gas-fired water heaters are inflated in comparison to those for gas-fired storage water heaters. BWC acknowledged that this effect should be smaller for UEF ratings, but still urged DOE to consider its potential impact. (BWC, No. 32 at p. 6) In response to BWC, DOE disagrees that its test procedure provides an unfair advantage to gas-fired instantaneous models over gas-fired storage models. DOE's 24-hour simulated use test, as defined at appendix E, is designed to emulate typical in-field usage patterns for consumer water heaters and includes periods of standby during which no water is being withdrawn from the water heater. Storage water heaters maintain a significant volume of stored water, which loses heat to the cooler surrounding air. This results in the water heater consuming energy to heat the stored water to offset these standby losses, in addition to the energy required to heat the water from the supply water temperature to the setpoint temperature. By contrast, because instantaneous-type water heaters do not typically maintain a significant volume of stored water, the standby losses they experience are generally much lower and do not require additional energy to offset. Instantaneous-type water heaters may therefore achieve higher UEF ratings compared to storage-type water heaters. However, DOE reiterates that this difference in efficiency is not a result of an unfair test procedure, but rather a result of the differences in design between gas-fired storage and gas-fired instantaneous water heaters and is indeed representative of an average use cycle or period of use. See section IV.A.1 of this document for discussion regarding whether storage-type and instantaneous-type product classes should be combined together under uniform standards. The June 2023 TP Final Rule additionally expanded coverage of the appendix E test procedure to additional consumer water heaters under the scope of coverage of standards. As discussed in that final rule, DOE revised the test procedure to provide additional instructions for testing circulating water heaters and low-temperature water heaters for UEF. 88 FR 40406. A circulating water heater is defined at 10 CFR 430.2 as an instantaneous or heat pump-type water heater that does not have an operational scheme in which the burner, heating element, or compressor initiates and/or terminates heating based on sensing flow; has a water temperature sensor located at the inlet or the outlet of the water heater or in a separate storage tank that is the primary means of initiating and terminating heating; and must be used in combination with a recirculating pump and either a separate storage tank or water circulation loop in order to achieve the water flow and temperature conditions recommended in the manufacturer's installation and operation instructions. A low-temperature water heater is defined at 10 CFR 430.2 as an electric instantaneous water heater that is not a circulating water heater and cannot deliver water at a temperature greater than or equal to the set point temperature specified in section 2.5 of appendix E when supplied with water at the supply water temperature specified in section 2.3 of appendix E and the flow rate specified in section 5.2.2.1 of appendix E. Treatment of circulating water heaters and low temperature water heaters as potential product classes is discussed in section IV.A.1.a of this document. In response to the March 2022 Preliminary Analysis, Rinnai provided comments indicating that gas-fired instantaneous water heaters with integrated recirculating pumps may have an additional benefit to water conservation. (Rinnai, No. 55 at pp. 1-2) However, while DOE may consider the energy use associated with increased or decreased water use, DOE does not have the authority to establish water conservation standards for circulating water heaters or instantaneous water heaters. ( See 42 U.S.C. 6291(6)) C. Technological Feasibility 1. General In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available products or in working prototypes to be technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A to 10 CFR 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. Section IV.B of this document discusses the results of the screening analysis for consumer water 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 water 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.a of this proposed rule 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 water heaters purchased in the 30-year period that begins in the year of compliance with the proposed standards (2030-2059). 17 The savings are measured over the entire lifetime of consumer water 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 amended energy conservation standards. 17 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 water 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 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. 18 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. 18 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 any new or amended 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)) 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. 19 For example, 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. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis, taking into account the significance of cumulative FFC national energy savings, the cumulative FFC emissions reductions, and the need to confront the global climate crisis, among other factors. DOE has initially determined the energy savings from the proposed standard levels are “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B). 19 The numeric threshold for determining the significance of energy savings established in a final rule published on February 14, 2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule published on December 13, 2021 (86 FR 70892, 70906). 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 proposed rulemaking. a. Economic Impact on Manufacturers and Consumers In determining the impacts of a potential amended standard on manufacturers, DOE conducts an 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. An anonymous commenter indicated that the benefits of making water heaters more energy-efficient would likely outweigh the costs. The commenter stated that many households have either very old water heaters or water heaters that consume a significant amount of energy, and that energy conservation standards can be helpful in guiding customer choices. (Anonymous, No. 19) 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 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)) EPCA 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. 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.X of this document. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L 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.” 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.X of this proposed rule. F. Interested Party Recommendations As discussed in section II.B.2 of this document, DOE received a Joint Stakeholder Recommendation for amended standards pertaining to electric storage water heaters, gas-fired storage water heaters, and gas-fired instantaneous water heaters. Specifically, the Joint Stakeholder Recommendation recommended that DOE adopt the standards shown in Table III.1 through Table III.3. (Joint Stakeholders, No. 49 at pp. 9-10) Table III.1—Joint Stakeholder Recommendation Levels for Electric Storage Water Heaters Draw pattern First hour rating (FHR) DOE rated storage volume ≥20 to ≤30 gallons >30 to ≤35 gallons >35 to ≤55 gallons >55 to 120 gallons Low ≥18 to 36 inches: 2.0 UEF Medium ≥51 to 50,000 BTU per hour. The levels shown are equivalent to DOE's preliminary TSD Efficiency Level 2 (EL2). In support of the recommended levels, the Joint Stakeholders stated that, if adopted, the recommendation would transition the majority of electric water heaters to heat pump technology and make incremental steps to improve gas-fired water heater efficiency. The Joint Stakeholders also stated that the recommended levels would provide significant reductions in national water heating energy use and their associated greenhouse gas emissions, save consumers money on their utility bills, provide manufacturers more business certainty with room to innovate, and offer manufacturers, consumers, and professional installers flexibility for certain applications where heat pump technology is not currently a viable replacement option. (Joint Stakeholders, No. 49 at p. 1 and pp. 5-6) DOE has included an analysis of the benefits and burdens of the Joint Stakeholder Recommendation as part of its analyses of amended energy conservation standards for this NOPR. The Joint Stakeholder Recommendation is discussed in further detail, as applicable, throughout section IV of this document. Following the submission by the Joint Stakeholders, three other commenters, SWEEP, CEE and NYSERDA, submitted comments in support of the efficiency level proposals recommended by the Joint Stakeholders. (SWEEP, No. 53 at p. 1; CEE, No. 50 at p. 1; NYSERDA, No. 51 at pp. 1-2) The CA IOUs provided a recommendation similar to the Joint Stakeholder Recommendation, suggesting that all electric storage water heaters between 20 and 120 gallons in rated storage volume would have to meet heat pump standards roughly equivalent to Efficiency Level (“EL”) 2 analyzed in the March 2022 Preliminary Analysis, except for products 20-30 gallons in the low draw pattern (based on FHR). The CA IOUs justified their recommendation by stating that it sought to maximize the share of the future residential water heater market that will be high-efficiency, while allowing less-efficient products to fill applications that are challenging for currently available heat pump water heaters. (CA IOUs, No. 52 at p. 6-7) The CA IOUs' recommendation is shown in Table III.4. Table III.4—CA IOUs Recommended Levels for Electric Storage Water Heaters Draw pattern First hour rating (FHR) Rated storage volume ≥20 to ≤30 gallons >30 to ≤120 gallons Low ≥18 to 55 gal and ≤100 gal Very Small, Low, Medium, High. Oil-Fired Storage Water Heater ≤50 gal Very Small, Low, Medium, High. Electric Storage Water Heater ≥20 gal and ≤55 gal Very Small Low, Medium, High. Electric Storage Water Heater >55 gal and ≤120 gal Very Small, Low, Medium, High. Tabletop Water Heater ≥20 gal and ≤120 gal Very Small, Low, Medium, High. Instantaneous Gas-Fired Water Heater 50,000 Btu/h Very Small, Low, Medium, High. Instantaneous Electric Water Heater 75 gal Very Small, Low, Medium, High. Table IV.2—Consumer Water Heater Product Classes Without Current UEF-Based Standards Product class Rated storage volume and input rating (if applicable) Gas-fired Storage 100 gal. Oil-fired Storage >50 gal. Electric Storage 120 gal Tabletop 120 gal. Gas-fired Instantaneous 55 gallons, ≤120 gallons, All draw patterns. New Product Class Structure Being Considered Small Electric Storage Water Heaters ≥20 gallons, ≤35 gallons, Very small and low draw patterns * ≥20 gallons, ≤55 gallons, All draw patterns, excluding “small electric storage water heaters” >55 gallons, ≤120 gallons, All draw patterns. * These products are collectively referred to as “small electric storage water heaters.” Tabletop water heaters, which typically have around 35 gallons of rated storage volume, also have very particular dimensions in order to be used as a kitchen workspace. DOE is not proposing to amend the standards for tabletop water heaters in this rulemaking based on the market assessment for these products (see section IV.C.1.a for details). There are only two basic models of tabletop water heaters on the market currently. Because of the similarities between tabletop water heaters and small electric storage water heaters, DOE is proposing to create alignment between the standards for these types of products. Specifically, in this NOPR, DOE proposes to amend the definition of “tabletop water heater” to specify that the tabletop designation of electric storage water heaters is only applicable to products in the very small or low draw pattern. As a result of this proposal (if finalized), any tabletop water heaters in the medium and high draw patterns would henceforth be considered in the broader electric storage water heater product classes. Out of the two basic models of tabletop water heaters certified to DOE, one is in the low draw pattern and will not be affected by the proposal. The other is in the medium draw pattern. DOE expects that this medium draw pattern tabletop model can be redesigned to meet the low draw pattern requirements with limited product conversion cost to the manufacturer. DOE requests comment on its proposal to limit the tabletop water heater designation to products in the very small and low draw patterns. 2. Technology Options As described in section III.C.1 of this document, DOE conducts a technology assessment to identify a complete list of technologies for consumer water heaters (“technology options”) with the potential to improve the UEF ratings of products. Section IV.B of this document describes the process by which technology options are screened in a separate screening analysis that aims to determine which technology options could feasibly be adopted based on five screening criteria. Finally, in the engineering analysis (section IV.C of this document), DOE selects the technology options that are most likely to constitute the design pathway to higher efficiency levels in a standards-case scenario (thereafter referred to as “design options”). Thus, after DOE identifies a comprehensive list of technologies for the technology assessment, the subsequent analysis focuses only on those technologies that are the most likely to be implemented in response to amended standards. In the preliminary market analysis and technology assessment, DOE identified numerous technology options that would be expected to improve the efficiency of consumer water heaters, as measured by the DOE test procedure. These technology options were presented in chapter 3 of the preliminary TSD. DOE requested feedback on the technology options identified and on whether there are additional technologies available that may improve consumer water heater performance. In response to the March 2022 Preliminary Analysis, the Joint Advocates requested that DOE evaluate 120 V/15 A heat pump water heaters because their commercial availability is expected to increase throughout 2022. (Joint Advocates, No. 34 at pp. 2-3) Rheem commented that there will be 120 V electric water heaters, including heat pump water heaters, on the market during the 30-year analysis timeframe. (Rheem, No. 45 at p. 4) In response, DOE has included 120 V HPWHs in its technology assessment for electric storage heat pump water heaters in this NOPR. However, as described further in chapter 3 of the NOPR TSD, there are currently very few models of 120 V heat pump water heaters available on the market, and DOE has not analyzed these designs directly in the engineering analysis due to the lack of information on these models and whether these designs would constitute the most cost-effective pathway to improved energy efficiency for electric storage water heaters. DOE's initial findings on the potential efficiency of 120 V heat pump water heaters are detailed in chapter 3 of the NOPR TSD. DOE requests comment on the outlook for the emergence of 120 V heat pump water heaters, information regarding how their design and operation may differ from 240 V heat pump water heaters, and data on performance characteristics and efficiencies. Rheem recommended DOE add an inlet damper to the list of technology options but indicated that this technology option may not be suitable for the entire gas-fired storage water heater product class. Rheem stated that it has concerns that the technology may have limitations for some installation applications. (Rheem, No. 45 at p. 3) Based on its independent research and discussions with manufacturers, DOE understands the technology in question to be gas-actuated flue dampers, which are installed at the air intake inlet (hence the term used by the commenter, “inlet damper”). The Joint Advocates urged DOE to evaluate gas-actuated, non-powered dampers, which require no external power source and instead use a self-powered gas valve to generate the power needed to operate, for gas-fired storage water heaters as a potentially lower-cost alternative to other damper technology options. (Joint Advocates, No. 34 at p. 2) As discussed further in chapter 3 of the NOPR TSD, DOE agrees with Rheem and the Joint Advocates that gas-actuated flue dampers are a viable technology option for gas-fired storage water heaters and has therefore included them in its updated analyses for this NOPR. AHRI and BWC opposed DOE's inclusion of modulating burners as a technology option for gas-fired storage, oil-fired storage, and gas-fired instantaneous water heaters because modulating burners are, to their knowledge, used only in gas-fired instantaneous water heaters in the consumer market. (AHRI, No. 42 at p. 3; BWC, No. 32 at p. 3) BWC added that adjusting the fuel-to-air ratio is typically done only in commercial applications (with the possible exception of consumer gas-fired instantaneous water heaters) as it is very sophisticated and costly. (BWC, No. 32 at p. 3) In response to comments from AHRI and BWC, DOE notes that it is technologically feasible to use modulating burners in fossil fuel-fired products, and therefore, it has been included in the list of technology options available for consumer water heaters. However, in the engineering analysis of the March 2022 Preliminary Analysis, which constructs the main design option pathway for efficiency improvements, DOE had tentatively determined that modulating burners were likely to be used as part of the technology pathway for increasing UEF only in instantaneous-type gas-fired water heaters, as commenters have suggested. Accordingly, in this NOPR, as in the March 2022 Preliminary Analysis, DOE has analyzed modulating burners only for gas-fired instantaneous water heaters in the engineering analysis (see section IV.C.1.a of this document for additional discussion). The technology options found in this NOPR for improving UEF in consumer water heaters, are listed in Table IV.5 and described in chapter 3 of the NOPR TSD. Table IV.5—Potential Technologies for Increasing Efficiency Technology option Heat traps. Improved insulation: Increased thickness. Insulation on tank bottom. Less conductive tank materials ( e.g., plastic). Foam insulation. Pipe and fitting insulation. Advanced insulation types: Aerogel. Vacuum panels. Inert gas-filled panels. Electronic ignition systems: Direct spark ignition. Intermittent pilot ignition. Hot surface ignition. Improved burners: Pulse combustion. Pressurized combustion. Side-arm heating. Two-phase thermosiphon technology. Modulating burners. Reduced burner size (slow recovery). Heat exchanger improvements: Increased heat exchanger surface area. Enhanced flue baffle. Submerged combustion chamber. Multiple flues. Alternative flue geometry (Helical). U-Tube. Condensing technology. Induced-draft (negative vent pressure) heat exchanger. Direct-fired heat exchange. Improved venting: Flue damper: Externally-powered. Thermopile-operated (non-powered). Gas-actuated (non-powered). Buoyancy-operated (non-powered). Concentric direct venting. Power vent. Improved heat pump water heater components: Compressor improvements: Increased capacity. Increased efficiency. Variable-speed drive. Fan improvements: High-efficiency fan motors. High-efficiency fan blades. Expansion device improvements. Increased evaporator surface area. Increased condenser surface area. Gas-fired absorption heat pump water heaters. Gas-fired adsorption heat pump water heaters. Carbon dioxide heat pump water heaters. Thermophotovoltaic and thermoelectric generators. Improved controls: Modulating controls. 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 commercially viable, existing prototypes will not be considered further. (2) Practicability to manufacture, install, and service. If it is determined that mass production of a technology in commercial products and reliable installation and servicing of the technology 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. If a technology is determined to have a significant adverse impact on the utility of the product to subgroups of consumers, or results 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) Safety of technologies. 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 technology has proprietary protection and represents a unique pathway to achieving a given efficiency level, it will not be considered further, due to the potential for monopolistic concerns. Sections 6(b)(3) and 7(b) of appendix A. 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 reasons for eliminating any technology are discussed in the following sections. The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria. 1. Screened-Out Technologies The following paragraphs describe the technologies that DOE eliminated for failure to meet one of the following five factors: (1) technological feasibility; (2) practicability to manufacture, install, and service; (3) impacts on equipment utility or equipment availability; (4) adverse impacts on health or safety; and (5) unique-pathway proprietary technologies. In the preliminary analysis, DOE eliminated the following technology options from further consideration based on the above criteria: advanced insulation types, condensing pulse combustion, side-arm heating, two-phase thermosiphon technology, reduced burner size (slow recovery), direct-fired heat exchange, dual fuel heat pumps, buoyancy-operated flue dampers, gas-fired absorption and adsorption heat pump water heaters, and U-tube flues. Each of these technology options and the reasons for which they were screened out are discussed in detail in the preliminary TSD. BWC commented that some technology options listed in Table 2.3.3 of the preliminary TSD cannot necessarily be easily implemented in residential products without significant investments. (BWC, No. 32 at p. 2) BWC did not specify which technologies were the subject of their comment. AHRI suggested DOE's consideration of internationally available technologies as feasible for this rulemaking is inappropriate because internationally available technologies conform to different standards than those used in the United States, which does not guarantee that these technologies can be certified in the United States. (AHRI, No. 42 at p. 3) As previously discussed, DOE evaluates all technology options identified in the technology assessment, including those that may be internationally available, according to the screening criteria enumerated in sections 6(b)(3) and 7(b) of appendix A to 10 CFR part 430 subpart C. If a specific technology option passes all the screening criteria, it is retained as a design option for the engineering analysis. DOE notes that all of the remaining technology options that were not proposed to be screened out are already available in the United States. BWC suggested that it is too early for DOE to consider gas-fired heat pump water heaters in its analysis, noting that they are not currently available in the consumer market and the technology has not been demonstrated to be easily and cost-effectively manufactured at large scale to meet the demands of the consumer water heater market. (BWC, No. 32 at p. 3) The Joint Advocates, however, urged DOE to evaluate gas-fired heat pump water heaters as the max-tech level for gas-fired storage water heaters because gas-fired heat pump technology is commercially available in other product types, has been used in some demonstrations for water heaters, and may soon be commercially available for water heaters. (Joint Advocates, No. 34 at p. 2) In response to these comments, DOE notes that it is not statutorily restricted to technologies that are currently on the market when conducting its analyses and considering standards; however, DOE is required to screen out technologies which are not practicable to manufacture at the scale necessary to serve the relevant market at the time of the projected compliance date of any amended standards (see section 6(b)(3)(i)-(ii) of appendix A and section IV.B of this document). Because there are no commercially available gas-fired heat pump water heaters on the market yet, DOE has no data or information that would suggest that gas-fired heat pump technology will be practicable to manufacture at the necessary scale upon the compliance date expected for this rulemaking. Therefore, DOE proposes to screen out this technology option from further consideration. AHRI requested that DOE remove millivolt-powered ( i.e., thermopile-operated) flue dampers in the screening analysis because they are not used in consumer products. (AHRI, No. 42 at p. 3) Rheem recommended that the thermopile-operated flue damper technology option be screened out due to technological feasibility, agreeing with AHRI that this technology option is not incorporated in commercialized products. (Rheem, No. 45 at p. 3) BWC also urged DOE not to consider millivolt-powered dampers as a technology option for consumer water heaters as they are not used domestically in consumer products. (BWC, No. 32 at p. 2) DOE reviewed product literature for water heaters which have thermopile-operated flue dampers. These water heaters convert thermal energy from a standing pilot light into electricity to operate a damper, but such thermopiles are found only in commercial water heaters, which typically have substantially higher input rate standing pilot lights. Manufacturers generally agreed during interviews that the standing pilot lights in consumer water heaters are not large enough to power flue dampers. Consequently, DOE screened this design option out because it has tentatively determined that thermopile-operated flue dampers are not technologically feasible for consumer water heaters. (As discussed in section IV.C.1.a of this document, DOE is now considering gas-actuated flue dampers as a design option for reaching EL 2 without use of external electricity, as this technology has been demonstrated in consumer water heaters that are currently 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 of this document 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 following technology options listed in Table IV.6. These technology options are shown from left to right from broader categories to specific design options. Table IV.6—Remaining Technology Options as Identified in the NOPR Analysis Technology option Improved insulation: Increased thickness. Insulation on tank bottom. Less conductive tank materials ( e.g., plastic). Foam insulation. Pipe and fitting insulation. Electronic ignition systems: Direct spark ignition. Intermittent pilot ignition. Hot surface ignition. Burner improvements: Pressurized combustion. Modulating burners. Gas-fired and Oil-fired Heat exchanger improvements: Increased heat exchanger surface area. Enhanced flue baffle. Submerged combustion chamber. Multiple flues. Alternative flue geometry (Helical). Condensing technology. Induced-draft (negative vent pressure) heat exchanger. Improved venting: Flue damper: Externally-powered. Gas-actuated (non-powered). Power vent. Concentric direct venting. Improved heat pump water heater components: Compressor improvements: Increased capacity. Increased efficiency. Variable-speed drive. Fan Improvements: High-efficiency fan motors. High-efficiency fan blades. Expansion device improvements. Increased evaporator surface area. Increased condenser surface area. Carbon dioxide (alternative refrigerant) heat pump water heaters. Improved controls: Modulating controls. Heat traps (all types) 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 working prototypes. DOE also finds that all of the remaining technology options meet the other screening criteria ( i.e., practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, or safety, unique-pathway proprietary technologies). For additional details, see chapter 4 of the NOPR TSD. BWC stated that direct vent technology severely limits how much products can be improved due to safety-related combustion requirements. (BWC, No. 32 at p. 2) DOE notes that there are numerous consumer water heaters currently on the market using direct vent technology, which demonstrates that the technology can be used safely. However, though direct vent technology was not screened out, it has been identified as not significantly improving the UEF rating and therefore DOE did not consider it as a design option in its engineering analysis. Section IV.C.1.b of this document and chapter 5 of the TSD have additional details regarding DOE's projected design pathway for improving UEF. NRECA commented that heat pump water heaters currently do not provide the same functionality as electric resistance water heaters in demand response programs, do not perform as well in certain regions of the country, and have no alternative for consumers without access to natural gas in their homes. NRECA suggested that heat pump water heaters would not be suited for programs in which the water heater is controlled to stop or start operating at different times of the day and sometimes for multiple on/off cycles per day or per hour, because these “short cycles” would reduce component lifetimes and reliability. NRECA also noted that heat pump water heaters require a specific minimum area to function properly, and many homes have a water heater located in a closet or small area and do not have the large space needed for the heat pump to operate effectively. (NRECA, No. 33 at p. 2) The most recent market assessment has found several commercially-available demand-response heat pump water heaters, suggesting that manufacturers are developing ways to implement control strategies in heat pump water heaters which allow them to meet the needs of utility demand-response programs. Additionally, as discussed, heat pump water heaters currently available on the market typically have backup electric resistance elements which may activate during a grid-signaled event if necessary and can allow the water heater to function similarly to an electric resistance water heater when needed. With regards to NRECA's concern about short-cycling, DOE expects that heat pump water heaters would be less likely to undergo shorter recovery periods than electric resistance water heaters. Heat pump water heaters take more time to recover when using only the compressor because the refrigeration cycle requires time to stabilize and begin transferring heat at a high output rate. The condenser coils of heat pump water heaters may also not be in direct contact with the water. By contrast, electric resistance elements are directly submerged in water and are capable of heating water faster because the electrical power is immediately converted into heat output. With respect to NRECA's concerns about space constraints, DOE notes that other options are available to consumers, such as utilizing a louvered door or ducting air to and from the water heater, and these options were considered as part of the installation cost analysis (see section IV.F.2). Finally, DOE agrees that air-source heat pump performance will vary depending on the region of the country due to varying the air conditions at the evaporator. To account for such differences, in the June 2023 TP Final Rule, DOE adopted optional metrics that manufacturers may use to make voluntary representations for heat pump water heaters at a range of alternative ambient and outdoor air conditions. As a result of these considerations, DOE did not screen out heat pump technology as a technology option for improving the UEF of electric storage water heaters. GEA and Rheem urged DOE to further evaluate the impact of ongoing refrigerant regulations on the viability, availability, and cost of heat pump water heaters. (GEA, No. 46 at p. 2; Rheem, No. 45 at p. 5) BWC urged DOE to consider the fact that alternative refrigerants can be extremely flammable, may have charge limits, operate at high pressures, and are often costly. BWC also noted that there is only one residential heat pump water heater product line on the market today that utilizes CO 2 27 as a refrigerant. (BWC, No. 32 at pp. 2-3) Southern Company indicated different refrigerants may be in use for heat pump water heaters by the implementation date of this rulemaking and requested that DOE account for their higher prices. (Southern Company, No. 31 at pp. 27-28) 27 Commercially referred to as R744. Based on information gathered from manufacturers in confidential interviews after the March 2022 Preliminary Analysis, DOE has tentatively determined that alternative refrigerants with low global warming potentials (“GWP”) will be made available for use in heating products if refrigerant regulations that apply to heat pump water heaters are promulgated by the Environmental Protection Agency (”EPA”). While BWC appeared to be alluding to potential issues with hydrocarbon refrigerants, other more viable options include drop-in replacements, with very similar performance characteristics as R134A (which is a non-flammable hydrofluorocarbon blend), the primary refrigerant used today in heat pump water heaters. Because the future of refrigerant regulations remains uncertain at this time, in this NOPR, DOE has assumed the continued use of R134A for heat pump components. Hence, DOE has not screened out R134A in this analysis. DOE tentatively did not screen out R744 (CO 2 ) in this analysis because there is no clear evidence that this constitutes a unique-pathway proprietary technology, 28 as BWC appears to suggest. However, as discussed in the engineering analysis, DOE has not assumed the use of R744 systems in order to meet the efficiency levels analyzed for heat pump water heaters because DOE does not expect this to be the most likely design pathway that manufacturers would take. 28 R744 is also used in some water chiller systems developed by other manufacturers. C. Engineering Analysis The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of consumer water 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). As discussed in section IV.A.1 of this document, certain classes of consumer water heaters currently have UEF-based standards, while for others EPCA's EF-based standards apply. For this NOPR, DOE analyzed amended UEF standards for the product classes that currently have standards in terms of UEF. For the product classes with EF-based standards, DOE developed translated standards in terms of UEF for use in the analysis. In this NOPR, DOE has analyzed standards with respect to the effective storage volume metric, which is described in section III.B of this document. Compared to rated storage volume and FHR, effective storage volume is a superior descriptor of the thermal energy stored in the hot water of the water heater, which can be made immediately available for consumer use, for the following reasons. The rated storage volume does not account for additional energy that could be stored due to an increase in storage tank temperature. The FHR metric is similar to effective storage volume; however, the FHR test allows the water heater to be energized and actively heating the water; therefore, it is not an appropriate measure of the stored energy. There are two types of water heaters which can cause the system to store more energy than would be otherwise determined by the rated storage volume, as discussed in the June 2023 TP Final Rule: water heaters capable of operating with an elevated tank temperature, and circulating water heaters. In the June 2023 TP Final Rule, DOE established that compliance with the effective storage volume provisions (and, relatedly, high temperature testing method and testing with separate storage tanks for circulating water heaters) would not be required until compliance with amended standards. For circulating water heaters, the effective storage volume of the water heater is determined by the measured storage volume of the separate storage tank used in testing because these types of water heaters are designed to operate with a volume of stored water in the field. 88 FR 40406, 40461-40462. Section V.C.1 of this document discusses the proposed approach to consider efficiency determinations for water heaters tested using the high temperature testing method. In this NOPR, DOE has initially determined not to propose amended standards for gas-fired storage water heaters (55 gal 55 gal and ≤100 gal No amendments proposed. >100 gal Converting EF-based standards to UEF-based standards. Oil-fired Storage Water Heater ≤50 gal Amending UEF-based standards. >50 gal Converting EF-based standards to UEF-based standards. Electric Storage Water Heater 55 gal and ≤120 gal Amending UEF-based standards. >120 gal Converting EF-based standards to UEF-based standards. Tabletop Water Heater 50,000 Btu/h Amending UEF-based standards. ≥2 gal and ≤200,000 Btu/h Converting EF-based standards to UEF-based standards. Electric Instantaneous Water Heater (including Low-Temperature Water Heaters) 75 gal No amendments proposed. Gas-fired Circulating Water Heater ≤200,000 Btu/h Amending UEF-based standards to reflect updates to the test procedure. Oil-fired Circulating Water Heater ≤210,000 Btu/h Amending UEF-based standards to reflect updates to the test procedure. Electric Circulating Water Heater ≤12 kW; for heat pump type units ≤24 A at ≤250 V Amending UEF-based standards to reflect updates to the test procedure. 1. Product Classes With Current UEF-Based Standards For product classes where DOE has analyzed amended UEF-based standards, DOE conducted an efficiency level analysis and a manufacturing cost analysis to generate cost-efficiency relationships that reflect the industry average manufacturing costs associated with each efficiency level analyzed. The following paragraphs of this document summarize the methodology used in these steps. a. 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 the March 2022 Preliminary Analysis, DOE developed efficiency levels with a combination of the efficiency-level and design-option approaches. DOE conducted a market analysis of currently available models listed in DOE's Compliance Certification Database (“CCD”) to determine which efficiency levels were most representative of the current distribution of consumer water heaters available on the market. DOE also completed physical teardowns of commercially available units to determine which design options manufacturers may use to achieve certain efficiency levels for each water heater category analyzed. DOE requested comments from stakeholders and conducted interviews with manufacturers concerning these initial efficiency levels, which have been updated in this NOPR based on the feedback DOE received. The efficiency levels for storage water heater classes presented in the March 2022 Preliminary Analysis are linear equations of UEF as a function of rated storage volume, while for this NOPR DOE has analyzed efficiency levels for UEF that are a function of effective storage volume (with the exception of certain levels which were analyzed in response to the Joint Stakeholder Recommendation). For products with substantial storage volumes, the UEF is expected to decrease with higher volumes because standby losses ( i.e., energy lost from the stored water to the surroundings when the water heater is not actively heating water) are related to the temperature of the water stored and the size of the tank. 29 The efficiency levels analyzed in this rulemaking assume that the relationships between standby losses and storage volume for baseline products ( i.e., the slopes of the current standards equations) would remain consistent for higher efficiency levels. In other words, the higher efficiency levels are linear equations that are parallel to the current standards. The exception to this is for DOE's analysis of the Joint Stakeholder Recommendation, which included certain efficiency levels that were not specified as a function of storage volume (see Table III.1). 29 As discussed in section III.B of this document, the effective storage volume metric accounts for both temperature and tank size, whereas rated storage volume alone only accounts for tank size. In response to the efficiency levels presented in the March 2022 Preliminary Analysis, NYSERDA stated that reducing standards by rated storage volume is unnecessary and recommended that DOE's proposed standard levels either not change or increase by capacity, as it is more typical of appliance standards and there are models at larger volumes with higher UEFs. (NYSERDA, No. 35 at p. 6) NEEA, ACEEE, and NWPCC urged DOE to consider whether less stringent standards for gas-fired storage water heaters with larger storage volumes are justified, given that smaller gas-fired storage water heaters can meet similar FHRs. (NEEA, ACEEE, and NWPCC, No. 47 at p. 7) As discussed, larger storage water heaters are more susceptible to standby losses due to the increased surface area of the storage tank when compared to smaller storage water heaters with the same design options. Standards that stay the same do not account for this fact; DOE therefore maintained its current approach and analyzed efficiency levels that are equations that decrease linearly as effective storage volume increases for all levels except those suggested by the Joint Stakeholder Recommendation (because the Joint Stakeholder Recommendation explicitly suggested flat-line standards for electric storage water heaters). Further, DOE understands NYSERDA's reference to “capacity” to refer to delivery capacity of the water heater—which is either FHR or Maximum GPM. Draw patterns, which are described in section IV.A.1 of this document, are bins of delivery capacity ranging from very small to high delivery capacity. DOE's current standards already increase in stringency with draw pattern ( see 10 CFR 430.32(d)), and this increase in stringency was retained in the efficiency level analyses of the March 2022 Preliminary Analysis and this NOPR. In this NOPR, DOE has revised the efficiency levels analyzed in the March 2022 Preliminary Analysis for electric storage water heaters, gas-fired storage water heaters, and gas-fired instantaneous water heaters. The details of the efficiency level analysis are presented in chapter 5 of the NOPR TSD, and a summary of these updates is discussed here. For electric storage water heaters, DOE has included additional levels for heat pump water heaters based on the standard levels recommended in the Joint Stakeholder Recommendation. For gas-fired storage water heaters, DOE revised its max-tech efficiency levels after conducting an updated market assessment for the NOPR analysis. DOE has tentatively determined that it is possible for gas-fired storage water heaters to surpass the max-tech levels chosen in the March 2022 Preliminary Analysis. Thus, DOE selected revised max-tech efficiency levels for this NOPR based on new product certifications and confidential manufacturer feedback. For gas-fired instantaneous water heaters, DOE analyzed an additional efficiency level for this NOPR that was not evaluated in the March 2022 Preliminary Analysis. In the updated market assessment for this NOPR, DOE observed a greater number of models at the levels specified in the ENERGY STAR v5.0 specification 30 than at the time of the March 2022 Preliminary Analysis; thus, efficiency levels corresponding to the ENERGY STAR v5.0 specification were added. DOE also reduced its max-tech efficiency levels based on feedback from stakeholders and a review of the current market and technologies at the time of this NOPR analysis. 30 EPA's ENERGY STAR v5.0 specification is available online at: www.energystar.gov/sites/default/files/asset/document/ENERGY%20STAR%20Residential%20Water%20Heaters%20Version%205%20Specification%20and%20Partner%20Commitments.pdf (Last accessed on April 1, 2023). These changes to the efficiency levels are discussed in further detail in the sub-sections that follow. Baseline Efficiency 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/equipment 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. For this NOPR, the baseline efficiency levels for product classes with current UEF-based standards are equal to the current energy conservation standards (see Table II.1). Higher Efficiency Levels As part of DOE's analysis, the maximum available efficiency level is the highest efficiency unit currently available on the market. DOE also defines a “max-tech” efficiency level to represent the maximum possible efficiency for a given product. In the March 2022 Preliminary Analysis, the max-tech efficiency levels generally corresponded to the maximum available efficiency level on the market. DOE also analyzed multiple intermediate efficiency levels between the baseline and max-tech in order to develop the cost-efficiency relationship for each product class. Intermediate efficiency levels were chosen based on the market assessment where there were clear groupings in the market's efficiency distribution. In some cases, efficiency levels were observed for one draw pattern but not the others. In response to the March 2022 Preliminary Analysis, BWC requested DOE clarify how max-tech levels were determined for draw patterns where products do not yet exist. (BWC, No. 32 at p. 2) In this NOPR, DOE has constructed cost versus efficiency curves for the representative capacities and representative draw patterns which exist on the market today, as opposed to directly analyzing every possible draw pattern. However, DOE is proposing to increase stringency of standards for draw patterns where products do not currently exist in order to match the stringency of standards for draw patterns where products in the same category do exist, in the event that products become available with draw patterns not currently on the market. For these cases, DOE estimated these max-tech levels using existing relationships between efficiency levels observed in other draw patterns where products do exist. Products in different draw patterns are typically differentiated by rated storage volume and heating capacity (burner input rate, compressor capacity, or element wattage), and the design options used to improve UEF in one draw pattern can generally also be applied to water heaters of the same type in a different draw pattern. For the cases where products at additional intermediate efficiency levels were observed in the market at one draw pattern but not the others, DOE estimated efficiency levels in the other draw patterns based on what was observed for the one available draw pattern. The approach took into account how each product type's efficiency correlates to its delivery capacity ( i.e., either FHR or maximum GPM, the delivery capacity metrics assigned for non-flow-activated water heaters and flow-activated water heaters, respectively), recovery efficiency, and technological feasibility of design option implementation. A detailed discussion of efficiency level selection on a product-class by product-class basis is provided in chapter 5 of the NOPR TSD. The following paragraphs provide additional discussion of the comments received in response to the efficiency levels analyzed in the March 2022 Preliminary Analysis and any updates made to the NOPR efficiency level analysis to address stakeholder concerns. Interested parties provided comments on electric storage water heaters, gas-fired storage water heaters, and gas-fired instantaneous water heaters. i. Electric Storage Water Heaters The efficiency levels above the baseline that were analyzed in the March 2022 Preliminary Analysis are shown in Table IV.8. Table IV.8—March 2022 Preliminary Analysis Efficiency Levels for Electric Storage Water Heaters EL Draw pattern Very small Low Medium High Rated Storage Volume (V r ) Greater Than or Equal to 20 Gallons and Less Than or Equal to 55 Gallons 1 N/A 0.9381−0.0003 × V r 0.9390−0.0002 × V r 0.9450−0.0001 × V r 2 N/A 3.3048−0.0003 × V r 3.3590−0.0002 × V r 3.4742−0.0001 × V r 3 N/A 3.7048−0.0003 × V r 3.7590−0.0002 × V r 3.8742−0.0001 × V r V r Greater than 55 Gallons and Less Than or Equal to 120 Gallons 1 N/A N/A 3.4133−0.0011 × V r 3.5380−0.0011 × V r 2 N/A N/A 3.9633−0.0011 × V r 4.0880−0.0011 × V r EEI expressed concern that some UEF requirements analyzed in the March 2022 Preliminary Analysis are too high for electric resistance water heaters with rated storage volumes less than 55 gallons, stating that there is a large difference between EL 1 and EL 2 in the preliminary analysis and there may be many water heaters between these levels. (EEI, No. 31 at pp. 34-35) NEEA, ACEEE, and NWPCC urged DOE to create a new heat pump efficiency level between the preliminary analysis EL 2 and EL 3 for electric storage water heaters between 20 and 55 gallons, because many such models are currently available between these two efficiency levels. NEEA, ACEEE, and NWPCC specifically recommended a new efficiency level at a UEF of 3.50 for a representative storage volume of 45 gallons in the medium draw pattern. (NEEA, ACEEE, and NWPCC, No. 47 at p. 7) Then, as discussed in section III.F of this document, the Joint Stakeholders recommended that DOE analyze specific efficiency levels for electric storage water heaters, some of which were not evaluated for the preliminary analysis (at 2.0, 2.3, and 2.5 UEF depending on the draw pattern, storage volume and height). (Joint Stakeholders, No. 49 at p. 2) In this NOPR, DOE has revised EL 1 for electric storage water heaters with effective storage volumes between 20 and 55 gallons (excluding small electric storage water heaters). In the March 2022 Preliminary Analysis, EL 1 represented an incremental improvement in efficiency over the baseline through the implementation of increased insulation thickness to reduce standby losses. However, DOE received feedback from multiple sources indicating that increasing the thickness may not be practical in the manufacturing process because the R-value of polyurethane diminishes when the compound is blown into larger cavities, and the increase in thickness does not offset the increase in water heater surface area (which will increase standby losses). Thus, in this NOPR, DOE considered a different stringency for EL 1 for electric storage water heaters, which would be more representative of the next level up from baseline and would currently be met using heat pump technology. Specifically, DOE considered the efficiency level recommended in the Joint Stakeholder Recommendation as EL 1 for the NOPR, a UEF of 2.30. On July 18, 2022, EPA published a final draft of the ENERGY STAR v5.0 specifications for water heaters, which went into effect on April 18, 2023. The UEF requirements for ENERGY STAR v5.0 can only be met by heat pump technology. For integrated 240 V heat pump water heaters, the minimum UEF must be 3.30. This stringency generally corresponds to EL 2 in this NOPR analysis. For integrated 120 V heat pump water heaters and split-system heat pump water heaters, the minimum UEF must be 2.20, which is similar to the efficiency level recommended by the Joint Stakeholders. DOE is aware that ongoing State efforts to decarbonize heating appliances may lead to an increased demand for 120 V heat pump water heaters, which do not need a 240 V electrical connection in order to transition from a gas-fired storage water heater to an electric one. As indicated by comments from interested parties that are discussed in section IV.A.2 of this document, multiple manufacturers are developing 120 V heat pump water heaters, and these products are now close to becoming commercially-available. 31 However, as suggested by ENERGY STAR's less stringent requirement for 120 V and split-system heat pump water heaters, these types of heat pump water heaters may not be able to achieve the same efficiencies as 240 V integrated heat pump water heaters. Reasons for this are discussed further in chapter 3 of the TSD. In its updated market assessment, DOE observed that currently certified 120 V heat pump water heaters can meet the ENERGY STAR v5.0 criteria, and a UEF of 2.20 generally aligns with the lowest heat pump water heaters efficiencies available. DOE has tentatively determined that the efficiency levels proposed by the Joint Stakeholders would not prevent novel 120 V products from entering the market based on the UEF efficiencies these products are reported to attain in CCD and ENERGY STAR certification databases. 31 EPA's ENERGY STAR qualified product database includes listings for 120 V heat pump water heaters. This database can be accessed online at www.energystar.gov/productfinder/product/certified-water-heaters/results (Last accessed on Jan. 24, 2023). Therefore, the redefinition of EL 1 from an electric resistance efficiency level to a low-efficiency heat pump efficiency level reduces the difference in stringency between EL 1 and EL 2, which may address the concern raised by EEI. For small electric storage water heaters, limitations in split-system heat pump technology result in a lower max-tech efficiency level than for the non-small classes. DOE analyzed one efficiency level above the baseline (which is also the max-tech efficiency level) that corresponds to a UEF of 2.00. This efficiency level was suggested by the Joint Stakeholders. DOE verified that this level was representative of a split-system heat pump small electric storage water heater based on teardown data as well as market data on the performance of other heat pump water heaters on the market today (this is discussed further in chapter 5 of the TSD). In response to the comment by NEEA, ACEEE, and NWPCC, DOE has not been able to determine whether there are any substantial differences in design options for 45-gallon electric storage water heaters rated at 3.35 UEF versus 3.50 UEF. In this NOPR, DOE has tentatively determined that the use of an electronic expansion valve, electronically commutated fan motors (“ECM” fans), and appreciable increases in heat exchanger surface areas can allow the majority of the market to achieve a UEF of 3.35 for a 45-gallon product in the medium draw pattern and a UEF of 3.47 for a 55-gallon product in the high draw pattern. DOE seeks further information that would assist in potentially re-evaluating the stringency of EL 2, especially data regarding the technologies employed in 45-gallon medium draw pattern products at a UEF of 3.50. NEEA, ACEEE, and NWPCC reiterated that, in establishing the max-tech level, the statute does not require DOE to consider only technologies that are commercially available. Therefore, NEEA, ACEEE, and NWPCC recommended that DOE consider establishing a “heat pump-only” level, which would exclude the use of electric resistance elements, as max tech for heat pump water heaters. NEEA, ACEEE, and NWPCC added that the majority of heat pump water heaters already offer a “heat pump-only mode” and that this design change would improve in-field efficiency simply through the removal of the resistance element. (NEEA, ACEEE, and NWPCC, No. 47 at pp. 7-8) In response, DOE notes that its own test data indicate that heat pump water heaters with backup electric resistance elements typically do not use the elements during DOE's 24-hour simulated use test. Therefore, adding an efficiency level that corresponds to a “heat-pump only” design option as max tech would not be expected to change the UEF. AHRI and BWC requested that DOE specifically include “lowboy” 32 electric storage water heaters in addition to short and tall models in its analysis. (AHRI, No. 42 at p. 4; BWC, No. 32 at pp. 1-2) Rheem expressed concern that lowboy electric storage water heaters were not properly addressed and requested that DOE separately examine lowboy electric storage water heaters. Rheem specifically requested that DOE include low-income consumers in the consumer subgroup analysis with a focus on how the removal of lowboy water heaters through the standards process will affect this group. (Rheem, No. 45 at pp. 5-6) Rheem suggested DOE's provided shipping dimensions for short electric storage water heaters do not align with typical dimensions for lowboy water heaters in medium and high draw patterns for EL 2. Rheem added that, for the low draw pattern, however, the height and diameter DOE provided (when accounting for shipping materials) is within the range of typical dimensions for lowboy water heaters. (Rheem, No. 45 at p. 6) 32 Lowboy water heaters are electric storage water heaters which are typically under 36 inches tall, with fittings considered. Lowboy water heaters are suitable for an installation arrangement commonly found in apartments and condominiums. In order to store a volume of water that is similar to the volume of a non-lowboy water heater, lowboy water heaters typically have a much wider aspect ratio as compared to non-lowboy water heaters, while still maintaining diameters that can fit through standard doorways. In the March 2022 Preliminary Analysis, DOE did not analyze lowboy aspect ratios for every draw pattern. Instead, the approach focused on “tall” and “short” aspect ratios—where “short” aspect ratios included some lowboy water heaters but also other mid-height products. In this NOPR, DOE revised its analysis to consider lowboy water heaters as the representative design aspect ratio for small electric storage water heaters. DOE developed efficiency levels and manufacturer production costs (“MPCs”) to specifically reflect lowboy water heaters for that product class given the prevalence of these designs as small electric storage water heaters. (Chapter 3 and Appendix 3A to the NOPR TSD provides additional details on the market distribution of lowboy water heaters.) Rheem noted that f [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-15306. Public record. Not legal advice.