Energy Conservation Program for Consumer Products: Proposed Rulemaking Regarding Energy Conservation Standards for Refrigerators, Refrigerator-Freezers, and Freezers

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430

[Docket No. EE-RM-93-801]

Energy Conservation Program for Consumer Products: Proposed

Rulemaking Regarding Energy Conservation Standards for Refrigerators,

Refrigerator-Freezers, and Freezers

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of

Energy (DOE).

ACTION: Notice of Proposed Rulemaking and Public Hearing.

-----------------------------------------------------------------------

SUMMARY: The purpose of this notice of proposed rulemaking (NOPR) is to

provide interested persons an opportunity to comment on this proposal

amending the energy conservation standards for refrigerators,

refrigerator-freezers, and freezers, and to invite interested persons

to participate in the appliance energy conservation standards

rulemaking process.

DATES: Written comments on the proposed rule must be received by the

Department by October 3, 1995. The Department requests 10 copies of the

written comments and, if possible, a computer disk.

Oral views, data, and arguments may be presented at the public

hearing to be held in Washington, DC, on September 12 and 13, 1995.

Requests to speak at

[[Page 37389]]

the hearing must be received by the Department by 4 p.m., August 25,

1995. Ten copies of statements to be given at the public hearing must

be received by the Department by 4 p.m., September 1, 1995.

The hearing will begin at 9:30 a.m., on September 12 and 13, 1995,

and will be held at the U.S. Department of Energy, Forrestal Building,

Room 1E-245, 1000 Independence Avenue, SW., Washington, DC 20585. The

length of each presentation is limited to 20 minutes.

ADDRESSES: Written comments, oral statements, requests to speak at the

hearing and requests for speaker lists are to be submitted to:

Refrigerator Rulemaking (Docket No. EE-RM-93-801), U.S. Department of

Energy, Office of Codes and Standards, Appliance Division, EE-431, 1000

Independence Avenue, SW., Rm 1J-018, Washington, DC 20585, (202) 586-

7574.

Copies of the Technical Support Document: Energy Efficiency

Standards for Consumer Products: Refrigerators, Refrigerator-Freezers,

and Freezers (TSD) may be obtained from: U.S. Department of Energy,

Office of Codes and Standards, Appliance Division, EE-431, 1000

Independence Avenue, S.W., Rm 1J-018, Washington, D.C. 20585. (202)

586-9127.

Copies of the TSD, transcript of the public hearing and public

comments received may be read at the DOE Freedom of Information Reading

Room, U.S. Department of Energy, Forrestal Building, Room 1E-190, 1000

Independence Avenue, SW., Washington, DC 20585, (202) 586-6020 between

the hours of 9 a.m. and 4 p.m., Monday through Friday, except Federal

holidays. For more information concerning public participation in this

rulemaking proceeding see Section VI, ``Public Comment Procedures,'' of

this NOPR.

FOR FURTHER INFORMATION CONTACT:

Edward O. Pollock Jr., U.S. Department of Energy, Office of Energy

Efficiency and Renewable Energy, Forrestal Building, Mail Station EE-

431, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-

5778.

Eugene Margolis, Esq., U.S. Department of Energy, Office of General

Counsel, Forrestal Building, Mail Station GC-72, 1000 Independence

Avenue, SW., Washington, DC 20585, (202) 586-9507.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Authority

B. Background

II. General Discussion

A. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

B. Economic Justification

1. Economic Impact on Manufacturers and Consumers

2. Life-cycle Costs

3. Energy Savings

a. Determination of Savings

b. Significance of Savings

4. Lessening of Utility or Performance of Products

5. Impact of Lessening of Competition

6. Need of The Nation to Conserve Energy

7. Other Factors

C. Rebuttable Presumption

III. Discussion of Comments

A. General Analytical Comments

1. Discount Rates

a. Consumer Discount Rates

b. Manufacturer Discount Rate

c. Social Discount Rate

2. Appliance Lifetimes

3. Methodology

a. Lawrence Berkeley Laboratory Residential Energy Model

b. Lawrence Berkeley Laboratory Manufacturer Impact Model/

Government Impact Model

c. Demand Functions

d. Data Sources

4. Cost Pass-Through

5. Small Firms

6. Multiple Standards

7. External Costs and Benefits

8. Manufacturability

B. Product Specific Comments

1. Classes

a. Compacts

b. HCFC-Free

2. Design Options

3. Other Comments

a. Uncertainty Inherent in Data

b. Simulation Model

c. CFC Phaseout

4. Standards Proposed in the Joint Comments

(Table 1: Standards Proposed in the Joint Comments)

a. Full Sized Refrigerator-Freezers

b. Compact Refrigerator, Refrigerator-Freezers, and Freezers

c. Household Freezers

d. Manual/Partial Defrost Refrigerators and Refrigerator-

Freezers

e. Non-HCFC Products

IV. Analysis

A. Engineering-Technical Issues

1. Efficiency Levels Analyzed

(Table 2: Annual Energy Usage for Refrigerators,

Refrigerator-Freezers, and Freezers at Maximum Technologically

Feasible Levels and Table 3: Standard Levels Analyzed for

Refrigerators, Refrigerator-Freezers, and Freezers--Annual Energy

Use (kwh/yr))

2. Payback Period

(Table 4: Payback Periods of Design Options (Years) for

Representative Class of Refrigerator-Freezer)

3. Significance of Energy Savings

B. Economic Justification

1. Economic Impact on Manufacturers and Consumers

2. Life-cycle Cost and Net Present Value (NPV)

3. Energy Savings

4. Lessening of Utility or Performance of Products

5. Impact of Lessening of Competition

6. Need of the Nation to Save Energy

C. Conclusion

1. Product Classes

a. Compact Refrigerators, Refrigerator-Freezers and Freezers

b. HCFC-Free Refrigerators, Refrigerator-Freezers and

Freezers

2. Standards

a. Standards Level 4

b. Standards Level 3

c. Standards Level 2

d. Standards Level 1

3. Effective Dates

V. Environmental, Regulatory Impact, Takings Assessment, Federalism

and Regulatory Flexibility Reviews

A. Environmental Review

B. Regulatory Planning and Review

C. Regulatory Flexibility Review Act

D. Federalism Review

E. ``Takings'' Assessment Review

F. Paperwork Reduction Act Review

VI. Public Comment Procedures

A. Participation in Rulemaking

B. Written Comment Procedures

C. Public Hearing

1. Procedure for Submitting Requests to Speak

2. Conduct of Hearing

D. Issues for Comment

Appendices

I. Acronyms and Abbreviations

I. Introduction

A. Authority

Part B of Title III of the Energy Policy and Conservation Act

(EPCA), Pub. L. 94-163, as amended by the National Energy Conservation

Policy Act (NECPA), Pub. L. 95-619, by the National Appliance Energy

Conservation Act (NAECA), Pub. L. 100-12, by the National Appliance

Energy Conservation Amendments of 1988, Pub. L. 100-357, and by the

Energy Policy Act of 1992, Pub. L. 102-486,1 created the Energy

Conservation Program for Consumer Products other than Automobiles. The

consumer products subject to this program are called ``covered

products.'' The residential covered products are: Refrigerators,

refrigerator-freezers and freezers; dishwashers; clothes dryers; water

heaters; central air conditioners

[[Page 37390]]

and central air-conditioning heat pumps; furnaces; direct heating

equipment; television sets; kitchen ranges and ovens; clothes washers;

room air conditioners; and pool heaters. The Act specifies that other

consumer products may be classified as covered products by the

Secretary of Energy. To date, the Secretary has not so classified any

additional products.

\1\ Part B of Title III of the Energy Policy and Conservation

Act, as amended by the National Energy Conservation Policy Act, the

National Appliance Energy Conservation Act, the National Appliance

Energy Conservation Amendments of 1988 and the Energy Policy Act of

1992, is referred to in this notice as the ``Act.'' Part B of Title

III is codified at 42 U.S.C. 6291 et seq. Part B of Title III of the

Energy Policy and Conservation Act, as amended by the National

Energy Conservation Policy Act only, is referred to in this notice

as the National Energy Conservation Policy Act.

DOE published a final rule amending standards established by NAECA

for refrigerators, refrigerator-freezers, and freezers (refrigerator

products) on November 17, 1989 (hereinafter, referred to as the 1989

Final Rule). 54 FR 47916. The Act directs DOE to review the 1989 Final

Rule for possible amendment and to issue final rules based on that

review no later than November 17, 1994.

B. Background

As directed by the Act, DOE published an Advance Notice of Proposed

Rulemaking (hereinafter referred to as the 1993 Advance Notice)

proposing standards for refrigerator products, as well as other

products, on September 8, 1993. 58 FR 47326. The 1993 Advance Notice

presented the product classes that DOE planned to analyze, and provided

a detailed discussion of the analytical methodology and models that the

Department expected to use in doing the analysis to support this

rulemaking. The Department invited comments and data on the accuracy

and feasibility of the planned methodology and encouraged interested

persons to recommend improvements or alternatives to the approach taken

by DOE. The original comment period on the 1993 Advance Notice was

extended to February 7, 1994, in response to a request from the Gas

Appliance Manufacturers Association (GAMA), the Air-Conditioning and

Refrigeration Institute (ARI), and the Association of Home Appliance

Manufacturers (AHAM). 58 FR 59418 (November 9, 1993).

This NOPR addresses only the refrigerator products covered by the

1993 Advance Notice. The 1989 Final Rule divided the refrigerator

products into 10 classes based on various characteristics (e.g.,

freezer location). This NOPR proposes new classes for eight different

compact refrigerator configurations and 18 new classes for those

refrigerator products which are free of HCFCs. A complete list of the

proposed classes and the proposed standards for each class is found in

the table at the end of this NOPR.

The comments to the 1993 Advance Notice are addressed in Section

III below. The last comment to be received was the ``Joint Comments of

the Association of Home Appliance Manufacturers, the Natural Resources

Defense Council, the American Council for an Energy Efficient Economy,

the New York State Energy Office, the California Energy Commission,

Pacific Gas and Electric, and Southern California Edison Relating to

Energy Conservation Standards for Refrigerator/Freezers.'' (Hereinafter

referred to as the ``Joint Comments.'') 2 This group of

refrigerator manufacturers, electric utilities, and energy conservation

advocates, acting on its own initiative, negotiated intensively for 2

years to develop a common recommendation for an energy conservation

standard that meets the NAECA requirements for refrigerators,

refrigerator-freezers and freezers. Although DOE neither organized nor

was a member of the group, DOE responded to group requests to send DOE

staff observers to some meetings and to make available its contractors

to perform data processing. Without prior commitment to accept the

negotiated conclusions, the Department has been receptive to this group

effort to reach agreement among representatives of industry, consumers

and environmentalists. The resulting joint comments have been very

valuable to the Department's review of this issue. The Joint Comments

contains important data and analyses for the Department to consider,

and realistic recommendations.

\2\ The Department considered the Joint Comments to supersede

earlier comments by the listed parties regarding issues subsequently

discussed in the Joint Comments.

---------------------------------------------------------------------------

II. General Discussion

A. Technological Feasibility

1. General. For those products and classes of products discussed in

today's NOPR, DOE believes that the efficiency levels analyzed, while

not necessarily being realized in current production, are

technologically possible. The technological feasibility of the design

options is addressed in the product-specific discussion. The criteria

used by the Department for evaluating design options for technological

feasibility are that the design options are already in use by the

industry, or that research has progressed to the likely development of

a prototype.

a. Maximum Technologically Feasible Levels. The Act requires the

Department, in considering any new or amended standard, to consider the

standard that is ``designed to achieve the maximum improvement in

energy efficiency which the Secretary determines is technologically

feasible and economically justified.'' EPCA, section 325(o)(2)(A), 42

U.S.C. 6295(o)(2)(A). Accordingly, for each class of product under

consideration in this rulemaking, a maximum technologically feasible

design option (``max tech'') was identified. The max tech level is one

that can be achieved by the addition of energy conserving design

options to the baseline units.3 DOE believes that in identifying

the max tech level a unit can be assembled, but not necessarily

manufactured, by the effective date of the amended standards. The

ability to manufacture is considered under the economic justification

analysis. For example, in the 1989 Final Rule, DOE concluded that

evacuated panels for refrigerators were a technically feasible design

option because refrigerators had been produced on a limited scale with

this technology. However, DOE concluded that this technology was not

economically justified because the chemical industry probably could not

provide sufficient quantities of the necessary raw materials by the

effective date of the standard.

\3\ The baseline unit is the most commonly used combination of

engineering design options which are found in appliances that meet

the existing standards.

---------------------------------------------------------------------------

The max tech levels were derived by adding energy-conserving

engineering design options for each of the respective classes in order

of decreasing consumer payback. A brief discussion of the max tech

level for each class analyzed is found in the ``Analysis'' section of

this NOPR. A complete discussion of each max tech level, and the design

options included in each, is found in the Engineering Analysis. (See

TSD, Chapter 3.)

B. Economic Justification

The Act provides seven factors to be evaluated in determining

whether a conservation standard is economically justified. EPCA,

section 325(o)(2)(B)(i), 42 U.S.C. 6295(o)(2)(B)(i).

1. Economic Impact on Manufacturers and Consumers. The engineering

analysis identified options for improvement in efficiency along with

the associated costs to manufacturers for each class of product. For

each design option, these costs constitute the increased per-unit cost

to manufacturers to achieve the indicated energy efficiency levels.

Manufacturer, wholesaler, and retailer markups will result in a

consumer purchase price higher than the manufacturer cost.

To assess the likely impacts of standards on manufacturers, and to

determine the effects of standards on different-sized firms, the

Department used a computer model that simulates

[[Page 37391]]

hypothetical firms in the industry under consideration. This model, the

Manufacturer Analysis Model (MAM), is explained in the TSD. (See TSD,

Appendix C.) The Manufacturer Analysis Model consists of version 1.2,

dated March 1, 1993, of the Government Regulatory Impact Model (GRIM)

which has been integrated into the earlier Lawrence Berkeley Laboratory

(LBL) Manufacturer Impact Model (LBL-MIM). The GRIM model was developed

by Arthur D. Little Consulting Company (ADL) under contract to AHAM,

GAMA, and ARI. It provides a broad array of outputs, including

shipments, price, revenue, net income, and short- and long-run returns

on equity. An ``Output Table'' lists values for all these outputs in

the base case and in each of the standards cases under consideration.

It also gives a range for each of these estimates. The base case

represents the forecasts of outputs without new or amended standards. A

``Sensitivity Chart'' (TSD, Appendix C) shows how returns on equity

would be affected by a change in any one of the nine control variables

of the model.

For consumers, measures of economic impact are the changes in

purchase price and annual energy expense. The purchase price and energy

expense, i.e., life-cycle cost, of each standard level are presented in

Chapter 4 of the TSD. Under section 325 of EPCA, the life-cycle cost

analysis is a separate factor to be considered in determining economic

justification.

2. Life-cycle Costs. One measure of the effect of proposed

standards on consumers is the change in operating expense and purchase

price resulting from the new standards. For the average consumer, this

is quantified by the difference in the life-cycle costs between the

base and standards cases for the refrigerator classes analyzed. The

life-cycle cost is the sum of the purchase price and the operating

expense, including installation and maintenance expenditures,

discounted over the lifetime of the appliance.

The life-cycle cost was calculated for the range of efficiencies in

the Engineering Analysis for each class in the year standards are

imposed, using a real consumer discount rate of 6 percent. The purchase

price is based on the factory costs in the Engineering Analysis and

includes a factory markup plus a distributor and retailer markup.

Energy price forecasts are taken from the 1994 Annual Energy Outlook of

the Energy Information Administration. (DOE/EIA-0383(94)). In the

analysis for the final rule, energy price forecasts included in the

most recent Annual Energy Outlook will be used. Appliance usage inputs

are taken from the relevant test procedures.

3. Energy Savings. The Act requires DOE to consider the total

projected energy savings that result from revised standards. The

Department used the LBL Residential Energy Model (LBL-REM) results in

its consideration of total projected savings. The savings for

refrigerators, refrigerator-freezers and freezers are provided in the

``Analysis'' section of this NOPR, supra.

a. Determination of Savings. The Department forecasts energy

consumption by using the LBL-REM, which forecasts energy consumption

over the period of analysis for candidate standards and the base case.

The Department quantified the energy savings that would be attributable

to a standard as the difference in energy consumption between the

candidate standard and the base case.

The Lawrence Berkeley Laboratory Residential Energy Model was used

by DOE in previous standards rulemakings. (See TSD, Appendix B for a

detailed discussion of the LBL-REM.) The LBL-REM contains algorithms to

project average efficiencies, usage behavior, and market shares for

each product. Long-term market share elasticities have been assumed

with respect to equipment price, operating expense, and income. The

effects of standards are expected to be lower operating expense and

increased equipment price. The percentage changes in these quantities

and the elasticities are used to determine changes in sales volumes

resulting from standards. Higher equipment prices will decrease, and

lower operating expenses will increase sales volumes. The net result

depends on the standard level selected and its associated equipment

prices and operating expenses.

The Lawrence Berkeley Laboratory Residential Energy Model is used

to project energy use over the relevant periods for refrigerator

products with and without amended standards. The Department estimated

the projected energy savings during the period 1998-2030 4, by

comparing the energy consumption projections at alternative standard

levels against the projections at current standards which is the base

case. The energy saved is expressed in quads, i.e., quadrillions of

British thermal units (Btu), and exajoules (EJ). With respect to

electricity, the savings are quads of source or primary energy, which

is the energy necessary to generate and transmit electricity. From data

that remain rather constant over the years, the amount of electrical

energy consumed at the site is less than one-third of the amount of

source energy required to generate and transmit the electrical energy

to the site.5

\4\ The Lawrence Berkeley Laboratory Residential Energy Model

was programmed to analyze a single standard level or alternate

standard levels over the entire period. That is, the fact that a

standard might be revised during subsequent rulemakings was not

considered by the model. The Department believes that it is not

possible to predict what result such reviews may have, and therefore

it would be speculative to model any particular result. Therefore,

for purposes of this rulemaking, each standard level that was

analyzed was projected to have been in place from the time of

implementation to the year 2030.

\5\ Energy Information Administration, Electric Power Annual

1987, Tables 25 and 82, DOE/EIA-0348(87), 1987.

---------------------------------------------------------------------------

The Lawrence Berkeley Laboratory Residential Energy Model

projections are dependent on many assumptions. Among the most important

are the responsiveness of household appliance purchasers to changes in

residential energy prices and consumer income, future energy prices,

future levels of housing construction, and options that exist for

improving the energy efficiency of appliances.

b. Significance of Savings. Under section 325(o)(3)(B) of the Act,

42 U.S.C. 6295(o)(3)(B), the Department is prohibited from adopting a

standard for a product if that standard would not result in

``significant conservation of energy.'' While the term ``significant''

is not defined in the Act, the U.S. Court of Appeals concluded that

Congress intended the word ``significant'' to mean ``non-trivial.''

Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373

(D.C. Cir. 1985).

4. Lessening of Utility or Performance of Products. In establishing

classes of products and design options, the Department tried to

eliminate any degradation of utility or performance in the products

under consideration in this rulemaking. That is, to the extent that

comments or research showed that a product included a utility or

performance-related feature that affected energy efficiency, a separate

class with a different efficiency standard was created for that

product. In this way, the Department attempted to minimize any

lessening of utility or performance resulting from amended standards.

5. Impact of Lessening of Competition. The Act directs the

Department to consider any lessening of competition that is likely to

result from the standards. It further directs the Attorney General to

gauge the impact, if any, of any lessening of competition.

To assist the Attorney General in making such a determination, the

Department studied the affected appliance industries to determine their

[[Page 37392]]

existing concentrations, levels of competitiveness, and financial

performances. This information will be sent to the Attorney General.

(See TSD, Chapter 6.) The Department also will give the Attorney

General copies of this NOPR and the TSD for review.

6. Need of the Nation to Conserve Energy. The estimated energy

security and environmental effects from each standard level for each

class is reported under this factor in the Product Specific Discussion

(Section IV. B. 6) of this NOPR.

7. Other Factors. This provision allows the Secretary of Energy, in

determining whether a standard is economically justified, to consider

any other factors that the Secretary deems to be relevant.

Each efficiency level was evaluated according to the economic

justification factors specified in the Act to determine economic

justification. The Department rejected energy conservation standards

for which the burdens outweighed the benefits (e.g., savings in

operating costs were outweighed by significant increases in first costs

and substantially adverse effects on manufacturers' returns on equity).

C. Rebuttable Presumption

Section 325(o)(2)(B)(iii) of EPCA, 42 U.S.C. 6925 (o)(2)(B)(iii),

states:

If the Secretary finds that the additional cost to the consumer

of purchasing a product complying with an energy conservation

standard level will be less than three times the value of the energy

savings during the first year that the consumer will receive as a

result of the standard, as calculated under the applicable test

procedure, there shall be a rebuttable presumption that such

standard level is economically justified. A determination by the

Secretary that such criterion is not met shall not be taken into

consideration in the Secretary's determination of whether a standard

is economically justified.

If the increase in initial price of an appliance due to a

conservation standard would repay itself to the consumer in energy

savings in less than 3 years, then it is presumed that such standard is

economically justified.6 This presumption of economic

justification can be rebutted upon a proper showing.

\6\ For this calculation, the Department calculated cost-of-

operation based on the DOE test procedures. Therefore, the consumer

is assumed to be an ``average'' consumer as defined by the DOE test

procedures. Consumers that use the products less than the test

procedure assumes will experience a longer payback while those that

use them more than the test procedure assumes will have a shorter

payback.

---------------------------------------------------------------------------

III. Discussion of Comments

The Department received 49 written comments in response to the 1993

Advance Notice.7 This section addresses the general analytical

issues raised by the comments, and then addresses the product-specific

issues.

\7\ Comments on the ANOPR have been assigned docket numbers and

have been numbered consecutively.

---------------------------------------------------------------------------

A. General Analytical Comments

1. Discount Rates. The proposals of the Department concerning the

appropriate discount rates to use in the analysis of the standards drew

more comments than any other issue.

In view of the apparent differences in the cost of financing,

average rate of return on investments and the time value of money among

various categories of consumers, and between consumers, manufacturers

and society as a whole, the Department proposed to use different

discount rates for the consumer life-cycle cost analysis, the

manufacturer impact analysis, and net national benefits calculation,

with sensitivity analyses designed to describe the range of impact.

Based on the comments received, the Department has made some

modifications in this proposal, but has retained the specification of

different discount rates for different types of impact analyses and the

use of sensitivity analyses.

a. Consumer Discount Rate. In the 1989 Final Rule, DOE used a 7

percent discount rate, based on the range of real financing rates

experienced by consumers. At the time, rates ranged from less than 1

percent to slightly more than 15 percent. DOE selected 7 percent

because it was near the midpoint of the potential consumer discount

rates.

In its comments on the Advance Notice of Proposed Rulemaking on

Energy Conservation Standards for Nine Products (55 FR 39624, 39631,

September 28, 1990), Whirlpool Corporation (Whirlpool) offered

estimates of the percentages of appliance purchasers that used

different types of financing: 40 percent of retail purchasers pay in

cash; 35 percent use credit cards; 25 percent use retailer loans. These

figures excluded new home construction, which accounts for

approximately 25 percent of Whirlpool's total sales. (Whirlpool, No. 31

at 1-2).

These percentage shares were used to weight the different real

finance rates experienced by consumers: Just over 3 percent for

appliances purchased as part of a new home (whose finance rate is a

tax-deductible mortgage interest rate), to slightly less than 1 percent

for cash purchases, to more than 15 percent for credit card purchases.

As a result, the weighted-average, real finance rate experienced by

consumers was estimated to be 6 percent. In the 1993 Advance Notice to

this proposed rulemaking, the Department stated that it believed that

the average consumer rate was between 4 and 10 percent and that it

intended to perform sensitivity analyses using this range. DOE

specifically solicited comments on a range of issues concerning

consumer discount rates: Including the usefulness of the Whirlpool

data, the methods used to finance retail purchases, the possible use of

data on rates of return required by consumers, the possible use of data

on the implicit discount rates revealed by consumer purchasing

decisions, and the extent to which the special requirements of low-

income consumers should be taken into account.

The American Council for an Energy Efficient Economy (ACEEE)

supported this weighted-average approach using the Whirlpool data.

However, ACEEE and the Natural Resources Defense Council (NRDC) both

stated that consumer discount rates based upon how appliances are

actually purchased may represent constrained choices or choices of

convenience; for example, consumers who pay off credit card balances

early, or default on their payments, are not counted correctly. (ACEEE,

No. 50 at 1, 2 and NRDC, No. 18 at 24).

The American Council for an Energy Efficient Economy also stated

that higher discount rates should not be used for low-income

households. Low-income households are particularly prone to market

failures (e.g., many low-income households live in rental housing where

landlords purchase the refrigerator-freezers, and tenants pay the

operating costs) but receive benefits equal to those for all other

households from higher standards. (ACEEE, No. 50 at 1, 2).

The Edison Electric Institute (EEI) argued that implicit discount

rates estimated through an examination of actual consumer purchases of

appliances and related consumer equipment is the most appropriate basis

for the consumer discount rate used under this program. (EEI, No. 35 at

4). On the other hand, NRDC and ACEEE supported the Department proposal

not to use implicit discount rates in the analysis of the cost-

effectiveness of potential minimum efficiency standards. (ACEEE, No. 50

at 1,2, and NRDC, No. 8 at 24).

DOE has further investigated various indicators of the opportunity

costs that consumers purchasing appliances might experience. For

example, the average real rate of return on residential property during

the 1980s varied

[[Page 37393]]

between 3.6 and 4.5 percent annually. The annual real rate of return

(nonfinancial) on corporate stocks during this period varied from 5.9

to 8.8 percent, but was generally less than this for nearly all other

forms of investment readily available to consumers. DOE believes such

opportunity costs are relevant indicators of the appropriate discount

rates for consumers with significant personal savings or investments.

For consumers with little or no personal savings, DOE believes that

the costs of credit-card financing and the willingness of consumers to

forego current consumption in favor of future savings should be taken

into account. According to the data derived from a 1992 Survey of

Consumer Finances performed by the National Opinion Research Center for

the Federal Reserve Bank, 30 percent of all U.S. households have less

than $500 in savings, checking and money market accounts, or have no

such account. Also, according to the survey, 13 percent of all U.S.

households have a net worth of less than $1000. These two survey

results suggest that many households may be forced, because of their

financial circumstances, to finance any increased appliance costs

resulting from efficiency standards through credit cards or other high

interest sources of financing, or by reducing (or postponing) their

current consumption of goods and services. Limited empirical research

8 suggests that low-income households exhibit higher-than-average

discount rates (i.e., required rates of return or time values of money)

across all of their time-sensitive decisions, including (but not

limited to) their appliance purchases. Real credit-card financing rates

remain above 10 percent for most consumers.

\8\ Train, Kenneth, Discount Rates in Consumers' Energy-Related

Decisions: A Review of the Literature; Energy, December 1985.

---------------------------------------------------------------------------

The Department continues to believe that appropriately weighted,

real financing rates are a useful indicator of consumer discount rates,

although it recognizes that there are considerable limitations to the

data concerning consumer financing provided by Whirlpool.

Regarding implicit discount rates, various studies have shown that

they range from as low as 3 percent to as high as 100 percent (or more)

for certain appliances. However, because implicit discount rates are

based on actual consumer purchase behavior, they also reflect the

extent to which there are market failures, such as inadequate

information, conflicting owner/renter incentives, and second party

(builder/contractor) purchases that inhibit consumers from making

energy efficiency investments they would otherwise consider to be

worthwhile. One major reason Federal appliance efficiency standards

were originally established was to overcome these market failures

regarding investment in energy efficiency.

For these reasons, DOE does not believe unadjusted (i.e., not

corrected for potential biases) discount rates derived from actual

consumer behavior should be used in evaluating the economic impact of

proposed standards on consumers. DOE believes the intent of the

legislation that established the appliance standards program is to

achieve energy savings which are being foregone because of market

failures that hinder or discourage consumer investments in energy

efficiency. This conclusion is supported by the findings of the

District Court in Natural Resources Defense Council v. Herrington, 768

F. 2d 1355, 1406-07 (D.C. Cir. 1985), where the court stated that ``the

entire point of a mandatory program was to change consumer behavior''

and ``the fact that consumers demand short payback periods was itself a

major cause of the market failure that Congress hoped to correct.''

Based on the comments received and the further investigation of

issues raised in the Notice of Proposed Rulemaking on Energy

Conservation Standards for Eight Products (59 FR 10464, 10532, March 4,

1994), the Department has concluded that a 6 percent discount rate is

an appropriate mid-range estimate of the ranges of real financing

rates, opportunity costs and time values of money experienced or

exhibited by residential consumers. However, because of the

considerable variability among different categories of consumers, the

Department intends to place increased emphasis on assessing the

sensitivity of the life-cycle cost analyses to the use of low (2

percent) and high (15 percent) discount rates.

b. Manufacturer Discount Rate. The real discount rate used to

assess the impacts of the proposed refrigerator standards on

manufacturers is 12 percent. It is the discount rate used to calculate

the net present value of the series of estimated net cash flows

expected to be experienced by industry, as calculated by the GRIM

module of the MAM.

The Manufacturer Analysis Model also uses a ``market discount

rate'' for forecasting the impact of standards on future appliance

sales, as distinct from the 12 percent rate used to calculate industry

net present values. This implicit market rate is a higher rate derived

from empirical analysis of historical efficiency choice decisions, and

is used as an indicator of the extent to which consumers implicitly

value operating costs compared with first costs.

c. Social Discount Rate. In identifying a discount rate that is

appropriate for use in calculating benefits to the Nation as a whole,

the Department considered the opportunity costs of devoting more

economic resources to the production and purchase of more energy-

efficient appliances and fewer national resources to other types of

investment. Since differentiating among specific classes of consumers

or businesses is not necessary, the Department considered a broad

measure of the average rates of return earned by economic investment

throughout the U.S. to be an appropriate basis for the social discount

rate.

Using this approach, the Office of Management and Budget (OMB)

prepared a Background on OMB's Discount Rate Guidance in November of

1992, containing an analysis of the average annual real rate of return

earned on investments made since 1960 in nonfinancial corporations,

noncorporate farm and nonfarm proprietorships, and owner-occupied

housing in the U.S. The results of this analysis showed that since

1980, the annual real rate of return for these categories of

investments averaged slightly more than 7 percent, ranging from a low

of about 4 percent for owner-occupied housing (which represented about

43 percent of total capital assets in 1991 of about $15 trillion) to a

high of about 9 percent on noncorporate farm and nonfarm capital (which

represented about 23 percent of the total). Between 1960 and 1980, the

average real rate of return on capital was higher, averaging about 8.5

percent in the 1970s and about 11.2 percent in the 1960s. Because of

this analysis, OMB chose to designate 7 percent as the social discount

rate specified in revisions to OMB Circular A-94 issued on November 10,

1992, 57 FR 53519.

Because the Department believes the methods and data used by OMB to

develop this guidance are appropriate bases for a social discount rate,

the 1993 Advance Notice to this proposed rule said that it was the

intent of the Department to use 7 percent as the discount rate in the

calculation of the net national benefits and costs of the proposed

standards.

The New York State Energy Office (NYSEO) stated that the average

rate of 7 percent for the societal perspective is too high and

suggested an average rate of 3 to 4 percent real, based upon current

30-year U.S. Treasury bond interest rates. (NYSEO, No. 26 at 17-19).

[[Page 37394]]

The Natural Resources Defense Council stated that, in principle,

societal discount rates should be lower than consumer discount rates,

but that it cannot quantify the difference. It also stated real

discount rates should be based upon long-term (hundred-year) averages,

which are in the range of 0 to 5 percent. (NRDC, No. 18 at 11).

Because the proposed appliance efficiency standards will primarily

affect private, rather than public, investment, the Department

continues to believe that using the average real rate of return on

private investment as the basis for the social discount rate is most

appropriate. If the primary impact of the standards were on Federal or

other public expenditures, DOE agrees that real interest rates on long

term government securities would likely be a better basis.

The Department disagrees with the contention that the average

social discount rate should necessarily be lower than the average

consumer discount rates, although it agrees that social rates are often

lower than those experienced by many consumers and businesses. The

increased risk faced by individual consumers or businesses is one

reason many believe social discount rates should be lower. The

Department believes that taking into account such variation in risk in

determining the appropriate social, consumer, or other discount rate is

inappropriate.

For these reasons, DOE proposes to continue to use a 7 percent

social discount rate in national net present value calculations. The

Department has performed sensitivity analyses at 4 and 10 percent and

finds that while the social discount rate used has a significant impact

on the estimated national net present value, there are only small

differences in the national net present value for each of the trial

standard levels being considered at any one of the three social

discount rates evaluated.

2. Appliance Lifetimes. Three comments discussed product lifetimes.

Maytag stated that the lifetime for refrigerator products should be 15

years, based on a National Family Opinion survey of first owners

carried out by AHAM. (Maytag, Transcript at 328). AHAM provided a

survey showing that lifetimes of refrigerator products at replacement

are shorter than previously assumed by the Department. (AHAM, No. 17 at

32). NRDC believes that savings should be estimated throughout the

lifetime of the appliance, not over the period that the first owner

keeps the appliance. (NRDC, No. 18 at 40).

The Act provides that the savings should be estimated throughout

the average lifetime of the appliance, not the time the first owner

keeps the appliance. EPCA, section 325(o)(2)(B)(i)(II), 42 U.S.C.

6295(o)(2)(B)(i)(II). The Department decided to retain the 19-year

baseline for refrigerators and refrigerator-freezers, based on its

study of saturations and purchases of new household refrigerators and

refrigerator-freezers. The 19-year lifetime of refrigerator-freezers is

consistent with observed purchases in the marketplace since 1980. For

compacts, the Department is using the industry-supplied value of 11

years since no other data are available.

3. Methodology.

a. Lawrence Berkeley Laboratory Residential Energy Model. The

Association of Home Appliance Manufacturers criticized the LBL-REM as

theoretical and based upon obsolete (1970s) data. It further stated no

model does an adequate job of forecasting the price-volume effects

leading to a payback analysis. In particular, AHAM commented that

demand in the current LBL-REM refrigerator products equations does not

appear to drop fast enough with increasing prices to meet the test of

real world experience and therefore LBL-REM should not be used to

compute demand functions. It commented that more accurate results are

generated by recent empirical data rather than by theories about the

effects of regulations on demand. (AHAM, No. 17 at 22).

The Department believes that individual manufacturers observe

greater price sensitivity because they are analyzing shifts among

manufacturers, rather than a response of the entire market (total

national sales) to a market-wide price change due to standards. The

forecasting methodology used in LBL-REM has been validated by

comparison with historical shipments over the 1981-1993 time period.

b. Lawrence Berkeley Laboratory Manufacturer Impact Model/

Government Regulatory Impact Model. Most of the comments recommended

that the Department adopt the GRIM cash-flow model. A comparison of

GRIM and LBL-MIM, using LBL-MIM price and quantity data, has been

conducted by DOE, and the results show that differences between these

two models are small enough to be inconsequential in almost all cases.

GRIM has been incorporated into LBL-MIM to calculate the impact of

standards on industry net present values.

Arthur D. Little, Inc. submitted comments for three major industry

trade associations: AHAM, ARI, and GAMA. Arthur D. Little, Inc. stated

``there is no generally acceptable approach for forecasting annual

shipments and prices of products using quantitative models.'' Further,

ADL said that forecasting the annual shipments and prices of products

is a difficult task, but there are basic principles for addressing the

issue. (ADL, No. 19 at 3).

In order to be useful, models analyzing industry impacts must

forecast shipments and prices. While ADL may not consider any of these

approaches generally acceptable, DOE is in favor of using a

quantitative method rather than a subjective approach.

c. Demand Functions. Arthur D. Little, Inc. commented that the

Department analyses use demand functions limited to consumer demand as

a function of price, payback period, and consumer income, while

omitting nonfinancial considerations (such as utility to consumers).

(ADL, No. 19 at 3).

The Department assumes there is no difference in consumer utility

between the various design options used to meet different trial

standards levels. This is intentional because the Act does not allow

the setting of a standard that diminishes consumer utility. EPCA,

section 325(o)(2)(B)(i)(IV), 42 U.S.C. 6295(o)(2)(B)(i)(IV). It is an

issue analyzed and initially determined by the engineering analysis

before its consideration as part of a standard level. This issue is

further addressed in the discussion of the various design options

considered found later in this NOPR.

d. Data Sources. Arthur D. Little, Inc. commented that the

empirical data relating to price and consumer demand (i.e., price

elasticities of demand) were estimated in the 1970s, before ``major

changes in the actual marketplace'' and, therefore, are not reliable.

(ADL, No. 19 at 4). The Association of Home Appliance Manufacturers

stated that DOE should develop an acceptable approach to demand

elasticity because ``neither LBL-REM nor LBL-MIM are acceptable as

predictors of volume and price elasticities.'' (AHAM, No. 17 at 35).

The Lawrence Berkeley Laboratory Residential Energy Model is not a

source of volume or price elasticity. The elasticities used in the LBL-

MIM were originally estimated by the LBL-REM based on data and results

estimated in the 1970s by Oak Ridge National Laboratory (ORNL).\9\ They

have been subsequently revised based on historical shipments or other

relevant information where available. DOE agrees that it

[[Page 37395]]

would be useful to have updated data for estimating elasticities and

any other information which explains major changes in the marketplace.

DOE notes that GRIM does not use such elasticities. The Department

encourages AHAM, ADL, or other parties to provide evidence about

whether the elasticities used in the analysis are reasonable, and how

they may obtain more accurate elasticities.

\9\ The original Oak Ridge National Laboratory data is

documented in Consumer Products Efficiency Standards Economic

Analysis Document, U.S. Department of Energy, DOE/CE-0029, March

1982.

---------------------------------------------------------------------------

4. Cost Pass-Through. Several comments, including ADL, AHAM, Amana

Corporation (Amana), and General Electric Appliances (GEA), raise

issues regarding cost pass-through and the relationship between cost

and price. According to ADL, manufacturers have not passed through a

significant portion of their costs as evidenced by the Consumer and

Producer Price Indices, which show that prices have risen by less than

the increase in costs. This means that firms have reduced operating

costs rather than increase costs to consumers. Therefore any model that

assumes or concludes that firms can pass on costs with any reasonable

probability is ``not acceptable and inconsistent with observed

behavior.'' (ADL, No. 19 at 4-5).

The Gas Appliance Manufacturers Association stated that DOE should

not assume that all equipment cost increases can be passed through to

the consumer, partly as a result of the option of deferring purchases

and repairing existing equipment. (GAMA. No. 28 at 3).

The Association of Home Appliance Manufacturers noted that

historically the price of appliances has risen much more slowly than

the price of some production inputs. They concluded that this

observation shows an inability of firms to pass on cost increases.

(AHAM, No. 17 at 6).

The relevant issue regarding cost pass-through is how appliance

prices have risen relative to the increased costs of all manufacturer

inputs. A more plausible explanation of why passing on their costs has

been increasingly difficult for firms is because of the rise of

monopsony power on the purchasing side of the market as AHAM has noted

in earlier comments.\10\ The growth of large and sophisticated

``power'' retailers that have significant and increasing power in the

marketplace has resulted in increased downward price pressure on

manufacturers.

\10\ See Written Comments of the AHAM to the DOE on Energy

Conservation Program for Consumer Products: ANOPR on Energy

Conservation Standards for Room Air Conditioners and Kitchen Ranges

and Ovens, Docket No. CE-RM-90-201, dated December 12, 1990, by the

AHAM, pp. 67-68; and Statement of the AHAM to the DOE on the NOPR on

Energy Efficiency Standards for Dishwashers, Clothes Washers, and

Clothes Dryers, CE-RM-88-101, also by AHAM, dated October 10, 1989.

---------------------------------------------------------------------------

5. Small Firms. Several commenters stated that DOE needs to be

concerned about the impacts of standards on small manufacturers.

General Electric Appliances wrote that an analysis using an ``average''

firm may not show the impacts of standards on small firms or on

industry concentration. (GEA, No. 39 at 21).

PVI Industries commented that ``a smaller company, with lower

volume, may be affected very differently from a larger, higher volume

producer. In particular, the smaller company can probably implement

significant design changes more quickly and at much lower cost because

of lower volume production and less automation. Therefore, the GRIM

model may not suitably reflect the financial impact of a change across

the broad spectrum of appliance manufacturers.'' (PVI Industries, No.

43 at 1).

The Department is interested in the impact of standards on the

different types of firms in the industry. The Department is aware that

the compact refrigerator industry has cost functions that are much

different than the full-size product manufacturers, and partly for this

reason, DOE is proposing less stringent standards for compact

refrigerator products than for full-sized refrigerator products.

6. Multiple Standards. Three comments, from AHAM, Amana, and GEA,

raised the issue of the cumulative costs of multiple regulations.

(AHAM, No. 17 at 7, Amana, No. 21 at 2, and GEA, No. 39 at 3). They

stated that the Department needs to consider and analyze the cumulative

costs of multiple regulations on industry. Some of these costs include

chlorofluorocarbon (CFC) phaseout, successive efficiency standards, and

demands on human and financial resources. General Electric Appliances

suggested the use of the GRIM because it includes a module that

analyzes the cumulative effects of multiple regulations. (GEA, No. 39

at 21-2).

The Department has considered the impact of costs due to

regulations concerning the phaseout of CFC and HCFC materials. The

Manufacturer Analysis Model is designed to analyze the impact of

standards on industry profitability for an individual appliance. To

date, this has involved treating each manufacturer of a subject product

as a separate company. Recognizing, however, that many manufacturers

produce more than one appliance type subject to appliance standards and

the companies have limited resources, the Department is presently

seeking approaches to account for the cumulative effects on a multi-

product company of the appliance conservation standards that it

promulgates, and requests comments in this regard. Such an analysis

will require both a manageable analytical method and relevant cost

data.

7. External Costs and Benefits. A number of comments on the ANOPR

urged the Department to consider external costs and benefits in its

economic analyses of the efficiency standards proposed in this NOPR.

(ACEEE, No. 50 at 2; Gas Research Institute (GRI), No.10 in Appendix H

at 6; NRDC, No. 18 at 28; Pacific Gas and Electric, No. 22 at 2; NYSEO,

No. 26 at 7; NWPPC, No. 30 at 4; AGA, No. 32 at 3). However, several

other commenters argued against the inclusion of externalities in the

economic analysis. (Tampa Electric Co. (TECo.), No. 3 at 3; Cleveland

Electric Illuminating Co., No. 7 at 1; ARI, No. 31 at 6; Electricity

Consumers Resource Council (ELCON), No. 33 at Attachment 1; EEI, No. 35

at 2; GAMA, No. 27 at 24; National Rural Electric Cooperative

Association (NRECA), No. 42 at 2, 3).

The Department recognizes that the inclusion of monetized

externality cost estimates in the evaluation of standards is a complex

and controversial question. In a Supplemental Advance Notice of

Proposed Rulemaking Regarding Energy Conservation Standards for Three

Types of Consumer Products, (59 FR 51140, October 7, 1994), the

Department solicited public comment on whether a sound analytical basis

exists for estimating the monetary value of environmental and energy

security externalities. Because the Department has yet to identify a

sound analytical basis for estimating the monetary value of

environmental or energy security externalities, it is not proposing to

use such estimated monetary values in this rulemaking. However, as in

previous efficiency standards rulemakings, the Department has estimated

the likely effects of the proposed standards on certain categories of

emissions and on oil use, and has considered these effects in reaching

a decision about whether the benefits of the proposed standards exceed

their burdens.

8. Manufacturability. General Electric Appliances believes that the

Department needs to incorporate an evaluation of manufacturability as

an essential aspect of the technical feasibility determination. (GEA,

No. 39 at 13). Maytag proposed that the Department recognize that

manufacturability and technological feasibility are inextricably

[[Page 37396]]

linked, that a new operating definition of max tech should be

developed, and that the process should consider patent restrictions,

toxicity, functional viability, verifiability, and reliability.

(Maytag, Transcript at 317-19).

The Department believes that the max tech level should reflect a

product that is capable of being assembled, but not necessarily mass

produced, by the effective date of the amended standards. (This issue

is discussed in more detail in the section on Maximum Technologically

Feasible Levels, II.A.2.)

B. Product-Specific Comments

1. Classes.

a. Compacts. The current energy efficiency standards specify

standards for seven classes of refrigerators and refrigerator-freezers

and three classes of freezers. The classes are based on various

characteristics of the products such as type of defrost, location of

the freezer and whether the unit has through-the-door features. No

consideration was given to dividing the refrigerator products in

different classes based on size. The Joint Comments proposed

establishing separate classes for compact refrigerator products which

would include all products less than 7.75 cubic feet (Federal Trade

Commission (FTC)/AHAM rated volume) and 36 inches or less in height.

The marketplace and industry recognize products meeting these criteria

as a separate niche with special engineering and investment

constraints. Much smaller, privately-held, family-owned, single-product

companies are typical in this market. Economies of scale for these

companies are much different from those of the full-size product

manufacturers. Also, there are far fewer design options available to

improve the performance of the compact refrigerator products. (Joint

Comments, No. 49 at 15).

The Department has decided to adopt additional classes for compact

refrigerator products because they have added consumer utility (ability

to fit in small spaces), and because there are fewer energy

conservation design options available for compacts. The additional

compact classes are Nos. 11-18 in the ``Product Classes and Effective

Dates'' Table found at the end of this NOPR.

b. HCFC-Free. The Joint Comments also proposed additional classes

for HCFC-free refrigerator products, both full-size and compact. The

Joint Comments stated that treatment of HCFCs becomes a significant

issue in the design of these standards because implementation of the

new energy standards will occur less than five years before regulations

promulgated by the Environmental Protection Agency (EPA), making HCFC-

141b unavailable, become effective January 1, 2003. There is also

concern that the date for phaseout of HCFC-141b may be moved up.

Current data from Europe, Japan, and the U.S., provided by the Joint

Comments, support approximately a 10 percent energy penalty in the

shift from HCFC-141b to proposed hydrofluorocarbon and hydrocarbon

substitutes. New technologies may be developed to reduce or eliminate

the energy penalty, but it is impossible to forecast with certainty

whether they will be commercially available by 2003. The Joint Comments

proposed that new classes be established for any product employing non-

ozone-depleting foam blowing agent which EPA approves under the Safe

Alternatives Program of the Clean Air Act, or which uses blends or

mixtures of less than 10 percent HCFC. (Joint Comments, No. 49 at 21).

The Environmental Protection Agency stated that, given the lack of

a technology equal or better than HCFC-141b in terms of energy and

ozone-depletion, EPA does not plan to phase out HCFC-141b any earlier

than 2003. (EPA, No. 34 at 9). The Environmental Protection Agency also

submitted a report entitled, ``Zero Ozone Depleting Blowing Agents for

Use in Polyurethane-based Foam Insulations,'' which found that the high

density, molded foam produced with the fluorinated ether, E245, has a

thermal conductivity similar to that of CFC-11. (EPA, No. 34, Appendix

8 at 4). The report also states that the major problem with E245 is

that it is not commercially available, and toxicity tests must still be

conducted. (EPA, No. 34 at Appendix 8, p. 7).

The Department has considered all the viewpoints expressed

concerning the impact of HCFC-141b phaseout on this rulemaking. The

thermal conductivity of HCFC-141b product substitutes that may become

available in the future is difficult to project. The following

summarizes what is presently known about four potential substitutes:

HFC-356 foam has a thermal conductivity of 0.126 Btu-in/

hr-ft2- deg.F (18.2mW/m-K), which is about 4 percent higher than

the 0.121 Btu-in/hr-ft2- deg.F (17.4 mW/m-K) conductivity of foams

using CFC-11 11. HFC-356 has the advantage of being less

aggressive toward liner materials than CFC-11. Toxicity testing is

incomplete.

\11\ E. Ball and W. Lamberts. ``HFC-356, a Zero Ozone Depletion

Potential (ODP) Blowing Agent Candidate for North American Appliance

Foam Formulations,'' Proceedings of Polyurethanes World Congress

1993, Vancouver, Canada, October 1993, pp. 10-13.

---------------------------------------------------------------------------

The fluorinated ether E245 is nonflammable and may serve

as a near drop-in replacement for CFC-11 and HCFC-141b. Foams using

E245 as a blowing agent have been reported to have a thermal

conductivity at 32 deg.F (0 deg.C) of 0.126 Btu-in/hr-ft\2\- deg.F

(25mW/m-K) 12. It is not commercially available and will need to

undergo toxicity testing.

\12\ E. Blevins et al., ``Zero Ozone Depleting Blowing Agents

for Use in Polyurethane Based Foam Insulations.'' EPA, No. 34,

Appendix 8.

---------------------------------------------------------------------------

Cyclopentane has about a 10 percent higher thermal

conductivity than CFC-11 blown foam. The conductivity could be lowered

by about 5 percent with the addition of small amounts of

perfluoralcanes (PFAs) 13. Although pentanes are being used in

Europe, the flammability of cyclopentane concerns U.S. manufacturers.

\13\ U. Wenning. ``Hydrocarbons as PU Blowing Agents in Domestic

Appliances'', Proceedings of 1993 International CFC and Halon

Alternatives Conference,'' Washington, DC, 1993, pp 317-325.

---------------------------------------------------------------------------

HFC-365 and a blend of H-365 and HFC-134a have been tested

as blowing agents and found to produce foams with similar thermal

conductivities to CFC-11 14. As has occurred for HCFC-141b, DOE

expects that the thermal conductivities of these new foams will improve

as more experience is gained with their use in different formulations.

In the analyses for these proposed standards, it was assumed that the

thermal conductivity remained constant at 1993 values.

\14\ J. Murphy et al., ``HFC-365 as a Zero ODP Blowing Agent for

Foams,'' Proceedings of 1993 International CFC and Halon Conference,

Washington, DC, October, 1993, pp 346-355.

---------------------------------------------------------------------------

Based on the uncertainty of the availability of HCFC-141b

replacements with equivalent thermal properties, the Department has

decided to develop new product classes for products that do not use

HCFC-141b or other HCFCs in the foam insulation.

2. Design Options. In the 1993 Advance Notice the Department

requested comments on 30 design options it proposed evaluating for

potential improvement of the refrigerator products. The comments

received on each design option are discussed below. (Through the

process of providing technical support for the informal negotiations of

the Joint Comments parties, the Department was able to gain a better

understanding of the issues relating to use of each of the design

options considered. This has greatly improved the Department's ability

to estimate the efficiency

[[Page 37397]]

improvements that will result from incorporation of the design

options.)

Increased Cabinet Insulation Thickness. Increasing the wall

thickness has been identified as the option providing the greatest

energy savings. According to the industry participants as stated in the

Joint Comments, an increase in external dimensions on refrigerator-

freezers of as little as a \1/2\ inch can eliminate as much as 20 to 30

percent of a marketplace available for that particular product. If the

external dimensions are maintained and the wall thickness increase is

made to the inside of a cabinet, the interior volume of the cabinet is

reduced. Smaller capacity products carry a lower price with less

margin. The smaller volume cabinet will also have to meet a more

restrictive energy standard. Finally, this design may sacrifice

important utility of the product in violation of the mandates of NAECA.

(Joint Comments, No. 49 at 7).

The non-industry participants in the Joint Comments agreed with

industry position that the max tech level based on increasing both wall

and door thickness by 1 inch--a 2-044h increase in side-to-side

dimensions of the refrigerator--would have a significant impact on some

products, because there are not sufficient alternative design options

available to manufacturers should they find it necessary not to produce

products with larger exterior dimensions (products that could not fit

through doors in existing buildings if enlarged). (Joint Comments, No.

49 at 10).

The Joint Comments state that increased wall and door thickness has

a more severe impact on compact refrigerators than it does on full-size

products. Marketing of compacts does not allow for an increase in wall

thickness since most products are designed for niche applications with

no room for expansion of the cabinet size. Any increase in wall

thickness would compromise the utility of the product by decreasing the

usable interior volume for a product that already has limited

applications in the marketplace. A similar problem applies to

insulation increases in top and bottom panels; this space constraint is

recognized in the new definition of the compact class as limited to

models below 36 inches in height. (Joint Comments, No. 49 at 16).

Sub-Zero stated pursuant to its definition of built-in compact

refrigerators, the available depth is restricted to 24 inches and the

width to 24, 30, 36 or 48 inches. (Sub-Zero, No. 37 at 2). U-Line

stated that the consumer uses of undercounter refrigerators and

freezers will not permit increased exterior cabinet dimensions;

exterior cabinet dimensions cannot exceed 24 inches in depth and width

and 34 inches in height. Shipping costs would increase $3 per unit for

a 1 inch increase in cabinet width. Decreasing internal volume would

reduce consumer utility and require retooling. (U-Line, No. 11 at 1,

2).

The Joint Comments also state that the impact of increased wall

thickness is as much a concern for household freezers as it is for

household refrigerator-freezers. One basic problem is getting the

larger, thicker-walled unit through doorways and stairwells. Another

problem is that because the freezer market is declining, introduction

of designs which are unacceptable to some consumers is even more

troublesome. The Joint Comments state that increased wall and door

thicknesses are not options that can be used to increase energy

performance for household freezers. One freezer manufacturer presented

information regarding how it had been forced to reduce its wall

thickness by one-half inch to improve the marketability of the product.

(Joint Comments, No. 49 at 18).

The Environmental Protection Agency has conducted a market survey

that indicated consumers strongly preferred the double-insulated, or

thick-walled, refrigerator when they are presented with economic

information and labeling which highlights the environmental benefits.

(EPA, No.34 at 9-10).

The Department agrees that there are problems associated with

increasing the wall thickness for some classes of refrigerator

products. If the increase is external, some of the larger models will

not be able to pass through doorways or fit into the space found in

many kitchens. The Department also recognizes that if the external

dimensions are not changed, an increase of only one-half inch in wall

thickness will decrease the internal volume of a typical refrigerator

by about 10 percent. The Department has considered these factors in

determining the proposed standards. However, the Department has

determined that in some cases increases of less than one inch in the

insulation thickness is acceptable.

Improved Foam Insulation for Cabinet or Door. Whirlpool stated that

the CFC-11 blown foam that it has used typically has had a k-factor of

approximately 0.125 Btu-in/hr-ft\2\ deg.F, and it generally has been

made with about 12 percent CFC-11 in the foam. The company said it was

possible to improve the k-factor by increasing the amount of CFC-11,

reducing cell size and increasing density, which required an increase

in cost and in investment in some new equipment. However, none of the

available replacements for CFC-11 has characteristics that match those

of CFC-11. (Whirlpool, No. 36 at 4).

Sub-Zero stated it uses a froth-foam system that typically has

higher k-values than high-pressure systems, but it would require a very

large capital expenditure for the company to switch to a high-pressure

system. Sub-Zero also commented that there is a lesser chance of

incorporating micro-cell insulation with a froth system. (Sub-Zero, No.

37 at 4). U-Line stated that most exotic foam technologies (such as

micro-cell) require high-pressure impingement foaming equipment; it

uses froth-foaming equipment which would be expensive to replace with

high-pressure systems. (U-Line, No. 11 at 2). General Electric

Appliances stated that insulation efficiency suffers from replacement

of CFC-11 foam by HCFC-141b foam, and that for it to switch from HCFC-

blown foams is feasible, but such a transition would result in foams

with poorer insulation value. (GEA, No. 39 at 4).

The Department did not find any experimental data to support this

option. The Department does not believe that any technology that would

improve the insulation properties of HCFC-141b blown foams beyond that

of the present CFC-11 blown foam would be available in time to be

considered in this rulemaking. Therefore, improvements in foam

insulation were not considered in this analysis.

Evacuated Insulation Panels. The Joint Comments, commenting on

vacuum panels, stated: ``Vacuum panel technologies have progressed

since the last refrigerator rulemaking. The appliance industry probably

will introduce limited vacuum panel designs over the next five to ten

years. Issues of concern are manufacturability, availability,

reliability and in-product performance. It is still too early in the

development of this technology to apply it as a reliable design option

in the production of a 1998 compliant product. Several major issues

remain unresolved.

`` Vacuum panels must be used in concert with foam

insulation (polyurethane foam is the mechanical support for the

cabinet).

`` Wire harnesses, drain tubes, shelf anchors, etc., are

[placed] between the cabinet shell and inner liner making 100 percent

coverage of vacuum panels impossible. Fifty to sixty percent is about

maximum and for freezers would be even less.

`` Vacuum panels are 6 to 10 times heavier than foam.

Panels in doors may compromise Underwriters Laboratories (UL) tip-over

requirements. The shipping weight of a typical cabinet

[[Page 37398]]

with vacuum panels would increase by about 50 pounds.

`` Polyurethane foam averages about 15 cents per board

foot. Powder-filled panels are $2.50 to $3.50 per board foot and fiber-

filled panels range from $5.00 to $7.50 per board foot. An average

refrigerator-freezer has about 114 board feet of surface area, of which

approximately 35 board feet would be vacuum panels.

`` Worldwide production capability for all types of vacuum

panels is between 3 to 5 million board feet per year. Full

implementation of vacuum panels in the U.S. alone would require more

than 400 million board feet of panels.

`` Product-life performance characteristics (15 to 20

years) are being observed, but industry continues to work toward a

vacuum panel product that maintains reliability over the life of the

refrigerator.'' (Joint Comments, No. 49 at 7-8).

The Environmental Protection Agency sponsored a study to estimate

the cost of producing vacuum panels at a new plant designed to produce

enough vacuum insulation panels for 300,000 refrigerator-freezers per

year. It determined that the variable cost for a 21 cubic foot

refrigerator-freezer is about $1.40 per board foot, and the investment

cost is about $0.55 per board foot. (EPA, No. 34, Appendix 5 at 54-58).

After feasibility is established and funding is obtained, it would take

about 2 \1/2\ years to begin production. (EPA, No. 34, Appendix 5 at

56-59). The energy savings estimated by simulation analyses averaged

about 16 percent for top-mounted refrigerator-freezers. (EPA, No. 34,

Appendix 5 at 73).

Based on the information cited above, the Department has concluded

that production capability will be insufficient in 1998 for vacuum

panel insulation to be considered as a design option for all classes of

refrigerator products. However, the Department believes that for some

classes of refrigerator products, vacuum panels may be the most

attractive option available to meet the proposed standards.

Gas-Filled Panels. Whirlpool stated there is a low probability

that this technology will be viable for use on products built in 1998.

It is not aware of any situation in which gas-filled panels have been

successfully demonstrated in a refrigerator. A major problem with

application in a refrigerator is the lack of sufficient structural

integrity of the resulting product. Whirlpool recommended that this

option not be considered. (Whirlpool, No. 36 at 5). U-Line commented

that gas-filled panels are not a feasible technology. (U-Line, No. 11

at 3).

General Electric Appliances stated that the gas-filled panels

developed at the LBL are even less promising than vacuum insulation

panels. Insulation values are only about R13/inch even with the most

insulating gas, krypton. This is only about 60 percent of the value of

powder vacuum panels. At the same time, gas panels are projected to

exceed vacuum panels in cost. Even if gas panels had comparable

performance and cost characteristics, they would require enormous

investment expenditures to be incorporated into current refrigerator

designs. At present, virtually all mass-produced refrigerators are

designed using the liner, foam insulation, and exterior metal case as

integrated elements of the cabinet structure. General Electric

Appliances also stated that gas panels have absolutely no structural

capability and would require the development of a fundamentally

different cabinet design concept to achieve adequate structural

integrity. Unlike other design options, where the option is designed to

fit the refrigerator, gas panels would require the refrigerator to be

completely redesigned to accommodate this option. Finally, the cost to

the industry would be enormous and, given the comparatively

unattractive efficiencies offered, unjustified. (GEA, No. 39 at 6).

The Department concurs that gas-filled panels lack structural

integrity and have low resistivity compared to evacuated panels and

therefore has not considered them in this NOPR.

Improved Gaskets. Whirlpool stated that much work has been done in

attempting to improve the performance characteristics of refrigerator

door gaskets. However, there is a tradeoff between the thermal

performance of a gasket and the forces required to open or close the

door. This makes it extremely difficult to improve on current designs.

While savings on the order of 1 percent may be achieved on some models,

Whirlpool stated this design option may not be available for all

products, and, therefore, should not be recommended as a viable design

option. (Whirlpool, No. 36 at 5). U-Line stated that because many

manufacturers redesigned gaskets prior to 1993, any additional

enhancements would provide diminished returns. (U-Line, No. 11 at 3).

The Environmental Protection Agency submitted a report, ``Finite

Element Analysis of Heat Transfer Through the Gasket Region of

Refrigerators-Freezers,'' evaluating means of improving a 1991 model

refrigerator, that described theoretical modeling and experimental

research on gasket heat loads. (EPA, No. 34, Appendix 6). The report

concluded that replacing about half of either the metal door flange or

cabinet flange with plastic can reduce the heat flow through the gasket

region by 25 percent. (EPA, No.34, Appendix 6 at 28). The report

concluded that for one refrigerator-freezer, a 30 percent heat flux

reduction for the gasket region led to a measured 7 to 8 percent energy

use reduction, whereas for a second refrigerator-freezer, a 22 percent

heat flux reduction led to a measured 4 to 5 percent energy use

reduction. (EPA, No. 34, Appendix 6 at 26-28).

AHAM provided the Department with estimates of energy savings and

the costs of improved gaskets from a number of its member

manufacturers. These values ranged from less than 1 percent to nearly 3

percent energy savings depending on the size and configuration of the

refrigerator product.

The Department has decided to use the industry supplied data in the

engineering analysis for each class of refrigerator. (See TSD, Chapter

3.) The higher EPA energy savings estimates were based on a

refrigerator that met the 1990 standards whereas the Department's

analysis is based on models which meet the 1991 standards.

Double Door Gaskets. Whirlpool stated that this option involves the

same tradeoff between thermal performance and door opening and closing

forces discussed under ``improved gaskets,'' see above. The company

does not recommend this as a viable design option. (Whirlpool, No. 36

at 5). General Electric Appliances agreed with Whirlpool's comments.

(GEA, No. 39 at 6-7). U-Line stated that cabinet icing and other

potential field service-related issues have precluded their application

to compact refrigerators and freezers. (U-Line, No 11 at 3).

The Department's analysis indicates that a significant amount of

heat leakage (from the outside) into a refrigerator occurs across the

door gasket. Decreasing this leakage could result in significant energy

savings. This could be achieved by either improving the gaskets or

using double-door gaskets. The cost of a double-door gasket is more

than the cost to improve the single gasket to achieve the same amount

of savings. The Department has, therefore, decided not to consider this

option but instead to consider improved gaskets, as discussed, supra.

Reduced Heat Load for Through-the-Door Features. Whirlpool stated

that there is some potential for energy savings in this area through

improvements in insulation around the

[[Page 37399]]

dispenser. However, the amount of savings is limited. It believes that

an appropriate allowance for ``through-the-door features'' with

improved insulation is approximately 70 kWh/year. (Whirlpool, No. 36 at

5). U-Line stated that compact refrigerator products do not employ

through-the-door features. (U-Line, No. 11 at 3). General Electric

Appliances stated that it had already made incremental design changes

on some 1993 models to reduce the heat leakage of through-the-door

features. (GEA, No. 39 at 7). These consisted of using polyurethane

(vs. expanded bead polystyrene) insulation and totally redesigning the

dispenser assembly. While some additional, marginal energy reductions

are possible, GEA stated that if it extended these design changes to

the full dispenser model line, further significant energy savings

beyond this do not seem likely with current technology. No toxicity/

safety or reliability problems exist with these changes. General

Electric Appliances stated that these design changes could be

introduced to the full line relatively quickly (i.e., from between 6

months and 2 years). (GEA, No. 39 at 7).

AHAM provided estimates of the energy savings from reducing the

heat load for through-the-door features and the associated costs based

on a survey of its members. These are the values that have been used in

the analysis.

Reduction in Energy Used for Anti-Sweat Heaters. Whirlpool stated

that most manufacturers utilize the minimum-needed energy within the

cabinet for the anti-sweat heaters. Therefore, there is little

opportunity to improve this option. (Whirlpool, No. 36 at 5). General

Electric Appliances stated that required wattage for most anti-sweat

heaters already has been reduced to save energy on 1993 models,

variable-watt density heaters are already being used, and reducing the

wattage further is expected to result in poor anti-sweat performance

and reduced consumer satisfaction. (GEA, No. 39 at 7).

Based on the data supplied by manufacturers through AHAM, DOE

decided not to use this option in its analyses because most models of

refrigerator-freezers already employ condenser hot gas or liquid line

to minimize the use of electric anti-sweat heat. Compacts and freezers,

in general, do not use anti-sweat heat.

Substitution of Condenser Hot Gas for Electric Anti-Sweat Heat.

Whirlpool stated this option already has been exercised by most

manufacturers. (Whirlpool, No. 36 at 5). Sub-Zero stated the company

already employs this option. (Sub-Zero, No. 37 at 5). U-Line stated

that with the exception of some compact freezers, anti-sweat heaters

are not employed in the designs of compact/undercounter refrigerator-

freezers. (U-Line, No. 11 at 3). General Electric Appliances stated

that it already uses condenser gas loops everywhere practicable. (GEA,

No. 39 at 7).

After reviewing the data received from the manufacturers, the

Department has concluded that this option already has been exercised by

most of the manufacturers of refrigerator products and, therefore, this

design option was not included in the engineering analysis for this

rulemaking.

Reduction in Energy Used for Auto-Defrost Heater. Whirlpool stated

that there are no significant savings available in this area because

this energy is required to remove frost and prevent buildup of ice.

Also, any savings would be redundant with savings from the use of

adaptive defrost. The company, therefore, does not recommend this

option. (Whirlpool, No. 36 at 5). U-Line stated that with the exception

of some compact freezers, this design does not apply to the compact/

undercounter refrigerator products. (U-Line, No. 11 at 4). General

Electric Appliances stated that little significant energy savings are

possible using this option; solenoid actuated dampers that attempt to

retain heat in the evaporator compartment do not significantly reduce

heater ``on'' times. (GEA, No. 39 at 7). Designs which attempt to

transfer heat more directly to the evaporator, and thus less to the air

are theoretically attractive but have achieved only minimal savings in

practice while increasing the likelihood of evaporator ice-balling.

Further reducing the temperature at which the thermostat turns the

heater off would result in poor defrost performance and increased

service calls. General Electric Appliances stated the basic defrost

heater system must be very robust or severe reliability problems can

occur. (GEA, No. 39 at 7).

The Department, after reviewing available data, concluded that most

manufacturers already have reduced significantly the electric heat for

automatic defrost in order to comply with the 1993 Standards, and there

is little opportunity to save additional energy by exercising this

option. The only exception is the side-by-side refrigerator-freezer

without through-the-door features, where the baseline model has a

higher defrost energy use than other models, and the Department

included this option in the engineering analyses for that class.

Substitution of Condenser Hot Gas for Electric Auto Defrost Heat.

Whirlpool stated it had explored this option in some depth in the

1970s. It was not successful in developing a system that would perform

well and be reliable. Also, any savings that might be achieved would be

redundant with savings from the use of adaptive defrost. The company

believes adaptive defrost is the preferred alternative for saving

defrost energy. Thus, it does not recommend substitution of condenser

hot gas for electric auto defrost heat. (Whirlpool, No. 36 at 6). U-

Line stated it is not aware of any compact/undercounter refrigerator-

freezers that employ electric auto-defrost heaters. (U-Line, No. 11 at

4). General Electric Appliances believes this method of defrost is more

complicated, more expensive and less reliable than its current designs.

(GEA, No. 39 at 8).

The defrost system increases the energy usage of a system in two

ways: the electric heater directly affects the electricity use and the

heat of defrost increases the heat load inside the refrigerator, which

to be rejected requires compressor work. One method of saving energy

would be to do away with the electric heaters by substituting condenser

hot gas in its place. The other method would be to better control the

time and amount of defrost heat by using adaptive defrost. The

Department did not find any data to demonstrate the condenser hot gas

method to be more cost-effective than adaptive defrost, which is a

well-developed and accepted technology. Thus, the condenser hot gas

method of defrost was not considered in the engineering analysis for

this rulemaking.

Adaptive Defrost Systems. Whirlpool stated this is a viable option

for most of its products and produces energy savings on the order of 3

percent. (Whirlpool, No. 36 at 6). U-Line stated that it employs timers

to initiate defrost, and it is unlikely that adaptive and demand

defrost systems would significantly reduce energy consumption. (U-Line,

No. 11 at 4).

The energy savings and associated costs of replacing the present

defrost system with the adaptive defrost system have been provided to

the Department by AHAM and its members. (See design option comments,

supra). These are the values that have been used in the analysis.

Compacts, in general, do not use electric heaters for initiation of

auto defrost.

Improved Compressor Efficiency. Whirlpool expects to see further

improvements in compressor efficiency prior to 1998. (Whirlpool, No. 36

at 6). However, the degree of improvement is uncertain at this time.

Although compressor efficiencies as high as 5.8 EER have been

projected, Whirlpool stated that any design changes made to

[[Page 37400]]

improve efficiency often have negative impacts on reliability. It

believes the risk of failure has increased with the introduction of a

new refrigerant and a new lubricant. Therefore, it believes a

conservative estimate should be used for future compressor

efficiencies. (Whirlpool, No. 36 at 6). Sub-Zero is concerned that

efficiencies of small-capacity compressors may not improve in time for

future standards. (Sub-Zero, Transcript at 427). It is concerned

particularly with the changeover to HFC-134a and the timing of

compressor efficiency improvements for small-capacity compressors.

(Sub-Zero, Transcript at 426). U-Line stated that compressor EERs of

5.5 are not realistic at low capacities. It expects 3.6 EER for HFC-

134a at 200 Btu/hr. Furthermore, due to their low production volumes,

manufacturing units with low capacities is a low priority for

compressor manufacturers. (U-Line, No. 11 at 4). Maytag stated there

are patent restrictions on linear motors that protect their use.

(Maytag, No. 20 at 6). Additionally, Maytag said there is not enough

time for proper reliability testing and implementation of linear motor

compressors for the January 1998 standards date. (Maytag, No. 20 at 5).

The Environmental Protection Agency submitted a report that found

efficiency levels of 5.0 EER can be obtained at the low end of the

capacity range of 200-600 Btu/hr with an increased cost to refrigerator

manufacturers of $10-20. (EPA, No. 34 at Appendix 4, ``State of the Art

Survey of Hermetic Compressor Technology Applicable to Domestic

Refrigerator-Freezers,'' at 7-1). The Environmental Protection Agency

also stated that for compressor capacity of 750 Btu/hr and above, an

EER level of 6.5 is technically feasible with an incremental increase

in manufacturer costs of about $15. (EPA, No. 34, at Appendix 3,

``State of the Art Survey of Motor Technology Applicable to Hermetic

Compressors for Domestic Refrigerator-Freezers,'' at i).

The Joint Comments stated that with improvements in foam insulation

and gaskets in freezers, the compressor size needed to maintain freezer

food quality is smaller than used in previous years. These smaller

compressors have lower EERs than used in DOE's max tech analysis.

Freezer manufacturers and compressor suppliers indicated that an

improvement of approximately 7 percent in EER can be expected between

1994 and 1998. (Joint Comments, No. 49 at 19).

The Department has obtained data on efficiency and costs of HFC-

134a compressors from three compressor manufacturers, from AHAM and its

members, and from other sources (e.g., company literature from

Sunpower, Inc. and EPA reports, referenced above). The Department

expects future efficiencies of small-capacity compressors will continue

to be lower than those of larger-capacity compressors and has reflected

that in its analyses of refrigerator products. (See TSD, Chapter 3).

Two-compressor system. Whirlpool stated a two-compressor system

requires the use of two smaller capacity compressors, thus inherently

it will be less efficient than the one larger capacity compressor used

in current refrigerators. One of these smaller compressors would be

operating under more efficient conditions due to the raised evaporator

temperature for the circuit cooling the refrigerator compartment.

Whirlpool stated all indications are that the decrease in compressor

EER from two smaller compressors offsets the increased efficiency in

one portion of the sealed system due to increased evaporator

temperature. In addition, any increase in refrigerator efficiency

inherently involves several other negative factors. They are

significant increases in product cost, increases in service incidence

rates due to the use of more components, reduction of useful volume of

the refrigerator due to a larger machine compartment for two

compressors, and potential for increased sound level when both

compressors are running. Whirlpool does not recommend this option.

(Whirlpool, No. 36 at 6).

Sub-Zero stated that although it presently uses a two-compressor

system, the efficiency gain from the higher evaporator temperature in

the fresh-food section is offset by the lower compressor efficiency for

the smaller capacity compressor. (Sub-Zero, No. 37 at 6). U-Line stated

that two-compressor systems are not practicable for compact/

undercounter refrigerator-freezers. (U-Line, No. 11 at 4).

The Department agrees that a two-compressor system requires a

larger, more efficient compressor to be replaced by two smaller, less

efficient compressors. Some of the gain from improving the

thermodynamics of the system will be offset by the decrease in the

compressor efficiencies. While it has been shown that the two-

compressor system could save some energy in the older less efficient

refrigerators, the Department is not aware of any experimental data

that demonstrate energy savings from this option for refrigerators in

the efficiency ranges being considered in this rulemaking. For this

reason, this option has not been included in the engineering analysis.

Variable-Speed Compressor. Whirlpool stated that the key to the

effectiveness of this type of compressor is the development of highly

efficient, cost-effective, and reliable drive systems (motor plus power

electronics) for the compressor. It said development to date for drive

systems sized for refrigerators has not been able to achieve the

efficiency levels required to make this concept viable. Once these

drive systems are available, there are then several other issues to be

addressed. For example, design changes will have to be made to the

compressor valves and bearings for good performance at a range of

speeds; compressor reliability will have to be ensured through

extensive life testing at a variety of speeds; sound tests will have to

be performed on the finished refrigerator under all speeds foreseen to

make sure that no resonances (which cause sound problems) are present;

and, there will have to be an understanding of the relationship between

any projected energy savings from this feature and the amount of

savings found in actual field usage conditions. Whirlpool stated that

the availability of this option in 1998 should not be assumed.

(Whirlpool, No. 36 at 7). U-Line stated that this option is not

feasible for compacts. (U-Line, No. 11 at 5). General Electric

Appliances stated its experiments indicate the energy savings are small

and the costs are large; it halted development when they found there

would be an unfavorable cost-performance ratio coupled with significant

noise problems. (GEA, No. 39 at 8).

The Department concurs that this technology has not been developed

to the point where it will be ready for incorporation into

refrigerators by the effective date of this rulemaking. This option is

not included in the analysis.

Improved Fan Motor Efficiency. Whirlpool commented that there is

significant uncertainty concerning the newer ``permanent magnet''

motors. They have not yet been produced in adequate volume in the

design required for refrigerators. The bearing systems must be made

quieter and must be tested for reliability. Whirlpool stated there is a

significant risk that these very high efficiency motors will not be

available by 1998. If they are not, then savings would be less, because

permanent split capacitor (PSC) motors would be the best available.

Whirlpool argued that the DOE should ``count on'' the PSC fan motors

and not count on permanent magnet motors as a viable design option.

(Whirlpool, No. 36 at 7). The Association of Home Appliances

[[Page 37401]]

Manufacturers stated the cost estimated by LBL for electronically

commutated motors is about 40 to 60 percent less than estimates

provided to it by suppliers. (AHAM, No. 17, Attachment 17 at 2).

Sub-Zero stated that it expects efficiencies of evaporator and

condenser fan motors to improve. (Sub-Zero, Transcript at 427). U-Line

stated that some improvement in the fan motor still may exist. (U-Line,

No. 11 at 5). General Electric Appliances said it is pursuing various

options with both evaporator and condenser fan motors and that

reliability and testing of these components are fairly well understood.

(GEA, No. 39 at 8).

The Department obtained cost and efficiency data from three

manufacturers of evaporator and condenser fan motors. Averages of these

data were used in the analyses performed by the Department. The cost

estimates obtained by the Department are for quantities equal to the

present volumes of fan motors being purchased by refrigerator-freezer

manufacturers. The Technical Support Document (Chapter 3) provides

details on these data for the various product classes.

Improved Fan Efficiency. Whirlpool stated that potential savings

through this option are very limited. Fan motor size is governed not

only by the operating load on the fan, but also by the need to ensure

starting under all anticipated voltage and temperature conditions.

Whirlpool said that most of the potential for fan energy savings lies

in the fan motors themselves. (Whirlpool, No. 36 at 7). U-Line stated

that where fan motors and blades are employed, optimization does

provide opportunity for energy improvement. (U-Line, No. 11 at 5).

General Electric Appliances stated it found energy savings benefits for

condenser fans are marginal and that an energy savings of approximately

4 kWh/yr are available from evaporator fan redesign. (GEA, No. 39 at

8).

The energy savings from improved condenser and evaporator fans and

the associated costs have been provided to the Department by AHAM and

its members. These figures have been used in the analysis for the full-

sized refrigerator products. Because most of the compacts employ

natural convection and do not use fans, this option is not included in

the analysis for compacts.

Variable-Speed Fans. Whirlpool stated that with a single-speed

compressor, the rate of heat transfer for either the evaporator or

condenser does not vary appreciably with changes in either ambient

temperature or control setting because the compressor operates at only

one speed. The compressor has a longer duty-cycle as either the ambient

temperature goes up or the control setting is lowered. In order for the

variable-speed fan feature to reduce energy consumption, it must allow

the refrigerator to attain a more optimal air flow condition for a

particular set of circumstances. The optimal air-flow condition is a

trade off--reduced heat transfer versus reduced fan use. Because the

heat transfer rate with single-speed compressors does not vary

appreciably, Whirlpool stated there is little potential for energy

reduction due to variable fan speed with a single-speed compressor. In

addition, it stated there are concerns about excessive costs for the

motors and required electronic controls, and the reliability of both

the mechanical (bearing) and electrical (windings and controls)

systems. Whirlpool argued that variable-speed fans should not be

counted on to save energy. (Whirlpool, No. 36 at 7). U-Line stated this

option is considered infeasible by the compact/undercounter AHAM

subcommittee. (U-Line, No. 11 at 5).

General Electric Appliances said fan energy consumption reductions

achieve false savings to the extent that a change in fan speed and

airflow adversely affects energy performance elsewhere within the

refrigerator system. General Electric Appliances found from a recent

internal study that a 25 percent reduction in evaporator fan power

input for its 24 cubic foot side-by-side product (with an ECM fan

motor) lowered the evaporator saturation temperature, lowered system

capacity, increased compressor run-time, and increased overall energy

consumption. General Electric Appliances also said that while

increasing fan speed enhances heat exchanger performance, it also

increases gasket heat leakage which, in turn, requires more fan motor

input power. Additionally, GEA said noise from higher fan speeds is

becoming such a significant issue with consumers that noise attenuation

costs must be factored into this cost-performance assessment. (GEA, No.

39 at 8-9).

Based on the comments provided, the Department has decided this

option should not be included in the analysis.

Hybrid Evaporator. Whirlpool commented that it has no experience

with ``hybrid evaporators.'' (Whirlpool, No. 36 at 8). U-Line stated

the evaporator may offer potential for energy improvement by enhancing

air to refrigerant heat exchange. (U-Line, No. 11 at 5). General

Electric Appliances understands this option to be a two-stage dual

evaporator system. (GEA, No. 39 at 9).

A hybrid evaporator employs two evaporators, one for the freezer

and the other for the fresh-food section.The Department did not include

this option in the analysis because the data available showed little

energy savings using this technology.

Other Refrigeration Cycles. Whirlpool commented that it worked

cooperatively with a major university in a development program for the

Lorenz cycle for more than 2 years. During that period, a number of

prototype systems were built and tested in its labs. While some energy

savings were measured, it was unable to consistently demonstrate

substantial savings using this technology. For products tested, the

maximum savings achieved was about 8 percent. Because the second

evaporator required for such systems reduces the storage volume by

approximately \1/2\ cubic foot, the net savings were something less

than 8 percent. Because of the difficulty in obtaining reproducible

results and the relatively small savings achieved, Whirlpool found this

not to be a viable technology. (Whirlpool, No. 36 at 8). U-Line stated

that other refrigeration cycles do not offer a feasible alternate

technology. (U-Line, No. 11 at 6). Maytag stated thermo-acoustic

refrigeration system prototypes are not available. (Maytag, No. 20 at

6). General Electric Appliances stated it has undertaken studies of

various refrigeration cycles (Brayton, gas absorption, thermoelectric,

magneto-caloric, and thermoacoustic) to compare their energy savings

potentials against enhanced Rankine cycle designs. Of the alternative

cycles studied, only the Stirling presented a credible opportunity for

competitive efficiencies. (GEA, No. 39 at 9-11). The company undertook

development of Stirling cycles in concert with Sunpower, Inc. General

Electric Appliances confirmed that the Stirling cycle could perform on

a par with the Rankine cycle currently being used, but it did not

present any material improvement. In addition, GEA said the problems

and costs associated with developing a completely new cycle design,

versus upgrading existing cycle technology, argued against pursuing the

Stirling cycle. (GEA, No. 39 at 9).

Except for the Lorenz cycle, the Department is not aware of any

prototypes using alternative refrigeration cycles. In the case of the

Lorenz cycle, the reports of energy savings vary considerably. Although

this option has a significant potential for future energy savings, this

technology is not developed well enough at this time to be considered

an option for 1998 refrigerator-freezers.

[[Page 37402]]

Two-Stage Two-Evaporator System. Whirlpool commented it understands

this concept to be one whereby there is an evaporator in each

compartment with refrigerant passing through both evaporators

simultaneously. The two different temperature (and thus pressure)

levels for the two evaporators require two compressors in order to

attain any efficiency improvements. Therefore, the negative effects

highlighted under two-compressor systems apply: Lower EER, service

incidence rate increases, very significant increases in product cost,

space concerns, and increased sound level. In addition, Whirlpool is

concerned about the ability of the two-compartment control scheme in

this concept to handle changes in relative heat loads between the two

compartments. These changes can occur when the door is opened in one

compartment only, or when warm food is added to one compartment only.

Whirlpool also is concerned about the loss of the ability to provide

independent temperature adjustment in each compartment. Whirlpool

recommends against the use of this option. (Whirlpool, No. 36 at 8). U-

Line stated that two-evaporator systems are not practicable for

compact/undercounter refrigerator-freezers. (U-Line, No. 11 at 5).

Due to the inability of the Department to find usable performance

data for this type of system, this option has not been included in the

engineering analysis.

Improved Heat Exchangers. Whirlpool believes there may be some

savings yet available with improved heat exchangers. Adding surface

area is generally difficult. For the condenser, space is limited and

densely finned surfaces do not have good lint-handling characteristics.

For the evaporator, simply making it larger detracts from product

volume, and increasing fin density can negatively impact frost handling

characteristics, causing poor performance in humid climates.

(Whirlpool, No. 36 at 8). U-Line stated that effectiveness improvements

are expected to be in the range of only 1 to 2 percent. (U-Line, No. 11

at 6). General Electric Appliances stated evaporator improvements have

reached the point of diminishing returns, and condenser improvement

benefits can be achieved but cost/performance tradeoffs will limit

opportunities to less than that which theory predicts. (GEA, No. 39 at

11). AHAM stated LBL should account for the fact that increasing the

evaporator size results in a loss of internal volume; this results in a

decrease in both the energy standard and the marketing utility of the

refrigerator. (AHAM, No. 17, Attachment 17 at 2).

The energy savings from improving the heat exchange in the

evaporator and condenser and the associated costs have been agreed upon

by AHAM and its members and provided to the Department. These are the

values that have been used in the engineering analysis. (See TSD,

Chapter 3). Increasing the evaporator heat exchange effectiveness might

increase evaporator area (although not necessarily) and therefore,

decrease internal volume very slightly. This slight decrease, a maximum

of 0.15 cubic feet (4.25L), would not be large

enough to noticeably impact consumer utility.

Alternative Refrigerants. Whirlpool stated there are no pure

refrigerants that demonstrate an efficiency improvement over HFC-134a

and are ready for application development work on refrigerators. If

such a candidate does appear, there is a long testing process before

production. This testing includes toxicity testing, chemical

compatibility testing, reliability testing and safety. Whirlpool

believes this option should not be considered. (Whirlpool, No. 36 at

8). U-Line stated it is unlikely that refrigerants not yet identified

could be commercially available in time to become a realistic part of

the solution. (U-Line, No. 11 at 6). General Electric Appliances said

HFC-134a is the refrigerant of choice and the flammability of HFC-152a

makes it undesirable. (GEA, No. 39 at 11). It also said that

hydrocarbon refrigerants are being used in Europe in cold wall

evaporators only and use of those designs in the U.S. would require a

total redesign of the refrigerator and would reduce consumer utility.

(GEA, No. 39 at 12).

With the phaseout of CFC-12, HFC-134a appears to be the accepted

refrigerant replacement in the U.S. There are other promising

refrigerants under development but none of the replacements that are

without problems such as toxicity or flammability have been proven to

perform better than HFC-134a . Therefore, the Department has assumed

that HFC-134a will be used as the refrigerant for 1998 refrigerators.

Improved Expansion Valve. Whirlpool stated expansion valves are not

generally used in refrigerators because capillary tubes yield better

performance. The company's studies show no savings from expansion

valves. It does not recommend this option. (Whirlpool, No. 36 at 9). U-

Line stated improved expansion valves offer no improvement over

properly balanced refrigeration systems using conventional capillary

tubes. (U-Line, No. 11 at 6). General Electric Appliances stated this

is a viable option but will require considerable time (3-5 years) to

optimize. It said reliability will be lower than that of the current

capillary design, and the cost will be higher. It believes improvement

may be limited to electronic units. (GEA, No. 39 at 12). AHAM stated

the improved expansion valve should be eliminated if its savings are

reflected in the fluid control valve option. (AHAM, No. 17, Attachment

17 at 3).

Because the Department was not able to find any data demonstrating

that thermostatic or electronic expansion valves will save energy in

refrigerators, this option has not been included in the analysis.

Fluid Control Valves. Whirlpool stated these devices provide

significant savings when used with rotary compressors, which are

designed with the compressor shell maintained at the condensing

pressure. Whirlpool said they do not yield significant savings when

used with reciprocating compressors, which operate with the compressor

shell at the evaporator pressure. To Whirlpool's knowledge, no rotary

compressors have passed reliability tests using HFC-134a and new

lubricants. The company believes this design option should be dropped.

(Whirlpool, No. 36 at 9). U-Line stated the application of fluid

control valves in reciprocating compressors requires use of a high

starting torque compressor (capacitor start motor) and that the energy

savings, although potentially significant, may not be economically

justified. (U-Line, No. 11 at 6). General Electric Appliances said this

option carries the greatest benefit for high-side compressors, but they

are no longer used in the U.S. This option has extremely limited value

(2 to 3 percent energy reduction) when applied to the high-efficiency

low-side compressors currently in use. The value of this option will

continue to decrease as cycling losses are further reduced through

other means. This type of design change could be put into production

relatively quickly (1 to 2 years) once the reliability of the valve is

confirmed. However, confidence in the valve must be high as its failure

can result in a total loss of refrigeration. (GEA, No. 39 at 12).

Based upon the comments above and research data received from Oak

Ridge National Laboratory 15 that fluid control valves do not save

energy when used with reciprocating compressors, and since most of the

manufacturers use reciprocating compressors, the

[[Page 37403]]

Department has decided not to include this option in the analysis.

\15\ Letter from J.R. Sand of Oak Ridge National Laboratory

dated March 16, 1994.

---------------------------------------------------------------------------

Location of Compressors. Whirlpool stated that for refrigerators

with ``forced air hi-side'' design (which is the most common design

used in the industry), there is no thermodynamic reason to expect

energy savings from a change in location of the compressor and

condenser. Such a change is also likely to decrease utility of the

product by reducing the storage volume available at a convenient height

off the floor. Whirlpool does not recommend this option. (Whirlpool,

No. 36 at 9). Sub-Zero stated that it already mounts the compressors at

the top of the unit; this allows easier servicing and theoretically

should reduce the temperature differential. (Sub-Zero, No. 37 at 6). U-

Line stated there are not many opportunities to relocate compressors

and condensers for compact/under counter products. (U-Line, No. 11 at

7).

General Electric Appliances stated that the benefit of removing the

evaporator fan from the refrigerated space diminishes as fan

efficiencies improve. The feasibility of this option in large-scale

production is questionable due to the need to seal the shaft without

significantly increasing the frictional losses. Moisture migration, ice

formation, and noise transfer to the cabinet are additional concerns.

Moving the high-side components to the top of the refrigerator has

marginal cabinet heat leakage benefits, but would require a fundamental

redesign of the cabinet structure. Moving the high-side components

would require the refrigerator to be completely redesigned to

accommodate the option. It likely would require enhanced structural

rigidity and deliberate means, such as low-placed weights, to prevent

tip-overs. General Electric Appliances concluded that, absent a total

restructuring of the production line, or creation of new production

capacity, the cost of introducing this design option is prohibitive.

(GEA, No. 39 at 12-13).

The Department could find no data that showed that relocation of

the compressor would save energy. After consideration of the comments

discussed above, the Department has decided that even if there are

small energy savings from this option, these savings would be

insignificant compared to the costs of redesigning and manufacturing a

refrigerator with the compressor on top. Therefore, this option has not

been included in the engineering analysis.

Use of Natural Convection. Whirlpool stated this option is

counterproductive for larger products (above about 14 cubic feet) since

the wattage of condenser fan motors has been reduced substantially in

recent years. It does not recommend this option. (Whirlpool, No. 36 at

9). U-Line stated that except for frost-free models, all compact/

undercounter refrigerator-freezers use natural convection evaporators.

Those units using forced air condenser systems are designed for built-

in or recessed installations. (U-Line, No. 11 at 7).

Based on the comments discussed above, the Department has concluded

that the industry is already using this option where it is practical

and so has not included it in the engineering analysis.

Electrohydrodynamic Enhancement of Heat Exchangers. Whirlpool

considers this to be a technology that is impractical, unsafe, and

expensive to implement in products. It does not recommend this option.

(Whirlpool, No. 36 at 9). U-Line stated that the compact/undercounter

AHAM subcommittee does not consider this option feasible. (U-Line, No.

11 at 7). Maytag stated that prototypes are not available for

electrohydrodynamically enhanced evaporators or condensers. (Maytag,

No. 20 at 6). General Electric Appliances stated this may be an

inexpensive approach to obtaining marginal energy savings; however, the

continuous use of an extremely high voltage field presents safety risks

that simply are not acceptable, even if they could be addressed to some

degree at a reasonable cost. (GEA, No. 39 at 13).

This concept has only been demonstrated in a laboratory, and no

prototypes using this technology have been built. Since there is no

cost or performance data for this design option in refrigerators, the

Department has decided that this option is not well enough developed

for consideration in this rulemaking.

Voltage Control Device. Whirlpool stated it has conducted tests on

these devices and found that they save no energy on products which are

designed to meet existing energy standards. It does not recommend this

option. (Whirlpool, No. 36 at 9). U-Line stated these devices have not

demonstrated measurable reductions in energy use when applied to

refrigerators and freezers. (U-Line, No. 11 at 7). General Electric

Appliances stated its testing indicates current high-efficiency

compressors do not exhibit energy savings when used with devices that

reduce line voltage and/or change phase angles. (GEA, No. 39 at 13).

Based upon data supplied to the Department,16 the Department

believes this option does not offer any potential for energy savings

for new refrigerators and freezers.

\16\ Admiral Refrigerator Test Report for the Admiral Company;

Izagulrre, F. L., Senior Engineer, International Technical Services,

Inc., August 25, 1993.

---------------------------------------------------------------------------

(3) Other Comments.

a. Uncertainty Inherent in Data. The Joint Comments formulated a

number of different approaches for quantifying the uncertainty and

variance inherent in estimated energy savings and costs for individual

design options. It said the basis for quantifying uncertainty lies not

only in the estimates of energy savings and costs reasonable in the

1998 time frame, but also in the different economies of scales

available to companies in the refrigerator-freezer industry. The impact

of design options and associated costs affect these companies' products

differently. (Joint Comments, No. 49 at 8).

An example from one of the uncertainty analyses demonstrates the

variance in unit cost impacts on top-mounted nondispenser automatic-

defrost refrigerators. In this example, for a trial standard energy

consumption 30 percent below the 1993 level, the increase in

manufacturing unit costs runs from approximately $65 up to $145,

depending on the specific energy saving options used. (Joint Comments,

No. 49 at 8).

The Department is aware there are uncertainties in the estimated

costs and energy savings of the various design options. Additionally,

the Department recognizes other uncertainties that affect the

feasibility of design options, including reliability, performance, and

safety. The Department has asked manufacturers to supply the data

needed to address the issue of the impact of uncertainties on life-

cycle cost and payback periods. The Department has considered the

uncertainties in costs and energy savings in developing the proposed

standards for this rulemaking. The Department has also considered

design feasibility and marketing utility uncertainties.

b. Simulation Model. The Joint Comments were critical of the

accuracy of the ERA model, which calculates refrigerator energy use.

The industry members of the Joint Comments assessed the accuracy of the

ERA model in two phases. The first phase was to use current technology

and currently available products to determine the accuracy of the ERA

estimates versus actual energy data from refrigerator-freezers. The

second phase of this assessment was to determine how the ERA model

handles nonconventional technologies, e.g., those technologies

[[Page 37404]]

not currently in production. (Joint Comments, No. 49 at 5)

The industry members of the Joint Comments constructed 100 ERA

input files on products ranging from compact refrigerator-freezers and

freezers to full-size automatic defrost refrigerator-freezers. The

standard uncertainty of the ERA model using this input data was

approximately 19 percent. The Joint Comments argued this accuracy level

makes the ERA useful to examine engineering assessments of energy

savings options, but not a sufficient tool to determine multi-million

dollar rulemaking impacts. (Joint Comments, No. 49 at 5)

AHAM also had Dr. Clark Bullard at the Air Conditioning and

Refrigeration Center of the University of Illinois conduct an

evaluation of the ERA model. (AHAM, Transcript at 296). This analysis

of the ERA model focused on the ability of the model to properly

evaluate nonconventional technologies which have yet to be built into

full-size refrigerator-freezers and tested or are not yet currently in

production. Dr. Bullard's final report noted that many of these design

options as modeled by the ERA had errors between 50-75 percent compared

to laboratory measurements of these technologies. (Joint Comments, 49

at 6).

The Environmental Protection Agency submitted the User's Manual for

the EPA Refrigerator Analysis Program. (EPA, No. 34, Appendix 2). The

EPA also submitted a rebuttal statement, ``Response to Report by Clark

Bullard Associates Accuracy Analysis of the ADL/EPA Refrigerator

Analysis (ERA) Model.'' (EPA, No. 34, Appendix 7). One of the EPA

comments is that Dr. Bullard's analysis was based on an older version

of ERA, which preceded the ``official'' release of Version 1.0. Version

1.0, which DOE used for its analysis, addressed the concerns about the

model raised by Dr. Bullard. (EPA, No. 34, Appendix 7, cover letter).

The Department has reviewed the reports by Dr. Bullard and by the

EPA concerning the ERA model. In performing the engineering analyses,

the Department selected actual refrigerator models to use for each

baseline case. The measured energy use for each of these baseline

models (supplied by AHAM and its members) was used to calibrate the

model for each class of refrigerator product evaluated. To account for

changes in performance due to the use of HFC-134a, the Department used

HFC-134a compressor maps in modeling each refrigerator class. For those

design options included in the cost-efficiency analyses but not

directly modeled with ERA, such as gasket improvements and vacuum panel

insulation, DOE energy-efficiency improvement estimates were based on

measured data or other methods of calculating the energy savings. (See

discussions of individual design options.) In summary, the Department

has utilized measured data rather than theoretical predictions whenever

data has been available.

c. CFC Phaseout. AHAM stated the costs of CFC elimination are not

included in the analysis. The effect of CFC elimination must first be

taken into account before proceeding with implementing options to meet

various standard levels above the 1993 energy standard. (AHAM, No. 17,

Attachment 17 at 3).

The Department has accounted for the costs of CFC phaseout by

increasing the cost of the baseline units. The manufacturer's costs

associated with the phaseout of CFC are accounted for in the

manufacturer impact analysis. (See discussion under ``baselines,''

below.)

4. Standards Proposed in the Joint Comments. The standards shown in

Table 1, with accompanying discussions, were proposed in the Joint

Comments. (Joint Comments, No. 49 at 14-27).

Table 1.--Standards Proposed in the Joint Comments

------------------------------------------------------------------------

HCFC-containing

Product class product HCFC-free product

------------------------------------------------------------------------

i. Automatic Defrost

Refrigerator-Freezers (excludes

compact refrigerator-freezers):

1. Top-mounted freezer without

through-the-door ice service. 9.80AV+276.0 10.78AV+303.6

2. Top-mounted freezer with

through-the-door ice service. 10.20AV+356.0 11.22AV+391.6

3. Side-mounted freezer

without through-the-door ice

service...................... 4.91AV+507.5 5.40AV+558.3

4. Side-mounted freezer with

through-the-door ice service. 10.10AV+406.0 11.11AV+446.6

5. Bottom-mounted freezer

without through-the-door ice

service...................... 4.60AV+459.0 5.06AV+504.9

ii. Compact Refrigerator-

Freezers (AHAM/FTC volume less

than 7.75 cubic feet and less

than 36 inches in height):

1. Manual defrost refrigerator-

freezer...................... 10.70AV+299.0 11.77AV+328.9

2. Partial automatic defrost

refrigerator-freezer......... 7.00AV+398.0 7.70AV+437.8

3. Top-mounted freezer

automatic defrost

refrigerator-freezer......... 12.70AV+355.0 13.97AV+390.5

4. Side-mounted freezer

automatic defrost

refrigerator-freezer......... 7.60AV+501.0 8.36AV+551.1

5. Bottom-mounted freezer

automatic defrost

refrigerator-freezer......... 13.10AV+367.0 14.41AV+403.7

6. Upright freezer automatic

defrost...................... 11.40AV+391.0 12.54AV+430.1

7. Upright freezer manual

defrost...................... 9.78AV+250.8 10.76AV+275.9

8. Chest freezer manual

defrost...................... 10.45AV+152.0 11.50AV+167.2

iii. Freezers (excludes compact

freezers):

1. Upright automatic defrost.. 12.43AV+326.1 13.67AV+358.7

2. Upright manual defrost..... 7.55AV+258.3 8.31AV+284.1

3. Chest freezer manual

defrost...................... 9.88AV+143.7 10.87AV+158.1

iv. Manual and partial defrost

refrigerator-freezers (excludes

compact refrigerator-freezers):

1. Manual defrost............. 8.82AV+248.4 9.70AV+273.2

2. Partial automatic defrost.. 8.82AV+248.4 9.70AV+273.2

------------------------------------------------------------------------

AV=Total adjusted volume, expressed in ft 3.

a. Full Sized Refrigerator-Freezers. The proposed standards ``are

based on a negotiated approach to identifying the maximum level of

efficiency that is technologically feasible and economically justified.

A negotiated approach may provide slightly different results from those

achieved by conventional rulemaking because this NAECA criterion can be

satisfied in a more flexible way, providing greater overall energy

savings for a given level of impacts.'' (Joint Comments, No. 49 at 14).

That flexibility permitted the participants, for the first time, to

[[Page 37405]]

address both the cumulative economic impact of individual design

options, and the varying severity of that impact upon different product

classes and manufacturers. The negotiation process allowed for a

cumulative assessment of impact, adjustments among various product

standard levels, and better balance of the economic impact among

manufacturers. The Joint Comments stated that * * *

``Impacts on manufacturers are different for different product

classes. For product classes representing discretionary purchases, such

as some compact refrigerators and most freezers, cost increases due to

standards may result in much greater reductions in sales compared to

the refrigerator-freezer classes, whose purchase is essentially

necessary when a new house is constructed or when an existing product

fails. Some design options with perceived consumer or marketing

disadvantages, such as increasing wall thickness, are more troublesome

for these more discretionary classes of products.

``The consumer cost-effectiveness of increasing levels of energy

efficiency, as well as the impact of these levels on manufacturers,

also depends on the scale on which the product is produced. For those

products with the highest production volumes, capital cost increases

can be amortized over a larger number of units, resulting in fewer

impacts. In contrast, for products with smallest sales volumes capital

cost increases will be spread over fewer models and will have a larger

impact on product cost. These effects will operate differently for

different manufacturers, depending on the mix of their sales.'' (Joint

Comments, No. 49 at 14).

As a result, the Joint Comments final agreement ``concentrates the

largest energy savings on the five automatic defrost categories

(refrigerator-freezers with: top-mounted freezer non-dispenser, top-

mounted freezer dispenser (ice and/or water), side-mounted freezer non-

dispenser, side-mounted freezer dispenser, and bottom-mounted freezer)

with the very largest percentage reduction in the two classes with the

highest sales volumes. These five classes represent more than two-

thirds of the total energy consumed by all refrigerators/freezers.

These five product classes represent 85 percent of the total energy

savings generated from the (proposed) standards.

``The parties agreed that in the interest of conserving engineering

and capital resources while maximizing energy savings, the greatest

changes in design should be concentrated on the largest two product

classes of the five automatic defrost refrigerator-freezer classes--top

mounted, non-dispenser, and side by side with dispensers--and not other

refrigerator-freezers, freezers or compacts.'' (Joint Comments, No. 49

at 14).

``Dispensers for ice and/or water through the door affect the

performance of top-mounted freezer models in which the dispenser is

normally in the fresh food door and side-mounted freezer models in

which the dispenser is normally in the freezer door, in significantly

different ways. Because of this difference, the energy consumption of a

side-mounted freezer dispenser can be higher than a top-mounted freezer

dispenser. This is due to the greater amount of heat transferred

through a freezer door dispenser.'' (Joint Comments, No. 49 at 15).

``Most manufacturers do not build all product classes or all sizes

within a product class. This fact emphasizes the need to maximize the

total energy savings while considering the resultant economic impacts

to each company.'' (Joint Comments, No. 49 at 15).

The Department estimated both the long term and short term return

on investment (ROI) for a typical small and a typical large company for

each energy efficiency trial standard level considered and found that

this evaluation tends to support the Joint Comments position that

requiring the largest improvement in energy savings for the largest

selling classes of products will maximize the energy savings.

b. Compact Refrigerators, Refrigerator-Freezers, and Freezers. This

new set of classes (Nos. 11-18) includes all refrigerator products less

than 7.75 cubic feet and 36 inches or less in height. The total energy

consumption of all compact refrigerator products in the U.S. is less

than 2.6 percent of the total energy consumed by all sizes of

refrigerator products.

The only design options for compact refrigerator-freezers that were

identified by industry as feasible from a design and marketing aspect

were: improved gaskets, improved compressor efficiency and improved fan

motor efficiency. Compact refrigerator manufacturers indicated that the

other design options have extremely low design feasibility or marketing

utility when applied to their products (not buildable or not saleable).

The Joint Comments stated ``The five compact refrigerator/freezer

manufacturers supplying data for life cycle cost and payback analysis

identified a ``max tech'' limitation to their products of approximately

15 percent below 1993 levels. This level did not take into account

economic justification (consumer and manufacturer) or safe harbor

issues.'' (Joint Comments, No. 49 at 16). This assessment took into

account the following:

`` High efficiency compressors of 5.5 Energy Efficiency

Ratio (EER) are not realistic for compact refrigerator/freezers. Low

capacity compressors available for compact refrigerator/freezers in the

1998 time frame are expected to have efficiencies of approximately 3.6

EER.

`` Most compact refrigerator-freezer manufacturers are

small companies with limited research and development funding and

capital resources.

`` High efficiency foams require high pressure impingement

systems that are only economically viable for very large manufacturers.

Most compact manufacturers use what is known as an auto froth foaming

system (low pressure) that cannot produce high efficiency foam

insulation. Non-CFC auto froth formulations are also limited to

moderately energy efficient replacements.

`` In most cases, compact refrigerator/freezers and

freezers do not employ fan motors, mullions, auto-defrost or through-

the-door features. As a result, design strategies which relate to these

components or technologies are not available for improvement.

`` The need for high efficiency components by compact

refrigerator/freezer and freezer manufacturers carries a low priority

with component suppliers. Motor and compressor manufacturers apply

their engineering resources to larger volume manufacturers leaving the

low volume niche type compact products to the tail end of their design

cycles. For example, there are compact manufacturers that still have

not been provided with sample non-CFC-12 compressors that provide

acceptable energy efficiency for household appliance applications.''

(Joint Comments, No. 49 at 16, 17).

``Because of the special design constraints and limited number of

options applicable to compact refrigerator-freezers and freezers, it

was difficult to develop life-cycle cost analyses that reflected the

real marketing situation for these products. An LBL assessment using

inputs from AHAM compact manufacturers showed that an energy savings

level of 2 to 3 percent below the 1993 standards would result in a

minimum five-year payback for consumers. This assessment did not take

into consideration unique marketing restrictions of individual compact

refrigerator-freezer and freezer manufacturers.'' (Joint Comments, No.

49 at 17).

[[Page 37406]]

In an effort to balance the economic impact on the compact product

manufacturers and the consumers benefit from improvements in energy

efficiency in these products, the Joint Comments proposed an energy

level approximately 5 percent below the 1993 standards for all eight

compact type refrigerator-freezers and freezers. (Joint Comments, No.

49 at 17).

The Department agrees with the Joint Comments statement that there

are fewer design options available for improving the energy efficiency

of compact refrigerator products. The Department also recognizes that

there is relatively little opportunity for energy savings from the

compact classes, given that they consume only 2.6 percent of total

energy used by residential refrigerator products. Therefore, the

Department has analyzed compact refrigerators, freezers, and

refrigerator-freezers separately and is proposing separate energy

efficiency standards for the compact refrigerator products.

c. Household Freezers. The Joint Comments stated ``The category of

household freezers includes three product classes defined as: chest

freezers with manual defrost; vertical freezers with manual defrost;

and vertical freezers with automatic defrost. As a group, the freezer

product classes have technical and marketing constraints unique to

their individual markets. These design constraints are amplified by the

fact that the 1993 NAECA energy efficiency standards imposed an

additional 14% stricter target on household freezers than refrigerator/

freezers. Energy efficiency gains on household freezers out pace those

for any other appliance standard in the U.S. Some parties believe that

as a direct partial consequence of the 1993 NAECA standards, three

companies terminated production of these products.'' (Joint Comments,

No. 49 at 18).

``The number of energy saving options applicable to household

freezers is almost as limited as those for compact refrigerator/

freezers. The options applied by LBL in its ``max tech'' analysis

included increased wall and door thicknesses, higher EER compressors,

improved gaskets, and enhanced performance of evaporator and condenser

coils. In the automatic defrost vertical freezer product class,

adaptive defrost and more efficient motors are applied. These latter

options are not used on manual models.'' (Joint Comments, No. 49 at

18).

The Joint Comments stated the CFC replacement issue has been

especially difficult to resolve on freezer products. The preferred

refrigerant replacement, HFC-134a, ``has an additional 3 to 4 percent

energy penalty inherent in its performance at temperatures necessary

for household freezer products as compared to refrigerator-freezers.''

(Joint Comments, No. 49 at 19). ``The most common replacement for CFC-

11 in the blowing agent for foam insulation is hydrochlorofluorocarbon

(HCFC)-141b. Since this chemical is basically in a liquid phase while

exposed to temperatures produced in household freezers, the liquid

thermal conductivity is especially important in its performance as an

energy efficient CFC-11 replacement. As applied to household freezers,

however, this particular CFC-11 replacement carries an approximate 5 to

6 percent energy penalty when applied to household freezers.'' (Joint

Comments, No. 49 at 19).

``Freezers are an optional commodity in a typical U.S. household.

They are basically sold in the replacement market, and due to the price

sensitivity of this market, there is a reduced opportunity to pass

through costs of energy improvements to the consumers. Thus, if

regulatory induced costs cannot be passed on, the product line becomes

relatively unprofitable.'' (Joint Comments, No. 49 at 19)

After carefully reviewing the feasibility and energy efficiency

options in the max tech analysis, and considering inputs from

refrigerator manufacturers and compressor manufacturers, the Joint

Comments proposed standards levels for freezer products. The proposal

is based on most of the design options identified by DOE in the 1993

Advance Notice, but with the more conservative industry estimates of

energy savings. (Joint Comments, No. 49 at 20).

The statements made by the Joint Comments concerning freezers

support the Department's analysis.

d. Manual and Partial Defrost Refrigerators and Refrigerator-

Freezers. The Joint Comments stated: ``There are only a few models with

a small market niche in this declining product category. The percentage

of U.S. sales in these product classes is 1.7 percent and falling. Data

and analysis on elementary engineering and economic issues are

difficult to obtain. However, non-industry participants felt that it is

important to recommend a relatively stringent U.S. standard on this

product class because of the potential impact on similar products

produced in or for less-developed countries.'' (Joint Comments, No. 49

at 20). The Joint Comments believe it is likely these less-developed

countries will adopt similar standards. Because of the limited

availability of data and the small market, the Joint Comments proposed

an energy consumption standard for manual and partial defrost

refrigerator-freezers that is 10 percent lower than they proposed for

Class 3 refrigerator-freezers (automatic defrost with top-mounted

refrigerator-freezer without through-the-door ice service). (Joint

Comments, No 49 at 20).

``The energy consumption differential between automatic defrost and

non-automatic defrost units has been declining over time, and is

expected to decline further as adaptive defrost options become

incorporated into the automatic defrosting systems. The standards

proposal is based on a judgment of all the participants that a 10%

energy consumption difference for a given adjusted volume accounts for

the relatively irreducible minimum change in energy consumption

relating to a member's decision not to use automatic defrost.'' (Joint

Comments, No. 49 at 20).

An analysis of the energy savings options available for the manual

and partial defrost refrigerators and refrigerator-freezers by the

Department supports the level of standards proposed by the Joint

Comments parties. However, the concern raised by Joint Comments parties

regarding the potential impact on similar products produced in or for

less-developed countries was not considered by DOE.

e. Non-HCFC Products. The Joint Comments propose establishing

separate classes for refrigerator products which do not use HCFCs.

``These non-HCFC classes would permit 10% greater energy use than the

comparable HCFC-using classes to provide industry with a known,

feasible way of meeting the standards before 2003.'' (Joint Comments,

No. 49 at 21). The Joint Comments parties recommended that less

stringent standards, which would expire 6 years after their effective

date, be established for the HCFC-free refrigerator classes. It is

anticipated that alternative design options will be available by this

time. (Joint Comments, No. 49 at 21).

The Joint Comments recommended that the following conditions apply

to the standards for the HCFC-free classes:

``(1) 18 months prior to the total phaseout by EPA of HCFC-141b in

January 1, 2003, to wit, July 1, 2001;

``(2) 18 months prior to any earlier phaseout date or restriction

on use of HCFC's in refrigerator-freezer foam set by EPA; or

``(3) After the granting of a petition by DOE which demonstrates

that HCFC-141b is in very short supply or economically infeasible to

use due to,

[[Page 37407]]

for example, chemical supplier announcements or other actions affecting

supply or use.

``After the 1998 effective date of the basic standards and before

the effective date of the non-HCFC standard as stated in (1)-(3) above,

each manufacturer may annually produce non-HCFC units subject to the

alternative standard for up to 5% of its total production or for 10,000

units, whichever is less. This allowance to apply the non-HCFC standard

to a small number of units allows manufacturers the ability for field

testing with real consumers under actual commercial conditions which

will be necessary in the case of the advanced technology which will be

required to meet the 1998 standards.'' (Joint Comments, No. 49 at 21).

As discussed earlier, because of the uncertainty of the

availability of HCFC-141b replacements with equivalent thermal

properties, the Department has decided to develop new product classes

for products that do not use HCFC-141b or other HCFCs in the foam

insulation. However, the timetable for adoption of HCFC-free standards

proposed by the Joint Comments differs from that proposed by DOE in

this NOPR.

IV. Analysis

A. Engineering--Technical Issues

1. Efficiency Levels Analyzed

The Department conducted engineering analysis of those classes of

refrigerator products for which performance and cost data could be

obtained. The classes analyzed were: Top-mounted refrigerator-freezer

with auto defrost, top-mounted refrigerator-freezer with auto defrost

and through-the-door features, side-by-side refrigerator-freezer with

auto defrost, side-by-side refrigerator-freezer with auto defrost and

through-the-door features, bottom-mounted refrigerator-freezer with

auto defrost, upright freezer with auto defrost, upright freezer manual

defrost, chest freezer manual defrost and compact refrigerator-freezer

manual defrost. Data was collected by surveys of the industry,

extensive literature review and discussions with experts. This

information was used as the basis for determining the improvement in

performance and the manufacturer cost for each design option added to

the baseline unit. The engineering analysis determined the annual

energy use, life cycle costs and pay back periods for each combination

of design options. Proposed standards for classes which could not be

analyzed, due to the lack of data, have been based on the percentage in

performance improvement over current standards determined for a similar

class that was analyzed. (See TSD, Chapter 3).

The combination of design options which results in the most

performance improvement technologically feasible is call the ``max

tech'' design level. Table 2 presents the max tech performance levels

expressed as annual energy use for all analyzed classes of refrigerator

products.

Table 2.--Annual Energy Usage for Refrigerators, Refrigerator-Freezers,

and Freezers at Maximum Technologically Feasible Levels

------------------------------------------------------------------------

Annual

energy

Product class use (kWh/

yr)

------------------------------------------------------------------------

Refrigerator-Freezers:

Top Mounted Auto Defrost................................... 422

Top Mounted Auto Defrost with Through-the-Door Feature..... 517

Side-by-Side Auto Defrost.................................. 502

Side-by-Side Auto Defrost with Through-the-Door Feature.... 516

Bottom Mounted Auto Defrost................................ 444

Freezers:

Upright Auto Defrost....................................... 484

Upright Manual Defrost..................................... 278

Chest Manual Defrost....................................... 284

Compacts: Manual Defrost Refrigerator-Freezer................ 260

------------------------------------------------------------------------

The Department selected the max tech level and three other levels

from the engineering analysis for further examination. Table 3 presents

the four efficiency levels selected for analysis for the nine classes

of refrigerator products analyzed Level 4 corresponds to the highest

efficiency level, max tech, considered in the engineering analysis.

Table 3.--Standard Levels Analyzed for Refrigerators, Refrigerator-Freezers, and Freezers--Annual Energy Use

(kWh/yr)

----------------------------------------------------------------------------------------------------------------

Product class Baseline Level 1 Level 2 Level 3 Level 4

----------------------------------------------------------------------------------------------------------------

Refrigerator-Freezers:

Top Mounted Auto

Defrost............ 397 + 14.2 AV

(397 + 0.50 av) 275 + 9.8 AV

(275 + 0.35 av) 270 + 9.7 AV

(270 + 0.34 av) 260 + 9.3 AV

(260 + 0.33 av) 239 + 8.5 AV

(239 + 0.30 av)

Top Mounted Auto

Defrost with

Through the Door

Feature............ 462 + 13.0 AV

(462 + 0.46 av) 362 + 10.2 AV

(362 + 0.36 av) 330 + 9.3 AV

(330 + 0.32 av) 321 + 9.03 AV

(321 + 0.32 av) 300 + 8.5 AV

(300 + 0.30 av)

Side-by-Side Auto

Defrost............ 609 + 5.8 AV

(609 + 0.20 av) 514 + 4.9 AV

(514 + 0.17 av) 429 + 4.1 AV

(429 + 0.14 av) 415 + 4.0 AV

(415 + 0.14 av) 402 + 3.8 AV

(402 + 0.14 av)

Side-by-Side Auto

Defrost with

Through the Door

Feature............ 484 + 12.1 AV

(484 + 0.43 av) 405 + 10.1 AV

(405 + 0.36 av) 353 + 8.8 AV

(353 + 0.31 av) 336 + 8.4 AV

(336 + 0.30 av) 312 + 7.8 AV

(312 + 0.27 av)

Bottom Mounted Auto

Defrost............ 579 + 5.6 AV

(579 + 0.29 av) 476 + 4.6 AV

(476 + 0.16 av) 419 + 4.1 AV

(419 + 0.14 av) 393 + 3.8 AV

(393 + 0.13 av) 359 + 3.5 AV

(359 + 0.12 av)

Freezers:

Upright Auto Defrost 399 + 14.2 AV

(399 + 0.50 av) 349 + 12.4 AV

(349 + 0.44 av) 321 + 11.4 AV

(321 + 0.40 av) 288 + 10.3 AV

(288 + 0.36 av) 254 + 9.1 AV

(254 + 0.32 av)

Upright Manual

Defrost............ 275 + 8.6 AV

(275 + 0.30 av) 241 + 7.6 AV

(241 + 0.27 av) 187 + 5.8 AV

(187 + 0.21 av) 172 + 5.4 AV

(172 + 0.19 av) 158 + 5.0 AV

(158 + 0.17 av)

Chest Manual Defrost 170 + 11.8 AV

(170 + 0.42 av) 142 + 9.9 AV

(142 + 0.35 av) 117 + 8.1 AV

(117 + 0.29 av) 111 + 7.7 AV

(111 + 0.27 av) 102 + 7.1 AV

(102 + 0.25 av)

Compacts:

Manual Defrost

Refrigerator-

Freezer............ 292 + 13.8 AV

(292 + 0.48 av) 286 + 13.5 AV

(286 + 0.48 av) 280 + 13.2 AV

(280 + 0.47 av) 274 + 13.0 AV

(274 + 0.46 av) 274 + 13.0 AV

(274 + 0.46 av)

----------------------------------------------------------------------------------------------------------------

AV = Total adjusted volume, expressed in ft\3\

(av = Total adjusted volume, expressed in Liters)

[[Page 37408]]

Rather than presenting the results for all classes of refrigerator

products in today's NOPR, the Department selected a representative

class of refrigerator-freezer, and is presenting the results only for

that class. The results for the other classes can be found in the TSD

in the same sections as those referenced for the representative class.

The representative class for refrigerator products is a top mounted

automatic defrost refrigerator-freezer, which accounts for more than 50

percent of the sales of all refrigerator-freezer products. For this

representative class, trial standard level 1 accomplishes its

efficiency improvements from the baseline by increased insulation,

improved compressor efficiency, reduced condenser and evaporator motor

power, reduced gasket heat leak, and improvements in evaporator fan

efficiency; level 2 adds additional insulation and increased evaporator

area; level 3 adds increased condenser area and adaptive defrost, and

level 4 adds vacuum panels on the walls and doors. Similar design

options are used to achieve the above efficiencies for the other

classes and are found tabulated in Section 3.3 of the TSD.

2. Payback Period. Table 4 presents the payback periods for the

efficiency levels analyzed for the representative class of the product.

Payback for all classes of refrigerator products may be found in Tables

4.12 to 4.36 of the TSD.

Table 4.--Payback Periods of Design Options (Years) For Representative

Class of Refrigerator-Freezers

------------------------------------------------------------------------

Payback

Standard level period

------------------------------------------------------------------------

1............................................................ 3.7

2............................................................ 3.9

3............................................................ 4.5

4............................................................ 6.2

------------------------------------------------------------------------

3. Significance of Energy Savings. To estimate the energy savings

by the year 2030 due to revised standards, the energy consumption of

refrigerator products under the base case is compared to the energy

consumption of products complying with the candidate standard levels.

For the candidate energy conservation standards, the REM projects that

over the period 1998-2030, the following energy savings would result

for all classes of the product:

Level 1--7.12 Quads (7.51 EJ)

Level 2--9.05 Quads (9.55 EJ)

Level 3--10.26 Quads (10.82 EJ)

Level 4--12.05 Quads (12.71 EJ)

The Department finds that each of the increased standards levels

considered above would result in a significant conservation of energy.

B. Economic Justification

1. Economic Impact on Manufacturers and Consumers. The

manufacturers' cost increase per unit over the base case to meet the

efficiency of level 1 is $40.81; to meet level 2, 3, and 4, the

manufacturers' cost increases are $43.92, $54.33, and $86.15,

respectively. (See TSD, Table 3.5.)

At those levels of efficiency, the projected consumer price

increases are $69.22 for level 1 and $74.32, $92.56, and $146.02 for

standard levels 2 through 4, respectively. (See TSD, Table 4.1.)

The per-unit reduction in annual cost of operation (energy expense)

at level 1 is $19.06 for the representative class; standard level 2

would reduce energy expenses by $19.70; standard level 3 by $21.32; and

standard level 4 by $24.55. (See TSD, Table 4.1.)

The Lawrence Berkeley Laboratory Manufacturer Impact Model results

for all classes of refrigerator products show that revised standards

would cause a prototypical manufacturer to have fairly large reductions

in short-run return on equity (ROE) from the 7.3 percent return in the

base case. Standard levels 1 through 4 for refrigerator-freezers are

projected to produce short-run ROEs of 7.0 percent, 6.2 percent, 5.8

percent, and 7.1 percent, respectively. Similarly, revised standards

have only a small effect on the prototypical manufacturer's long run

ROE of 7.3 in the base case. Standard levels 1 through 4 for

refrigerator-freezers are projected to produce long-run ROEs of 7.4

percent, 7.2 percent, 7.2 percent, and 7.7 percent, respectively. (See

TSD, Tables 6.4 and 6.8.)

Most financial data of the type needed to characterize the

prototypical manufacturer are generally not available because most

manufacturing firms are subsidiaries or divisions of larger parent

companies. Hence, DOE assumes that the prototypical firm has largely

the same financial characteristics (e.g., debt-equity ratio, interest

rate on debt, etc.) as parent firms. Financial data for the parent

firms are based on publicly available sources such as Securities and

Exchange Commission 10K reports and company annual reports.

2. Life-Cycle Cost and Net Present Value (NPV). A life-cycle cost

is calculated for a unit meeting each of the candidate standard levels.

For the representative class, life-cycle costs at all standard levels

are less than the baseline unit. Of the four candidate standard levels,

a unit meeting level 2 has the lowest consumer life-cycle cost. (See

TSD, Figure 4.1.)

At each candidate standard level, the Department determines the

average change in life-cycle costs by considering only those consumers

who are being forced by the standard to move from a lower efficiency

unit to one which just meets the standard level being considered and

assuming that consumers who would purchase units at or above this

level, even without a standard, would not be affected. This is done by

assuming in the base case a distribution of purchases of units meeting

the respective efficiencies of each standard level. The base case

distribution is based on the distribution of current sales as a

function of efficiency. As each standard level is examined, the change

in life-cycle cost reported is the average change only for affected

consumers. Under this scenario, standard level 1 would cause reductions

in life-cycle cost for the average affected consumer of $143.36 for the

representative class of refrigerator products; standard level 2 would

reduce average life-cycle costs by $145.46; standard level 3, by

$145.24; and standard level 4, by $127.81. These life-cycle cost

reductions indicate that no standard level would cause any economic

burden on the average consumer. (See TSD, Table 4.1.) The Department

notes that standard levels 3 and 4 are beyond the minimum life-cycle

point which, if adopted, could require some consumers, who would have

otherwise purchased refrigerators having the characteristics of

standard level 2, to experience higher life cycle costs.

The net present value analysis, a measure of the net savings to

society, indicates that for all classes of refrigerator products,

standard level 1 would produce a NPV of $7.66 billion to consumers. The

corresponding net present values for standard levels 2-4 are $8.19

billion, $8.26 billion, and $7.78 billion, respectively. (See TSD,

Table 5.20.)

Even though the life cycle cost and net present value analyses

indicate that the proposed standards would result in substantial net

benefits for consumers, as well as the nation as a whole, the

Department is concerned about whether there might be adverse effects of

the proposed standards on identifiable groups of consumers. Because the

proposed standard level is below the level that is estimated to result

in minimum life-cycle cost (level 2), it would not preclude

manufacturers from producing refrigerators (or consumers from

purchasing) refrigerators with even lower life-cycle costs. This

assumes that

[[Page 37409]]

the affected consumers experienced discount rates, energy prices and

usage patterns similar to those assumed in the DOE analysis. However,

because DOE believes that significant numbers of refrigerator users are

likely to experience discount rates and energy prices that differ from

the average rates and prices used in DOE's basic analysis, DOE

performed additional sensitivity analyses using lower and higher

consumer discount rates (2 and 15 percent), and lower and higher energy

prices. These sensitivity analyses indicated that these variations in

discount rates and energy prices did not change the Department's

conclusion that the proposed standards would result in significant net

benefits and had little or no impact on the relative merits of the

different standard levels analyzed. DOE believes that there is little

variation in the usage patterns of refrigerators, and therefore did not

perform sensitivity analyses on this factor. The Department invites

comments on whether the proposed standard would have any significant

adverse effect on any identifiable group of consumers.

3. Energy Savings. As indicated above, DOE concludes that

standards, at each candidate standard level, will result in significant

savings of electricity consumption by refrigerator products.

4. Lessening of Utility or Performance of Products. As indicated

above, DOE established classes of products in order to assure that the

standards analyzed would not lessen the existing utility or performance

of refrigerator products.

5. Impact of Lessening of Competition. The determination of this

factor must be made by the Attorney General.

6. Need of the Nation to Save Energy. In addition to the reasons

for saving energy recognized when Congress established the appliance

standards program, there is an extraordinary need to save energy to

reduce damage to the environment. Refrigerator products use electricity

directly. In 1993, 1.74 quads (1.84 EJ) were used by refrigerator

products nationally. Improving the energy efficiency of these products

will reduce future electricity demands and thereby decrease air

pollution. (See TSD, Environmental Assessment.)

As a result of the national cap on emissions of sulfur dioxide,

together with a credit and trading system, established by the Clean Air

Act Amendments of 1990, the proposed refrigerator standards are

unlikely to have any significant effect on actual emissions of sulfur

dioxide. However, because the proposed standards will reduce overall

electricity demand, they will also enable electric utilities and other

covered sources of sulfur dioxide to spend less on sulfur dioxide

emission controls. This savings will be reflected in the marginal costs

experienced by utilities, but may not be fully reflected in the average

rates charged consumers. Because there may be some marginal benefit

associated with the avoidance of sulfur dioxide emission control costs,

DOE has continued to estimate the tons of sulfur dioxide emissions

represented by the reductions in electricity demand likely to result

from the standards. For all classes of refrigerator products at

standard level 1, over the years 1998 to 2030, the total estimated

sulfur oxide emissions (listed in equivalent weight of sulfur dioxide

(SO2)) affected would be 1017 kt (1120 thousand short tons).

During this time period, the peak annual SO2 emissions affected

would be 0.7 percent of the U.S. total. For standard levels 2-4, the

emissions affected are estimated to be 1292 kt (1424 thousand short

tons); 1465 kt (1615 thousand short tons); and 1720 kt (1896 thousand

short tons), respectively. The highest peak annual amount of emissions

affected at these levels is estimated to be 1.20 percent.

Standards are expected to result in some decreases in nitrogen

dioxide (NO2) emissions, although here too the Clean Air Act

Amendments established new requirements that may lead to regional caps

(and floors) on emissions of NO2 in certain nonattainment areas.

These new requirements could, in turn, reduce or eliminate the impact

of the proposed refrigerator standards on NO2 emissions in these

areas. It should also be noted that while the proposed refrigerator

standards are likely to result in significant reductions of NO2

emissions in areas of the country that are already in compliance with

national ambient air quality standards for NO2, the benefits of

such reductions are likely to be very small or insignificant compared

to those resulting from reductions in nonattainment areas. For standard

level 1, over the years 1998 to 2030, the total estimated NO2

reduction would be 966 kt (1065 thousand short tons), assuming that

there are no regional caps/floors on NO2 emissions. During this

time period, the peak annual reduction of NO2 emissions that are

expected to be emitted by power plants in the U.S. is 0.70 percent. For

standard levels 2-4, the reductions are 1228 kt (1353 thousand short

tons); 1393 kt (1535 thousand short tons); and 1635 kt (1802 thousand

short tons), respectively. The highest peak annual reduction of these

levels is 1.20 percent.

Another consequence of the standards will be the reduction of

carbon dioxide (CO2) emissions. For standard level 1, over the

years 1998 to 20

This text is long and has been trimmed here. Open the source document for the complete record.