Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

Federal RegisterDec 11, 2009

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EE-2006-BT-STD-0129]

RIN 1904-AA90

Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

AGENCY:

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

ACTION:

Notice of proposed rulemaking and public meeting.

SUMMARY:

The Energy Policy and Conservation Act (EPCA) prescribes energy conservation standards for various consumer products and commercial and industrial equipment, including residential water heaters, direct heating equipment (DHE), and pool heaters. EPCA also requires the U.S. Department of Energy (DOE) to determine whether more stringent, amended standards for these products would be technologically feasible and economically justified, and would save a significant amount of energy. In this notice, DOE is proposing amended energy conservation standards for residential water heaters (other than tabletop and electric instantaneous models), gas-fired DHE, and gas-fired pool heaters. DOE also is announcing a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

DOE will hold a public meeting on Thursday, January 7, 2010, from 9 a.m. to 4 p.m., in Washington, DC. DOE must receive requests to speak at the public meeting before 4 p.m., Wednesday, December 23, 2009. DOE must receive a signed original and an electronic copy of statements to be given at the public meeting before 4 p.m., Wednesday, December 30, 2009.

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than February 9, 2010. See section VII, “Public Participation,” of this NOPR for details.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW., Washington, DC 20585-0121. To attend the public meeting, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Brenda Edwards to initiate the necessary procedures.

Any comments submitted must identify the NOPR for Energy Conservation Standards for Heating Products, and provide the docket number EE-2006-BT-STD-0129 and/or regulatory information number (RIN) number 1904-AA90. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: ResWaterDirectPoolHtrs@ee.doe.gov.

Include docket number EE-2006-BT-STD-0129 and/or RIN 1904-AA90 in the subject line of the message.

Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Please submit one signed paper original.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. Please submit one signed paper original.

For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document (Public Participation).

Docket:

For access to the docket to read background documents or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 600, Washington, DC, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards at the above telephone number for additional information regarding visiting the Resource Room.

FOR FURTHER INFORMATION CONTACT:

Mr. Mohammed Khan, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-7892. E-mail:

Mohammed.Khan@ee.doe.gov.

Mr. Eric Stas or Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-9507. E-mail:

Eric.Stas@hq.doe.gov

Michael.Kido@hq.doe.gov.

For information on how to submit or review public comments and on how to participate in the public meeting, contact Ms. Brenda Edwards, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-2945. E-mail:

Brenda.Edwards@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule

II. Introduction

A. Consumer Overview

B. Authority

C. Background

1. Current Standards

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

2. History of Standards Rulemaking for Water Heaters, Direct Heating Equipment, and Pool Heaters

III. General Discussion

A. Test Procedures

1. Water Heaters

2. Direct Heating Equipment

3. Standby Mode and Off Mode Energy Consumption

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

1. Determination of Savings

2. Significance of Savings

D. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need of the Nation to Conserve Energy

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion

A. Market and Technology Assessment

1. Consideration of Products for Inclusion in This Rulemaking

a. Determination of Coverage Under the Act

b. Covered Products Not Included in This Rulemaking

2. Definition of Gas Hearth Direct Heating Equipment

3. Product Classes

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

B. Screening Analysis

1. Comments on the Screening Analysis

a. General Comments

b. Water Heaters

2. Technologies Considered

3. Heat Pump Water Heaters Discussion

a. Consumer Utility

b. Production, Installation, and Servicing Issues

c. General Comments

C. Engineering Analysis

1. Representative Products for Analysis

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

2. Ultra-Low NO

Gas-Fired Storage Water Heaters

3. Efficiency Levels Analyzed

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

4. Cost Assessment Methodology

a. Teardown Analysis

b. Cost Model

c. Manufacturing Production Cost

d. Cost-Efficiency Curves

e. Manufacturer Markup

f. Shipping Costs

g. Manufacturer Interviews

5. Results

6. Scaling to Additional Rated Storage Capacities for Water Heaters

7. Energy Efficiency Equations

D. Markups to Determine Product Price

E. Life-Cycle Cost and Payback Period Analyses

1. Product Cost

2. Installation Cost

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

3. Annual Energy Consumption

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

d. Rebound Effect

4. Energy Prices

5. Repair and Maintenance Costs

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

6. Product Lifetime

7. Discount Rates

8. Compliance Date of the Amended Standards

9. Product Energy Efficiency in the Base Case

a. Water Heaters

b. DHE

c. Pool Heaters

10. Inputs to Payback Period Analysis

11. Rebuttable-Presumption Payback Period

F. National Impact Analysis—National Energy Savings and Net Present Value Analysis

1. Shipments

a. Water Heaters

b. Direct Heating Equipment

c. Pool Heaters

d. Impacts of Standards on Shipments

2. Other Inputs

a. Base-Case Forecasted Efficiencies

b. Standards-Case Forecasted Efficiencies

c. Annual Energy Consumption

d. Site-to-Source Energy Conversion

e. Total Installed Costs and Operating Costs

f. Discount Rates

3. Other Inputs

a. Effects of Standards on Energy Prices

G. Consumer Subgroup Analysis

H. Manufacturer Impact Analysis

1. Overview

a. Phase 1: Industry Profile

b. Phase 2: Industry Cash-Flow Analysis

c. Phase 3: Subgroup Impact Analysis

2. GRIM Analysis

a. GRIM Key Inputs

b. GRIM Scenarios

3. Discussion of Comments

a. Responses to General Comments

b. Water Heater Comments

4. Manufacturer Interviews

a. Storage Water Heater Key Issues

b. Gas-Fired Instantaneous Water Heater Key Issues

c. Direct Heating Equipment Key Issues (Gas Wall Fan, Gas Wall Gravity, Gas Floor, and Gas Room Direct Heating Equipment)

d. Direct Heating Equipment Key Issues (Gas Hearth Direct Heating Equipment)

e. Pool Heater Key Issues

I. Employment Impact Analysis

J. Utility Impact Analysis

K. Environmental Analysis

1. Impacts of Standards on Emissions

2. Valuation of CO

Emissions Reductions

3. Valuation of Other Emissions Reductions

V. Analytical Results

A. Trial Standard Levels

1. Water Heaters

2. Direct Heating Equipment

3. Gas-Fired Pool Heaters

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers

a. Life-Cycle Cost and Payback Period

b. Analysis of Consumer Subgroups

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Water Heater Cash-Flow Analysis Results

b. Direct Heating Equipment Cash-Flow Analysis Results

c. Pool Heaters Cash-Flow Analysis Results

d. Impacts on Employment

e. Impacts on Manufacturing Capacity

f. Cumulative Regulatory Burden

g. Impacts on Small Businesses

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Net Present Value of Benefits from Energy Price Impacts

d. Impacts on Employment

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

C. Proposed Standards

1. Water Heaters

2. Direct Heating Equipment

3. Pool Heaters

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

1. Water Heater Industry

2. Pool Heater Industry

3. Direct Heating Equipment Industry Characteristics

a. Description and Estimated Number of Small Entities Regulated

b. Reasons for the Proposed Rule

c. Objectives of, and Legal Basis for, the Proposed Rule

d. Description and Estimate of Compliance Requirements

e. Duplication, Overlap, and Conflict With Other Rules and Regulations

f. Significant Alternatives to the Proposed Rule

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Public Meeting

B. Procedure for Submitting Requests to Speak

C. Conduct of Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

The Energy Policy and Conservation Act (42 U.S.C. 6291

et seq.;

EPCA or the Act), as amended, provides that any new or amended energy conservation standard DOE prescribes for certain consumer products, including residential water heaters, direct heating equipment (DHE), and pool heaters (collectively referred to in this document as the “three heating products”), shall be designed to “achieve the maximum improvement in energy efficiency * * * which the Secretary determines is technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B)) In accordance with these and other statutory provisions discussed in this notice, DOE proposes amended energy conservation standards for the three types of heating products listed above. Compliance with the proposed standards would be required for all residential water heaters listed in Table I.1 that are manufactured in or imported into the United States on or after five years after the date of publication of the final rule. The proposed standards would apply to all DHE and pool heaters listed in Table I.1 that are manufactured in or imported into the United States on or after three years after the date of publication of the final rule. Table I.1 sets forth the proposed standards for the products that are the subject of this rulemaking.

Table I.1—Proposed Amended Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters

Product class

Proposed standard level

Residential water heaters

Gas-fired Storage

For tanks with a Rated Storage Volume at or below 60 gallons: EF = 0.675 − (0.0012 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 60 gallons: EF = 0.717 − (0.0019 × Rated Storage Volume in gallons).

Electric Storage

For tanks with a Rated Storage Volume at or below 80 gallons: EF = 0.96 − (0.0003 × Rated Storage Volume in gallons)

For tanks with a Rated Storage Volume above 80 gallons: EF = 1.088 − (0.0019 × Rated Storage Volume in gallons).

Oil-fired Storage

EF = 0.68 − (0.0019 × Rated Storage Volume in gallons).

Gas-fired Instantaneous

EF = 0.82 − (0.0019 × Rated Storage Volume in gallons).

Product class

Proposed standard level

Direct heating equipment

Gas wall fan type up to 42,000 Btu/h

AFUE = 76%

Gas wall fan type over 42,000 Btu/h

AFUE = 77%

Gas wall gravity type up to 27,000 Btu/h

AFUE = 70%

Gas wall gravity type over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 71%

Gas wall gravity type over 46,000 Btu/h

AFUE = 72%

Gas floor up to 37,000 Btu/h

AFUE = 57%

Gas floor over 37,000 Btu/h

AFUE = 58%

Gas room up to 20,000 Btu/h

AFUE = 62%

Gas room over 20,000 Btu/h up to 27,000 Btu/h

AFUE = 67%

Gas room over 27,000 Btu/h up to 46,000 Btu/h

AFUE = 68%

Gas room over 46,000 Btu/h

AFUE = 69%

Gas hearth up to 20,000 Btu/h

AFUE = 61%

Gas hearth over 20,000 Btu/h and up to 27,000 Btu/h

AFUE = 66%

Gas hearth over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 67%

Gas hearth over 46,000 Btu/h

AFUE = 68%

Pool heaters

Gas-fired

Thermal Efficiency = 84%

* EF is the “energy factor,” and the “Rated Storage Volume” equals the water storage capacity of a water heater (in gallons), as specified by the manufacturer.

** Btu/h is “British thermal units per hour” and AFUE is “Annual Fuel Utilization Efficiency.”

DOE's analyses indicate that the proposed standards would save a significant amount of energy—an estimated 2.85 quads of cumulative energy over a 30-year period. This amount is equivalent to 61 days of U.S. gasoline use. Breaking these figures down by product type, the national energy savings of the proposed standards is estimated to be 2.60 quads for residential water heaters, 0.22 quads for DHE, and 0.03 quads for pool heaters.

The cumulative national net present value (NPV) of total consumer costs and savings from the proposed standards (in 2008$) ranges from $5.73 billion (at 7-percent discount rate) to $18.1 billion (at 3-percent discount rate). This is the estimated total value of future operating-cost savings minus the estimated increased product and installation costs, discounted to 2010.

The NPV of the proposed standards for water heaters ranges from $4.79 billion (7-percent discount rate) to $15.6 billion (3-percent discount rate). DOE estimates the industry net present value (INPV) for water heaters to be approximately $1,455 million in 2008$. If DOE adopts the proposed standards, it estimates U.S. water heater manufacturers will lose between 0.2 percent and 5.6 percent of the INPV, which is approximately −$2.4 to −$81.0 million. However, the NPV for consumers (at the 7-percent discount rate) is 59 to 1996 times larger than the industry losses due to the proposed standards with the 7-percent discount rate, and 193 to 6500 times larger than the industry losses due to the proposed standards with the 3-percent discount rate.

For DHE, the NPV of the proposed standards ranges from $0.91 billion (7-percent discount rate) to $2.22 billion (3-percent discount rate). DOE estimates the INPV for DHE to be approximately $104 million in 2008$. If DOE adopts the proposed standards, it estimates U.S. DHE manufacturers will lose between 1.9 percent and 5.9 percent of the INPV, which is approximately −$2.0 to −$6.2 million. However, the NPV for consumers (at the 7-percent discount rate) is 147 to 455 times larger than the industry losses due to the proposed standards with the 7-percent discount rate, and 358 to 1,110 times larger than the industry losses due to the proposed standards with the 3-percent discount rate.

For pool heaters, the NPV of the proposed standard ranges from $0.03 billion (7-percent discount rate) to $0.25 billion (3-percent discount rate). DOE estimates the INPV for pool heaters to be approximately $61.4 million in 2008$. If DOE adopts the proposed standards, it expects the impacts on U.S. pool heater manufacturers will be between a gain of 0.9 percent and a loss of 12.1 percent of the INPV, which is approximately −$0.5 million to −$7.5 million. However, the NPV for consumers (at the seven-percent discount rate) is 4 to 60 times larger than the industry losses due to the proposed standards at the 7-percent discount rate, and 33 to 498 times larger than the industry losses due

to the proposed standards at the 3-percent discount rate.

The economic impacts of the proposed standards on individual consumers (

i.e.,

the average life-cycle cost (LCC) savings) are predominately positive. For water heaters, DOE projects that the average LCC impact is a gain of $68 for gas-fired storage water heaters, $39 for electric storage water heaters, and $395 for oil-fired storage water heaters, and no change for gas-fired instantaneous water heaters. For DHE, DOE projects that the average LCC impact for consumers is a gain of $104 for gas wall fan DHE, $192 for gas wall gravity DHE, $13 for gas floor DHE, $143 for gas room DHE, and $96 for gas hearth DHE. For pool heaters, DOE projects that the average LCC impact for consumers is a loss of $13 (which represents only 0.2 percent of the average total LCC).

In addition, the proposed standards would be expected to provide significant environmental benefits. The proposed standards would potentially result in cumulative greenhouse gas emission reductions of 167 million tons (Mt) of carbon dioxide (CO

) from 2013 to 2045. Specifically, the proposed standards for water heaters would reduce CO

emissions by 154 Mt; the proposed standards for DHE would reduce CO

emissions by 8.5 Mt; and the proposed standard for pool heaters would reduce CO

emissions by 4.2 Mt. For the three types of heating products together, DOE estimates that the range of the monetized value of CO

emission reductions based on global estimates of the value of avoided CO

is $0.399 billion to $4.386 billion at a 7-percent discount rate and $0.902 billion to $9.925 billion at a 3-percent discount rate.

The proposed standards would also be expected to result in reduction in cumulative nitrogen oxides (NO

) emissions of 129 kilotons (kt). Specifically, the proposed water heater standards would result in cumulative NO

emissions reductions of 118 kt; the proposed standards for DHE would result in 7.7 kt of NO

emissions reductions; and the proposed standard for pool heaters would result in 3.7 kt of NO

emissions reductions.

The proposed standards for heating products would also be expected to result in power plant mercury (Hg) emissions reductions. For water heaters, cumulative Hg emissions would be reduced by 0.20 tons (t). The proposed standards for DHE and pool heaters would be expected to have a negligible impact on mercury emissions.

The benefits and costs of today's proposed rule can also be expressed in terms of annualized values. The annualized values refer to consumer operating cost savings, consumer incremental product and installation costs, the quantity of emissions reductions for CO

, NO

, and Hg, and the monetary value of emissions reductions. DOE calculated annualized values using discount rates of three percent and seven percent. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined are a steady stream of payments.

Table I.2, Table I.3, and Table I.4 present the annualized values for the standards proposed for water heaters, DHE, and pool heaters, respectively. The tables also present the annualized net benefit that results from summing the two monetary benefits and subtracting the consumer incremental product and installation costs. Although summing the value of operating cost savings with the value of CO

reductions (and other emissions reductions) provides a valuable perspective, please note the following. The operating cost savings are domestic U.S. consumer monetary savings found in market transactions, but in contrast, the CO

value is based on an estimate of imputed marginal social cost of carbon (SCC), which is meant to reflect the global benefits of CO

reductions. In addition, the assessments of operating cost savings and CO

savings are performed with different computer models, leading to different time frames for analysis. The operating cost savings are measured for the lifetime of appliances shipped in 2015-2045 or 2013-2043. The value of CO

, on the other hand is meant to reflect the present value of all future climate-related impacts, even those beyond 2065.

Table I.2—Annualized Benefits and Costs of Proposed Standards for Water Heaters (TSL 4)

Category

Unit

Primary estimate

(

AEO

reference case)

Low estimate

(

AEO

low-growth case)

High estimate

(

AEO

high-growth case)

Benefits

Monetized Operating Cost Savings

Million 2008$

59.88

68.79

57.29

65.66

61.62

70.86

Quantified Emissions Reductions

(Mt)

0.13

0.16

0.17

0.09

0.10

(kt)

0.112

0.119

0.134

0.143

0.085

0.091

Hg (t)

0.000

(0.000)

(0.001)

(0.000)

0.000

Monetized Avoided CO

Value (at $20/t).*

Million 2008$

4.20

4.84

5.24

6.08

3.01

3.47

Costs

Monetized Incremental Product and Installation Costs

2008$

56.66

54.59

56.66

54.59

56.66

54.59

Net Benefits

Monetized Value

Million 2008$

7.41

19.04

5.88

17.15

7.97

19.74

* For CO

, benefits reflect value of $20/t, which is in the middle of the values considered by DOE for valuing the potential global benefits resulting from reduced CO

emissions. For NO

and Hg, the annual benefits are very small and are thus not reported in the table.

DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy. Products achieving these standard levels are already commercially available. Based on the analyses culminating in this proposal, DOE found the benefits to the Nation of the proposed standards (energy savings, consumer LCC savings, national NPV increase, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some consumers). DOE considered higher efficiency levels as trial standard levels, and is still considering them in this rulemaking; however, DOE has tentatively concluded that the burdens of the higher efficiency levels would outweigh the benefits. With that said, based on consideration of public comments DOE receives in response to this notice and related information, DOE may adopt efficiency levels in the final rule that are either higher or lower than the proposed standards, or some level(s) in between the proposed standards and other efficiency levels presented.

DOE is proposing TSL 4 for residential water heaters as the level which it has tentatively concluded meet the applicable statutory criteria (i.e., the highest level that is technologically feasible, economically justified, and would result in significant conservation of energy). Based upon public comments and any accompanying data submissions, DOE would strongly consider other TSLs (as presented in this NOPR or at some level in between), some of which might provide an even higher level of energy savings and promote a market for advanced water heating technologies, including heat pump and condensing water heaters. Accordingly, DOE is presenting a variety of issues throughout today's notice upon which it is seeking

comment which will bear upon its consideration of TSL 5 or TSL 6 for residential water heaters in the final rule.

II. Introduction

A. Consumer Overview

EPCA currently prescribes energy conservation standards for the three heating products that are the subject of this rulemaking. DOE is proposing to raise the standards for the products shown in Table I.1. The proposed standards would apply to residential water heaters manufactured or imported on or after five years after the final rule publication date (

i.e.

, approximately March 31, 2015). The proposed standards would apply to DHE and pool heaters manufactured or imported on or after three years after the final rule publication date (

i.e.

, approximately March 31, 2013).

DOE's analyses suggest that consumers would realize benefits from the proposed standards. Although DOE expects that the purchase price of the more-efficient heating products would be higher than the average prices of these products today, for most consumers, the energy efficiency gains would result in lower energy costs that would more than offset the higher purchase price. For water heaters, the median payback period is 2.7 years for gas-fired storage water heaters, 5.8 years for electric storage water heaters, 0.5 years for oil-fired storage water heaters, and 23.5 years for gas-fired instantaneous water heaters. For DHE, the median payback period is 6.0 years for gas wall fan DHE, 8.3 years for gas wall gravity DHE, 14.7 years for gas floor DHE, 5.3 years for gas room DHE and 0.0 years for gas hearth DHE. (The reason that the median payback period for gas hearth DHE is zero is because for about two-thirds of the consumers, there is no incremental cost to get to the proposed standard level). For pool heaters, the median payback period is 13.0 years.

When the overall net savings are summed over the lifetime of these products, water heater consumers will save, on average, $68 for gas-fired storage water heaters, $30 for electric storage water heaters, $305 for oil-fired storage water heaters, and $0 for gas-fired instantaneous water heaters, compared to their life-cycle expenditures on base-case water heaters (

i.e.

, the equipment expected to be purchased in the absence of revised energy conservation standards). (For gas-fired instantaneous water heaters, the average LCC for the proposed standard level is the same as the average LCC in the base case, so the savings are zero.) The average LCC impact for DHE consumers is a gain of $104 for gas wall fan DHE, $192 for gas wall gravity DHE, $13 for gas floor DHE, $143 for gas room DHE, and $96 for gas hearth DHE, compared to their life-cycle expenditures on base-case products. Pool heater consumers will see, on average, a slight increase in their life-cycle costs, compared to their expenditures on base-case products.

B. Authority

Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A

of Title III (42 U.S.C. 6291-6309) establishes the Energy Conservation Program for Consumer Products Other Than Automobiles. The program covers consumer products and certain commercial equipment (referred to hereafter as “covered products”), including the three types of heating products that are subject to this rulemaking. (42 U.S.C. 6292(a)(4), (9) and (11)) EPCA prescribes energy conservation standards for the three heating products. (42 U.S.C. 6295(e)(1)-(3)) The statute further directs DOE to conduct two cycles of rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(e)(4)) As explained in further detail in section II.C, “Background,” this rulemaking represents the second round of amendments to the water heater standards, and the first round of amendments to the DHE and pool heater standards.

This part was originally titled Part B. It was redesignated Part A in the United States Code for editorial reasons.

Under the Act, DOE's energy conservation program for covered products consists essentially of three parts: (1) Testing; (2) labeling; and (3) Federal energy conservation standards. The Federal Trade Commission (FTC) is responsible for the labeling provisions for consumer products, and DOE implements the remainder of the program. Section 323 of the Act authorizes DOE, subject to certain criteria and conditions, to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. Manufacturers of covered products must use the DOE test procedure as the basis for certifying to DOE that their products comply with applicable energy conservation standards adopted under EPCA and for representing the efficiency of those products. Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted under EPCA. (42 U.S.C. 6293) The test procedures for water heaters, unvented DHE, vented DHE, and pool heaters appear at Title 10 Code of Federal Regulations (CFR) part 430, subpart B, appendices E, G, O, and P, respectively.

EPCA provides criteria for prescribing amended standards for covered products. As indicated above, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, EPCA precludes DOE from adopting any standard that would not result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) Moreover, DOE may not prescribe a standard for certain products (including the three heating products) if no test procedure has been established. (42 U.S.C. 6295(o)(3)(A)) The Act also provides that, in deciding whether a standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must do so after receiving comments on the proposed standard and by considering, to the greatest extent practicable, the following seven factors:

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

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

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

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

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

6. The need for national energy and water conservation; and

7. Other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

Furthermore, EPCA contains what is commonly known as an “anti-backsliding” provision, which prohibits

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

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

Under 42 U.S.C. 6295(q)(1), EPCA specifies requirements for promulgation of a standard for a type or class of covered product that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products “for any group of covered products which have the same function or intended use, if * * * products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must “consider such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate.

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

Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) However, DOE can grant waivers of Federal preemption for particular State laws or regulations in accordance with the procedures and other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d))

Finally, section 310(3) of the Energy Independence and Security Act of 2007 (EISA 2007; Pub. L. 110-140) amended EPCA to prospectively require that energy conservation standards address standby mode and off mode energy use. Specifically, when DOE adopts new or amended standards for a covered product after July 1, 2010, the final rule must, if justified by the criteria for adoption of standards in section 325(o) of EPCA, incorporate standby mode and off mode energy use into a single standard if feasible, or otherwise adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)) Because the final rule in this rulemaking is scheduled for adoption by March 2010, this requirement does not apply in this rulemaking, and DOE has not attempted to address the standby mode or off mode energy use here. DOE is currently working on a test procedure rulemaking to address standby mode and off mode energy consumption for the three types of heating products that are the subject of this rulemaking.

C. Background

1. Current Standards

a. Water Heaters

On January 17, 2001, DOE prescribed the current energy conservation standards for residential water heaters manufactured on or after January 20, 2004. 66 FR 4474. This final rule completed the first amended standards rulemaking for water heaters required under 42 U.S.C. 6295(e)(4)(A). The standards consist of minimum energy factors (EF) that vary based on the storage volume of the water heater, the type of energy it uses (

i.e.

, gas, oil, or electricity), and whether it is a storage, instantaneous, or tabletop model. 10 CFR 430.32(d). The water heater energy conservation standards are set forth in Table II.1 below.

Table II.1—Current Federal Energy Conservation Standards for Residential Water Heaters

Product class

Energy factor as of January 20, 2004

1. Gas-Fired Storage Water Heater

EF = 0.67 − (0.0019 × Rated Storage Volume in gallons).

2. Oil-Fired Storage Water Heater

EF = 0.59 − (0.0019 × Rated Storage Volume in gallons).

3. Electric Storage Water Heater

EF = 0.97 − (0.00132 × Rated Storage Volume in gallons).

4. Tabletop Water Heater

EF = 0.93 − (0.00132 × Rated Storage Volume in gallons).

5. Gas-Fired Instantaneous Water Heater

EF = 0.62 − (0.0019 × Rated Storage Volume in gallons).

6. Instantaneous Electric Water Heater

EF = 0.93 − (0.00132 × Rated Storage Volume in gallons).

b. Direct Heating Equipment

EPCA prescribes the energy conservation standards for DHE, which apply to gas-fired products manufactured on or after January 1, 1990. (42 U.S.C. 6295(e)(3)) These standards consist of several minimum annual fuel utilization efficiency (AFUE) levels, each of which applies to units of a particular type (

i.e.

, wall fan, wall gravity, floor, room) and heating capacity range.

. These statutory standards have been codified in DOE's regulations at 10 CFR 430.32(i). The DHE energy conservation standards are set forth in Table II.2 below. DOE notes that while electric DHE are available, standards for these products are outside the scope of today's rulemaking. See IV.A.1.b for a more detailed discussion of DHE coverage under EPCA.

Table II.2—Current Federal Energy Conservation Standards for Direct Heating Equipment

Direct heating equipment design type

Product class

Btu/h

Annual fuel

utilization

efficiency, as of

Jan. 1, 1990

Gas Wall Fan

Up to 42,000

Over 42,000

Gas Wall Gravity

Up to 10,000

Over 10,000 and up to 12,000

Over 12,000 and up to 15,000

Over 15,000 and up to 19,000

Over 19,000 and up to 27,000

Over 27,000 and up to 46,000

Over 46,000

Gas Floor

Up to 37,000

Over 37,000

Gas Room

Up to 18,000

Over 18,000 and up to 20,000

Over 20,000 and up to 27,000

Over 27,000 and up to 46,000

Over 46,000

c. Pool Heaters

EPCA requires pool heaters manufactured on or after January 1, 1990 to have a thermal efficiency no less than 78 percent. The thermal efficiency for this product is measured by testing in accordance with the DOE test procedure for pool heaters codified in 10 CFR 430, subpart B, Appendix P. The statutory standard for pool heaters has been codified in DOE's regulations at 10 CFR 430.32(k).

2. History of Standards Rulemaking for Water Heaters, Direct Heating Equipment, and Pool Heaters

Before being amended by the National Appliance Energy Conservation Act of 1987 (NAECA; Pub. L. 100-12), Title III of EPCA included water heaters and home heating equipment as covered products. NAECA's amendments to EPCA included replacing the term “home heating equipment” with “direct heating equipment,” adding pool heaters as a covered product, establishing energy conservation standards for these two products as well as residential water heaters, and requiring that DOE determine whether these standards should be amended. (42 U.S.C. 6295(e)(1)-(4)) As indicated above, DOE amended the statutorily-prescribed standards for water heaters in 2001 (66 FR 4474 (Jan. 17, 2001)), but has not amended the statutory standards for DHE or pool heaters.

DOE initiated this rulemaking on September 27, 2006, by publishing on its Web site its “Rulemaking Framework for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters.” (A PDF of the framework document is available at

http://www.eere.energy.gov/buildings/appliance_standards/residential/pdfs/heating_equipmentframework_092706.pdf

.) DOE also published a notice announcing the availability of the framework document and a public meeting and requesting comments on the matters raised in the document. 71 FR 67825 (Nov. 24, 2006). The framework document described the procedural and analytical approaches that DOE anticipated using to evaluate potential energy conservation standards for the three heating products and identified various issues to be resolved in conducting the rulemaking.

DOE held the public meeting on January 16, 2007, where it: Presented the contents of the framework document; described the analyses it planned to conduct during the rulemaking; sought comments from interested parties on these subjects; and in general, sought to inform interested parties about, and facilitate their involvement in, the rulemaking. Interested parties that participated in the public meeting discussed the following issues: the scope of coverage for the rulemaking; product classes; efficiency levels analyzed in the engineering analysis; installation, repair, and maintenance costs; and product and fuel switching. At the meeting and during the public comment period, DOE received many comments that helped DOE identify and resolve the issues involved in this rulemaking to consider amended energy conservation standards for the three types of heating products.

DOE then gathered additional information and performed preliminary analyses to help develop the potential energy conservation standards for the three heating products. This process culminated in DOE's announcement of another public meeting to discuss and receive comments on the following matters: The product classes DOE planned to analyze; the analytical framework, models, and tools that DOE has been using to evaluate standards; the results of the preliminary analyses DOE performed; and potential standard levels that DOE could consider. 74 FR 1643 (Jan. 13, 2009) (the January 2009 notice). DOE also invited written comments on these subjects and announced the availability of a preliminary technical support document (preliminary TSD) to inform interested parties and enable them to provide comments.

. (The preliminary TSD is available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/water_pool_heaters_prelim_tsd.html

.) DOE stated its interest in receiving comments on other relevant issues that participants believe DOE should address in this NOPR, which would affect energy conservation standards for the three heating products.

. at 1646.

The preliminary TSD provided an overview of the activities DOE undertook in developing potential standard levels for the three heating products and discussed the comments DOE received in response to the framework document. It also described the analytical framework that DOE used (and continues to use in this rulemaking), including a description of the methodology, the analytical tools, and the relationships among the various analyses that are part of the rulemaking. The preliminary TSD described in detail each analysis DOE performed up to that point, including inputs, sources,

methodologies, and results. DOE examined each of the three heating products in each of the following analyses:

• A

market and technology assessment

addressed the scope of this rulemaking (

i.e.

, which types of heating products this rulemaking covers), identified the potential classes for each product, characterized the markets for these products, and reviewed techniques and approaches for improving product efficiency.

• A

screening analysis

reviewed technology options to improve the efficiency of each of the three heating products and weighed these options against DOE's four prescribed screening criteria (

i.e.

, technological feasibility; practicability to manufacture, install, and service; adverse impacts on product utility or product availability; and adverse impacts on health or safety).

• An

engineering analysis

estimated the manufacturer selling prices (MSPs) associated with more efficient water heaters, DHE, and pool heaters.

• An

energy use analysis

estimated the annual energy use in the field of each of the three heating products.

• A

markups analysis

developed factors to convert estimated MSPs derived from the engineering analysis to consumer prices.

• A

life-cycle cost analysis

calculated, at the consumer level, the discounted savings in operating costs throughout the estimated average life of the product compared to any increase in installed costs likely to result directly from a given standard.

• A

payback period (PBP) analysis

estimated the amount of time it takes consumers to recover the higher purchase expense of more energy efficient products through lower operating costs.

• A

shipments analysis

estimated shipments of each of the three heating products over the time period examined in the analysis (

i.e.,

2015-2045 for water heaters and 2013-2043 for DHE and pool heaters) under both a base-case scenario (

i.e.,

assuming no new standards) and a standards-case scenario (

i.e.,

assuming new standards at the various levels under consideration). The shipments analysis provides key inputs to the national impact analysis (NIA).

• A

national impact analysis

assessed the aggregate impacts at the national level of potential energy conservation standards for each of the three heating products, as measured by the net present value of total consumer economic impacts and national energy savings.

• A

preliminary manufacturer impact analysis

took the initial steps in evaluating the effects on manufacturers of potential new efficiency standards.

In the January 2009 notice, DOE summarized in detail the nature and function of the following analyses: (1) Engineering, (2) energy use characterization, (3) markups to determine installed prices, (4) LCC and PBP analyses, and (5) national impact analysis. 74 FR 1643, 1645-46 (Jan. 13, 2009).

The public meeting announced in the January 2009 notice took place on February 9, 2009. At this meeting, DOE presented the methodologies and results of the analyses set forth in the preliminary TSD. The major topics discussed at the February 2009 public meeting included the product classes for the rulemaking, the treatment of ultra-low NO

water heaters, heat pump water heaters screening considerations, installation costs and concerns for heat pump water heaters, the manufacturing costs for max-tech products, pool heater shipments, the energy-use adjustment for gas-fired instantaneous water heaters, and the compliance dates for amended standards. The comments received since publication of the January 2009 notice, including those received at the February 2009 public meeting, have contributed to DOE's proposed resolution of the issues in this rulemaking. This NOPR quotes and summarizes many of these comments, and responds to the issues they raised. (A parenthetical reference at the end of a quotation or paraphrase provides the location of the relevant source in the public record.)

III. General Discussion

A. Test Procedures

As noted above, DOE's current test procedures for water heaters, vented DHE, and pool heaters appear at Title 10 Code of Federal Regulations (CFR) part 430, subpart B, appendices E, O, and P, respectively. DOE uses these test procedures to determine whether the products comply with standards adopted under EPCA. (42 U.S.C. 6293)

1. Water Heaters

During the preliminary analysis, DOE received a number of comments on the test procedure for residential water heaters. Edison Electric Institute (EEI) stated that DOE should modify the values for hot water use and the number of daily draws in the water heater test procedure to more closely resemble field conditions (

i.e.,

include more shorter draws, rather than fewer longer draws), and SEISCO INTERNATIONAL (SEISCO) recommended the adoption of a testing protocol for water heaters that can best simulate real world usage patterns. (EEI, No. 40 at p.5; SEISCO, No. 41 at p. 3)

Southern Company (Southern), Bock Water Heaters (Bock), and EEI all stated that DOE needs to revise the test procedure to account for the actual performance of gas-fired instantaneous water heaters. (Southern, No. 50 at p. 2; Bock, No. 53 at p. 3; EEI, No. 40 at p. 5)

“EEI, No. 40 at p. 5” refers to: (1) To a statement that was submitted by the Edison Electric Institute. It was recorded in the Resource Room of the Building Technologies Program in the docket under “Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters,” Docket Number EERE-2006-BT-STD-0129, as comment number 40; and (2) a passage that appears on page 5 of that statement.

DOE acknowledges that the actual hot water use and the number of daily draws seen in the field can vary greatly depending upon occupancy and consumer usage patterns for each type of water heater. DOE's test procedure attempts to normalize the usage across fuel types by specifying a typical draw pattern and total hot water usage. DOE accounts for the variability of these parameters on the energy consumption of the water heater using: (1) A hot water draw model that accounts for field conditions in a representative sample of U.S. homes; and (2) data from field studies of gas-fired instantaneous water heaters that incorporate a distribution of correction factors to account for actual field operation. These adjustments are used to estimate the impacts on consumers of amended standards in the LCC and PBP analysis.

In the past, the issue of whether the efficiency levels examined by DOE in this NOPR are achievable using the current DOE test procedures for residential water heaters has received much attention from commenters. In particular, several manufacturers either through manufacturer interviews or docket submissions have expressed their concern that as efficiencies increase and approach the theoretical maximum efficiency for electric resistance water heating (

i.e.,

1.0 EF), the ability to consistently and repeatedly achieve those efficiencies is significantly hindered by the variations and inaccuracies that are inherent in the current DOE test procedure. During engineering and manufacturer interviews, manufacturers have indicated that this becomes an increasingly important issue at 0.95 EF.

Rheem Manufacturing Company (Rheem) commented that the nature of the DOE test procedure, including test set-up variations, instrumentation, and measurement inaccuracies, limits the attainable energy factor values. Rheem

stated that DOE should reevaluate the current test procedure to determine whether it can accurately measure the EF levels being proposed for standards, especially if a standard is set at or near the theoretically maximum-attainable EF. (Rheem, No. 49 at pp. 3-4)

DOE agrees with Rheem's assertion that as the theoretical limit is reached for a covered product utilizing a given technology (

e.g.,

electric resistance storage water heaters), the limitations imposed by the instrumentation, test set-up, and measurement accuracies become increasingly important. In response, DOE notes that there are currently several models in AHRI's Directory of certified residential water heaters that are listed with energy factors of 0.95 EF over a range of storage volumes. DOE believes this fact demonstrates that it is possible for manufacturers to make products that can repeatedly achieve an energy factor of 0.95 and can be certified at this efficiency level. In order to further verify the ability of manufacturers to achieve this efficiency level, DOE performed its own research, which consisted of independent third-party testing of several water heater models rated at 0.95 EF with rated storage volumes spanning 30 to 80 gallons. Of the five models tested that were rated at 0.95 EF, four fell within the acceptable range of values to be rated and certified at 0.95 EF, while only one model failed to achieve an efficiency that would be acceptable for a 0.95 EF rating. This further demonstrates the ability of manufacturers to consistently achieve 0.95 EF, as the large majority of the sample of models tested did reach an acceptable value for certification at 0.95 EF.

DOE has tentatively concluded that the TSLs being considering in the proposed rule provide ample room for manufacturers to innovatively design products which meet the standards using the existing test procedure. DOE's test results further provide evidence that electric storage water heaters exist at TSL 4 (0.95 EF at the representative rated storage capacity) across a range of storage volumes in the market today. In addition, DOE notes that once the product surpasses the theoretical maximum of a given technology by utilizing a different design these problems are mitigated. Consequently, DOE does not believe commenter's concerns regarding the repeatability and accuracy of the test procedure apply to TSL 6 and 7, where DOE is considering advance technology water heaters, including heat pump water heaters.

The Natural Resources Defense Council (NRDC) stated that the water heater test procedure fails to capture all of the cost-effective efficiency measures; the American Council for an Energy-Efficient Economy (ACEEE) and NRDC both stated that due to test procedure flaws (

e.g.,

giving no efficiency advantage for an insulated tank bottom), manufacturers are generally not willing to incorporate enhanced efficiency features because product costs are likely to rise without improving the rated energy efficiency. (NRDC, No. 48 at p. 3; ACEEE, No. 35 at p. 4) DOE acknowledges that the current test procedure may not reflect recent advances in technology. DOE believes, however, that the test procedure provides satisfactory methods for measuring performance of the efficiency levels considered in this rulemaking. Furthermore, the design paths that can be used to achieve the considered efficiency levels are given appropriate credit by the test procedure. DOE believes that the appropriate time to address the concerns raised is during the next revision of DOE's test procedure.

2. Direct Heating Equipment

The energy conservation standards set by EPCA for DHE are consistent with the energy efficiency metric described in the vented home heating equipment test procedure. On May 12, 1997, DOE published a final test procedure rule (the May 1997 final rule) in the

Federal Register

that amended the test procedures for DHE, particularly for vented home heating equipment. 62 FR 26140. In this rulemaking, DOE proposes that this test procedure be applied to establish the efficiency of vented gas hearth DHE.

3. Standby Mode and Off Mode Energy Consumption

EPCA, as amended by EISA 2007 requires DOE to amend the test procedures for the three types of heating products to include the standby mode and off mode energy consumption measurements. (42 U.S.C. 6295(gg)(2)(B)(v)) Consistent with EISA 2007's statutory deadline for these changes, DOE intends to amend its test procedures to incorporate these measurements by March 31, 2010. DOE is handling standby mode and off mode energy use for the three heating products in a separate rulemaking.

B. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening analysis, which it bases on information it has gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such analysis, DOE develops a list of design options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of these means for improving efficiency are technologically feasible. DOE considers a design option to be technologically feasible if it is in use by the relevant industry or if research has progressed to the development of a working prototype. “Technologies incorporated in commercial products or in working prototypes will be considered technologically feasible.” 10 CFR 430, subpart C, appendix A, section 4(a)(4)(i).

Once DOE has determined that particular design options are technologically feasible, it evaluates each design option in light of the following additional screening criteria: (1) Practicability to manufacture, install, or service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. Section IV.B of this notice discusses the results of the screening analysis for the three types of heating products, particularly the designs DOE considered, those it screened out, and those that are the basis for the efficiency levels in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt (or not adopt) an amended or new energy conservation standard for a type or class of covered product, it must “determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible” for such product. (42 U.S.C. 6295(p)(1)) Accordingly, DOE determined the maximum technologically feasible (“max-tech”) efficiency levels for the three heating products in the engineering analysis using the most efficient design parameters that lead to the creation of the highest product efficiencies possible. (See chapter 5 of the NOPR TSD.)

The max-tech efficiency levels are set forth in TSL 7 for residential water heaters, TSL 6 for DHE, and TSL 6 for pool heaters. For the representative rated storage volumes and input capacity ratings within a given product class, products with these efficiency levels were or are now being offered for sale, or there is a prototype that has

been tested and developed. No products at higher efficiency levels are currently available. Table III.1 lists the max-tech efficiency levels that DOE determined for this rulemaking.

Table III.1—Max-Tech Efficiency Levels for the Residential Heating Products Rulemaking

Product class

Representative product

Max-tech efficiency level

Residential water heaters

Gas-Fired Storage Water Heater

Rated Storage Volume = 40 Gallons

EF = 0.80

Electric Storage Water Heater

Rated Storage Volume = 50 Gallons

EF = 2.2

Oil-Fired Storage Water Heater

Rated Storage Volume = 32 Gallons

EF = 0.68

Gas-Fired Instantaneous Water Heater

Rated Storage Volume = 0 Gallons, Rated Input Capacity = 199,999 Btu/h

EF = 0.95

Direct heating equipment

Gas Wall Fan Type

Rated Input Capacity = Over 42,000 Btu/h

AFUE = 80%

Gas Wall Gravity Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 72%

Gas Floor Type

Rated Input Capacity = Over 37,000 Btu/h

AFUE = 58%

Gas Room Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 83%

Gas Hearth Type

Rated Input Capacity = Over 27,000 Btu/h and up to 46,000 Btu/h

AFUE = 93%

Pool heaters

Gas Fired

Rated Input Capacity = 250,000 Btu/h

Thermal Efficiency = 95%

See section IV.C.3 for additional details of the max-tech efficiency levels and discussion of related comments from interested parties on the preliminary analysis. In this NOPR, DOE again seeks public comment on the max-tech efficiency levels identified for its analyses. Specifically, DOE requests information about whether the efficiency levels identified by DOE would be achievable using the technologies screened-in during the screening analysis (see section IV.B), especially for gas-fired storage water heaters, and whether even higher efficiencies would be achievable using screened-in technologies. (See Issue 1 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

C. Energy Savings

1. Determination of Savings

DOE used its NIA spreadsheet to estimate energy savings expected to result from amended energy conservation standards for products that would be covered under today's proposed rule. (Section IV.F of this notice and chapter 10 of the NOPR TSD describe the NIA spreadsheet model.) For each TSL, DOE forecasted energy savings over the period of analysis (beginning in 2013 (DHE, pool heaters) or 2015 (water heaters), the year that compliance with the amended standards would be required, and ending 30 years later) relative to the base case. (The base case represents the forecast of energy consumption in the absence of amended energy conservation standards.) Stated another way, DOE quantified the energy savings attributable to potential amended energy conservation standards as the difference in energy consumption between the standards case and the base case.

The NIA spreadsheet model calculates the energy savings in site energy, which is the energy directly consumed on location by an individual product. DOE reports national energy savings on an annual basis in terms of the aggregated source (primary) energy savings, which are the energy savings used to generate and transmit the energy consumed at the site. To convert site energy to source energy, DOE derived conversion factors, which change with time, from the Energy Information Agency's (EIA)

Annual Energy Outlook 2009 (AEO2009)

For results of DOE's National Energy Savings (NES) analysis, see section V.B.3 of this notice or chapter 10 of the NOPR TSD.

2. Significance of Savings

As noted above, under 42 U.S.C. 6295(o)(3)(B), DOE is prohibited from adopting a standard for a covered product if such standard would not result in “significant” energy savings. While the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in

Natural Resources Defense Council

Herrington,

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

D. Economic Justification

1. Specific Criteria

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

a. Economic Impact on Manufacturers and Consumers

EPCA requires DOE to consider the economic impact on manufacturers and consumers of products when determining the economic justification of a standard. (42 U.S.C. 6295(o)(2)(B)(i)(I)) In determining the impacts of an amended standard on manufacturers, DOE first determines the quantitative impacts using an annual cash-flow approach. This includes both a short-term assessment—based on the cost and capital requirements during the period between the announcement of a regulation and when the regulation comes into effect—and a long-term

assessment over the 30-year analysis period. The impacts analyzed include INPV (which values the industry on the basis of expected future cash flows), annual cash flows, changes in revenue and income, and other measures of impact, as appropriate. DOE analyzes and reports the impacts on different types of manufacturers, paying particular attention to impacts on small manufacturers. DOE also considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for plant closures and loss of capital investment. Finally, DOE accounts for cumulative impacts of different DOE regulations and other regulatory requirements on manufacturers.

For consumers, measures of economic impact include the changes in LCC and PBP for each TSL. The LCC, which is also separately specified as one of the seven factors to be considered in determining the economic justification for a new or amended standard (42 U.S.C. 6295(o)(2)(B)(i)(II)), is discussed in the following section.

For the results of DOE's analysis of the economic impacts of potential standards on manufacturers and consumers, see section V.B of this notice and chapters 8 and 12 of the NOPR TSD.

b. Life-Cycle Costs

The LCC is the sum of the purchase price of a product (including associated installation costs) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. In this rulemaking, DOE calculated both LCC and LCC savings for various efficiency levels for each product. The LCC analysis estimated the LCC for representative heating products in housing units that represent the segment of the U.S. housing stock that uses these appliances. Through the use of a housing stock sample, DOE determined for each household in the sample the energy consumption of the heating product and the appropriate energy prices. By using a representative sample of households, the analysis captured the wide variability in energy consumption and energy prices associated with heating product use. For each household, DOE sampled the values of several inputs to the LCC calculation from probability distributions. For purposes of the analysis, DOE assumes that the consumer purchases the product in the year the standard becomes effective.

DOE presents the LCC savings as a distribution, with a mean value and a range across the sample for each product. This approach permits DOE to identify the percentage of consumers achieving LCC savings or attaining certain payback values due to an amended energy conservation standard, in addition to the average LCC savings or average payback for that standard.

For the results of DOE's LCC and PBP analyses, see section V.B.1.a of this notice and chapter 8 of the NOPR TSD.

c. Energy Savings

While significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, the Act requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE used the NES spreadsheet results in its consideration of total projected savings.

For the results of DOE's energy savings analyses, see section V.B.3.a of this notice and chapter 10 of the NOPR TSD.

d. Lessening of Utility or Performance of Products

In establishing product classes and evaluating their potential for improved energy efficiency, DOE sought to develop potential standards for the three types of heating products that would not lessen the utility or performance of these products. During the screening analysis, DOE tentatively concluded that the efficiency levels being considered would not necessitate changes in product design that would reduce utility or performance of the three types of heating products that are the subject of this rulemaking. Therefore, none of the TSLs presented in today's NOPR would reduce the utility or performance of the products under consideration. (42 U.S.C. 6295(o)(2)(B)(i)(IV))

For the results of DOE's analyses related to the impact of potential standards on product utility and performance, see section IV.B of this notice and chapter 4 of the NOPR TSD, the screening analysis.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition likely to result from standards. It directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary, not later than 60 days after the publication of a proposed rule, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE has transmitted a copy of today's proposed rule to the Attorney General and has requested that the U.S. Department of Justice (DOJ) provide its determination on this issue. DOE will publish and address the Attorney General's determination in the final rule.

f. Need of the Nation To Conserve Energy

EPCA directs DOE to consider the need for national energy and water conservation as part of its standard-setting process. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) DOE has preliminarily determined that the non-monetary benefits of the proposed standards would likely be reflected in improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity may result in reduced costs for maintaining reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the Nation's power generation capacity requirements.

Energy savings from the proposed standards would also be likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production, and through reduced use of fossil fuels at the homes where heating products are used. Although presented in summary form in section IV.K, DOE reports the environmental effects from the proposed standards and all of the considered TSLs in the environmental assessment contained in chapter 15 of the NOPR TSD. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs.

g. Other Factors

The Act allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) Under this provision, DOE considered LCC impacts on identifiable groups of consumers, such as seniors and residents of multi-family housing, who may be disproportionately affected by any national energy conservation standard level. In addition, DOE considered the uncertainties associated with the heat pump water heater market related to the ability of manufacturers to ramp up production of heat pump water heaters to serve the U.S. market, the ability of heat pump component manufacturers to increase production to serve the water

heater market, and the ability to retrain enough servicers and installers of water heaters to serve the market. See section V.C.1 for an additional discussion of the uncertainties in the heat pump water heater market.

For the results of DOE's LCC subgroup analysis, see section IV.G of this notice and chapter 11 of the NOPR TSD. For a full discussion of the uncertainties related to heat pump water heaters, see sections V.C.1 and IV.B.3 of this notice.

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA provides for a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard level is less than three times the value of the first-year energy (and, as applicable, water) savings resulting from the standard, as calculated under the applicable DOE test procedure. The LCC and PBP analyses generate values that calculate the payback period for consumers of potential amended energy conservation standards. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable presumption test discussed above. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.D of this NOPR and chapter 8 of the NOPR TSD.

IV. Methodology and Discussion

In November 2006, DOE published a notice of public meeting and availability of the framework document. 71 FR 67825 (Nov. 24, 2006). DOE initially presented its proposed methodology for the analyses pertaining to the heating products rulemaking in the framework document. After receiving comments from interested parties on the approaches proposed in the framework document, DOE modified its methodology and assumptions, and performed a preliminary analysis for heating products. Subsequently, DOE published a notice of public meeting on January 13, 2009. 74 FR 1643. In the Executive Summary of that notice and preliminary TSD which accompanied it, DOE detailed its preliminary analysis conducted for the heating products rulemaking, including methodology, assumptions, and results. After receiving further comment from interested parties on the analytical approach and results of the preliminary analysis, DOE further refined its analyses for today's NOPR.

DOE used two spreadsheet tools to estimate the impact of today's proposed standards. The first spreadsheet calculates LCCs and PBPs of potential new energy conservation standards. The second provides shipments forecasts and then calculates national energy savings and net present value impacts of potential new energy conservation standards. DOE also assessed manufacturer impacts, largely through use of the Government Regulatory Impact Model (GRIM). These spreadsheets are available online at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/waterheaters.html.

Additionally, DOE estimated the impacts on utilities and the environment of potential energy efficiency standards for the three heating products. DOE used a version of EIA's National Energy Modeling System (NEMS) for the utility and environmental analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS to prepare its

AEO,

a widely-known energy forecast for the United States. The EIA approves the use of the name NEMS to describe only an

AEO

version of the model without any modification to code or data. For more information on NEMS, refer to

The National Energy Modeling System: An Overview 1998.

DOE/EIA-0581 (98) (Feb. 1998) (available at:

http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf

The version of NEMS used for appliance standards analysis is called NEMS-BT. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from

AEO

assumptions, the name “NEMS-BT” refers to the model as used here. (“BT” stands for DOE's Building Technologies Program.) NEMS-BT offers a sophisticated picture of the effect of standards because it accounts for the interactions between the various energy supply and demand sectors and the economy as a whole.

A. Market and Technology Assessment

1. Consideration of Products for Inclusion in This Rulemaking

In this subsection, DOE is presenting its determination of scope and coverage for the rulemaking. Specifically, this subsection addresses whether EPCA covers certain products and provides DOE with the authority to adopt standards for those products. Second, it addresses certain types of heating products that are covered under EPCA, but for which DOE is not proposing amended standards at this time, due to other relevant statutory provisions, technological limitations, or other considerations.

a. Determination of Coverage Under the Act

i. Solar-Powered Water Heaters and Pool Heaters

As indicated above, EPCA directs DOE to determine whether to amend the energy conservation standards that the Act prescribes for residential water heaters and pool heaters. (42 U.S.C. 6295(e)(4)) Under EPCA, any standard for residential water heaters and pool heaters must establish either a maximum amount of energy use or a minimum level of efficiency that is based on energy use (42 U.S.C. 6291(5)-(6)). EPCA defines “energy use,” in part, as “the quantity of energy” that the product consumes. (42 U.S.C. 6291(4)) Further, EPCA covers these two products as consumer products. (42 U.S.C. 6291(2); 6292(a)(4), (9), and (11)) EPCA defines “consumer product,” in part, as an article that consumes or is designed to consume energy. (42 U.S.C. 6291(1)) EPCA defines “energy” as meaning “electricity, or fossil fuels,” or other fuels that DOE adds to the definition, by rule, upon determining “that such inclusion is necessary or appropriate to carry out the purposes” of EPCA. (42 U.S.C. 6291(3)) DOE does not have statutory authority to add solar energy (or any other type of fuel) to EPCA's definition of “energy.” Thus, DOE presently lacks authority to prescribe standards for these products when they use the sun's energy instead of fossil fuels or electricity because EPCA currently covers only water heaters and pool heaters that use electricity or fossil fuels, and because any “energy conservation standard” currently adopted under EPCA for these two products must address or be based on the quantity of these fuels, but not solar power, that the product consumes. As to water heaters, DOE lacks authority to adopt standards for solar-powered products for an additional reason. “Water heater” under EPCA currently means “a product which utilizes oil, gas, or electricity to heat potable water,” thereby excluding solar water heaters from coverage. (42 U.S.C. 6291(27); 10 CFR 430.2)

ii. Add-On Heat Pump Water Heaters

EPCA defines a residential “water heater,” in part, as a product that “heat[s] potable water for use outside the heater upon demand, including * * * heat pump type units * * * which are products designed to transfer thermal energy from one temperature level to a higher temperature level for the purpose of heating water, including all ancillary equipment such as fans, storage tanks, pumps, or controls necessary for the device to perform its function.” (42 U.S.C. 6291(27); 10 CFR 430.2) Integral heat pump water heaters are fully functioning water heaters when shipped by the manufacturer. They heat water for use outside the appliance upon demand and include in a single packaged product all of the components required for operation as a water heater. Therefore, integral units meet EPCA's definition of a “water heater.”

Another product sold for residential use is commonly known as an add-on heat pump water heater. This product typically is marketed and used as an add-on component to a separately manufactured, fully functioning storage water heater (usually a conventional electric storage-type unit). The add-on unit consists of a small pump and a heat pump system. The pump circulates the refrigerant from the water heater storage tank through the heat pump system and back into the tank. The add-on heat pump extracts heat from the surrounding air and transfers it to the water in a process that is much more efficient than traditional electric resistance designs. The unit can be mounted on top of the storage tank, or can be separately placed on the floor or mounted on a wall. Add-on units cannot by themselves provide hot water on demand, but rather heat water only after being added to a storage-type water heater. Manufacturers do not ship the product as a fully-functioning water heating unit or paired with a storage tank. The add-on device, by itself, is not capable of heating water and lacks much of the equipment necessary to operate as a water heater. As such, it does not meet EPCA's definition of a “water heater” and currently is not a covered product. Consequently, DOE is not proposing in this rulemaking to adopt energy conservation standards for such add-on heat pump units.

iii. Gas-Fired Instantaneous Water Heaters With Inputs Above and Below the Levels Specified in Existing Definitions

Another element of EPCA's definition of a residential “water heater” is that it includes “instantaneous type units which heat water but contain no more than one gallon of water per 4,000 Btu [British thermal units (Btu)] per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less * * *.” (42 U.S.C. 6291(27)(B); 10 CFR 430.2) DOE's test procedure for residential water heaters implements and elaborates on this definition: “

Gas Instantaneous Water Heater

means a water heater that * * * has an input greater than 50,000 Btu/hr (53 MJ/h) but less than 200,000 Btu/h (210 MJ/h) * * *.” 10 CFR part 430, subpart B, appendix E, section 1.7.2. During the preliminary analysis and as today's NOPR was developed, DOE considered whether to evaluate for standards gas-fired instantaneous water heaters with inputs greater than 200,000 Btu/h and less than 50,000 Btu/h.

DOE's review of product literature from manufacturers of gas-fired instantaneous water heaters indicates that the majority of such products rated for residential, whole-house use has an input capacity of 199,000 Btu/h, and, thus, are covered by this rulemaking. Given the limitations set by Congress, residential gas-fired instantaneous water heaters with inputs greater than 200,000 Btu/h do not meet EPCA's definition of a “water heater.” Consequently, DOE is not proposing in this rulemaking to adopt energy conservation standards for such products.

Regarding the lower end of the range, DOE reviewed Air-Conditioning, Heating, and Refrigeration Institute's (AHRI)

Consumers' Directory of Certified Efficiency Ratings for Heating and Water Heating Equipment

and manufacturer literature to determine the input capacities of products currently being offered for sale on the U.S. market. DOE found that the Directory contains only one gas-fired instantaneous water heater with an input capacity less than 50,000 Btu/h. Moreover, DOE determined that this product has been discontinued and is being replaced by a comparable product that has an input capacity greater than 50,000 Btu/h. Therefore, DOE is not proposing standards for products with an input capacity below 50,000 Btu/h.

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) is the trade association that represents manufacturers of heating products. It was formed on January 1, 2008, by the merger of the Gas Appliance Manufacturers Association (GAMA), which formerly represented these manufacturers, and the Air-Conditioning and Refrigeration Institute. AHRI maintains a Consumers' Directory of Certified Product Performance for water heaters, direct heating equipment, and pool heaters which can be found on AHRI's Web site at

http://www.ahridirectory.org/ahridirectory/pages/home.aspx.

iv. Input Capacity for Residential Pool Heaters and Coverage of Spa Heaters

Under EPCA, “pool heater” is defined as “an appliance designed for heating nonpotable water contained at atmospheric pressure, including heating water in swimming pools, spas, hot tubs and similar applications.” (42 U.S.C. 6291(25); 10 CFR 430.2) During a preliminary phase of this rulemaking, DOE considered excluding from consideration pool heaters with an input capacity greater than 1 million Btu/h, based on its understanding that manufacturers market such pool heaters as light industrial or commercial products. Subsequently, two manufacturers advised DOE that the industry defines residential pool heaters as having an input capacity of less than or equal to 400,000 Btu/h. These comments suggested that DOE should use this capacity limit in its definition of residential pool heaters and for determining the scope of coverage of this product under EPCA.

As indicated by its definition of “pool heater,” quoted above, EPCA places no capacity limit on the pool heaters it covers. (42 U.S.C. 6291(25)) Furthermore, EPCA covers pool heaters as a “consumer product,” (42 U.S.C. 6291(2), 6292(a)(11)) and defines “consumer product,” in part, as an article that “to any significant extent, is distributed in commerce for personal use or consumption by individuals.” (42 U.S.C. 6291(1)) These provisions establish that EPCA, and standards adopted under it, apply to any pool heater distributed to any significant extent as a consumer product for residential use, regardless of input capacity; pool heaters marketed as commercial equipment, which contain additional design modifications related to safety requirements for installation in commercial buildings, are not covered by this standard. Therefore, DOE has tentatively concluded that an input capacity limit is neither necessary nor appropriate to determine the scope of coverage of this product under EPCA.

Regarding whether spa heaters, which heat the water in spas, are covered products, DOE notes that EPCA defines a “pool heater” to include appliances “designed for * * * heating water in * * * spas.” (42 U.S.C. 6291(25); 10 CFR 430.2) As the definition encompasses spa heaters, they are covered by EPCA as well as by the current standards for pool heaters, and DOE has included them in this rulemaking. Because spa heaters and pool heaters perform similar functions, include similar features, and lack performance or operating features that

would cause them to have inherently different energy efficiencies, DOE has not created a separate product class for such units.

v. Vented Hearth Products

As discussed in section II.C.2 above, before the enactment of NAECA, EPCA included “home heating equipment” in DOE's appliance standards program. EPCA did not define “home heating equipment.” NAECA's amendments to EPCA included replacing the term “home heating equipment” with “direct heating equipment,” and specified energy conservation standards for “direct heating equipment.” However, EPCA did not define this term, and subsequent legislation has not amended EPCA to provide a definition of “direct heating equipment.”

DOE defined “home heating equipment” and related terms in its regulations. These definitions inform the meaning of “direct heating equipment.” 10 CFR 430.2. Specifically, DOE defines “home heating equipment” as meaning “vented home heating equipment and unvented home heating equipment,” and defines each of these two terms.

Id.

The definition of “vented home heating equipment,” relevant here, is as follows:

* * * a class of home heating equipment, not including furnaces, designed to furnish warmed air to the living space of a residence, directly from the device, without duct connections (except that boots not to exceed 10 inches beyond the casing may be permitted) and includes: vented wall furnace, vented floor furnace, and vented room heater.”

Id.

DOE also defines the last three terms in this definition.

Id.

In order to provide additional clarity for interested parties, DOE is proposing to define the term “direct heating equipment” in today's rulemaking. Specifically, DOE is proposing to add the following definition in 10 CFR 430.2:

Direct heating equipment means vented home heating equipment and unvented home heating equipment.

Given that background, the following addresses the issue of vented hearth products.

Vented hearth products include gas-fired products such as fireplaces, fireplace inserts, stoves, and log sets that typically include aesthetic features such as a yellow flame. Consumers typically purchase these products to add aesthetic qualities and ambiance to a room, and the products also provide space heating. They provide such heating by furnishing warmed air to the living space of a residence directly from the device without duct connections. There are two types of vented hearth product designs: (1) Recessed and (2) non-recessed. Recessed products are typically incorporated into or attached to a wall, whereas non-recessed products are typically free-standing and not attached to a wall. Both may include fireplace or hearth aesthetics, and the recessed product may include a surrounding mantle.

Vented hearth products meet DOE's definition of “vented home heating equipment,” because they are designed to furnish warmed air to the living space of a residence without duct connections. Furthermore, recessed and non-recessed vented hearth products are similar in design to some of the direct heating products for which EPCA prescribes standards, namely gas wall fan and gravity-type furnaces in the case of recessed products, and room heaters in the case of non-recessed products.

In sum, DOE has tentatively concluded that vented hearth products are covered products under EPCA, because they meet DOE's definition for “vented home heating equipment” and, therefore, are classified as DHE. Thus, DOE proposes to establish standards for these products in this rulemaking and subject these products to the existing testing and certification provisions for DHE. See section IV.2 and IV.3, below, for additional discussion on DOE's proposal for establishing coverage of hearth products and the product classes for the rulemaking analyses. If DOE finalizes this rulemaking as proposed for hearth type DHE, manufacturers of these products would be subject to the provisions in 10 CFR parts 430.23, 430.24, 430.27, 430.32, 430.33, 430.40 through 430.49, 430.50 through 430.57, 430.60 through 430.65, and 430.70 through 430.75, which currently apply to DHE. DOE seeks comment on the potential burdens to manufacturers of hearth-type DHE as a result of the testing, certification, reporting, and enforcement provisions in these sections. (See Issue 2 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

b. Covered Products Not Included in This Rulemaking

i. Unvented Direct Heating Equipment (Including Electric Equivalents to Gas-Fired Products)

When EPCA included “home heating equipment” as a covered product, DOE construed this term as including unvented as well as vented products, and prescribed a separate test procedure for each one. 43 FR 20128 (May 10, 1978); 43 FR 20147 (May 10, 1978). Each of these test procedures has since been amended, and they are codified in 10 CFR part 430, subpart B, appendices G and O, respectively. The new energy conservation standards for this equipment in NAECA's amendments to EPCA in 1987 were only for gas products, however, and used the AFUE descriptor, which applies to vented but not unvented equipment. (42 U.S.C. 6295(e)(3)) The AFUE descriptor is generally a measure of the amount of heat provided by the product compared to the amount of fuel supplied. Subsequent DOE actions concerning DHE—first in a NOPR proposing standards for eight separate products, 59 FR 10464 (March 4, 1994), and then in a final rule adopting test procedure amendments for DHE, 62 FR 26140 (May 12, 1997)—have focused solely on vented products. This approach reflects DOE's understanding that because unvented heating products dissipate any heat losses directly into the conditioned space rather than elsewhere through a vent, the amount of energy losses from these products is minimal.

The current test procedure for unvented equipment includes neither a method for measuring energy efficiency nor a descriptor for representing the efficiency of unvented home heating equipment. Instead, the current test procedure focuses on a method to measure and calculate the annual energy consumption of unvented equipment.10 CFR part 430, subpart B, appendix G. Nevertheless, it remains the case that the unvented products in question would dissipate any heat losses directly into the conditioned space, thereby resulting in minimal overall energy losses. Thus, DOE sees little benefit from setting a minimum efficiency level for these products and believes that it would be unnecessary to do so, given the extremely limited energy savings that could be achieved by such a standard. For these reasons, and consistent with previous rulemakings in which it has addressed DHE, DOE has not evaluated unvented products in this rulemaking and is not proposing standards for them at this time.

ii. Electric Pool Heaters

EPCA's definition of “pool heater,” quoted above, is not limited to appliances that use a particular type or types of fuel. (42 U.S.C. 6291(25); 10 CFR 430.2) Thus, EPCA covers both gas-fired pool heaters and electric pool heaters, including heat pump pool heaters. EPCA also specifies that the energy efficiency descriptor for residential pool heaters is thermal efficiency. (42 U.S.C. 6291(22)(E)). Lastly, EPCA defines the term “thermal

efficiency of pool heaters” as “a measure of the heat in the water delivered at the heater outlet divided by the heat input of the pool heater as measured under test conditions specified in section 2.8.1 of the American National Standard for Gas Fired Pool Heaters, Z21.56-1986, or as may be prescribed by the Secretary.” (42 U.S.C. 6291(26))

Currently, DOE's test procedures specify only a method for testing gas-fired pool heaters (10 CFR part 430, subpart B, appendix P), and the current energy conservation standard for pool heaters is a minimum level of thermal efficiency that applies only to gas-fired products. In order for DOE to consider an energy conservation standard for electric pool heaters, DOE would first need to establish a test procedure for electric pool heaters using the thermal efficiency metric required by EPCA. DOE seeks comments from interested parties on how DOE could address EPCA's efficiency descriptor requirements in a future potential test procedure revision for electric pool heaters. For this reason, DOE is proposing amended standards for gas-fired pool heaters only and is not considering standards for electric pool heaters. This is identified as Issue 3 in Section VII.E, “Issues on Which DOE Seeks Comment.”

iii. Tabletop and Electric Instantaneous Water Heaters

Standards are currently applicable to tabletop and electric instantaneous water heaters. (10 CFR 430.32(d)) These products meet EPCA's definition of “water heater” (42 U.S.C. 6291(27); 10 CFR 430.2) and are covered by the Act because they utilize electricity to heat potable water for use outside the heater upon demand. However, for the reasons explained below, DOE has not analyzed tabletop water heaters and electric instantaneous water heaters in this rulemaking, and is not proposing amended standards for them, because of the limited potential for energy savings from higher standards for these products.

Tabletop products are primarily electric and are relatively small units because they are designed to be located underneath tabletops in highly specialized applications. The only means of which DOE is aware for manufacturers to increase the energy efficiency of tabletop units is to increase the thickness of their insulation, which would make them larger. Manufacturers already maximize the size of these water heaters in order to meet the currently required minimum energy factors, and size restrictions do not allow the units to be any larger. Thus, DOE is unaware of any means to make tabletop water heaters more energy efficient. Put another way, if DOE were to adopt a higher efficiency standard for this product, it would force this class of covered product off the market, in violation of 42 U.S.C. 6295(o)(4). For these reasons, DOE has not evaluated tabletop products in this rulemaking and is not proposing standards for them.

Regarding electric instantaneous water heaters, DOE notes that the energy efficiency metric for electric instantaneous water heaters (and all other water heaters) is a combination of recovery efficiency and standby losses. All electric water heaters, including instantaneous products, have minor losses in recovery efficiency. Moreover, electric instantaneous water heaters have negligible standby losses because they store no more than two gallons of hot water. In addition, many of the electric instantaneous products currently on the market perform well above the existing applicable energy conservation standard and use available technologies to produce negligible standby losses. Therefore, DOE has not evaluated electric instantaneous water heaters in this rulemaking and is not proposing standards for them.

iv. Combination Water Heating/Space Heating Products

EPCA authorizes DOE to set more than one standard for any product that performs more than one major function by setting one energy conservation standard for each major function. (42 U.S.C. 6295(o)(5)) Some products on the market provide both water heating and space heating. To the extent such combination products meet EPCA's criteria for coverage, DOE could set standards for them, including a separate standard for each of those functions.

Id.

However, because DOE's current test procedure cannot handle combination appliances and DOE has not yet adopted a test procedure to determine the energy efficiency of these combination appliances, DOE has not evaluated them in this rulemaking and is not proposing standards for them.

2. Definition of Gas Hearth Direct Heating Equipment

In the preliminary analysis, DOE stated that vented hearth products can be used to provide residential space heating. When used to furnish heat to a living space, DOE reasoned that these products provide the same function and utility as vented heaters. DOE stated in the preliminary analysis that hearth heaters also provide the same utility and function as gas wall furnaces or gas room heaters, and do not use any unique technologies. See chapter 2 of the preliminary TSD. Additionally, AHRI's Consumers' Directory categorizes fireplace heaters as either room heaters or wall furnaces. DOE treated gas hearth DHE as either a room heater or a wall furnace for the purposes of the preliminary analysis and requested comment in the Executive Summary to the preliminary TSD on the need for a separate product definition and class for gas hearth DHE.

AHRI stated that gas-fired hearth heaters need a unique definition but that they can be included within the room heater DHE product class. AHRI further stated that DOE should use the safety standard in the American National Standards Institute (ANSI) Standard Z.21-88,

Vented Fireplace Heaters

as a reference for developing a fireplace heater definition. (AHRI, Public Meeting Transcript, No. 34.4 at p. 36)

DOE agrees with AHRI and has decided to establish a separate definition for “hearth direct heating equipment” to allow manufacturers to easily determine coverage under DOE's regulations. DOE has determined that hearth DHE should not be included with room heater DHE (the alternative suggested by AHRI) due to the unique constraints on hearth products that are not applicable to room heaters because of the former's aesthetic appeal to consumers (

e.g.,

glass viewing panes, yellow flames, and ceramic log sets). DOE reviewed the “vented gas fireplace heater” definition in ANSI Standard Z.21-88, as suggested by AHRI. The “vented gas fireplace heater” definition in ANSI Standard Z.21-88 reads as follows:

Vented gas fireplace heater

is a vented appliance which simulates a solid fuel fireplace and furnishes warm air, with our without duct connections, to the space in which it is installed. A vented gas fireplace heater is such that it may be controlled by an automatic thermostat. The circulation of heating room air may be by gravity or mechanical means. A vented gas fireplace heater may be freestanding, recessed, zero clearance, or a gas fireplace insert.

Part of the “vented gas fireplace heater” definition specified by ANSI Standard Z.21-88 would conflict with DOE's definition of “home heating equipment.” 10 CFR 430.2. Specifically, all types of home heating equipment under DOE's regulations must function without duct connections (although boots not to exceed 10 inches beyond the casing may be permitted). Therefore, DOE is modifying the definition of

“vented gas fireplace heater” in ANSI Standard Z.21-88 to be consistent with the types of equipment covered under DOE's authority for home heating equipment. Consequently, in order to account for hearth DHE, DOE is proposing a definition of “vented hearth heater” in section 430.2 to read as follows:

Vented hearth heater

means a vented, freestanding, recessed, zero clearance fireplace heater, a gas fireplace insert or a gas-stove, which simulates a solid fuel fireplace and is designed to furnish warm air, without ducts to the space in which it is installed.

DOE seeks comment on its definition for “vented hearth heater.” (See Issue 4 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

3. Product Classes

In evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used or by capacity or other performance-related feature that justifies a different standard for products having such feature. (See 42 U.S.C. 6295(q)) In deciding whether a feature justifies a different standard, DOE must consider factors such as the utility of the feature to users.

Id.

DOE normally establishes different energy conservation standards for different product classes based on these criteria.

Table IV.1 presents the product classes for the three types of heating products under consideration in this rulemaking. The subsections below provide additional details, discussion of comments relating to the product classes for the three heating products, as well as identified issues on which DOE is seeking comments.

Table IV.1—Proposed Product Classes for the Three Heating Products

Residential water heater type

Characteristics

Gas-Fired Storage Type

Nominal input of 75,000 Btu/h or less; rated storage volume from 20 to 100 gallons.

Oil-Fired Storage Type

Nominal input of 105,000 Btu/h or less; rated storage volume of 50 gallons or less.

Electric Storage Type

Nominal input of 12 kW (40,956 Btu/h) or less; rated storage volume from 20 to 120 gallons.

Gas-Fired Instantaneous

Nominal input of over 50,000 Btu/h up to 200,000 Btu/h; rated storage volume of 2 gallons or less.

Direct heating equipment type

Heating capacity (Btu/h)

Gas Wall Fan Type

Up to 42,000.

Over 42,000.

Gas Wall Gravity Type

Up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Floor

Up to 37,000

Over 37,000.

Gas Room

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Hearth

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Pool heater type

Characteristics

Residential Pool Heaters

Gas-fired.

a. Water Heaters

Residential water heaters can be divided into various product classes categorized by physical characteristics that affect product efficiency. Key characteristics affecting the energy efficiency of the residential water heater are the type of energy used and the volume of the storage tank.

The existing Federal energy conservation standards for residential water heaters correspond to the efficiency levels promulgated by the January 2001 final rule, as shown in 10 CFR 430.32(d). These product classes are differentiated by the type of energy used (

i.e.,

electric, gas, or oil) and the type of storage for the water heater (

i.e.,

storage, tabletop, or instantaneous). In this rulemaking, DOE has excluded tabletop water heaters and electric instantaneous water heaters from consideration for the reasons discussed above. Table IV.2 shows the four product classes presented in the preliminary analysis for consideration in today's rulemaking.

Table IV.2—Product Classes for Residential Water Heaters Described in the Preliminary Analysis *

Residential water heater type

Characteristics

Gas-Fired Storage Type

Nominal input of 75,000 Btu/h or less; rated storage volume from 20 to 100 gallons.

Oil-Fired Storage Type

Nominal input of 105,000 Btu/h or less; rated storage volume of 50 gallons or less.

Electric Storage Type

Nominal input of 12 kW (40,956 Btu/h) or less; rated storage volume from 20 to 120 gallons.

Gas-Fired Instantaneous

Nominal input of over 50,000 Btu/h up to 200,000 Btu/h; rated storage volume of 2 gallons or less.

* Only the product classes covered by this rulemaking are shown. The table does not include tabletop and instantaneous electric water heaters.

In response to the preliminary analysis, DOE received several comments from interested parties about DOE's potential product classes and their organization. These comments are summarized and addressed immediately below.

i. Gas-Fired and Electric Instantaneous Water Heaters

EEI suggested that DOE should revisit the parameters for the input capacity range for gas-fired and electric instantaneous water heaters. Specifically, EEI stated that some gas-fired instantaneous water heaters on the market have an input capacity higher than 200,000 Btu/h, and some electric instantaneous water heaters have an input capacity much higher than 12 kW. (EEI, No. 40 at p. 2) Northwest Energy Efficiency Alliance (NEEA) and Northwest Power and Conservation Council (NPCC) recommended combining gas-fired storage and gas-fired instantaneous water heaters into one product class, because this would simplify the rulemaking, and the commenters do not believe manufacturers will reduce the efficiency of the products they offer now (most of which have EF ratings above 0.80) in response. (NEEA and NPCC, No. 42 at p. 4) SEISCO commented that DOE should establish a separate product class and definition for “electric instantaneous water heaters”. SEISCO recommended creating a definition for “whole house electric instantaneous water heaters” and amending the current 12 kilowatt (kW) maximum to a more reasonable 18 to 36 kW maximum to more accurately reflect the marketplace. (SEISCO, No. 41 at p. 1)

In response, DOE notes that EPCA's definition of “water heater,” establishes the input capacity limits for residential instantaneous water heaters. Specifically, the term “water heater” means “a product which utilizes oil, gas, or electricity to heat potable water for use outside the heater upon demand, including * * * (B) instantaneous type units which heat water but contain no more than one gallon of water per 4,000 Btu per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less, oil instantaneous water heaters with an input of 210,000 Btu per hour or less, and electric instantaneous water heaters with an input of 12 kilowatts or less * * *” (42 U.S.C. 6291(27)) As noted above, this statutory definition demonstrates that residential, gas-fired instantaneous water heaters with inputs greater than 200,000 Btu/h and residential, electric instantaneous water heaters with inputs greater than 12 kW do not meet the definitions of a “water heater” under EPCA. Accordingly, instantaneous water heaters outside the specified capacity range are not covered products under EPCA and are outside DOE's authority for standard setting pursuant to 42 U.S.C. 6295(e)(4). The input capacity ranges for gas-fired instantaneous water heaters and electric instantaneous water heaters are discussed further in sections IV.A.1.a and IV.A.1.b, respectively, of today's NOPR.

Additionally, DOE disagrees with the suggestion from NEEA and NPCC that DOE should combine the gas-fired storage and gas-fired instantaneous water heater product classes for this rulemaking. As noted earlier in this section, storage capacity is a key characteristic affecting the energy efficiency of water heaters, and it is within DOE's authority to divide products into classes based on capacity. (42 U.S.C. 6295(q)) Thus, DOE is maintaining separate product classes for gas-fired storage and gas-fired instantaneous water heaters for today's NOPR.

ii. Low-Boy Water Heaters

AHRI recommended establishing a separate product class for low-boy heaters since they must fit under a 36-inch counter, be less than 34 inches high, and have a jacket diameter of less than 26 inches. AHRI stated that low-boy heaters provide a specific utility to space-constrained residences and that these products cannot be made any larger. Low-boy heaters account for approximately 18 percent of the residential market. (AHRI, No. 43 at p. 3)

DOE does not agree that a separate product class needs to be established for low-boy water heaters. In evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used, or by capacity or another performance-related feature that justifies a different standard. (See 42 U.S.C. 6295(q)) DOE notes that low-boy water heaters use the same type of energy (

i.e.,

gas or electricity) and are offered in a range of storage volumes. Thus, the type of energy used and the functionality of low-boy units are similar to other types of water heaters, and the size constraints of these units do not appear to impact energy efficiency, since many “low-boy” models have efficiencies that are comparable to standard-size water heaters currently available on the market.

DOE seeks comment on its product classes for water heaters. In particular, DOE is seeking further comment about the need for a separate product class for low-boy water heaters. (See Issue 5 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

iii. Ultra-Low NO

Water Heaters

In the preliminary analysis, DOE did not distinguish ultra-low NO

gas-fired storage water heaters from traditional gas-fired storage water heaters with standard burners. AHRI recommended establishing a separate product class. AHRI argued that these water heaters employ unique burners, designed to meet the ultra-low NO

requirements (imposed by local air quality management districts to limit NO

emissions of certain products), but which limit the manufacturer's options to increase efficiency. (AHRI, No. 43 at p. 2)

Rheem commented that instantaneous gas-fired water heater ultra-low NO

requirements from local air quality management districts will commence in 2012 and that this product design

should be included in the analysis. (Rheem, No. 49 at p. 7)

DOE does not agree that a separate product class needs to be established for ultra-low NO

gas-fired storage water heaters. As noted above, in evaluating and establishing energy conservation standards, DOE generally divides covered products into classes by the type of energy used, or by capacity or other performance-related feature that justifies a different standard for products having such feature. (See 42 U.S.C. 6295(q)) Ultra-low NO

gas-fired storage water heaters use the same type of energy (

i.e.,

gas) and are offered in comparable storage volumes to traditional gas-fired storage water heaters using standard burners. In deciding whether the product incorporates a performance feature that justifies a different standard, DOE must consider factors such as the utility of the feature to users.

Id.

In terms of water heating, DOE believes ultra-low NO

water heaters provide the same utility to the consumer. However, DOE also notes that ultra-low NO

water heaters do incorporate a specific burner technology, allowing these units to meet the strict emissions requirements of local air quality management districts. Consequently, DOE developed an analysis on ultra-low NO

gas-fired storage water heaters. See section IV.C.2 for additional details. DOE requests comment from interested parties regarding the approach to the analysis for ultra-low NO

gas-fired storage water heaters. As indicated in section VII.E under Issue 6, DOE also seeks further comment about the need for a separate product class for ultra-low NO

water heaters.

iv. Gas-Fired and Electric Storage Water Heaters Product Class Divisions

DOE received two comments about the product class divisions for gas-fired and electric storage water heaters. ACEEE stated that DOE should consider capacity-based product classes for gas-fired and electric storage water heaters. ACEEE stated that EPCA directs DOE to divide covered products into product classes by the type of energy used or by capacity or other performance-related features that affect efficiency. (42 U.S.C. 6295(q)) ACEEE also stated that DOE's energy efficiency equations demonstrate that capacity (

i.e.,

rated storage volume) is one determinant of efficiency. Accordingly, ACEEE recommended separating gas-fired and electric storage water heaters into two product classes, including “very large” and “other.” (ACEEE, No. 35 at p. 2) ACEEE expressed its belief that DOE will not adequately reflect the potential of the product classes without considering larger and smaller products as separate product classes. (ACEEE, Public Meeting Transcript, No. 34.4 at pp. 66-67)

ACEEE suggested that gas-fired storage water heaters with an input capacity greater than 65,000 Btu/h and electric storage water heaters with a rated storage volume greater than 75 gallons could be in the very large category. (ACEEE, No. 35 at p. 2) ACEEE commented that for heat pump water heaters, impacts such as air flow in small residences are much different for a 50-gallon model than a 30-gallon model. (ACEEE, Public Meeting Transcript, No. 34.4 at pp. 66-67)

In light of the above, ACEEE recommended that DOE should propose energy conservation standards for electric storage water heater products in the very large category requiring a minimum EF of 1.7, which would move the largest electric water heaters to utilize heat pump water heater technologies. ACEEE recommended that DOE should propose standards for the very large product class of gas-fired storage water heaters requiring a minimum EF of 0.77, which corresponds to the least-efficient condensing product. (ACEEE, No. 35 at p. 1)

Pacific Gas and Electric Company (PG&E), San Diego Gas and Electric (SDGE), and Southern California Gas Company (SoCal Gas) filed a joint comment and urged DOE to subdivide gas-fired storage water heaters and electric storage water heaters into subclasses based on rated storage volume. (PG&E, SDGE, and SoCal Gas, No. 38 at p. 3)

DOE believes considering separate efficiency levels for different rated storage volumes could offer a way for DOE to capture additional potential energy savings. Instead of dividing gas-fired and electric storage water heaters into separate product classes by rated storage volume or input capacity as ACEEE suggested, however, DOE is using energy efficiency equations that vary with rated storage volume to describe the relationship between rated storage volume and energy factor. Historically, DOE has used the energy efficiency equations to account for the variability in performance resulting from tank size; these equations consider the increases in standby losses as tank volume increases. DOE is using the energy efficiency equations along with TSL pairings to consider different amended standards in the proposed rule. DOE further discusses the energy efficiency equations and the proposed modifications in section IV.C.7. DOE is requesting comment from interested parties on the energy efficiency equations developed for gas-fired and electric storage water heaters (See section IV.C.7 and Issue 7 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR for more information.) In addition, DOE further discusses the trial standard levels, which are comprised of various efficiency level pairings across the full range of rated storage volumes, in section V.A.

v. Heat Pump Water Heaters

In response to DOE's treatment of heat pump water heaters as a design option for electric storage water heaters in the preliminary analysis, DOE received several comments from interested parties. All of the commenters urged DOE to establish separate product classes for traditional electric resistance storage water heaters and heat pump water heaters. Their specific comments and DOE's response are presented below.

A.O. Smith stated DOE should separate the electric storage water heater product class into two products classes—one for electric resistance heaters and one for heat pump water heaters. A.O. Smith noted that DOE separated the two classes in the ENERGY STAR criteria. A.O. Smith further stated that since heat pump water heaters may not even fit in 30 percent of the installations that currently have resistance electric heaters, they cannot be considered to be a truly interchangeable technology. (A.O. Smith, No. 37 at p. 9)

AHRI agreed with some of the concerns DOE noted in the preliminary screening analysis for heat pump water heaters. Specifically, AHRI pointed to previous DOE studies, which found size-related installation issues with replacing an electric storage water heater with a heat pump water heater. To AHRI's knowledge, the heat pump water heater market has not changed significantly since DOE's 2001 water heater rulemaking, even with the recent initiation of the ENERGY STAR program and the enactment of legislation that provides a significant tax credit for the installation of these systems. With this in mind, AHRI recommended that DOE establish a separate product class for heat pump water heaters because its energy source is different than that of an electric water heater. While a heat pump water heater does use electricity to operate certain components, the actual energy source that heats the water is air. AHRI noted that an analogous situation exists for electric furnaces, which are

not subject to the same standards as heat pump systems. (AHRI, No. 43 at p. 4)

Rheem also maintains that heat pump water heaters require a separate product class. (Rheem, No. 49 at p. 5) Rheem commented that heat pump water heater designs require unique installations, air flow, space, condensate drain, service, and operational provisions that are considerably different from conventional electric storage water heaters. Rheem also stated that installation and air flow conditions will affect energy efficiency, and that heat pump water heaters cannot replace all electric storage type water heaters, as space and air flow constraints are quite common. Furthermore, Rheem commented that heat pump water heater technology depends largely on the operating environment; this represents a special performance-related consideration that warrants defining a separate product class for heat pump water heaters. (Rheem, No. 49 at p. 6) Rheem commented that the utility heat pump water heaters provide is not equivalent to other electric storage water heaters across the entire range of rated storage volumes. Rheem stated that the reduced delivery performance was recognized by ENERGY STAR, which requires a minimum first-hour rating of 50 gallons, instead of 67 gallons for common conventional technologies. The difference in utility will result in differing sizing guidelines to meet equivalent capacities. Rheem commented that while the primary fuel source for heat pump water heaters is assumed to be electricity, the technology attains an economic benefit by moving energy from one location to another. According to Rheem, it is conceivable that a heat pump water heater may operate and be designed with gas as a primary back-up fuel. Rheem noted that with energy factors exceeding 2.0, it can be argued that electricity is no longer the dominant fuel source. Rheem commented that these differences support the argument that heat pump water heaters are not simply an extension of conventional resistance-type electric storage water heaters. (Rheem, No. 49 at pp. 5-6)

While DOE acknowledges some of the challenges associated with heat pump water heaters, DOE does not agree that they require a separate product class. Specifically, DOE does not believe heat pump water heaters provide a different utility from traditional electric resistance water heaters. Heat pump water heaters provide hot water to a residence just as a traditional electric storage water heater. In addition, both heat pump water heaters and traditional electric resistance storage water heaters use electricity as the primary fuel source. DOE believes heat pump water heaters can replace traditional electric resistance storage water heaters in most residences, although the installation requirements may be quite costly. DOE further addresses heat pump water heaters in the screening analysis at section IV.B.3 and the installation requirements in section IV.E.2.a.

DOE seeks further comment on the need for a separate product class for heat pump water heaters. In particular, DOE is interested in receiving comments and data on whether a heat pump water heater can be used as a direct replacement for an electric resistance water heater, and the types and frequency of installations where a heat pump water heater cannot be used as a direct replacement for an electric resistance water heater. (See Issue 8 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

b. Direct Heating Equipment

DHE can be divided into various product classes categorized by physical characteristics and rated input capacity, both of which affect product efficiency and function. Key characteristics affecting the energy efficiency of DHE are the physical construction (

i.e.,

fan wall units contain circulation blowers), intended installation (

i.e.,

floor furnaces are installed with the majority of the unit outside of the conditioned space), and input capacity.

In the preliminary analysis, DOE examined the possibility of consolidating product classes for DHE. (See chapter 3 of the preliminary TSD.) NAECA originally established the Federal energy conservation standards, which are differentiated by input capacity range. Thus, to determine whether consolidation of existing product classes is appropriate, DOE examined the relationship between AFUE and input rating for DHE. The results of this inquiry are presented below.

i. Gas Wall Fan-Type Direct Heating Equipment

For fan-type wall furnaces, DOE surveyed AHRI's Consumers' Directory and available product literature. DOE identified available products ranging from 8,000 to 65,000 Btu/h. The market data demonstrate two separate trends for fan-type wall furnaces based on the efficiency range of the products. For higher-efficiency products (

i.e.,

78 percent AFUE and higher), DOE noticed that efficiency decreases as capacity increases. For lower-efficiency products (

i.e.,

73 to 77 percent AFUE), DOE noticed that efficiency increases as capacity increases. Therefore, because of the differing trends between capacity and efficiency, DOE proposes that the two product classes for gas wall fan-type DHE should remain.

ii. Gas Wall Gravity-Type Direct Heating Equipment

DOE examined the relationship between AFUE and input rating for gravity-type wall furnaces by reviewing AHRI's Consumers' Directory and available product literature. DOE identified products with input capacities ranging from 5,000 to 50,000 Btu/h. The Federal energy conservation standards for gas wall gravity-type furnaces divide these products into seven product classes based on input capacity ranges. The seven product classes are differentiated by one AFUE percentage point increase for each increase in input capacity range (

i.e.,

the larger the input capacity, the higher the AFUE requirements). The market data for gas wall gravity-type furnaces indicate that manufacturers are not offering products over the entire input capacity range. Therefore, some product classes may be unnecessary. DOE proposes that five product classes (up to 10,000 Btu/h, over 10,000 and up to 12,000 Btu/h, over 12,000 and up to 15,000 Btu/h, over 15,000 and up to 19,000 Btu/h, and over 19,000 and up to 27,000 Btu/h) be consolidated into a single product class labeled up to 27,000 Btu/h, leaving three product classes for gas wall gravity-type furnaces.

iii. Gas Floor-Type Direct Heating Equipment

DOE surveyed the current market for gas floor furnaces by reviewing AHRI's Consumers' Directory and available product literature. The AHRI directory lists 23 products. The Federal energy conservation standard includes two product classes divided by input ratings, one above and one at or below 37,000 Btu/h. According to the AHRI directory, more than 75 percent of products are rated above 37,000 Btu/h. When comparing the models with the highest AFUE rating between the two product classes in the preliminary analysis, however, DOE found that the energy savings potential increases as the input capacity range increases. This fact suggests that input capacity affects the AFUE of gas floor-type furnaces. Therefore, DOE proposes that the two product classes for gas floor-type DHE should remain.

iv. Gas Room-Type Direct Heating Equipment

DOE examined currently available room heaters by reviewing AHRI's Consumers' Directory and product literature. DOE found that room heaters have inputs ranging from 20,000 to 70,000 Btu/h. DOE also determined that the relationship between AFUE and input rating established by the Federal energy conservation standards is generally similar to the trend found among products listed in the AHRI directory. The market data show a general trend of increasing AFUE with input capacity range. DOE is proposing to consolidate the two lower input capacity ranges into a single product class (

i.e.,

input ratings up to 20,000 Btu/h), because there are no products in the AHRI directory under 20,000 Btu/h and all products at this input rating have the same efficiency. As a result, DOE is proposing only four product classes for gas room heaters.

Overall, DOE only received one comment in response to its product class consolidation for the existing DHE product types in the preliminary analysis. AHRI agreed that the number of product classes (

i.e.,

divisions by input capacity) for DHE product classes can be reduced. (AHRI, Public Meeting Transcript, No. 34.4 at p. 43)

Therefore, for the NOPR, DOE is proposing to reduce the number of product classes as suggested in the preliminary analysis and described above. DOE is seeking comments on the proposed product classes. (See Issue 9 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

v. Gas Hearth Direct Heating Equipment

DOE is proposing to add new product classes for gas hearth DHE, which are distinguished by input heating capacity. DOE modeled the product class divisions for gas hearth DHE after the proposed product class divisions for room heaters. DOE is seeking comments on the proposed product class divisions for gas hearth DHE. (See Issue 10 under “Issues on Which DOE Seeks Comment” in section VII.E of this NOPR.)

Table IV.3 presents the proposed product classes for DHE being considered for this rulemaking.

Table IV.3—Proposed Product Classes for Direct Heating Equipment

Direct heating equipment type

Input heating capacity

Btu/h

Gas Wall Fan Type

Up to 42,000.

Over 42,000.

Gas Wall Gravity Type

Up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Floor

Up to 37,000.

Over 37,000.

Gas Room

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

Gas Hearth

Up to 20,000.

Over 20,000 and up to 27,000.

Over 27,000 and up to 46,000.

Over 46,000.

c. Pool Heaters

As discussed above, the existing Federal energy conservation standards for pool heaters correspond to the efficiency levels specified by EPCA, as amended (42 U.S.C. 6295(e)(2)), and codified in 10 CFR 430.32(k), classifying residential pool heaters with one product class. This product class is distinguished by fuel input type (

i.e.,

gas-fired). DOE notes there are currently electric heat pump pool heaters on the market, which are not being considering in today's rulemaking, as discussed in section IV.A.1.b.

B. Screening Analysis

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

Technological feasibility.

DOE will consider technologies incorporated in commercial products or in working prototypes to be technologically feasible.

Practicability to manufacture, install, and service.

If mass production and reliable installation and servicing of a technology in commercial products could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE will consider that technology practicable to manufacture, install, and service.

Adverse impacts on product utility or product availability.

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

Adverse impacts on health or safety.

If DOE determines that a technology will have significant adverse impacts on health or safety, it will not consider this technology further.

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

In the preliminary analysis, DOE initially identified the technology options that could improve the efficiency of the three types of heating products that are the subject of this rulemaking. These technologies are listed in Table IV.4. See chapter 3 of the NOPR TSD for a detailed description of each technology option.

Table IV.4—Technologies DOE Considered for Heating Products

Water heaters

Direct heating equipment

Pool heaters

Heat Traps

Heat Exchanger Improvements

Electronic Ignition

Insulation Improvements

Electronic Ignition

Improved Heat Exchanger Design

Power Vent (Gas-Fired and Oil-Fired Only)

Thermal Vent Damper

More Effective Insulation (Combustion Chamber)

Heat Exchanger Improvements

Electrical Vent Damper

Power Venting

Flue Damper (Electromechanical)

Power Burner

Sealed Combustion

Side-Arm Heater

Induced Draft

Condensing Pulse Combustion

Electronic (or Interrupted) Ignition

Two Stage and Modulating Operation

Condensing

Heat Pump Water Heater (Electric Only)

Improved Fan or Blower Motor Efficiency

Heat Pump Water Heater

Increased Insulation (Floor Furnaces Only)

Flue Damper (Buoyancy Operated)

Condensing

Directly-Fired

Condensing Pulse Combustion

Condensing

Air Circulation Fan

Condensing Pulse Combustion

Sealed Combustion

Thermophotovoltaic and Thermoelectric Generators

Reduced Burner Size (Slow Recovery)

Timer Control

Two-Phase Thermosiphon (tpts)

Modulating Controls

Intelligent Controls

Self-Cleaning

In response to DOE's request for comments at the preliminary analysis stage of the rulemaking, DOE did not receive any comments suggesting additional technologies beyond those technology options presented in the preliminary analysis. Therefore, DOE considered the same technology options for the NOPR screening analysis.

1. Comments on the Screening Analysis

In the preliminary analysis, DOE excluded several of the technologies listed in Table IV.4 from consideration in this rulemaking based on one or more of the screening criteria described above. The technology options that were screened out, along with the reasons for their exclusion, are shown below in Table IV.5. For greater detail regarding each technology option, please see Chapters 3 and 4 of the TSD accompanying today's notice.

Table IV.5—Summary of Screened-Out Technology Options

Applicable product types

Excluded technology option

Reasons for exclusion

Technological feasibility

Practicability to manufacture, install, and service

Adverse impacts on product utility

Adverse impacts on health of safety

Water Heaters

Side-Arm Heater

Advanced Insulation

Thermophotovoltaic and Thermoelectric Generators

U-Tube Flue Design

Heat Pump Water Heaters

Two-Phase Thermosiphons

Reduced Burner Size (Slow Recovery)

Directly Fired Water Heater

Flue Damper (Buoyancy Operated)

Condensing Pulse Combustion

Direct Heating Equipment

Increased Heat Transfer Coefficient

Power Burner

Improved Fan Blower Motors

Condensing Pulse Combustion

Pool Heaters

Condensing Pulse Combustion

In response to the screening analysis performed for the preliminary analysis, DOE received feedback from several interested parties.

a. General Comments

NRDC commented generally that screening technologies because they have not penetrated the market for the covered product is a flawed approach. NDRC stated that determining if a product is practical to manufacture does not require someone to already be manufacturing it. Instead, NRDC stated that when determining whether a product is practical to manufacture, DOE should consider identified technology options even if they are not

currently used in covered products. NRDC stated that DOE should gather data to determine whether technologies used in other products would be useful in the products in question. (NRDC, No. 48 at p. 3)

In response, as part of every rulemaking, DOE reviews the markets and technologies of the appliances under consideration using primary and secondary research. DOE considers prototype designs in the analysis that have not yet fully penetrated the market. In the case of a prototype design (or any design that has not penetrated the market at the time of the analysis) that is not being manufactured on a large scale, DOE examines the practicality of manufacturing, installing, and servicing the design, if it were required to be implemented on a larger scale by the anticipated compliance date of a standard, and accepts the product or screens it out of the analysis on that basis. DOE requires demonstration of a technology in at least a working prototype, because even though technologies may be proven for other applications, it may not translate to a different product type for a variety of reasons. NRDC did not point to specific examples of technologies DOE should consider, and hence, it is more difficult for DOE to specifically address the comment.

AHRI commented that DOE should recognize that many DHE products do not require electricity. AHRI stated that such designs allow consumers to use these products for emergency heat during power outages, which provides a real utility that needs to be factored into DOE's analysis. (AHRI, Public Meeting Transcript, No. 34.4 at p. 21)

DOE considers the impact of any lessening of utility from standards during the screening analysis. If DOE determines a technology would have significant adverse impact on the utility of the product to significant subgroups of consumers, or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not consider this technology further. DOE considered several technology options for DHE that require electricity for the NOPR analyses, including electronic ignition systems and blowers or fans. Blowers and fans are generally not necessary for the products to operate and, because the equipment can be operated without them, do not impact the utility of being able to use the equipment for emergency heat during a power outage. For models with electronic ignition systems, electricity is required to light the burner, and, thus, required for product operation. In the case of a power failure, however, many products employ battery backup systems that can provide the electrical power needed to light the burner (or the pilot in the case of intermittent pilot ignitions) during the power outage. Because of this, an electronic ignition system with battery backup would not cause any lessening of utility as compared to a traditional standing pilot system for DHE. Therefore, DOE did not screen out these technologies.

b. Water Heaters

NEEA and NPCC stated that tank bottom insulation is an effective means of improving product efficiency. Accordingly, NEEA and NPCC urged DOE to consider this as a technology option for electric storage water heaters because field data from the Pacific Northwest suggest that tank bottom insulation decreases standby energy loss, especially when the tank is located on a concrete slab. (NEEA and NPCC, No. 42 at p. 4)

DOE considered various improvements in insulation for storage water heaters during the screening analysis, including tank bottom insulation. (See chapter 3 of the NOPR TSD for a full description of the insulation improvements DOE considered.) DOE notes that tank bottom insulation was not screened out during the screening analysis, which is in contrast to advanced forms of insulation which were screened out as unproven (

e.g.,

vacuum panels, aerogels). When listing the potential technology options at each efficiency level (see section IV.C.3), DOE shows only those technologies most commonly used in manufacturing, although specific implementation details vary by manufacturer. Manufacturers currently do not use increased tank bottom insulation as a primary means of increasing efficiency; therefore, it was not listed as one of the technologies used in achieving these efficiency levels for storage water heaters. Hence, DOE agrees with NEEA and NPCC that tank bottom insulation is an effective means of improving the energy factor of storage water heaters.

NEEA and NPCC also urged DOE to include as technology options heat pump water heaters that use CO

as the refrigerant. NEEA and NPCC commented that CO

heat pump water heaters have been sold and serviced by hundreds of thousands of manufacturers in Southeast Asia and elsewhere over the last 5 to 10 years. (NEEA and NPCC, No. 42 at pp. 4-5)

DOE is not considering CO

-based heat pump water heaters because DOE research suggests U.S. manufacturers do not have the necessary infrastructure to support manufacturing, installation, and service of CO

heat pump water heaters on the scale necessary to serve the relevant market by the compliance date of an amended energy conservation standard. DOE also does not believe manufacturers would be able to develop the necessary infrastructure before the compliance date of an amended energy conservation standard because these products have not penetrated the U.S. market.

ACEEE commented that DOE should revisit the preliminary conclusions presented in the screening analysis, including the tentative decision to not further consider thermophotovoltaic and thermoelectric generators. (ACEEE, No. 35 at pp. 3-4) The commenter stated that the inclusion of thermophotovoltaic and thermoelectric generators would make other technologies such as side-arm themosiphons more feasible. ACEEE asserted that in the case of thermophotovoltaic and thermoelectric generators, DOE assumes that line voltage or 24-volt power cannot be required for gas-fired storage water heaters. DOE research suggests that the amount of power that can be generated by thermophotovoltaic and thermoelectric generators in a residential storage water application is quite limited. Commercially-available thermoelectric elements for water heaters typically produce less than 0.05 Watts of power, and so-called thermopiles can reach as high as 0.75 Watts. While it is theoretically possible to power devices other than the customary gas valves with thermoelectric power sources, DOE is unaware of an external device that has an impact on energy efficiency whose power demands are low enough to allow it to be powered by such generators. DOE is also unaware of any thermophotovoltaic power generators that have been developed to the point where they could be incorporated by the compliance date of the rulemaking, nor of any role that such generators would play in increasing the energy efficiency of gas-fired storage water heaters.

Rheem commented that DOE should recognize the special utility of self-powered water heaters. (Rheem, No. 49 at p. 4) DOE acknowledges that most gas-fired storage-water heaters on the market today do not require an electrical connection to operate (

i.e.,

they are self-powered). Typically, the gas valves on these units incorporate a thermoelectric

element that is impinged on by a standing pilot flame. The minute power generated by the thermoelectric element opens the gas supply in the valve assembly via a low-power solenoid. Thus, thermoelectric elements typically act as a safety device. They do not provide sufficient power to run fan blower motors and other high-powered devices. Therefore, DOE has tentatively decided to continue to exclude thermophotovoltaic and thermoelectric generators from its analysis, because they are not an effective means of improving the efficiency of water heaters.

ACEEE also stated that DOE should revisit the preliminary conclusions presented in the screening analysis regarding flue dampers since electromechanical dampers were common on furnaces and boilers and appear to be available for residential boilers today. (ACEEE, No. 35 at pp. 3-4) DOE research suggests that there are no residential storage water heaters on the market today that incorporate such dampers.

Although electromechanical dampers may be found on some furnaces, boilers, and commercial water heaters, their benefit in a residential water heater application is unknown because no manufacturer incorporates them in their products. All products that incorporate electromechanical dampers of which DOE is aware require line power to operate them. Thus, such dampers may not be practicable for all consumers. Additionally, DOE researched damper systems that do not require electrical power to operate. Typically, such systems are based on a bi-metal damper installed on top of the flue pipe outlet that opens when heated and closes as it cools. DOE research suggests that such non-electrically-actuated dampers pose potential health and safety problems. For example, such dampers can fail in the closed position, which could cause the exhaust gases to be stuck in the flue. Furthermore, they rely on hot air impingement to open. However, when the water heater begins its combustion cycle, the flue and its baffles are relatively cold, and flue gas temperatures may require some time until they reach the point where they will open a bi-metal damper quickly and completely. This is especially true for flammable vapor ignition resistant (FVIR) water heaters (which all residential water heaters are) whose natural draft is already restricted by FVIR components. With the flue shut or mostly shut on start-up, water heater combustion can be impacted in a number of ways, including nuisance lockouts, increased carbon monoxide production, and flue gases spilling into living spaces. For these reasons, non-electromechanical dampers were screened out.

ACEEE commented that DOE should revisit the preliminary conclusions presented in the screening analysis regarding advanced forms of insulation, which resulted in DOE's tentative decision to screen out those technologies. (ACEEE, No. 35 at pp. 3-4) In response, DOE research suggests that emerging technologies such as vacuum-insulated-panels (VIPs) may allow manufacturers to reduce heat loss, but such technologies have yet to find application in storage water heaters. DOE notes that ACEEE did not provide any new rationale or data to support why DOE should reconsider its original conclusion presented in the preliminary screening analysis that advanced forms of insulation have not been demonstrated as practical to manufacture and install. Hence, DOE screened out advanced forms of insulation from the NOPR analyses.

ACEEE also stated that DOE should revisit its preliminary conclusions regarding sidearm heaters and two-phase thermosiphons (TPTS) which resulted in DOE's tentative decision to screen out those technologies. (ACEEE, No. 35 at pp. 3-4) Regarding two-phase thermosiphons, ACEEE did not provide any explanation in its comment as to why DOE should reconsider its initial conclusion that it is not practicable to manufacture, install, and service this technology on the scale necessary to serve the relevant market at the time compliance with the standard is required. TPTSs require a drastic redesign of the water heater and are typically not practical for indoor installation. Therefore, DOE has continued to screen out this technology.

Regarding side-arm heaters, ACEEE commented that sidearm heaters are more feasible with access to 24-volt power, which would allow them to be located above or below the unit. This assertion does not address DOE's concerns about sidearm heaters presented in the preliminary analysis. DOE research did not reveal any working prototypes for gas-fired or oil-fired storage water heaters, and manufacturers seem to no longer use this technology. Therefore, this technology is not feasible and not practical to manufacture, install, and service side-arm storage water heaters on the scale necessary to serve the relevant market at the time of the compliance date of the standard, and was not considered further in the analysis. See chapter 4 of the NOPR TSD, Screening Analysis, for more details about DOE's assessment of two-phase thermosiphons and sidearm heaters.

For the reasons listed above, DOE still believes that thermophotovoltaic and thermoelectric generators, side-arm heaters, and advanced forms of insulation are not technologically feasible and are impractical to manufacture, repair, and install; that two-phase thermosiphons are impractical to manufacture, repair, and install; and that buoyancy operated flue dampers have an adverse impact on the safety of these products.

Bradford White Corporation (BWC) stated that using multiple flues for gas-fired storage water heaters is difficult, costly, and impractical to produce on residential water heater tank production lines. (BWC, No. 46 at p. 2)

In response, DOE research suggests that multi-flue storage water heaters can be produced at a higher production scale than is commonly done now. The current low shipment-volume techniques are commonly used in commercial gas-fired and oil-fired water heater designs. Solutions for higher-volume production of such heaters would require significant investments but are not technically infeasible. Thus, DOE believes multiple flue designs could be implemented on residential storage water heaters and are a viable technology for improving the efficiency of oil-fired storage water heaters.

In summary, none of the comments DOE received on the screening analysis led DOE to reconsider its determination for any of the technologies that were excluded from the preliminary analysis. Therefore, DOE excluded the same technologies in the NOPR analysis. Chapter 4 of the NOPR TSD provides more details about the technologies that DOE screened out.

2. Technologies Considered

Based upon the totality of the available information, DOE has tentatively concluded that: (1) All of the efficiency levels discussed in today's notice are technologically feasible; (2) products at these efficiency levels could be manufactured, installed, and serviced on a scale needed to serve the relevant markets; (3) these efficiency levels would not force manufacturers to use technologies that would adversely affect product utility or availability; and (4) these efficiency levels would not adversely affect consumer health or safety. Thus, the efficiency levels that DOE analyzed and is discussing in this notice are all achievable through technology options “screened in” during the screening analysis. The

technologies DOE considered are shown in Table IV.6 through Table IV.8.

Table IV.6—Technologies DOE Considered for the Water Heater Engineering Analysis

Technology

Water heater type by Fuel Source

Storage

Gas-fired

Electric

Oil-fired

Instantaneous

Gas-fired

Increased Jacket Insulation

Foam Insulation

Improve/Increased Heat Exchanger Surface Area

Enhanced Flue Baffle

Direct-Vent (Concentric Venting)

Power Vent

Electronic (or Interrupted) Ignition

Heat Pump Water Heater

Condensing

Table IV.7—Technologies DOE Considered for the Direct Heating Equipment Engineering Analysis

Technology

Increased Heat Exchanger Surface Area.

Direct-Vent (Concentric Venting).

Electronic Ignition.

Induced Draft.

Two Stage and Modulating Operation.

Condensing.

Table IV.8—Technologies DOE Considered for the Pool Heater Engineering Analysis

Technology

Increased Heat Exchanger Surface Area.

More Effective Insulation (Combustion Chamber).

Power Venting.

Sealed Combustion.

Condensing.

3. Heat Pump Water Heaters Discussion

For the preliminary analysis, DOE considered heat pump water heaters as a viable technology option for improving the efficiency of electric storage water heaters. DOE posted the preliminary TSD for residential heating products on its Web site on January 5, 2009 (for more information see

http://www1.eere.energy.gov/buildings/appliance_standards/residential/water_pool_heaters_prelim_tsd.html

). Pages 2-21 to 2-29 of chapter 2 of the preliminary TSD contain an extensive discussion of heat pump water heaters and the significant issues pertaining to the consideration of heat pump water heaters in this rulemaking. In the executive summary to the preliminary TSD, DOE sought comments on the viability of heat pump water heaters as a technology for electric storage water heaters and whether these water heaters would be practicable to manufacture, service, and install on a scale necessary to serve the relevant market by the compliance date of any amended standard, which would be five years after publication of the final rule.

In addition, DOE sought comment on several other issues regarding integral heat pump water heaters: (1) Whether manufacturers would be able to finance the investment costs necessary to convert their existing product lines to heat pump water heaters by the compliance date of an amended standard; (2) what percentage of manufacturers' product lines would be converted to heat pump water heaters by the compliance date of an amended standard (

e.g.,

if standards did not reach the levels provided by heat pump water heaters); (3) how the market for heat pump water heaters has changed since the January 2001 final rule, and the number of installations that would incur a significant increase in cost due to extensive modifications that will have to be made to a residence to accommodate a heat pump water heater; and (4) heat pump water heater programs that have been conducted since the January 2001 final rule.

In response to the preliminary analysis, DOE received a multitude of comments from interested parties, both at the public meeting and in written responses during the preliminary analysis comment period. A summary of the comments received and DOE's responses are presented below.

a. Consumer Utility

Southern stated that DOE needs to address issues regarding cold air produced by heat pump water heaters. According to Southern, simply increasing a residence's heat output is not an appropriate way to compensate for the cold air a heat pump water heater generates. Southern also asserted that constantly blowing cold air will create uneven temperatures within the dwelling space, leading to utility and comfort issues. (Southern, Public Meeting Transcript, No. 34.4 at p. 22) Southern noted that a heat pump water heater could provide supplemental cooling during a home's cooling hours; however, concentrated cooling at a particular location would result in uneven temperatures in a home, thereby being incompatible with the home's temperature needs. Southern stated that this would reduce the utility and performance of a home's HVAC system, and that there is no practical solution. (Southern, No. 50 at p. 2) The commenter stated that an HVAC supply vent near the unit would not help mitigating cold air issues. Southern commented that although a vent may cancel the effect of the cool air supplied in the winter (by supplying heat), during the cooling season, the supply vent (now supplying cool air) would exacerbate the temperature imbalance in the area of the heat pump water heater. (Southern, No. 50 at p. 2)

DOE agrees with Southern that cold air production of heat pump water heaters should be considered in the analysis. While DOE believes most consumers would choose to increase the use of their space heating system to deal with the increased heating load, DOE did account for the possibility that some consumers would choose to install ductwork to vent cold air away from the space surrounding the water heater to the outdoors to overcome uneven temperature problems. The increased installation costs of venting cold air away from a conditioned space, along with the increased cost of space heating for consumers who choose not to vent cold air away from the conditioned space, are accounted for in DOE's

analysis for certain percentages of consumers (see section IV.E.2).

Southern also commented on noise issues. Southern stated that is difficult to comment on a hypothetical product where no specifications exist, but that existing electric storage water heaters are often located in utility closets close to bedrooms and living areas. The commenter asserted that even if the product generates decibel levels similar to a refrigerator, such noise is a matter of greater concern because a heat pump water heater would tend to be in closer proximity to a bedroom or other quiet living area, as compared to a refrigerator located in a kitchen. Noise dampening would not be practical because louvered doors would be required to allow adequate air flow for the heat pump water heater. Southern cited the EPCA criteria, stating that there would be a significant impact on the utility or performance of the appliance if excessive noise disturbs the consumer. (Southern, No. 50 at p. 2)

DOE does not agree that the additional noise from a compressor used for a heat pump water heater would affect consumer utility for two reasons. First, as Southern points out, noise from a heat pump water heater compressor may be comparable in decibel level to the noise created by a refrigerator compressor, which has not been found to adversely affect consumer utility. Second, while the actual impact of excess noise created by a compressor may vary greatly based on the location of the appliance installation, DOE does not have any reason to believe that water heaters are any more likely to be installed near a bedroom than a refrigerator. Water heaters are typically not installed in consumers' bedrooms or living spaces, but instead are usually installed in garages, close

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