Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers)

DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2006-STD-0127]

RIN 1904-AB93

Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers)

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Energy (DOE) is adopting amended energy conservation standards for commercial clothes washers (CCWs). DOE has determined that amended energy conservation standards for these types of equipment would result in significant conservation of energy, and are technologically feasible and economically justified.

DATES:

The effective date of this rule is March 9, 2010. The standards established in today's final rule will be applicable starting January 8, 2013.

ADDRESSES:

For access to the docket to read background documents, the technical support document, transcripts of the public meetings in this proceeding, or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Brenda Edwards at the above telephone number for additional information regarding visiting the Resource Room. (

Note

: DOE's Freedom of Information Reading Room no longer houses rulemaking materials.) You may also obtain copies of certain previous rulemaking documents in this proceeding (

i.e.,

framework document, advance notice of proposed rulemaking, notice of proposed rulemaking, supplemental notice of proposed rulemaking), draft analyses, public meeting materials, and related test procedure documents from the Office of Energy Efficiency and Renewable Energy's Web site at

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.

FOR FURTHER INFORMATION CONTACT:

Stephen Witkowski, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585 Telephone: (202) 586-7463. E-mail:

Stephen.Witkowski@ee.doe.gov.

Francine Pinto, Esq. or Betsy Kohl, Esq., U.S. Department of Energy, Office of General Counsel, GC-71/72, 1000 Independence Avenue, SW., Washington, DC 20585. Telephone: (202) 586-7432, (202) 586-7796. E-mail:

Francine.Pinto@hq.doe.gov, Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

B. Current Federal Standards for Commercial Clothes Washers

C. Benefits to Consumers of Commercial Clothes Washers

D. Impact on Manufacturers

E. National Benefits

F. Conclusion

II. Introduction

A. Consumer Overview

B. Authority

C. Background

1. Current Standards

2. History of Standards Rulemaking

III. General Discussion

A. Test Procedures

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

D. Economic Justification

1. Specific Criteria

a. Economic Impact on Commercial Consumers and Manufacturers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

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 of Comments on Methodology

A. Equipment Classes

B. Technology Assessment

C. Engineering Analysis

1. Efficiency Levels

2. Manufacturing Costs

D. Life-Cycle Cost and Payback Period Analysis

1. Equipment Prices

2. Installation Cost

3. Annual Energy Consumption

4. Energy and Water Prices

a. Energy Prices

b. Water and Wastewater Prices

5. Repair and Maintenance Costs

6. Equipment Lifetime

7. Discount Rates

8. Effective Date of the Amended Standards

9. Equipment Energy Efficiency in the Base Case

10. Split Incentive Between CCW Consumers and Users

11. Rebound Effect

12. Inputs to Payback Period Analysis

13. Rebuttable-Presumption Payback Period

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

1. General

2. Shipments

a. New Construction Shipments

b. Replacements and Non-replacements

c. Impacts of Standards on Shipments

3. Other Inputs

a. Base-Case Forecasted Efficiencies

b. Standards-Case Forecasted Efficiencies

c. Annual Energy Consumption

d. Site-to-Source Conversion

e. Energy Used in Water and Wastewater Treatment and Delivery

f. Total Installed Costs and Operating Costs

g. Discount Rates

h. Effects of Standards on Energy Prices

F. Consumer Subgroup Analysis

G. Manufacturer Impact Analysis

H. Employment Impact Analysis

I. Utility Impact Analysis

J. Environmental Assessment

K. Monetizing Carbon Dioxide and Other Emissions Impacts

V. Discussion of Other Comments

A. Proposed Trial Standard Levels (TSLs) for Commercial Clothes Washers

B. Proposed Standards for Commercial Clothes Washers

VI. Analytical Results and Conclusions

A. Trial Standard Levels

B. Significance of Energy Savings

C. Economic Justification

1. Economic Impacts on Commercial Customers

a. Life-Cycle Cost and Payback Period

b. Commercial Consumer Subgroup Analysis

c. Rebuttable-Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Cumulative Regulatory Burden

c. Impacts on Employment

d. Impacts on Manufacturing Capacity

e. Impacts on Subgroups of Manufacturers

3. National Impact Analysis

a. Amount and Significance of Energy Savings

b. Net Present Value of Customer Costs and Benefits

c. Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

D. Conclusion

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

The Energy Policy and Conservation Act

1

(EPCA), as amended (42 U.S.C. 6291

et seq.;

EPCA), directs the Department of Energy (DOE) to consider amended mandatory energy conservation standards for CCWs. (42 U.S.C. 6313(e)(2)(A)) Any such amended energy conservation standard must 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) and 6316(a)) Furthermore, any new or amended standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 6316(a)) The standards in today's final rule, which apply to all CCWs, satisfy these and other statutory criteria discussed in this notice.

1

42 U.S.C. 6291

et seq.

Table I.1 shows the amended standard levels that DOE is adopting today. These standards will apply to all CCWs manufactured for sale in the United States, or imported to the United States, on or after January 8, 2013.

Table I.1—Amended Energy Conservation Standards for Commercial Clothes Washers

Equipment class

Amended energy conservation

standards

Top-loading commercial clothes washers

1.60 Modified Energy Factor/8.5 Water Factor.

Front-loading commercial clothes washers

2.00 Modified Energy Factor/5.5 Water Factor.

B. Current Federal Standards for Commercial Clothes Washers

EPCA, as amended by the Energy Policy Act of 2005 (EPACT 2005), prescribes standards for CCWs manufactured on or after January 1, 2007. (42 U.S.C. 6313(e)) These standards require that CCWs have a modified energy factor (MEF) of at least 1.26 and a water factor (WF) of not more than 9.5. (

Id.;

10 CFR 431.156)

C. Benefits to Consumers of Commercial Clothes Washers

Table I.2 indicates the impacts on commercial consumers of today's amended standards. The economic impacts of the amended CCW standards on commercial consumers as measured by the average life-cycle cost (LCC) savings are positive, even though the standards may increase some initial costs. For example, typical top-loading CCWs—the most common type currently being sold—have an average installed price of $760 and average lifetime operating costs (discounted) of $3,286. To meet the amended standards, DOE estimates that the average installed price of such equipment will increase by $214, which will be more than offset by savings of $394 in average lifetime operating costs (discounted).

Table I.2—Implications of Amended Standards for Commercial Consumers

Equipment class

Energy conservation standard

Average installed price *

$

Average installed price increase

$

Average life-cycle cost savings

$

Median payback period

years

Top-loading CCWs

1.60 Modified Energy Factor/8.5 Water Factor

974

214

180

4.3

Front-loading CCWs

2.00 Modified Energy Factor/5.5 Water Factor

1,365

23

** 20

** 0.4

* For a baseline model.

** DOE estimates that 96 percent of front-loading CCW consumers would purchase a model at the standard level even without amended standards. The values refer to average impacts for the 4 percent of consumers who would be affected by the standard.

D. Impact on Manufacturers

Using a real corporate discount rate of 7.2 percent, DOE estimates the industry net present value (INPV) of the CCW industry to be approximately $62 million in 2008$. DOE expects the impact of today's standards on the INPV of manufacturers of CCWs to be a loss of between 7.8 percent and 11.4 percent of the INPV, which is approximately $5 to $7 million. Based on DOE's interviews with the manufacturers of CCWs, DOE expects possible loss of employment for one manufacturer as a result of the standards.

E. National Benefits

DOE estimates that the energy conservation standards will save a significant amount of energy—an estimated 0.10 quadrillion British thermal units (Btu), or quads, of cumulative energy over 30 years (2013-2043). This amount is equivalent to 2 days of U.S. gasoline use. In addition, DOE estimates the standards for CCWs will save over 143 billion gallons of cumulative water consumption over 30 years (2013-2043).

The national net present value (NPV) of CCW consumer benefit resulting from the standards, considering the impacts of equipment sold in 2013-2043, is $0.4 billion using a 7-percent discount rate and $0.9 billion using a 3-percent discount rate, in 2008$. This is the estimated total value of future operating cost savings minus the estimated increased equipment costs, discounted to 2009. The NPV for consumers (at the 7-percent discount rate) would exceed industry losses, discussed above, due to energy efficiency standards by at least 80 times.

By 2043, DOE expects the energy savings from the standards to eliminate the need for approximately 18 MW of electricity generating capacity. The energy savings will result in cumulative greenhouse gas emissions reductions in 2013-2043 of approximately 5.1 million tons (Mt) of carbon dioxide (CO

2

), or an amount equal to that produced by approximately 5.1 million new cars in a year. Additionally, the standards will help alleviate air pollution by resulting in approximately 3.0 kilotons (kt) of cumulative nitrogen oxide (NO

X

) emission reductions and 0.0003 tons of cumulative mercury (Hg) emission reductions. The estimated net present monetary values of these emissions reductions at a 7-percent discount rate (discounted to 2009 and expressed in 2008$) are between $13 and $140 million for CO

2

, between $0.4 and $4.2

million for NO

X

, and between $0.0 and $0.6 million for Hg. At a 3-percent discount rate, the estimated net present values of these emissions reductions (discounted to 2009 and expressed in 2008$) are between $28 and $303 million for CO

2

, between $0.8 million and $8.4 million for NO

X

, and between $0.0 and $0.6 million for Hg.

The benefits and costs of today's final rule can also be expressed in terms of annualized values. Estimates of annualized values for three economic growth cases are shown in Table I.3. The annualized monetary values are the sum of the annualized national economic value of operating savings benefits (energy, maintenance and repair), plus the monetary values of the benefits of carbon dioxide emission reductions, monetized using a value of $20 per metric ton of carbon dioxide. The $20 value is a central interim value from a recent interagency process, as discussed in section VI.C.6. Although summing the value of operating savings to the values of CO

2

reductions provides a valuable perspective, please note the following. The national operating savings are domestic U.S. consumer monetary savings found in market transactions while the CO

2

value is based on a range of estimates of imputed marginal social cost of carbon, which are meant to reflect the global benefits of CO

2

reductions. Furthermore, the assessments of operating savings and CO

2

savings are performed with different computer models, leading to different time frames for analysis. The present value of national operating savings considers the impacts of equipment sold in 2013-2043. The value of CO

2

, on the other hand is meant to reflect the present value of all future climate-related impacts, which go well beyond the lifetime of the equipment sold in the forecast period.

Using a 7-percent discount rate for the annualized cost analysis, the cost of the standards established in today's final rule for CCWs is $23.4 million per year in increased equipment and installation costs, while the annualized benefits are $60.6 million per year in reduced equipment operating costs and $5.1 million in CO

2

reductions, for a net benefit of $42.2 million per year. Using a 3-percent discount rate, the cost of the standards established in today's final rule is $22.7 million per year in increased equipment and installation costs, while the benefits of today's standards are $72.8 million per year in reduced operating costs and $5.9 million in CO

2

reductions, for a net benefit of $56.0 million per year.

Table I.3—Annualized Benefits and Costs of Amended Standards for Commercial Clothes Washers (TSL 3)

Category

Unit

Primary estimate

(

AEO

reference case)

7%

3%

Low estimate

(

AEO

low-growth case)

7%

3%

High estimate

(

AEO

high-growth case)

7%

3%

Benefits

Monetized Operating Cost Savings

Million 2008$

60.6

72.8

54.9

65.3

66.6

80.4

Quantified Emissions Reductions

CO

2

(Mt)

0.14

0.16

0.14

0.16

0.14

0.16

NO

X

(kt)

0.087

0.194

0.087

0.194

0.087

0.194

Hg

(t)

0.0002

0.0001

0.0002

0.0001

0.0002

0.0001

Monetized Avoided Emissions Reductions * (

Million 2008$

)

CO

2

5.1

5.9

5.1

5.9

5.1

5.9

NO

X

0.2

0.3

0.2

0.3

0.2

0.3

Hg

0.0

0.0

0.0

0.0

0.0

0.0

Costs

Monetized Incremental Product and Installation Costs

Million 2008$

23.4

22.7

21.9

20.9

24.6

23.9

Net Benefits

Monetized Value

Million 2008$

42.5

56.3

38.3

50.6

47.3

62.7

* For CO

2

, 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

2

emissions. For NO

X

and Hg, the benefits reflect values of $2,491/t and $17 million/t, respectively. These values are the midpoint of the range considered by DOE.

F. Conclusion

The benefits (energy savings, LCC savings for CCW consumers, positive national NPV, and emissions reductions) to the Nation of the standards outweigh their costs (loss of manufacturer INPV and LCC increases for some CCW consumers). Today's standards also represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and will result in significant energy savings. At present, CCWs that meet the amended standard levels are commercially available.

II. Introduction

A. Consumer Overview

DOE is amending in today's final rule energy conservation standard levels for CCWs as shown in Table I.1. These standards apply to equipment manufactured or imported on or after January 8, 2013.

DOE research suggests that commercial consumers will see benefits from today's standards even though DOE expects the purchase price of the high efficiency CCWs to increase (by 2 to 28 percent) from the average price of this equipment today. However, the energy efficiency gains are expected to result in lower energy and water costs, saving consumers $53 to $103 per year on their energy and water bills, again depending on the equipment class. When these savings are summed over the lifetime of the equipment, consumers are expected to save an average of $20 to $190, depending on the equipment class, utility costs, and other factors. DOE estimates that the payback period (PBP) for the more efficient, higher-priced equipment will range from 0.2 to 5.6 years, depending on the equipment class.

B. Authority

Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A-1 of Title III (42 U.S.C. 6311-6317) establishes an energy conservation program for “Certain Industrial Equipment,” which deals with a variety of commercial and industrial equipment (referred to hereafter as “covered equipment”) including CCWs, the subject of this rulemaking. (42 U.S.C. 6312; 6313(e)) DOE publishes today's final rule pursuant to Part A-1 of Title III, which provides for test procedures, labeling, and energy conservation standards for CCWs and certain other equipment, and authorizes DOE to require information and reports from manufacturers. The test procedures for CCWs appear at 10 CFR part 430, subpart B, appendix J1 (pursuant to 10 CFR 431.154).

Section 136(a) and (e) of the Energy Policy Act of 2005 (EPACT 2005; Pub. L. 109-058) added CCWs as equipment covered under EPCA and established standards for such equipment that is manufactured on or after January 1, 2007.

2

(42 U.S.C. 6311(1) and 6313(e)) These amendments to EPCA also require that DOE issue a final rule by January 1, 2010, to determine whether these standards should be amended. (EPACT 2005, section 136(e); 42 U.S.C. 6313(e)) If amended standards are justified, they would become effective no later than January 1, 2013. (

Id.

)

2

Under the statute, a CCW must have an MEF of at least 1.26 and a WF of not more than 9.5.

EPCA provides criteria for prescribing amended standards for covered products and equipment.

3

As indicated above, any amended standard for this equipment 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) and 6316(a)) Additionally, EPCA provides specific prohibitions on prescribing such standards. DOE may not prescribe an amended or new standard for any equipment for which DOE has not established a test procedure. (42 U.S.C. 6295(o)(3)(A) and 6316(a)). Further, DOE may not prescribe an amended standard if DOE determines by rule that such standard would not result in “significant conservation of energy” or “is not technologically feasible or economically justified.” (42 U.S.C. 6295(o)(3)(B) and 6316(a))

3

The EPCA provisions discussed in the remainder of this subsection directly apply to covered products, and also apply to certain covered equipment, such as CCWs, by virtue of 42 U.S.C. 6316(a). Note that the term “product” is used generally to refer to consumer appliances, while “equipment” is used generally to refer to commercial units.

EPCA also provides that, in deciding whether such a standard is economically justified for equipment such as CCWs, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens 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 or equipment subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the covered products or equipment 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 or equipment 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) and 6316(a))

In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a)), establishes a rebuttable presumption that any standard for covered products is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the test procedure * * *” in place for that standard. See section III.D.2.

Furthermore, EPCA contains what is commonly known as an “anti-backsliding” provision. (42 U.S.C. 6295(o)(1) and 6316(a)) This provision 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 or equipment. EPCA further provides that the Secretary may not prescribe an amended standard if interested persons have established by a preponderance of the evidence that the standard is “likely to result in the unavailability in the United States of any product type (or class)” with performance characteristics, features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4) and 6316(a))

Section 325(q)(1) of EPCA is applicable to promulgating standards for most types or classes of equipment, including CCWs, that have two or more subcategories. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(a)) Under this provision, DOE must specify a different standard level than that which applies generally to such type or class of products or equipment “for any group of covered products which have the same function or intended use, if * * * covered products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether a performance-related feature justifies such a different standard for a group of equipment, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate. (42 U.S.C. 6295(q)(1)) Any rule prescribing such a standard must include an explanation of the basis on which DOE established such higher or lower level. (See 42 U.S.C. 6295(q)(2))

Federal energy conservation requirements for commercial equipment, including CCWs, generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c); 42 U.S.C. 6316(a)) DOE can, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of EPCA found in 42 U.S.C. 6297(d). Specifically, States that regulate an energy conservation standard for a type of covered product for which there is a Federal energy conservation standard may petition the Secretary for a DOE rule that allows the State regulation to become effective with respect to such covered product. (42 U.S.C. 6297(d)(1)(A); 42 U.S.C. 6316(a)) DOE must prescribe a rule granting the petition if the Secretary finds that the

State has established by a preponderance of the evidence that its regulation is needed to meet “unusual and compelling State or local energy * * * interests.” (42 U.S.C. 6297(d)(1)(B); 42 U.S.C. 6316(a))

C. Background

1. Current Standards

EPCA, as amended by EPACT 2005, prescribes energy conservation standards for CCWs manufactured on or after January 1, 2007. (42 U.S.C. 6313(e)) These standards require that CCWs have an MEF of at least 1.26 cubic feet of capacity (ft

3

) per kilowatt-hour (kWh) and a WF of not more than 9.5 gallons of water (gal) per ft

3

. (

Id.;

10 CFR 431.156)

2. History of Standards Rulemaking

As discussed in the supplemental notice of proposed rulemaking (SNOPR), 74 FR 57738 (Nov. 9, 2009) (the November 2009 SNOPR), the EPACT 2005 amendments to EPCA require that DOE issue a final rule by January 1, 2010, to determine whether standards for CCWs should be amended. (EPACT 2005, section 136(e); 42 U.S.C. 6313(e)) If amended standards are justified, they would become effective no later than January 1, 2013. (

Id.

)

To initiate the current rulemaking to consider energy conservation standards, on March 15, 2006, DOE published on its Web site a document titled,

Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and Cooking Products

(Framework Document).

4

71 FR 15059 (March 27, 2006). The Framework Document described the procedural and analytical approaches that DOE anticipated using to evaluate energy conservation standards for these products, and identified various issues to be resolved in conducting the rulemaking. DOE held a public meeting on April 27, 2006, to present the Framework Document, to describe the analyses it planned to conduct during the rulemaking, to receive comments from interested parties, and to inform and facilitate interested parties' involvement in the rulemaking. DOE received 11 written comments in response to the Framework Document after the public meeting.

4

This document is available on the DOE Web site at:

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.

DOE published the advance notice of proposed rulemaking (ANOPR) for this rulemaking on November 15, 2007 (November 2007 ANOPR) (72 FR 64432), and held a public meeting on December 13, 2007, to present and seek comment on the November 2007 ANOPR analytical methodology and results. The November 2007 ANOPR included background information on the history and conduct of this rulemaking. 72 FR 64432, 64438-39 (Nov. 15, 2007) In the November 2007 ANOPR, DOE described and sought further comment on the analytical framework, models, and tools (

e.g.,

LCC and NIA spreadsheets) it was using to analyze the impacts of energy conservation standards for these products. In conjunction with the November 2007 ANOPR, DOE also posted on its Web site the complete November 2007 ANOPR technical support document (TSD). The TSD included the results of a number of DOE's preliminary analyses in this rulemaking. In the November 2007 ANOPR and at the public meeting, DOE invited comment in particular on the following issues concerning CCWs: (1) Product classes; (2) horizontal-axis designs; (3) technologies unable to be analyzed and exempted product classes, including potential limitations of existing test procedures; (4) per-cycle energy consumption; (5) consumer prices; (6) repair and maintenance costs; (7) efficiency distributions in the base case; (8) shipments forecasts; (9) base-case and standards-case forecasted efficiencies; and (10) TSLs. 72 FR 64432, 64512-14 (Nov. 15, 2007).

On October 17, 2008, DOE published a NOPR (October 2008 NOPR) in the

Federal Register,

in which it proposed amended energy conservation standards for certain products and equipment, including CCWs. 73 FR 62034. The energy conservation standards proposed in the October 2008 NOPR for CCWs are shown in Table II.1.

Table II.1—Commercial Clothes Washer Energy Conservation Standards Proposed in the October 2008 NOPR

Equipment

Modified energy factor

ft

3

/kWh

Water factor

gal/ft

3

Top-loading CCWs

1.76

8.3

Front-loading CCWs

2.00

5.5

In the October 2008 NOPR, DOE described and sought further comment on the analytical framework, models, and tools (

e.g.,

LCC and NIA spreadsheets) it was using to analyze the impacts of energy conservation standards for this equipment. In conjunction with the October 2008 NOPR, DOE also posted on its Web site the complete TSD, which along with the October 2008 NOPR, is available at

http://www1.eere.energy.gov/buildings/appliance_standards/.

The TSD included the results of a number of DOE's analyses. In the October 2008 NOPR and at the public meeting held on November 13, 2008 (referred to as the “November 2008 public meeting”), DOE invited comment in particular on the following issues concerning CCWs: (1) The efficiency levels; (2) DOE's determination of the maximum technologically feasible (max-tech) efficiency levels for top-loading and front-loading CCWs; (3) the magnitude of possible equipment class shifting to front-loading CCWs; (4) the analysis and data relevant to the price elasticity of demand for calculating the anticipated energy and water savings at different TSLs; (5) the analysis of consumer knowledge of the Federal ENERGY STAR program and its potential as a resource for increasing knowledge of the availability and benefits of energy efficient appliances in the home appliance consumer market; (6) discount rates other than 7 percent and 3 percent real to discount future emissions reductions; (7) data that might enable DOE to test for market failures or other specific problems for CCWs; and (8) the determination of anticipated environmental impacts of the standards proposed in the October 2008 NOPR, particularly with respect to the methods for valuing the expected CO

2

and NO

X

emissions savings. 73 FR 62034, 62133 (Oct. 17, 2008).

The October 2008 NOPR also included background information, in

addition to that set forth above, on the history and conduct of this rulemaking. 73 FR 62034, 62040-62041 (Oct. 17, 2008). DOE presented the methodologies and results for the October 2008 NOPR analyses at the November 2008 public meeting. Comments presented by interested parties during this meeting and submitted in response to the October 2008 NOPR concerning the accuracy of the stated max-tech CCW efficiency level led to a thorough investigation of CCW efficiencies and the November 2009 SNOPR. DOE subsequently tested the max-tech unit at an independent test facility, revised the max-tech level, updated the analysis, and published the November 2008 SNOPR to allow interested parties to comment on the revised efficiency level proposals. 74 FR 57738 (Nov. 9, 2009).

In the November 2009 SNOPR, DOE revised the proposed energy conservation standards for CCWs. 74 FR 57738 (Nov. 9, 2009). In conjunction with the November 2009 SNOPR, DOE also published on its Web site the complete TSD for the proposed rule, which incorporated the final analyses that DOE conducted, and contained technical documentation for each step of the analysis. The TSD included the engineering analysis spreadsheets, the LCC spreadsheet, and the national impact analysis spreadsheet. The revised energy conservation standards proposed in the November 2009 SNOPR for CCWs are shown in Table II.2.

Table II.2—Commercial Clothes Washer Energy Conservation Standards Proposed in the November 2009 SNOPR

Equipment

Modified energy factor

ft

3

/kWh

Water factor

gal/ft

3

Top-loading CCWs

1.60

8.5

Front-loading CCWs

2.00

5.5

In the November 2009 SNOPR, DOE identified issues on which it was particularly interested in receiving comments and views of interested parties. These included the following: (1) Whether the method of “loading” clothes washers, or any other characteristic commonly associated with traditional “top-loading” or “front-loading” clothes washers, are “features” within the meaning of 42 U.S.C. 6295(o)(4) in EPCA and whether the availability of such feature(s) would likely be affected by eliminating the separate classes for these equipment types previously established by DOE; (2) the revised efficiency levels, including the revised max-tech level for top-loading CCWs; (3) technological feasibility of the proposed max-tech CCW, including washing and rinsing performance measures for CCWs and population data for water heating CCWs; (4) the determination of manufacturer impacts, including the effects of manufacturer tax credits and competitive concerns; (5) the determination of environmental impacts; and (6) the newly proposed energy conservation standards. 74 FR 57738, 57800 (Nov. 9, 2009) After the publication of the November 2009 SNOPR, DOE also held a public meeting in Washington, DC, on November 16, 2009 (referred to as the “November 2009 public meeting”), to hear oral comments on and solicit information relevant to the revised proposed rule. The November 2009 SNOPR included additional background information on the history of this rulemaking. 74 FR 57738, 57742-43 (Nov. 9, 2009).

Comments presented by interested parties during the November 2009 public meeting and submitted in response to the November 2009 NOPR concerning the sensitivity of the analyses to the estimated market share split of CCW shipments among laundromats, multi-family housing, and on-premises laundry applications led DOE to conduct a sensitivity analysis for today's final rule. See appendix 11C of the TSD.

III. General Discussion

A. Test Procedures

EPCA directs DOE to use the same test procedures for CCWs as those established by DOE for residential clothes washers (RCWs). (42 U.S.C. 6314(a)(8)) 73 FR 62034, 62043-44 (Oct. 17, 2008). While DOE believes commercial laundry practices likely differ from residential practices,

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DOE concluded in the October 2008 NOPR that the existing clothes washer test procedure (at 10 CFR part 430, subpart B, appendix J1) adequately accounts for the efficiency rating of CCWs, and that DOE's methods for characterizing energy and water use in the October 2008 NOPR analyses adequately accounted for the consumer usage patterns specific to CCWs. In response to the October 2008 NOPR, interested parties agreed with DOE's conclusion that the DOE clothes washer test procedure is adequate for rating CCWs. DOE did not receive any comments objecting to the use of the DOE clothes washer test procedure for CCWs. Therefore, for the November 2009 SNOPR, DOE continued to consider the existing DOE test procedure adequate to measure energy and water consumption of CCWs. 74 FR 57738, 57743 (Nov. 9, 2009).

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CCWs are typically used more frequently and filled with a larger load than RCWs.

The Appliance Standards Awareness Project (ASAP) commented that DOE is currently reviewing its clothes washer test procedure, and noted that there may be revisions as a result of that rulemaking. ASAP asked whether, under EPACT 2005, those potential changes in the test procedure would apply to the determinations of compliance with this standard that is currently proposed for CCWs. (ASAP, Public Meeting Transcript, No. 67.4 at pp. 13-16

6

) EPCA states that “[w]ith respect to commercial clothes washers, the test procedures shall be the same as the test procedures established by the Secretary for RCWs under section 6295(g) of this title.” (42 U.S.C. 6314(a)(8)) Therefore, CCWs will be required to be tested to the DOE clothes washer test procedure that is effective at the time the testing is conducted.

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A notation in the form “ASAP, Public Meeting Transcript, No. 67.4 at pp. 13-16” identifies an oral comment that DOE received during the November 16, 2009, SNOPR public meeting and which was recorded in the public meeting transcript in the docket for this rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource Room of the Building Technologies Program. This particular notation refers to a comment (1) made by the Appliance Standards Awareness Project (ASAP) during the public meeting, (2) recorded in document number 67.4, which is the public meeting transcript that is filed in the docket of this rulemaking, and (3) which appears on pages 13-16 of document number 67.4.

B. Technological Feasibility

1. General

As stated above, any standards that DOE establishes for CCWs must be technologically feasible. (42 U.S.C.

6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(a)) DOE considers a design option to be technologically feasible if it is in use by the respective 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 part 430, subpart C, appendix A, section 4(a)(4)(i). Therefore, in each standards rulemaking, DOE conducts a screening analysis, based on information it has gathered regarding existing technology options and prototype designs. In consultation with manufacturers, design engineers, and other interested parties, DOE develops a list of design options for consideration in the rulemaking. Once DOE has determined that a particular design option is technologically feasible, it further evaluates each design option in light of the following three additional criteria: (a) Practicability to manufacture, install, and service; (b) adverse impacts on product utility or availability; or (c) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(3) and (4). All design options that pass these screening criteria are candidates for further assessment in the engineering and subsequent analyses in the NOPR (or SNOPR) stage.

DOE published a list of evaluated CCW technologies in the November 2007 ANOPR. 72 FR 64432, 64458 (Nov. 15, 2007). For the reasons described in the November 2007 ANOPR and in chapter 4 of the TSD, DOE is not considering the following design options, as they do not meet one or more of the screening criteria: Bubble action, electrolytic disassociation of water, ozonated laundering, reduced thermal mass, suds-saving, and ultrasonic washing. In the November 2009 SNOPR, DOE did not screen out any additional technology options that were retained in the October 2008 NOPR analyses. No comments were received objecting to the technology options which were screened out in the October 2008 NOPR. 73 FR 62034, 62052 (Oct. 17, 2008). Therefore, DOE considered the same design options in the November 2009 SNOPR as those evaluated in the October 2008 NOPR. 74 FR 57738, 57743-44 (Nov. 9, 2009).

This final rule considers the same design options as those evaluated in the November 2009 SNOPR. All the evaluated technologies have been used (or are being used) in commercially available equipment or working prototypes. DOE also has determined that there is equipment either in the market or in working prototypes at all of the efficiency levels analyzed in this notice. Therefore, DOE has determined that all of the efficiency levels evaluated in this final rule, which are based upon the retained design options, are technologically feasible. For more detail on DOE's method for developing CCW technology options and the process for screening these options, refer to the chapters 3 and 4 of the TSD.

2. Maximum Technologically Feasible Levels

When DOE considers an amended standard for a type (or class) of equipment such as front-loading or top-loading CCWs, it must “determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible” for such equipment. (42 U.S.C. 6295(p)(2) and 6316(a)) For the October 2008 NOPR, DOE determined the max-tech efficiency levels for front-loading and top-loading CCWs in the engineering analysis, based on published MEF and WF values of commercially available equipment. (See chapter 5 in the NOPR TSD.) For the October 2008 NOPR, DOE proposed the max-tech levels shown in Table III.1. 73 FR 62034, 62036 (Oct. 17, 2008).

Table III.1—Commercial Clothes Washer Max-Tech Efficiency Levels Proposed in the October 2008 NOPR

Equipment class

Max-tech level

MEF,

ft

3

/kW

WF,

gal/ft

3

Top-Loading CCWs

1.76

8.3

Front-Loading CCWs

2.35

4.4

DOE received comments in response to the October 2008 NOPR questioning the max-tech top-loading CCW efficiency rating presented in the November 2009 SNOPR. DOE examined the max-tech efficiency level for top-loading CCWs, contracting an independent testing laboratory to verify the performance ratings for the max-tech top-loading CCW model. The laboratory results (based on a 3-unit sample) suggested that the max-tech model achieves 1.63 MEF/8.4 WF. Based on this information, DOE revised the max-tech top-loading CCW level in the November 2009 SNOPR downward to 1.60 MEF/8.5 WF, a level proposed in the October 2008 NOPR as a “gap-fill” level and one which DOE concluded in the November 2009 SNOPR is attainable by the max-tech CCW model. For the November 2009 SNOPR, the proposed front-loading max-tech level was the same as in the October 2008 NOPR, whereas the proposed top-loading max-tech level was revised to 1.60 MEF/8.5 WF based on the independent test results. 74 FR 57738, 57744 (Nov. 9, 2009).

DOE received comments in response to the November 2009 SNOPR that objected to the max-tech efficiency level for top-loading CCWs based on lack of wash performance and consumer acceptance of the max-tech top-loading CCW model in a commercial laundry setting. DOE agrees that inherent in a determination of technological feasibility is performance related to the equipment's primary function (

i.e.,

cleaning clothes), but DOE considers as evidence of sufficient performance and consumer acceptance of the highest efficiency top-loading CCWs the presence on the market of two such models at or near the max-tech level proposed in the November 2009 SNOPR. Therefore, for today's final rule, the max-tech levels for both classes are the max-tech levels identified in the November 2009 SNOPR. These levels are shown in Table III.2 below. For more details on this selection of max-tech levels, see section IV.C.1.a of today's final rule.

Table III.2—Commercial Clothes Washer Max-Tech Efficiency Levels

Equipment class

Max-tech level

MEF,

ft

3

/kW

WF,

gal/ft

3

Top-Loading CCWs

1.60

8.5

Front-Loading CCWs

2.35

4.4

C. Energy Savings

DOE forecasted energy savings in its national energy savings (NES) analysis through the use of an NES spreadsheet tool, as discussed in the November 2009 SNOPR. 74 FR 57738, 57744 (Nov. 9, 2009).

One criterion that governs DOE's adoption of standards for CCWs is the standard must result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(a)) While EPCA does not define the term “significant,” the U.S. Court of Appeals for the District of Columbia, in

Natural Resources Defense Council

v.

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.” DOE's estimates of the energy savings for the energy conservation standards adopted in today's final rule are nontrivial. Therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria

As noted earlier, EPCA provides seven factors to be evaluated in determining whether an energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B) and 42 U.S.C. 6316(a)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Commercial Consumers and Manufacturers

DOE considered the economic impact of the amended CCW standards on commercial consumers and manufacturers. For consumers, DOE measured the economic impact as the change in installed cost and life-cycle operating costs,

i.e.,

the LCC. (See sections IV.D and IV.E and chapter 8 of the TSD.) DOE investigated the impacts on manufacturers through the manufacturer impact analysis (MIA). (See sections IV.G and VI.C.2, and chapter 13 of the TSD.) The economic impact on commercial consumers and manufacturers is discussed in detail in the November 2009 SNOPR. 74 FR 57738, 57751-55, 57761-65, 57769-77 (Nov. 9, 2009).

b. Life-Cycle Costs

DOE considered life-cycle costs of CCWs, as discussed in the November 2009 SNOPR. 74 FR 57738, 57751-55 (Nov. 9, 2009). DOE calculated the sum of the purchase price and the operating expense—discounted over the lifetime of the equipment—to estimate the range in LCC benefits that commercial consumers would expect to achieve due to the standards.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA also requires DOE, in determining the economic justification of a proposed 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) and 42 U.S.C. 6316(a)). As in the November 2009 SNOPR (74 FR 57738, 57755-61 (Nov. 9, 2009)), for today's final rule, DOE used the NIA spreadsheet results in its consideration of total projected savings that are directly attributable to the standard levels DOE considered.

d. Lessening of Utility or Performance of Equipment

In selecting today's standard levels, DOE sought to avoid new standards for CCWs that would lessen the utility or performance of that equipment (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(a)). As with the November 2009 SNOPR (74 FR 57738, 57745 (Nov. 9, 2009)), today's standards do not involve changes in equipment design or unusual installation requirements that would reduce the utility or performance of CCWs.

e. Impact of Any Lessening of Competition

DOE considers any lessening of competition likely to result from standards. Accordingly, as discussed in the November 2009 SNOPR (74 FR 57738, 57745, 57762-63 (Nov. 9, 2009)), DOE requested that the Attorney General transmit to the Secretary a written determination of the impact, if any, of lessening of competition likely to result from the proposed standards, 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) and 42 U.S.C. 6316(a)).

To assist the Attorney General in making such a determination, DOE provided the U.S. Department of Justice (DOJ) with copies of the November 2009 proposed rule and the TSD for review. The Attorney General's response is discussed in section VI.C.5 below, and is reprinted at the end of this rule. Impacts on manufacturers are also discussed in section IV.G below.

f. Need of the Nation to Conserve Energy

In considering standards for CCWs, the Secretary must consider the need of the Nation to conserve energy (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 42 U.S.C. 6316(a)). The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary benefits of the standards are likely to be reflected in improvements to the security and reliability of the Nation's energy system. Today's standards will also result in environmental benefits. As discussed in the November 2009 SNOPR, DOE has considered these factors in adopting today's standards. 74 FR 57738, 57765-67 (Nov. 9, 2009).

g. Other Factors

In determining whether a standard is economically justified, EPCA directs the Secretary to consider any other factors deemed relevant (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(a)). In adopting today's amended standards, the Secretary found no relevant factors other than those identified elsewhere in today's final rule.

2. Rebuttable Presumption

Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer that meets the standard level is less than three times the value of the first-year energy savings resulting from the standard (and water savings in the case of a water efficiency standard), as calculated under the applicable DOE test procedure (42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a)).

DOE's LCC and PBP analyses generate values that calculate the PBP for consumers of equipment meeting potential energy conservation standards, which includes, but is not limited to, the 3-year PBP contemplated under the rebuttable presumption test discussed above. (See chapter 8 of the TSD.) 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) and 42 U.S.C. 6316(a). 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).

IV. Methodology and Discussion of Comments on Methodology

DOE used several previously developed analytical tools in setting today's standard. Each was adapted for this rule. One of these analytical tools is a spreadsheet that calculates LCC and PBP. Another calculates national energy savings and national NPV. A third tool is the Government Regulatory Impact Model (GRIM), the results of which are the basis for the MIA, among other methods. In addition, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of energy efficiency standards for CCWs on electric utilities and the environment. The TSD appendices discuss each of these analytical tools in detail.

As a basis for this final rule, DOE has continued to use the spreadsheets and approaches explained in the November 2009 SNOPR. DOE used the same general methodology but has revised some of the assumptions and inputs for this final rule in response to comments from interested parties. The following paragraphs discuss these revisions.

A. Equipment Classes

In the October 2008 NOPR, DOE proposed separate equipment classes and accompanying standards for top-loading and front-loading CCWs with separate standards for each class. 73 FR 62034, 62036 (Oct. 17, 2008). DOE determined in the October 2008 NOPR that two equipment classes were warranted because the method of “loading” had been previously determined, under DOE rulemakings for residential clothes washers, to be a “feature,” as defined by EPCA, and because an amended standard for a single equipment class might set the MEF for all CCWs at a level significantly higher than what the max-tech for top-loading machines can attain today, and effectively eliminate top-loading CCWs from the market. 73 FR 62034, 62049-50 (Oct. 17, 2008). This determination remained unchanged in the November 2009 SNOPR, 74 FR 57738, 57746-47, although DOE sought comment as to (1) whether the method of “loading” clothes washers, or any other characteristic commonly associated with traditional “top-loading” or “front-loading” clothes washers, such as presence or absence of agitators, ability to interrupt cycles, and possibly others, are “features” within the meaning of 42 U.S.C. 6295(o)(4) in EPCA; and (2) whether the availability of such feature(s) would likely be affected by eliminating the separate classes for these equipment types previously established by DOE. DOE received comments in response to the November 2009 SNOPR both in support of and opposed to establishing two equipment classes for CCWs. These comments are described in more detail in the following paragraphs.

The Association of Home Appliance Manufacturers (AHAM), GE Consumer & Industrial (GE),

7

Whirlpool Corporation (Whirlpool), and Alliance Laundry Systems (Alliance) stated that they support the definition of separate equipment classes for top-loading and front-loading CCWs. (AHAM, Public Meeting Transcript, No. 67.4 at p. 33; AHAM, No. 67.12 at p. 2;

8

; GE, Public Meeting Transcript, No. 67.4 at p. 44; GE, No. 67.9 at p. 1) Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45; Whirlpool, No. 67.11 at p. 1; Alliance, Public Meeting Transcript, No. 67.4 at p. 46. AHAM stated that EPACT 2005 allows DOE to establish different classes, directing DOE to create “classes of products, depending on their energy use or performance characteristics.” AHAM noted that there is a bimodal distribution of efficiencies between top-loading and front-loading CCWs. According to AHAM, the standards proposed for the front-load equipment class in terms of MEF and WF are beyond the capability of a traditional, or even a non-traditional, top-load CCW. (AHAM, Public Meeting Transcript, No. 67.4 at pp. 39-40; AHAM, No. 67.12 at pp. 2-3) GE, Whirlpool, and Alliance agree that DOE has the ability to define two CCW equipment classes. (GE, Public Meeting Transcript, No. 67.4 at p. 44; Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45; Alliance, Public Meeting Transcript, No. 67.4 at p. 46). AHAM further stated that if DOE moves forward with a single equipment class, top-loading CCWs would not be able to meet a standard that would be fairly easy for front-loaders to achieve. With two equipment classes, energy and water savings could be achieved by both top-loaders and front-loaders, albeit at a different level. According to AHAM, this reduces the possibility that consumers would repair older, less efficient top-loading CCWs, because new high efficiency top-loaders would be available. (AHAM, Public Meeting Transcript, No. 67.4 at pp. 40-41; AHAM, No. 67.12 at p. 2.)

7

In its December 9, 2009, letter, GE states that it “adopt[s] by reference the comments on the SNOPR that [it] understand[s] will be submitted by the Association of Home Appliance Manufacturers (AHAM) * * * ” Therefore, comments submitted by AHAM, designated by comment number 67.12 in the docket for this rulemaking, should be interpreted as representing GE's and well as AHAM's views.

8

A notation in the form “AHAM, No. 67.12 at p. 2” identifies a written comment (1) made by the Association of Home Appliance Manufacturers (AHAM), (2) recorded in document number 67.12 that is filed in the docket of this rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource Room of the Building Technologies Program, and (3) which appears on page 2 of document number 67.12.

Alliance commented that “ `top-loading' is a `feature' within the meaning of 42 U.S.C. 6295, because it provides consumers the opportunity to purchase lower cost CCWs.” Alliance stated that purchase cost is a primary reason why top-loading clothes washers hold an approximate 65-percent market share, since consumers can choose the lower-cost design option of a top-loading door for a vertical-axis machine versus the higher-cost front-loading door design for a horizontal-axis machine. Alliance noted that there is one unique horizontal-axis design that incorporates a loading door on top that essentially opens a door on the side of the horizontally rotatable spin tub, but described this design as “unpopular.” Alliance commented that, although the cost difference between vertical-axis and horizontal-axis models has decreased, a comparably featured standard capacity top-loader remains far less costly than a standard capacity front-loader due to the inherent differences in components. Alliance listed variable speed motors, sophisticated motor electronic controls, heavy mass weights, and door assembly costs as the key components contributing to the cost of front-loading designs. More specifically, Alliance stated that a front-loader door must incorporate high-temperature impact-resistant glass, a door/tub boot seal, a very sophisticated lock system, and a heavy-duty hinge system to withstand the abuse in a commercial environment. In contrast, Alliance described a top-loader door as a simple metal stamping

with a low-cost hinge and a fairly simple micro-switch to remove power from the basket drive mechanism during spin. Additionally, Alliance stated that front-loaders require a “pedestal” to raise the loading door in response to consumer objections to stooping so far down. Alliance estimated the retail price of such a pedestal as $250, which along with an estimated $250 retail price difference between a baseline efficiency top-loader and a comparably featured front-loader, would result in a top-loader costing consumers at least $500 less than a front-loader. Therefore, Alliance concluded that top-loading is “undeniably” a feature for consumers because of its low cost. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 46-48; Alliance, No. 66.4 Letter at pp. 1-2,

9

Alliance, No. 67.8 at p. 2.) Whirlpool described a top-loading horizontal-axis RCW as a rare configuration that is not produced or sold domestically by any major manufacturers of laundry equipment, and one that does not effectively meet the needs of either top-loading or front-loading RCW consumers. According to Whirlpool, the openings of such units are small and prone to snagging of clothes. Further, Whirlpool stated that this configuration is not available in CCWs. (Whirlpool, No. 67.11 at p. 4.)

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A notation in the form “Alliance, No. 66.4 Letter at pp. 1-2” identifies pages 1-2 of a written comment submitted by Alliance entitled “Is Top-Loading a Feature Within the Meaning of EPCA?” This letter was entered as comment number 66.4 in the docket for this rulemaking, along with a written comment submitted by Alliance entitled “Response to DOE Commercial Clothes Washer SNOPR.”

Alliance also stated that top-loading is a “feature” because of its convenience to the user. A user is not required to stoop or bend to load a top-loader, and according to Alliance most consumers prefer this convenience, though no supporting data was provided. Alliance stated that another convenience is the ability to add a garment to a clothes load in a washer which has already initiated a wash cycle. For top-loaders, such action only requires lifting the lid to drop the item in. Alliance commented that most front-loaders require time to unlock the door and possibly drain the wash water, then require the user to stoop or bend to add the garment to the washer. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 48-49; Alliance, No. 66.4 Letter at p. 2; Alliance, No. 67.8 at p. 2) Finally, Alliance commented that convenient cycle times, as defined by typical top-loading washers, are important to users. According to Alliance, front-loading washers have longer cycle times because there is less mechanical action in tumbling in a front-loading design than the vigorous mechanical action imparted by an agitator in a top-loading design. Alliance cited the February 2009 edition of

Consumer Reports

magazine as stating that “front-loader cycle times are getting longer; many take more than 90 minutes per load,” and that the article shows that front-loader cycle times are 70-115 minutes compared to top-loader cycle times of 30-85 minutes. Alliance noted that all front-loaders in the

Consumer Reports

article with cycle times less than 85 minutes scored poorly in Consumer Union's “wash rating” compared to front-loaders with cycle times of 85 minutes or longer, while top-loaders with cycle times of 55 minutes achieved wash ratings of “good” to “very good.” Alliance concludes that top-loader door location is associated with providing consumers with their expected good washing performance at a convenient washing cycle time of around 55 minutes. (Alliance, Public Meeting Transcript, No. 67.4 at p. 49; Alliance, No. 66.4 Letter at p. 2; Alliance, No. 67.8 at p. 3) GE agreed that cycle time and cost to the consumer are very important differentiators between top-loading and front-loading CCWs which, along with consumer preference, counsel in favor of maintaining the two separate equipment classes. (GE, Public Meeting Transcript, No. 67.4 at pp. 44-45) AHAM provided a similar consumer utility rationale in support of two equipment classes, specifying level of vibration, ergonomic factors (bending), history, and experience of use, cycle interruption, and preference as consumer utilities and functions. (AHAM, No. 67.12 at p. 3) Whirlpool agreed that vibration, ergonomics, cycle time, and familiarity are factors which consumers use in selecting top-loading CCWs, and added configuration, noise, value proposition, and sour smell. (Whirlpool, No. 67.11 at p. 1) Whirlpool also commented that it does not believe high efficiency top-loaders are viable in the commercial market because clothes rollover necessary for effective washing and rinsing is not possible in an overloaded machine. Whirlpool states that overloading is a common practice by CCW users because they are paying by the load. (Whirlpool, No. 67.11 at p. 4) Alliance also commented that, for the September 21, 2009, RCW Framework public meeting, Whirlpool had stated that one-fifth of consumers who bought a front-loading washer have gone back to a top-loading washer. (Alliance, No. 66.4 Letter at p. 2)

Whirlpool commented that, in addition to the impact on the user of a standard applicable to a single equipment class, there is also an impact on the route operators

10

and multi-housing complexes, most of which have specialized in either top-loading or front-loading CCWs. According to Whirlpool, a major reinvestment in terms of technical training and parts inventories would be required for those companies that have invested in top-loading CCWs if a standard resulted in the phaseout of such machines. Whirlpool also stated that CCWs are often refurbished and moved down-market, possibly multiple times during a particular unit's lifetime, making CCWs available to many socioeconomic classes. (Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45; Whirlpool, No. 67.11 at p. 1; see also AHAM, No. 67.12 at p. 3) AHAM stated that route operators have accumulated expertise on either the top-loading or front-loading platform. (AHAM, No. 67.12 at p. 3)

10

Route operators supply laundry equipment and maintain facilities in exchange for a percentage of the laundry revenue.

Whirlpool also commented that separate equipment classes would be consistent with energy conservation standards for refrigeration, which have separate classes for side-by-side, top freezer, and bottom freezer refrigerators, and room air conditioners, since the product classes reflect home configuration, consumer choice, and consumer utility. (Whirlpool, Public Meeting Transcript, No. 67.4 at p. 46; Whirlpool, No. 67.11 at pp. 1-2) Earthjustice (EJ) stated that the separation in EPCA of refrigerator by method of access was codified by Congress as two distinct standards. According to EJ, because Congress enacted a single standard for all CCWs, what it chose to do for refrigerators is not entirely applicable to the CCW rulemaking. (EJ, Public Meeting Transcript, No. 67.4 at pp. 49-50)

EJ stated that Congress has provided several examples of the product attributes that it anticipated as constituting “features” under EPCA: “automatic defrost, through the door ice, size of room air conditioners, and noise levels.” H. Rep. 100-11, at 23 (1987). EJ commented that this demonstrates that Congress indicated that the fact of access is a feature (for example, through the door ice), but did not suggest that the method of access is also a feature (for example, side-by-side versus stacked configuration refrigerators) within the meaning of 42 U.S.C. 6295(o)(4). (EJ, No. 67.5 at p. 5)

EJ commented that subparagraph (B) of 42 U.S.C. 6295(q)(1) is permissive, and provides that DOE “shall” create

separate classes for products based on the presence of “a capacity or other performance-related feature” only if “such feature justifies a [different] standard.” According to EJ, EPCA then sets out very expansive criteria for DOE to apply in determining whether a given feature justifies a unique standard. EJ stated that, although DOE must consider the utility of the feature, DOE is free to supplement this consideration with any other factors it deems appropriate. (EJ, No. 67.5 at p. 3)

EJ stated that 42 U.S.C. 6295(o)(4) provides that DOE may separate covered equipment into distinct classes when necessary to prohibit the adoption of standards that eliminate certain product attributes. EJ further stated that DOE's authority to adopt standards that group all varieties of the given covered equipment into a single class is only barred when such a standard is likely to result in the unavailability of features that are substantially the same as those currently available;

i.e.,

EPCA only mandates the creation of multiple equipment classes when the failure to do so would eliminate certain truly unique equipment attributes from the market. According to EJ, this statutory scheme forecloses an interpretation that EPCA mandates the designation of distinct equipment classes for top-loading and front-loading CCWs. (EJ, No. 67.5 at pp. 3-4) EJ provided four separate reasons why it believes 42 U.S.C. 6295(o)(4) prohibits DOE from adopting standards that would treat all CCWs as a single equipment class: (1) The method of loading a CCW is not a “feature” within the meaning of 42 U.S.C. 6295(o)(4)

11

; (2) the ability to load a CCW from the front is substantially the same as the ability to load from the top; (3) maintaining a single CCW category is not likely to lead to the unavailability of top-loaders; and (4) top-loading CCWs possess no other attributes requiring protection under 42 U.S.C. 6295(o)(4). (EJ, No. 67.5 at pp. 4-8)

11

EJ stated that the method of loading a CCW is not a feature because: (1) DOE research on the public's valuation of clothes washer characteristics, presented in a December 2000 Technical Support Document, shows that door placement was not among the top ten most important attributes, and the value of this attribute is likely even lower now given the increased prevalence of front-loaders; (2) the FTC eliminated the distinction between top-loading and front-loading machines in its labeling requirements (65 FR 16134 (March 27, 2000)); and (3) the legislative history supports the conclusion that door placement is not a feature because examples cited suggest that while access itself may be a feature, the method of access is not. (EJ No. 67.5 at 4)

EJ commented that if, for the sake of argument, the method provided to access a CCW is a “feature” within the meaning of 42 U.S.C. 6295(o)(4), it did not follow that EPCA would require separate equipment classes. EJ stated that, in enacting the EPCA language, Congress was “careful to note” that the “prohibition against grouping all varieties of a covered product into a single product class was a narrow one.” (EJ, No. 67.5 at p. 6)

A valid standard may entail some minor loss of characteristics, features, sizes, etc.; for this reason, the Act requires that “substantially the same,” though not necessarily identical, characteristics or features should continue to be available. [42 U.S.C. 6295(o)(4)] also does not apply to trivial effects in which a standard might result.

H. Rep. 100-11, at 23 (1987).

According to EJ, the inclusion of this “substantially the same” language shows that Congress did not intend the resulting unavailability of any and every feature to be a barrier to the imposition of strong efficiency standards, but rather a standard would be barred only if it would have a substantial impact on product utility. EJ stated that the ability to access the CCW from the top is “substantially the same” as the ability to access the unit from the front because either delivers the same basic functionality of accessing the unit for loading and unloading. Thus EJ states that DOE is not barred from maintaining a single set of efficiency standards for all CCWs, even assuming that those standards would have the consequence of eliminating all top-loading CCWs from the market. (EJ, No. 67.5 at p. 6)

EJ also did not agree with AHAM's statement that a distinction in energy use between two types of CCWs would justify a separate equipment class. According to EJ, that would be at odds with the intent of EPCA. EJ stated that whenever two examples of equipment use different amounts of energy, the intent is for a standard to eliminate the one that uses too much energy. (EJ, Public Meeting Transcript, No. 67.4 at pp. 41-42)

EJ also commented that it is sensible to adopt a strong unitary standard that applies to both top-loading and front-loading CCWs. EJ stated that it had already made the case that the method of loading is not a feature under 42 U.S.C. 6295(o)(4), but even if DOE did determine that the method of loading is a feature, a strong standard would not eliminate top-loading CCWs from the market. (EJ, Public Meeting Transcript, No. 67.4 at pp. 42-43) EJ also commented on the recent Ninth Circuit decision reversing DOE's denial of the California Energy Commission's (CEC) petition for exemption from existing energy efficiency standards for RCWs and remanding the petition for further review.

12

EJ stated that the court, while not directly addressing the “features” issue, indicated that DOE can't just look at the market today, but must assess what the market will be when the standard takes effect. EJ stated that DOE would have to find by preponderance of the evidence that a strong standard would eliminate top-loaders from the market in 2013. EJ noted that it did not believe that top-loaders would be eliminated at that time, based on the existence of very efficient top-loading RCWs currently in the market. (EJ, Public Meeting Transcript, No. 67.4 at p. 43; EJ, No. 67.5 at pp. 6-7)

12

California Energy Commission versus DOE, Case No. 07-71576 (October 28, 2009).

EJ further commented that no other attributes of CCWs which DOE identified in the November 2009 SNOPR as possibly providing consumer utility, such as the presence or absence of agitators and the ability to interrupt cycles, require protection under 42 U.S.C. 6295(o)(4). EJ stated that DOE has neither explained why the presence or absence of agitators would provide any consumer utility, nor considered that high efficiency CCWs may still be equipped with an agitator. EJ also stated that horizontal-axis CCWs available today are often able to be interrupted mid-cycle. In addition, EJ commented that, although Alliance cited an article which discussed cycle times for top-loaders and front-loaders, Alliance did not contend that the variation in cycle time is an issue for CCWs. EJ stated that the range of cycle times for top-loaders and front-loaders broadly overlap, and because front-loaders typically have a lower ending remaining moisture content (RMC) than top-loaders, the total washing and drying times required for top-loading and front-loading CCWs are likely to be equivalent. (EJ, No. 67.5 at p. 8)

The Pacific Gas and Electric Company, Southern California Gas Company, and San Diego Gas Company (the California Utilities) also supported a single equipment class, arguing for reasons similar to those articulated by EJ that the method of loading and other characteristics commonly associated with the method of loading are not features, and that a single class would not likely result in the unavailability of top-loading CCWs. (California Utilities, No. 67.10 at pp. 2-3) Further, the California Utilities stated that, although CCWs and RCWs are similar in technologies, design, and operating characteristics, a “feature” of RCWs is not necessarily a “feature” of CCWs. (California Utilities, No. 67.10 at p. 3)

The California Utilities also asserted that the LCC savings of a single equipment class with standards at various front-loading TSLs could increase as much at $304 as compared to the LCC savings estimated for the standards proposed in the November 2009 SNOPR. According to the California Utilities and ASAP, American Council for an Energy-Efficiency Economy, American Rivers, National Consumer Law Center, Natural Resources Defense Council, Northeast Energy Efficiency Partnerships, and Seattle Public Utilities (the Joint Comment), cost-effectiveness of standards based on a single equipment class best serves long-term public interest. (California Utilities, No. 67.10 at p. 4; Joint Comment, No. 67.6 at p. 3)

The Joint Comment commented that DOE is concerned that at the highest TSL, significant numbers of potential consumers of front-loading CCWs would choose to purchase a less efficient top-loading CCW instead. (Joint Comment, No. 67.6 at p. 2) According to ASAP and the Joint Comment, this underscores the interchangeability between top-loading and front-loading CCWs in a commercial setting and that this interchangeability could be so broad and substantial that it would facilitate potential recapture of market share by less efficient but less expensive top-loaders. ASAP stated that the real distinction between top-loaders and front-loaders is price point rather than any specific consumer utility. Therefore, ASAP and the Joint Comment recommended a single equipment class for CCWs. ASAP also stated that route operators are operating in a one equipment class environment today, and managing the issues that Whirlpool identified. (ASAP, Public Meeting Transcript, No. 67.4 at pp. 46, 99-102; Joint Comment, No. 67.6 at pp. 2-3)

ASAP and the Joint Comment stated that the standard proposed for front-loaders is already met by almost 97 percent of the front-loaders on the market, and since DOE has seldom, if ever, proposed a standard that has such a low impact on the marketplace, ASAP suggests there are some difficulties in going forward with two equipment classes. (ASAP, Public Meeting Transcript, No. 67.4 at pp. 53-54; Joint Comment, No. 67.6 at p. 2) The California Utilities estimated that a single equipment class with standards set at 2.35 MEF/4.4 WF would achieve 50 percent more energy savings and over 200 percent more water savings over the next 30 years than the standards proposed in the November 2009 SNOPR, and that additional energy and water savings would be captured in future CCW rulemakings. (California Utilities, No. 67.10 at pp. 3-4)

Regarding impacts to competition as these impacts relate to the equipment class issue, EJ stated that it would not agree with DOE if the Department determines that a single standard cannot be adopted because of impacts to the manufacturers and impacts on competition. EJ and the Joint Comment believe those impacts are overstated. (EJ, Public Meeting Transcript, No. 67.4 at pp. 30-31; Joint Comment, No. 67.6 at pp. 4-5; see also California Utilities, No. 67.10 at pp. 4-5) EJ asserted that it is not only the lessening in competition, but rather the effects of such lessening, that DOE must consider. EJ stated that the DOJ, in its letter to DOE on this rulemaking, failed to consider low barriers to entry into the CCW market in its analysis of the impacts to competition, and that consequently, it would be irrational for DOE to conclude that a single standard would result in any significant impact on competition in the CCW market. (EJ, No. 67.5 at p. 9) EJ, ASAP, and the Joint Comment also asserted that DOE must consider adopting a tiered standard, or granting Alliance a temporary waiver, as ways to minimize any impacts on competition that may result from imposition of a single standard. (EJ, No. 67.5 at 9-10; ASAP, Public Meeting Transcript, No. 67.4 at pp. 166-167; Joint Comment, No. 67.6 at p. 6; see also California Utilities, No. 67.10 at pp. 4-5)

In response to the above comments, DOE notes that EPCA provides the criteria under which DOE may define classes for covered equipment:

A rule prescribing an energy conservation standard for a type (or class) of covered products shall specify a level of energy use or efficiency higher or lower than that which applies (or would apply) for such type (or class) for any group of covered products which have the same function or intended use, if the Secretary determines that covered products within such group—

• Consume a different kind of energy from that consumed by other covered products within such type (or class); or

• Have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class).

In making a determination under this paragraph concerning whether a performance-related feature justifies the establishment of a higher or lower standard, the Secretary shall consider such factors as the utility to the consumer of such a feature, and such other factors as the Secretary deems appropriate.

42 U.S.C. 6295(q); see also 6316(a).

As stated above, DOE concluded preliminarily in the October 2008 NOPR and the November 2009 SNOPR that separate equipment classes for top-loading and front-loading CCWs were warranted because the method of loading had been previously determined to be a “feature” under rulemakings for RCWs and a single standard would eliminate top-loading CCWs from the market. DOE analysis for this final rule, including evaluation of comments submitted by interested parties, has identified at least one consumer utility related to the method of loading clothes, specifically for CCWs, which represents a “feature” for purposes of 42 U.S.C. 6295(o)(4). Consequently, DOE has retained two equipment classes for CCWs for this standard.

Specifically, DOE believes that the longer cycle times of front-loading CCWs versus cycle times for top-loaders are likely to significantly impact consumer utility. In commercial and multi-housing settings, it is beneficial to consumers with multiple, sequential laundry loads to approximately match CCW cycle times to those of the dryers to maximize throughput and minimize wait times, and wash times of 70-115 minutes would be longer than most drying cycles. Because the longer wash cycle times for front-loaders arise from the reduced mechanical action of agitation as compared to top-loaders, DOE believes such longer cycles may be required to achieve the necessary cleaning, and thereby constitute a performance-related utility of front-loading CCWs versus top-loading CCWs under the meaning of 42 U.S.C. 6295(q).

DOE notes that access without stooping is not a consumer utility that would warrant the definition of separate equipment classes. DOE agrees that top-loaders eliminate the need for stooping, while front-loaders, in the absence of a pedestal, require such action. DOE further notes, however, that commercial clothes dryers are front-loading as well, so it believes that those consumers that dry their clothing loads are already accustomed to stooping. In addition, DOE observes that many laundromat and multi-housing applications have installed the CCWs on a platform to effect the same elevation as a manufacturer-supplied pedestal would, and that the cost of installing such a platform in the event that the owner/operator decides that preventing stooping is important is likely to be minimal.

DOE is aware that a top-loading, horizontal-axis CCW had been available previously. Due to the inherently higher efficiency of a horizontal-axis platform, it is likely that such a design could achieve a higher MEF and lower WF than the max-tech top-loading CCW

efficiency level assumed for this analysis. DOE research determined, however, that this particular washer platform was withdrawn from the market based on a lack of suitability for commercial settings. However, even if a top-loading, horizontal-axis CCW was again marketed, it is likely that such washers would have cycle times similar to those of other horizontal-axis machines and, therefore, would not likely provide substantially the same consumer utility as top-loading, vertical-axis machines.

DOE also does not consider first cost a “feature” that provides consumer utility for purposes of EPCA. DOE acknowledges that price is an important consideration to consumers, but DOE accounts for such consumer impacts in the LCC and PBP analyses conducted in support of this rulemaking.

Given the above discussion on cycle times, DOE concludes, consistent with its preliminary conclusion in the October 2007 NOPR and November 2008 SNOPR, that top-loading involves consumer utilities that, in the context of CCWs, are a feature for purposes of 42 U.S.C. 6295(o)(4). For the reasons stated in section VI.D of the preamble, DOE believes that the standards established for top-loading and front-loading CCWs achieve the maximum improvements in energy efficiency that are technologically feasible and economically justified. DOE further believes that the top-loading standard, set at the max-tech efficiency level, can be achieved by all manufacturers by the time compliance with the standards is required. Therefore, DOE concludes that top-loading CCWs would not be eliminated from the market by the amended energy conservation standards.

In response to the comments related to impacts on competition, DOE believes its analysis accurately describes the impacts of the various TSLs, including the standards established today, on the low-volume manufacturer (LVM). See section VI.C.2 of the preamble for further discussion of these impacts. In addition, EPCA does not permit DOE to establish a tiered standard for CCWs. 42 U.S.C. 6313(e)(2)(A)(ii) states that an amended standard for CCWs “shall apply to products manufactured 3 years after the date on which the final amended standard is published.” DOE interprets this provision to mean that the amended standard must apply to all CCWs manufactured 3 years after the date of publication of this final rule, and that imposing some intermediate standard at that time (

i.e.,

2013) and the final amended standard at some future date (

i.e.,

2015) is not authorized. In contrast, 42 U.S.C. 6295(g)(4)(C) states in relevant part that amendments to the standards “shall apply to products manufactured after a date which is five years after” the effective date of the previous amendment. DOE believes that the phrase “

after

a date which is 5 years after” (emphasis added) may allow more flexibility for a tiered standard. DOE also believes that the provisions of 42 U.S.C. 7194 that allow for the grant of an exemption from an energy conservation standard promulgated by DOE are not an appropriate justification for the promulgation of a particular efficiency standard in the first instance.

B. Technology Assessment

For the technology assessment in the November 2009 NOPR analyses, DOE considered all RCW and CCW technology options that it was aware have been incorporated into working prototypes or commercially available clothes washers at the time of the analysis. DOE noted in the November 2009 SNOPR that it considered as design options many technologies that are found in both RCWs and CCWs. Of the technology options screened out, only suds-saving

13

has appeared previously as a feature in commercially available RCWs. DOE concluded in the November 2009 SNOPR that suds-savings was an RCW feature that was appropriately screened out for the CCW analysis. 74 FR 57738, 57747 (Nov. 9, 2009).

13

A suds-saving feature allows water from one wash cycle to be reused in the next wash cycle. After agitation, sudsy wash water is pumped into a separate storage tub, remaining there until the next wash cycle. While the water is stored, soil settles to the bottom of the tub. During the next wash cycle, all but an inch of the water is pumped back into the washer tub for use again. Clothes washers with the suds-saving feature must be larger than typical clothes washers in order to accommodate the additional storage tub.

For the November 2009 SNOPR, DOE also gathered and analyzed data published by CEC, CEE, and the ENERGY STAR Program to provide an overview of the energy efficiency levels achieved in CCWs and RCWs. DOE found that all front-loading CCWs on the market at that time were more efficient than top-loading CCW models. No top-loading CCW listed in these databases had an MEF greater than 1.76, whereas the majority of front-loading CCWs were listed as having MEFs greater than 2.0. Similarly, no top-loading CCWs were rated as having a WF below 8.0, whereas the majority of front-loading CCWs had rated WFs below 7.0. In contrast, DOE research suggested that the most efficient vertical-axis RCWs achieved efficiency levels comparable to some horizontal-axis CCWs.

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High efficiency, vertical-axis platforms that do not employ an agitator have been sold into the RCW market for several years, but have yet to be released in a CCW form. DOE noted in the November 2009 SNOPR that it expected manufacturers would continue to introduce new features first in the higher-volume residential markets before transitioning them to commercial applications. However, DOE noted that it is not aware of such technologies being incorporated in either commercially available CCWs or working CCW prototypes, and therefore did not consider them in the SNOPR analyses. DOE concluded in the November 2009 SNOPR that it believed it had adequately considered RCW technologies that may be applicable to CCWs in its technology assessment. 74 FR 57738, 57747-48 (Nov. 9, 2009).

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Typically, vertical-axis clothes washers are accessed from the top (also known as “top-loaders”), while horizontal-axis clothes washers are accessed from the front (also known as “front-loaders”). However, a limited number of residential horizontal-axis clothes washers which are accessible from the top (using a hatch in the wash basket) are currently available, although DOE is unaware of any such CCWs on the market. For the purposes of this analysis, the terms “vertical-axis” and “top-loading” will be used interchangeably, as will the terms “horizontal-axis” and “front-loading.” Additionally, clothes washers that have a wash basket whose axis of rotation is tilted from horizontal are considered to be horizontal-axis machines.

Because DOE did not receive any comments on the technology options analyzed in the November 2009 SNOPR, DOE continues to conclude in today's final rule that it has adequately considered RCW technologies that may be applicable to CCWs in its technology assessment.

C. Engineering Analysis

The purpose of the engineering analysis is to characterize the relationship between the incremental manufacturing cost and efficiency improvements of CCWs. DOE used this cost-efficiency relationship as input to the PBP, LCC, and NES analyses. As discussed in the November 2009 SNOPR, DOE conducted the engineering analysis for this rulemaking using the efficiency-level approach, which provides the incremental costs of moving to higher energy efficiency levels, without regard to the particular design option(s) used to achieve such increases. For this analysis, DOE relied upon efficiency data published in multiple databases, including those published by CEC, CEE, and ENERGY STAR, which were supplemented with limited laboratory testing, data gained through engineering analysis, and

primary and secondary research. 74 FR 57738, 57748-51 (Nov. 9, 2009). Chapter 5 of the TSD contains a detailed discussion of the engineering analysis methodology.

1. Efficiency Levels

In the November 2009 SNOPR, DOE proposed the following efficiency levels for CCWs, shown in Table IV.1, in which the max-tech top-loading level was designated at efficiency level 2 (1.60 MEF/8.5 WF). The top-loading max-tech efficiency level representated a change from the max-tech level proposed in the October 2008 NOPR, based on DOE testing and analysis of the max-tech top-loading CCW model. No changes were made to the efficiency levels proposed in the October 2008 NOPR for front-loading CCWs in the November 2009 SNOPR.

Table IV.1—Commercial Clothes Washer Efficiency Levels Proposed for the November 2009 SNOPR

Efficiency level

Modified energy factor,

ft

3

/kWh

/water factor,

gal/ft

3

Top-loading

Front-loading

Baseline

1.26/9.5

1.72/8.0

1

1.42/9.5

1.80/7.5

2

1.60/8.5

2.00/5.5

3

N/A

2.20/5.1

4

N/A

2.35/4.4

DOE noted in the November 2009 SNOPR that the max-tech top-loading CCW is currently marketed only to on-premise laundry facilities and is not yet offered with a coin-box or smart card reader option for laundromat or multi-housing laundry use. DOE research indicated that the max-tech CCW is based on a standard vertical-axis RCW platform (

i.e.,

one with an agitator) with similar construction and components as the CCW models marketed by that manufacturer to commercial laundromats. No proprietary technologies were observed, and, thus, DOE stated in the November 2009 SNOPR that it believes that all CCW manufacturers could market vertical-axis clothes washers with similar performance in time for the compliance date of the proposed rule. 74 FR 57738, 57749-50 (Nov. 9, 2009).

DOE research, conducted as part of the November 2009 SNOPR, also suggested that commercial acceptance depends on wash performance. DOE recognized that any amended energy conservation standard could result in a lessening of certain equipment utility and hence interviewed interested parties for the November 2009 SNOPR to better understand the potential impacts of energy efficiency strategies that manufacturers might employ in their equipment. Although interested parties suggested that the max-tech model does not provide acceptable washing and rinsing performance targets, especially when overloaded, they did not submit evidence of such performance degradation. 74 FR 57738, 57750 (Nov. 9, 2009).

EJ commented that, if top-loading CCWs are required to be retained in the commercial market under amended standards, DOE must consider a third standard level based on the performance of Alliance's best-performing top-loader.

Alliance stated that, while no industry standard performance test procedure exists for CCWs, it believes wash and rinse performance would be affected at the top-loading max-tech level, because the max-tech model does not allow true hot or warm water, unlike existing traditional CCWs which offer site-supplied hot water typically of 120 degrees Fahrenheit (°F) and above and user-acceptable 90 °F to 110 °F warm water. Alliance stated that the max-tech top-loading model only provides 108 °F to 112 °F water when the hot setting is selected, which Alliance considers to be warm water. Similarly, Alliance stated that when the user selects a warm setting on the max-tech top-loader, the unit only provides 71 °F to 73 °F wash water, which Alliance considers to be cold water. Alliance believes that CCW users that pay for hot water should receive hot water. Otherwise, CCW users could not clean clothes as well as consumers with access to RCWs. Further, Alliance commented that rinsing is minimal for the max-tech top-loader, unlike typical complete submersion of the clothes load that would allow sand, heavy sediment, or suds trapped between the layers to be properly removed. Alliance stated that the max-tech top-loading model has received almost no acceptance by the industry, based on comments it received from its top 20 multi-housing customers, and that DOE has not tested its ability to clean clothes. Therefore, Alliance believes that max-tech top-loader model is not appropriate for the commercial laundry market. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 22-23, 29); Alliance, No. 66.4 at pp. 4, 7, 9; Alliance, No. 67.8 at p. 3).

Alliance stated that the front-loading max-tech efficiency level should have a WF of 5.0 rather than 4.4. Alliance stated that it tested a competitive front-loading CCW model that had a WF of 4.5 and found that it did not wet the center of the clothes load during the wash tumble portion of the cycle. Therefore, Alliance stated that consumer utility would be negatively affected. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 139-140; Alliance, No. 67.8 at p. 3). Alliance further stated that consumer utility in a CCW must go beyond just getting clothes wetted, applying some mechanical action and then extraction of the moisture. Alliance commented that DOE did not assess if the proposed max-tech CCW cleans clothes to user expectations. According to Alliance, the ability of a CCW to clean clothes sufficiently is a central issue in this rulemaking, and stated that “A rulemaking will be overturned as arbitrary and capricious if `the [agency] has failed to respond to specific challenges that are sufficiently central to its decision.' ”

Horsehead Resource Dev. Co.

v.

Browner

, 16 F.3d 1246, 1263 (DC Cir 1994) (citations omitted). (Alliance, No. 66.4 at pp. 6-7).

GE commented that, while it supports the standards proposed in the November 2009 SNOPR for top-loading and front-loading CCWs, it is concerned that the max-tech top-loading CCW model is designed for on-premises laundry, which is a relatively limited segment of the commercial market. GE stated that the max-tech model has not been shown to be viable in the harsher laundromat environment where CCWs are subject to tougher conditions such as overloading. GE also requested DOE's test data on the max-tech top-loader model. (GE, Public

Meeting Transcript, No. 67.4 at p. 58; GE, No. 67.9 at pp. 1-2).

Whirlpool stated that a top-loading CCW max-tech level of 1.76 MEF/8.3 WF can be attained with sufficient investment of financial and human capital. However, Whirlpool considers this level a considerable stretch target that it has not achieved even in a prototype platform. Whirlpool believes that the front-loading CCW max-tech level could be slightly higher, since the CEE database lists a model at 2.23 MEF/4.3 WF. Whirlpool believes this level is at or near the capabilities of known technologies that are viable in the commercial environment. (Whirlpool, No. 67.11 at p. 2). Northwest Power and Conservation Council (NPCC) asked whether, because the max-tech top-loading CCW model did not meet its rated MEF and WF, DOE would consider testing units at other levels, particularly high-efficiency models, to make sure the performance is as advertised. (NPCC, Public Meeting Transcript, No. 67.4 at pp. 57-59).

In response, DOE notes that, in the absence of an accepted, standardized test procedure for CCW wash and rinse performance, it cannot evaluate the cleaning capabilities of various considered max-tech models. DOE agrees that proper wetting and distribution of the detergent and rinse water in the machine is critical for cleaning performance. However, DOE did not receive any evidence that the max-tech top-loading model does not achieve such action, only the inference that, because the unit employs spray rinse, that it would not exhibit acceptable rinse performance. DOE further notes that it did not receive any evidence that somewhat reduced water temperatures at hot and cold settings would preclude acceptable cleaning performance. DOE notes the existence of multiple wash and rinse performance standards such as AHAM HLW-1, but the industry has yet to come to a consensus regarding the minimum wash and rinse performance that an RCW or CCW should achieve. In the interim, DOE relies on manufacturers to market and sell only those products that they feel perform adequately.

DOE concluded for the November 2009 SNOPR that the performance of the top-loading CCW model was 1.63 MEF/8.4 MEF instead of the rated value of 1.76 MEF/8.3 WF on which the max-tech level for the October 2008 NOPR was based. DOE does not have evidence to suggest that any other CCWs currently on the market can achieve 1.76 MEF/8.3 WF, nor that technology exists to do so without significantly impacting cleaning performance. DOE based the selection of the top-loading max-tech level at efficiency level 2 on test results for the max-tech model and its belief that 1.60 MEF/8.5 WF represented the maximum CCW performance achievable by all manufacturers without material harm. At the time of the analysis, Alliance's highest efficiency top-loading CCW was rated at 1.55 MEF/8.6 WF. DOE believes that Alliance's model and the max-tech model incorporate similar technologies, and that the energy and water usage of the two models are not sufficiently different as to warrant the inclusion of an additional efficiency level slightly below the max-tech level. Given the constraints of the rulemaking schedule, DOE cannot evaluate an undetermined number of CCW models in order to confirm that no other unit which is rated at lower efficiencies than the proposed max-tech model could in actuality achieve higher performance, nor does DOE have any evidence, particularly regarding durability, to demonstrate that the max-tech top-loading CCW model, while designed for on-premises laundry applications, cannot be utilized successfully in other commercial laundry facilities such as laundromats or multi-family housing settings. Therefore, DOE has retained the max-tech top-loader efficiency level for today's final rule based on the max-tech top-loading CCW model proposed in the November 2009 SNOPR.

ASAP suggested that DOE should not limit consideration of max-tech models to CCWs, but that DOE should also consider clothes washer products from the residential market. According to ASAP, the distinctive nature of the CCW market has been characterized by the need for durability and resistance to overloading and misuse, which is typical of laundromats and multi-housing laundry rooms. But CCWs for on-premises laundry facilities are also being considered in this rulemaking, and they typically are subject to less harsh conditions than models destined for laundromats and multi-family housing, Thus, ASAP questioned why RCWs would not be considered for the max-tech levels if CCWs designed for on-premises laundry are. (ASAP, Public Meeting Transcript, No. 67.4 at pp. 61-62, 64-65) Southern California Gas Company (SCG) commented that DOE should consider durability as well as efficiency in selecting the max-tech models. (SCG, Public Meeting Transcript, No. 67.4 at p. 63) Additional comments regarding the applicability of RCWs in CCW application were received (along with other comments) from 20 route operators: All Valley Washer Services, Inc; Angel Coin Service, Inc.; Automatic Industries; Automatic Laundry Services Co., Inc.; B&H Coin Laundry Service; Caldwell and Gregory, LLC; CALECO; Cincinnati Coin Laundry, Inc.; Coin Meter Company; Commercial Laundries, Inc.; Continental Laundry Systems Incorporated; Excalibur Laundries, Inc.; F&B Coin Laundry Route; Family Pride Laundries; FMB Laundry, Inc.; Jetz Service Co., Inc.; Launderama, LLC; Laundry Equipment Corp.; National Coin Washer and Service Company, Inc.; and San Diego Laundry Equipment Co. (the Multiple Route Operators). These comments were originally sent to DOJ in response to the October 2008 NOPR, and were resubmitted by Alliance along with its own comments in response to the November 2009 SNOPR. Ninety-five percent of all route operators who commented on the November 2009 SNOPR stated that they did not consider RCWs suitable for CCW applications. The principal reasons given were the lack of durability, lack of resistance to vandalism, and other specified and unspecified performance issues. Most of the Multiple Route Operators expressed reluctance to try high efficiency top-loading clothes washers due to perceived wash performance issues. Additionally, several of the Multiple Route Operators stated that had tried out such washers and replaced them with regular top-loading clothes washers due to consumer complaints regarding wash performance and other issues. (Multiple Route Operators, No. 67.8, pp. 1-3

15

)

15

The Multiple Route Operators' letters were attached to the Alliance letter, comment number 67.8, in response to the November 2009 SNOPR. A notation in the form “Multiple Route Operators, No. 67.8 at pp. 1-3” identifies a written comment (1) made by some or all of the Multiple Route Operators, (2) recorded in document number 67.8 that is filed in the docket of this rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource Room of the Building Technologies Program, and (3) which appears on pages 1-3 of each of the letters submitted by the Multiple Route Operators.

DOE notes that multiple manufacturers stated during interviews that high efficiency RCWs utilize technologies that are not suitable in harsher commercial settings such as laundromats and multi-family housing due to environmental factors such as overloading and abuse. Among these manufacturers were suppliers of high efficiency top-loading RCWs,

i.e.,

manufacturers that would face the lowest conversion costs in the industry to modify a given RCW model for CCW use. Additionally, DOE considered the comments submitted by the Multiple Route Operators with experience

utilizing high efficiency top-loading clothes washers in a commercial setting. Lastly, DOE received no evidence that all the technologies used in a max-tech top-loading RCW can be expected to be ready for inclusion in CCWs by the compliance date of today's final rule while offering similar or better wash performance, given the very different operational environments (short wash cycles, among other factors). Hence, DOE concludes that high efficiency top-loading RCW models should not be considered representative of the efficiency levels that top-loading CCWs can achieve until the technologies required to achieve such efficiency levels have been successfully demonstrated in CCWs.

For front-loaders, DOE observes that multiple models from several manufacturers, including Alliance, are rated with a WF of 4.5 or lower. DOE believes that the presence of these CCW models on the commercial market suggests that sufficient cleaning performance is able to be achieved at such WF levels. Further, DOE did not receive any evidence that the max-tech model, rated at a 4.4 WF, could not demonstrate wash performance on par with consumer utility requirements, nor if, in fact, it did not, that a WF of 5.0 would provide wash performance that would be deemed suitable, DOE notes that the max-tech level proposed in the November 2009 SNOPR had approximately 5 percent higher MEF and 2 percent higher WF than the model that Whirlpool suggests. While the proposed max-tech level therefore was slightly less stringent in terms of water consumption than the level Whirlpool suggested, DOE believes that the higher energy consumption of the proposed level is the primary factor to consider in defining a max-tech level. Therefore, DOE concluded that the max-tech levels proposed in the November 2009 SNOPR are technologically feasible, and it has retained the efficiency levels shown in Table IV.1 for today's final rule.

DOE received comments in response to the October 2008 NOPR that front-loading CCWs with electric heaters have an MEF of 1.96, which would not meet the proposed front-loading standards. According to these comments, consumers in some parts of the northern United States need such heaters to supplement their hot water supply in order to maintain proper wash temperatures despite very cold water supply temperatures. DOE indicated in the November 2009 SNOPR that it had received no data on the extent or size of this impact or of the affected population. DOE sought comment, including population and efficiency impact data, to describe this issue. 74 FR 57738, 57750 (Nov. 9, 2009)

Alliance and NPCC discussed whether a water heating CCW would be measured as having higher water heating energy consumption under the DOE clothes washer test procedure than a non-water heating CCW, given the inlet water temperature requirements. Alliance stated that the test procedure would require measurement of energy consumption with the heater on. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 66-72)

Whirlpool stated that it does not produce any water heating CCWs and does not believe this is a significant segment of the market. In the absence of further data on the affected population or efficiency impacts, DOE is adopting energy conservation standards for front-loading CCWs both with and without electric heaters for the reasons discussed in section VI.D.

DOE did not receive further information regarding the market share or efficiency impact of water heating CCWs, but agrees that it likely does not represent a significant segment of the CCW market. In the absence of additional data, DOE determined that it will retain the max-tech front-loading CCW level that was proposed in the November 2009 SNOPR.

2. Manufacturing Costs

In the October 2008 NOPR, DOE presented manufacturing cost estimates based on the November 2007 ANOPR analysis, revised in response to detailed CCW manufacturer feedback obtained at the NOPR stage for equipment at each efficiency level. 73 FR 62034, 62055-56 (Oct. 17, 2008). These manufacturing costs were the basis of inputs for a number of other analyses in this rulemaking, including the LCC, national impact, and GRIM analyses.

As described in the October 2008 NOPR, DOE found that an LVM operates in both the residential and CCW markets. DOE considers this manufacturer to be low-volume because its annual shipments in the combined RCW and CCW market are significantly lower than those of its larger competitors. However, unlike its larger rivals, most of the LVM's unit shipments are in the CCW market, where the LVM has significant market share. Also unlike its diversified competitors, this company exclusively manufactures laundry equipment. A review of the Securities and Exchange Commission (SEC) 10-K documents filed by the LVM revealed that, as of 2005, this company derived 22 percent of its total revenue from the sale of front- and top-loading clothes washers and 87 percent of that income was from the commercial market.

16

As a result, the LVM could be affected disproportionately by any rulemaking concerning CCWs compared to its competitors, for whom CCWs represent less than 2 percent of total clothes washer sales. Alliance stated in response to the October 2008 NOPR that it is the LVM and that it has neither the purchasing power nor the funding to support wide-ranging research and development programs like those of its larger, more diverse rivals. As a result, the manufacturing costs for Alliance are inherently higher compared to those of its rivals. Alliance believes that the cost of compliance with the top-loading CCW standard proposed in the October 2008 NOPR would be especially high if Alliance were required to introduce non-traditional agitator designs to meet it. 74 FR 57738, 57762 (Nov. 9, 2009).

16

SEC documents pertaining to the LVM are available online at

http://sec.gov/.

DOE research, conducted as part of the November 2009 SNOPR, suggests that the proposed efficiency level for vertical-axis clothes washers can be met with conventional, non-proprietary technology that is on the market today. Since the October 17, 2008 NOPR meeting, DOE received no further comments on the manufacturing cost curves. For the November 2009 SNOPR, DOE retained all cost estimates presented in the October 2008 NOPR at the retained efficiency levels, though each value was scaled by the Producer Price Index (PPI) multiplier for the commercial laundry equipment industry (NAICS 333312) between 2007 and 2008 to update the costs in the October 2008 NOPR to 2008$.

17

These are shown in Table IV.2.

17

PPI data is maintained by the Bureau of Labor Statistics and is available at http://

www.bls.gov/ppi/

Table IV.2—Commercial Clothes Washer Incremental Manufacturing Costs Proposed in November 2009 SNOPR

Efficiency level

Modified energy factor

ft

3

/kWh

/water factor

gal/ft

3

Top-loading

Front-loading

Incremental cost

$

Top-loading

Front-loading

Baseline

1.26/9.5

1.72/8.0

0.00

0.00

1

1.42/9.5

1.80/7.5

77.60

0.00

2

1.60/8.5

2.00/5.5

134.99

14.21

3

N/A

2.20/5.1

N/A

39.34

4

N/A

2.35/4.4

N/A

66.16

Because DOE did not receive any new information on the manufacturing cost curves, DOE retained all the incremental manufacturing costs presented in the November 2009 SNOPR at the retained efficiency levels for today's final rule. Table IV.3 shows these costs.

Table IV.3—Commercial Clothes Washer Incremental Manufacturing Costs

Efficiency level

Modified energy factor

ft

3

/kWh

/water factor

gal/ft

3

Top-loading

Front-loading

Incremental cost

$

Top-loading

Front-loading

Baseline

1.26/9.5

1.72/8.0

0.00

0.00

1

1.42/9.5

1.80/7.5

77.60

0.00

2

1.60/8.5

2.00/5.5

134.99

14.21

3

N/A

2.20/5.1

N/A

39.34

4

N/A

2.35/4.4

N/A

66.16

D. Life-Cycle Cost and Payback Period Analysis

In response to the requirements of section 325(o)(2)(B)(i) of the Act, DOE conducted LCC and PBP analyses to evaluate the economic impacts of possible amended energy conservation standards on CCW consumers. This section of the notice describes these analyses. DOE conducted the analysis using a spreadsheet model developed in Microsoft (MS) Excel for Windows 2007.

The LCC is the total consumer expense over the life of the equipment, including purchase and installation expense and operating costs (energy and water expenditures, repair costs, and maintenance costs). The PBP is the number of years it would take for the consumer to recover the increased costs of a higher-efficiency equipment through energy savings. To calculate the LCC, DOE discounted future operating costs to the time of purchase and summed them over the lifetime of the equipment. DOE measured the change in LCC and the change in PBP associated with a given efficiency level relative to a base case forecast of equipment efficiency. The base case forecast reflects the market in the absence of amended mandatory energy conservation standards. As part of the LCC and PBP analyses, DOE developed data that it used to establish equipment prices, installation costs, annual energy consumption, energy and water prices, maintenance and repair costs, equipment lifetime, and discount rates.

Commenting on DOE's use of LCC and PBP results to evaluate the economic impacts of possible amended energy conservation standards on CCW consumers, Mr. Gayer stated that if the private benefits to consumers of a more efficient CCW outweigh the private costs of a more efficient CCW, then there will be a market for high efficiency CCWs and regulation would not be necessary. He added that if consumers are unwilling to purchase a high efficiency CCW without the regulation, then this suggests they are not willing to pay the higher CCW price in order to accrue lower future energy costs. (Gayer, No. 67.7 at p. 1)

DOE agrees with the observation that many CCW purchasers are unwilling to pay the higher cost of a more efficient CCW in the face of potential operating savings benefits. DOE disagrees that this implies that it is using the wrong cost of capital in its analysis. DOE does not in general assume in its analysis that unregulated markets will equilibrate to a state where consumer decisions are perfectly aligned with private benefits and costs. DOE estimated the cost of capital based on information regarding the cost of borrowing and the opportunity cost of investment for CCW owners. Based on this cost of capital, DOE found that the operating cost benefits for many CCWs exceed the burden of increased initial costs for more efficient CCWs for many consumers who are currently using low-cost, low-efficiency CCWs. There are several possible reasons for the disparity between observed consumer behavior and the results of DOE's consumer financial analysis which may include: (1) Limited consumer information and information processing capabilities and (2) the high transaction costs of fully evaluating LCC and other characteristics of available CCWs prior to purchase or lease. In addition, there remain a number of environmental externalities that are not currently reflected in energy and water prices, which cannot be considered by consumers and which are not included in DOE's LCC and PBP analyses.. DOE did not receive or obtain sufficient information to provide a detailed explanation of why CCW purchasers tend to minimize first costs in the face of financially feasible gains that are likely to accrue from increased energy efficiency. DOE believes that its use of LCC and PBP results to evaluate the economic impacts of possible amended energy conservation standards on CCW consumers is appropriate given the information that is available.

DOE was unable to develop a survey-based consumer sample for CCWs because the U.S. Energy Information Administration's (EIA)

Commercial Building Energy Consumption Survey

(CBECS) does not provide the necessary

data to develop one.

18

Instead, DOE established the variability and uncertainty in energy and water use by defining the uncertainty and variability in the use (cycles per day) of the equipment. The variability in energy and water pricing was characterized by regional differences in energy and water prices. DOE calculated the LCC associated with a baseline CCW. To calculate the LCC savings and PBP associated with equipment meeting higher efficiency standards, DOE substituted the baseline unit with a more efficient design.

18

Available online at:

http://www.eia.doe.gov/emeu/cbecs/.

Table IV.4 summarizes the approaches and data DOE used to derive the inputs to the LCC and PBP calculations for the November 2009 SNOPR. For today's final rule, DOE did not introduce changes to either the LCC and PBP analyses methodology described in the November 2009 SNOPR or the inputs to the analysis. Chapter 8 of the TSD contains detailed discussion of the methodology utilized for the LCC and PBP analyses as well as the inputs developed for the analyses.

Table IV.4—Summary of Inputs and Key Assumptions in the LCC and PBP Analyses

Inputs

November 2009 SNOPR

Changes for the final rule

Affecting Installed Costs

Equipment Price

Derived by multiplying manufacturer cost by manufacturer, distributor markups, and sales tax

No change.

Installation Cost

Baseline cost updated with RS Means

Mechanical Cost Data,

2008

No change

Affecting Operating Costs

Annual Energy and Water Use

Per-cycle energy and water use based on MEF and WF levels. Disaggregated into per-cycle machine, dryer, and water heating energy using data from DOE's 2000 TSD for residential clothes washers. Annual energy and water use determined from the annual usage (number of use cycles). Usage based on several studies including research sponsored by MLA

19

and the Coin Laundry Association

20

(CLA). Different use cycles determined for multi-family and laundromat equipment applications

No change.

Energy and Water/Wastewater Prices

Electricity: Updated using EIA's 2007 Form 861 data

No change.

Natural Gas: Updated using EIA's 2007

Natural Gas Monthly

.

Water/Wastewater: Updated using RFC/AWWA's 2006

Water and Wastewater Survey

Variability: Regional energy prices determined for 13 regions; regional water/wastewater price determined for four regions

Energy and Water/Wastewater Prices Trends

Energy: Reference Case forecast updated with EIA's

AEO 2009

April Release. High-Growth and Low-Growth forecasts updated with EIA's

AEO 2009

March Release

No change.

Water/Wastewater: Linear extrapolation of 1970-2008 historical trends in national water price index. For the four years after 2008, fixed the annual price to the value in 2008 to prevent a dip in the forecasted prices

Repair and Maintenance Costs

Estimated annualized repair costs for each efficiency level based on half the equipment lifetime divided by the equipment lifetime

No change.

Affecting Present Value of Annual Operating Cost Savings

Equipment Lifetime

Based on data from various sources including the CLA. Different lifetimes established for multi-family and laundromat equipment applications. Variability and uncertainty characterized with Weibull probability distributions

No change.

Discount Rates

Approach based on cost of capital of publicly traded firms in the sectors that purchase CCWs. Primary data source is Damodaran Online.

21

No change.

Affecting Installed and Operating Costs

Effective Date of New Standard

2013

No change.

Base-Case Efficiency Distributions

Analyzed as two equipment classes: top-loading and front-loading. Distributions for both classes based on the number of available models at the efficiency levels

No change.

Top-Loading: 64.8% at 1.26 MEF/9.5 WF; 33.8% at 1.42 MEF/9.5 WF; 1.4% at 1.60 MEF/8.5 WF

Front-Loading: 3.5% at 1.72 MEF/8.0 WF; 0.0% at 1.80 MEF/7.5 WF; 73.7% at 2.00 MEF/5.5 WF; 22.8% at 2.20 MEF/5.1 WF; 0.0% at 2.35 MEF/4.4 WF

19

Please see the following Web site for further information:

http://www.mla-online.com/.

20

Please see the following Web site for further information:

http://www.coinlaundry.org/.

21

Please see the following Web site for further information:

http://pages.stern.nyu.edu/~adamodar/.

1. Equipment Prices

To calculate the equipment prices faced by CCW purchasers, DOE multiplied the manufacturing costs developed from the engineering analysis by the supply chain markups it developed (along with sales taxes). DOE used the same supply chain markups for today's final rule that were developed

for the November 2009 SNOPR. See chapter 7 of the TSD for additional information. To calculate the final installed prices, DOE added installation cost to the equipment prices.

2. Installation Cost

Installation costs include labor, overhead, and any miscellaneous materials and parts. For the November 2009 SNOPR and today's final rule, DOE used data from the RS Means

Mechanical Cost Data,

2008 on labor requirements to estimate installation costs for CCWs.

22

DOE estimates that installation costs do not increase with equipment efficiency.

22

Available online at:

http://www.rsmeans.com/bookstore/.

3. Annual Energy Consumption

DOE determined the annual energy and water consumption of CCWs by multiplying the per-cycle energy and water use by the estimated number of cycles per year. In the November 2009 SNOPR, DOE concluded that the use of the existing RCW test procedure provides a representative basis for rating and estimating the per-cycle energy use of CCWs. For today's final rule, DOE maintained the same approach.

4. Energy and Water Prices

a. Energy Prices

DOE derived average electricity and natural gas prices for 13 geographic areas consisting of the nine U.S. Census divisions, with four large States (New York, Florida, Texas, and California) treated separately.

For the November 2009 SNOPR and today's final rule, DOE estimated commercial electricity prices for each of the 13 geographic areas based on 2007 data from EIA Form 861,

Annual Electric Power Industry Report.

23

DOE calculated an average commercial electricity price by first estimating an average commercial price for each utility, and then calculated a regional average price by weighting each utility with consumers in a region by the number of commercial consumers served in that region.

23

Available online at:

http://www.eia.doe.gov/cneaf/electricity/page/eia861.html

.

For the November 2009 SNOPR and today's final rule, DOE estimated average commercial natural gas prices in each of the 13 geographic areas based on 2007 data from the EIA publication

Natural Gas Monthly.

24

DOE calculated an average natural gas price for each area by first calculating the average prices for each State, and then calculating a regional price by weighting each State in a region by its population.

24

Available online at:

http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html.

To estimate the trends in electricity and natural gas prices for the November 2009 SNOPR and today's final rule, DOE used the price forecasts in the

AEO 2009

April Release.

25

To arrive at prices in future years, DOE multiplied the average prices described above by the forecast of annual average price changes. Because the

AEO

forecasts prices only to 2030, DOE followed past guidelines provided to the Federal Energy Management Program by EIA and used the average rate of change during 2020-2030 to estimate the price trends beyond 2030.

25

All AEO publications are available online at:

http://www.eia.doe.gov/oiaf/aeo/

.

The spreadsheet tools used to conduct the LCC and PBP analysis allow users to select either the

AEO'

s high-growth case or low-growth case price forecasts to estimate the sensitivity of the LCC and PBP to different energy price forecasts. The

AEO 2009

April Release provides only forecasts for the Reference Case. Therefore, for the November 2009 SNOPR and today's final rule, DOE used the

AEO 2009

March Release high-growth case or low-growth forecasts to estimate high-growth and low-growth price trends.

b. Water and Wastewater Prices

DOE obtained commercial water and wastewater price data from the

Water and Wastewater Rate Survey

conducted by Raftelis Financial Consultants (RFC) and the American Water Works Association (AWWA). For the November 2009 SNOPR and today's final rule, DOE used the 2006

Water and Wastewater Rate Survey.

26

The survey covers approximately 300 water utilities and 200 wastewater utilities, with each industry analyzed separately. DOE calculated values at the Census region level (Northeast, South, Midwest, and West). Edison Electric Institute (EEI) questioned why water and wastewater prices were not developed at the Census division level. (EEI, Public Meeting Transcript, No. 40.5, p. 103 and p. 178) The samples that DOE obtained of 200-300 utilities are not large enough to calculate regional prices for all U.S. Census divisions and large States. Hence, DOE was only able to capture the variability of water and wastewater prices at the Census region level.

26

Raftelis Financial Consultants, Inc.,

2006 RFC/AWWA Water and Wastewater Rate Survey, 2006,

(2006). This document is available at:

http://www.raftelis.com/ratessurvey.html

.

To estimate the future trend for water and wastewater prices, DOE used data on the historic trend in the national water price index (U.S. city average) provided by the Bureau of Labor Statistics (BLS). For the October 2008 NOPR, DOE extrapolated a future trend based on the linear growth from 1970 to 2007. For the SNOPR, DOE continued to use the BLS historical data, which now provides data for the year 2008, and extrapolated the future trend based on the linear growth from 1970 to 2008. But rather than use the extrapolated trend to forecast the prices for the four years after 2008, DOE pinned the annual price to the value in 2008. Otherwise, forecasted prices for this 4-year time period would have been up to 8 percent lower than the price in 2008. Estimating prices in this manner is appropriate because it is consistent with the historical trend that demonstrates that prices do not decrease over time. Beyond the 4-year time period, DOE used the extrapolated trend to forecast prices out to the year 2043. DOE continued to use the above approach for today's final rule.

5. Repair and Maintenance Costs

Repair costs are associated with repairing or replacing components that have failed in the appliance, whereas maintenance costs are associated with maintaining the operation of the equipment. DOE was unable to gather any empirical data specific to CCWs to estimate repair and maintenance cost. For the October 2008 NOPR and the November 2009 SNOPR, DOE included increased repair costs based on an algorithm developed by DOE for central air conditioners and heat pumps and which was also used for residential furnaces and boilers.

27

This algorithm calculates annualized repair costs by dividing half of the equipment retail price over the equipment lifetime. In the absence of better data, DOE retained its approach from the November 2009 SNOPR for today's final rule.

27

U.S. Department of Energy, Technical Support Document: Energy Efficiency Standards for Consumer Products: Residential Central Air Conditioners and Heat Pumps (May 2002) chapter 5. This document is available at:

http://www.eere.energy.gov/buildings/appliance_standards/residential/ac_central_1000_r.html.

6. Equipment Lifetime

For the November 2009 SNOPR and today's final rule, DOE used a variety of sources to establish low, average, and high estimates for equipment lifetime. The average CCW lifetime was 11.3 years for multi-family applications, and 7.1 years in laundromat applications. DOE characterized CCW lifetimes with Weibull probability distributions.

7. Discount Rates

To establish discount rates for CCWs for the November 2009 SNOPR and today's final rule, DOE estimated the cost of capital of publicly traded firms in the sectors that purchase CCWs as the weighted average of the cost of equity financing and the cost of debt financing. DOE identified the following sectors purchasing CCWs: (1) Educational services; (2) hotels; (3) real estate investment trusts; and (4) personal services. DOE estimated the weighted-average cost of capital (WACC) using the respective shares of equity and debt financing for each sector that purchases CCWs. It calculated the real WACC by adjusting the cost of capital by the expected rate of inflation. To obtain an average discount rate value, DOE used additional data on the number of CCWs in use in various sectors. DOE estimated the average discount rate for companies that purchase CCWs at 5.7 percent.

8. Effective Date of the Amended Standards

The compliance date is the future date when parties subject to the requirements of a new standard must begin compliance. For the November 2009 SNOPR, DOE expected that the final rule will be published by January 1, 2010, as required by EPACT 2005, with compliance with new standards required by January 1, 2013. For today's final rule, DOE used the same date for compliance. DOE calculated the LCC for CCW consumers as if they would purchase new equipment in the year after the standard takes effect.

9. Equipment Energy Efficiency in the Base Case

For the LCC and PBP analysis, DOE analyzes higher efficiency levels relative to a baseline efficiency level. However, some consumers may already purchase equipment with efficiencies greater than the baseline equipment levels. Thus, to accurately estimate the percentage of consumers that would be affected by a particular standard level, DOE estimates the distribution of equipment efficiencies that consumers are expected to purchase under the base case (

i.e.,

the case without new energy efficiency standards). DOE refers to this distribution of equipment energy efficiencies as a base-case efficiency distribution. As discussed previously in section IV.A, DOE decided to analyze CCWs with two equipment classes—top-loading CCWs and front-loading CCWs. For the November 2009 SNOPR and today's final rule, DOE used the number of available models within each equipment class to establish the base-case efficiency distributions. Table IV.5 presents the market shares of the efficiency levels in the base case for CCWs. See chapter 8 of the TSD for further details on the development of CCW base-case market shares.

Table IV.5—Commercial Clothes Washers: Base Case Market Shares

Top-loading

Standard level

MEF

WF

Market share

%

Front-loading

Standard level

MEF

WF

Market share

%

Baseline

1.26

9.50

64.8

Baseline

1.72

8.00

3.5

1

1.42

9.50

33.8

1

1.80

7.50

0.0

2

1.60

8.50

1.4

2

2.00

5.50

73.7

3

2.20

5.10

22.8

4

2.34

4.40

0.0

10. Split Incentive Between CCW Consumers and Users

Under a split incentive situation, the party purchasing more efficient and presumably more expensive equipment (referred to as “consumers” in this notice) may not realize the operating cost savings from that equipment, because another party may pay the utility bill. Such a situation exists in segments of the CCW market. In comments on the October 2008 NOPR, Whirlpool and Alliance stated that those who own CCWs (usually route operators) often do not incur the operating costs as do, generally, laundromats and owners of multi-family dwellings. 73 FR 62067 (Oct. 17, 2008). Recognizing this, DOE evaluated the ability of CCW consumers to pass on the higher purchase costs of more expensive CCWs and concluded that few route operators would allow themselves to be held to a lease agreement that would prevent them from recovering the cost of more efficient CCW equipment. That is, DOE believes that these CCW consumers would be able to realize a significant share of the operating cost savings from more-efficient equipment. The Joint Comment stated that contracts between route operators and multi-housing property owners are subject to revision and renewal, and that the division of coin-box revenue may be renegotiated to allow for the savings achieved by more-efficient CCWs to be equitably shared between the purchasers/owners of the machines (route operators) and the parties responsible for paying electric, gas, water, and sewer bills (property owners). (Joint Comment, No. 67.6 at p. 3) DOE agrees with the above comment, and continues to conclude that CCW consumers would be able to realize a significant share of the operating cost savings from more-efficient equipment.

11. Rebound Effect

The rebound effect occurs when a piece of equipment, made more efficient and used more intensively, does not yield the expected energy savings from the efficiency improvement. In the case of more efficient clothes washers, limited research indicates that there is no rebound effect for RCWs, although the consumer may choose to purchase larger models with more features that would result in higher energy use.

28

DOE did not receive any comments from interested parties on the issue of the rebound effect for CCWs. Based on the limited research showing no rebound effect for RCWs, DOE did not include a rebound effect in its analysis of CCW standards.

28

L.A. Greening, D.L. Greene, and C. Difiglio. “Energy efficiency and consumption—the rebound effect—a survey.”

Energy Policy

28 (2000) 389

-

401. Available for purchase at

http://

www.elsevier.com/locate/enpol.

12. Inputs to Payback Period Analysis

The PBP is the amount of time (expressed in years) it takes the consumer to recover the additional installed cost of more efficient equipment through operating cost savings, compared to baseline equipment. The simple PBP does not account for changes in operating expense over time or the time value of money. The inputs to the PBP calculation are the total installed cost of the equipment to the consumer for each efficiency level and the annual (first-

year) operating expenditures for each efficiency level. For the November 2009 SNOPR and today's final rule, the PBP calculation uses the same inputs as the LCC analysis, except that energy price trends and discount rates are not needed.

13. Rebuttable-Presumption Payback Period

As noted above, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a)), establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as applicable, water) savings during the first year that the consumer will receive as a result of the standard,” as calculated under the test procedure in place for that standard. For each TSL, DOE determined the value of the first year's energy savings by calculating the quantity of those savings in accordance with DOE's test procedure, and multiplying that amount by the average energy price forecast for the year in which a new standard would be first effective—in this case, 2013.

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

1. General

DOE's NIA assesses the national energy savings, as well as the national NPV of total consumer costs and savings, expected to result from new standards at specific efficiency levels. DOE applied the NIA spreadsheet to perform calculations of energy savings and NPV, using the annual energy consumption and total installed cost data from the LCC analysis. DOE forecasted the energy savings, energy cost savings, equipment costs, and NPV for each equipment class from 2013 to 2043. The forecasts provide annual and cumulative values for all four parameters. In addition, DOE incorporated into its NIA spreadsheet the capability to analyze sensitivity of the results to forecasted energy prices and equipment efficiency trends. Table IV.6 summarizes the approach and data DOE used to derive the inputs to the NES and NPV analyses for the November 2009 SNOPR. DOE made no changes to the analyses for today's final rule. (See chapter 11 of the final rule TSD for further details.)

Table IV.6—Approach and Data Used to Derive the Inputs to the National Energy Savings and NPV Analyses

Inputs

2009 SNOPR Description

Changes for the final rule

Shipments

Annual shipments from Shipments Model

No change.

Effective Date of Standard

2013

No change.

Base-Case Forecasted Efficiencies

Shipment-weighted efficiency (SWEF) determined in the year 2005. SWEF held constant over forecast period

No change.

Standards-Case Forecasted Efficiencies

Analyzed as two equipment classes. For each equipment class, roll-up scenario used for determining SWEF in the year that standards become effective for each standards case. SWEF held constant over forecast period

No change.

Annual Energy Consumption per Unit

Annual weighted-average values as a function of SWEF

No change.

Total Installed Cost per Unit

Annual weighted-average values as a function of SWEF

No change.

Energy and Water Cost per Unit

Annual weighted-average values as a function of the annual energy consumption per unit and energy (and water) prices

No change.

Repair Cost and Maintenance Cost per Unit

Incorporated changes in repair costs as a function of efficiency

No change.

Escalation of Energy and Water/Wastewater Prices

Energy Prices: Updated to

AEO 2009

April Release forecasts for the Reference Case.

AEO 2009

April Release does not provide High-Growth and Low-Growth forecasts; used

AEO 2009

March Release High-Growth and Low-Growth forecasts to estimate high- and low-growth price trends

Water/Wastewater Prices: Linear extrapolation of 1970-2008 historical trends in national water price index. For the four years following 2013, fixed the annual price to the value in 2008 to prevent a dip in the forecasted prices

No change.

Energy Site-to-Source Conversion

Conversion varies yearly and is generated by DOE/EIA's NEMS program (a time-series conversion factor; includes electric generation, transmission, and distribution losses)

No change.

Effect of Standards on Energy Prices

Determined but found not to be significant

No change.

Discount Rate

3% and 7% real

No change.

Present Year

Future expenses discounted to year 2009

No change.

2. Shipments

The shipments portion of the NIA Spreadsheet is a Shipments Model that uses historical data as a basis for projecting future shipments of the equipment that are the subject of this rulemaking. In projecting CCW shipments, DOE accounted for three market segments: (1) New construction; (2) existing buildings (

i.e.,

replacing failed equipment); and (3) retired units not replaced. DOE used the non-replacement market segment to calibrate the Shipments Model to historical shipments data. For purposes of estimating the impacts of prospective standards on equipment shipments (

i.e.,

forecasting standards-case shipments) DOE considered the combined effects of changes in purchase price, annual operating cost, and household income on the magnitude of shipments.

Table IV.7 summarizes the approach and data DOE used to derive the inputs to the shipments analysis for the November 2009 SNOPR, and the changes it made for today's final rule. The general approach for forecasting CCW shipments for today's final rule remains unchanged from the November 2009 SNOPR. That is, all CCW shipments (for both equipment classes) were estimated for the new construction, replacement, and non-replacement markets. DOE then allocated shipments to each of the two equipment classes based on the market share of each class. For the November 2009 SNOPR, DOE estimated that top-loading washers comprise 70 percent of the market while front-loading washers

comprise 30 percent. DOE estimated that the equipment class market shares would remain unchanged over the time period 2005-2043.

Table IV.7—Approach and Data Used To Derive the Inputs to the Shipments Analysis

Inputs

2009 SNOPR description

Changes for the

final rule

Number of Equipment Classes

Two: top-loading washers and front-loading washers. Shipments forecasts established for all CCWs and then disaggregated into the two equipment classes based on the market share of top- and front-loading washers. Updated market share data based on SEC 10K report of the LVM and tax credits claimed by the LVM for producing high-efficiency CCWs. Market share determined to be 70% top-loading and 30% front-loading. Equipment class market shares held constant over forecast period

No change.

New Construction Shipments

Determined by multiplying multi-housing forecasts by forecasted saturation of CCWs for new multi-housing. Multi-housing forecasts with

AEO 2009

April Release forecasts for the Reference Case. Verified frozen saturations with data from the U.S. Census Bureau's

American Housing Survey

(AHS) for 1997-2005

No change.

Replacements

Determined by tracking total equipment stock by vintage and establishing the failure of the stock using retirement functions from the LCC and PBP analysis. Retirement functions revised to be based on Weibull lifetime distributions

No change.

Retired Units not Replaced (

i.e.,

non-replacements)

Used to calibrate Shipments Model to historical shipments data. Froze the percentage of non-replacements at 15 percent for the period 2007─2043 to account for the increased saturation rate of in-unit washers in the multi-family stock between 1997 and 2005 timeframe shown by the AHS

No change.

Historical Shipments

Data sources include AHAM data submittal,

Appliance Magazine,

and U.S. Bureau of Economic Analysis' quantity index data for commercial laundry. Relative market shares of the two equipment applications, common-area laundry facilities in multi-family housing and laundromats, estimated to be over time at 85 and 15 percent, respectively

Conducted a sensitivity analysis based on relative market shares of 66 percent for multi-family housing and a 34-percent share for laundromats.

Purchase Price, Operating Cost, and Household Income Impacts due to efficiency standards

Developed the “relative price” elasticity which accounts for the purchase price and the present value of operating cost savings divided by household income. Used purchase price and efficiency data specific to residential refrigerators, clothes washers, and dishwashers between 1980 and 2002 to determine a “relative price” elasticity of demand, of −0.34

No change.

Fuel Switching

Not applicable

No change.

DOE based its Shipments Model for CCWs on the following three assumptions: (1) All equipment shipments for new construction are driven by the new multi-family housing market, (2) the relative market shares of the two equipment applications, common-area laundry facilities in multi-family housing and laundromats, are constant over time at 85 and 15 percent, respectively, and (3) the U.S. Census Bureau's quantity index data can be used to validate the shipments trend observed in the historical data.

The Joint Comment stated that DOE's assumed 85 percent to 15 percent split between sales for multi-family applications and sales for laundromat applications is not based on robust or current data, and understates the energy, water, and dollar savings that would be achieved by all of the standard levels under consideration. It cited information from Alliance's Form 10-K for 2008, which, the Joint Comment asserted, suggested that the ratio of multi-family to laundromat shipments is about 40 percent to 60 percent. It noted that because some laundromats purchase a limited number of larger capacity washers not found in multi-family settings, the commenters believe a split of roughly 45 percent for multi-family venues and 55 percent for laundromats is reasonable, and should be evaluated by DOE for the final rule. (Joint Comment, No. 67.6 at p. 3) Whirlpool commented that it believes the industry mix is not nearly as heavily weighted toward the multi-family channel as DOE assumed. (Whirlpool, No. 67.11 at p. 4). In contrast, Alliance stated that it believes that the split of the distribution channels of laundromat versus multi-family housing common-area laundry rooms of 15 percent and 85 percent respectively is generally representative of the industry. (Alliance, No. 67.8 at p. 2)

In response, DOE believes that the interpretation by the Joint Comment of information from Alliance's Form 10-K for 2008 understates the importance of equipment other than CCWs. The total 2008 revenues from Alliance's sales to the commercial laundry industry are $338 million, and sales to laundromats and multi-family housing amount to $240 million. However, based on data gathered for its MIA, DOE estimated that the total sales of CCWs by Alliance amount to only $73 million. Therefore, it seems evident that a large fraction of the sales to laundromats and multi-family housing are accounted for by equipment other than CCWs. This unaccounted-for equipment would include clothes dryers in addition to washer-extractors and tumblers, which are large-capacity, higher-performance washing machines, and matching large-capacity dryers, respectively. Laundromats account for much more of the larger equipment than multi-family housing, and this type of equipment is more expensive than CCWs. Therefore, the laundromat share of sales to the North American commercial laundry industry by Alliance is as high as it is primarily due to sales of larger equipment. Thus, the revenue share between the multi-family and laundromat markets is not a good indicator of the share of laundromats in sales of CCWs.

The CCW unit shipment shares of 85 percent for multi-family housing and 15 percent for laundromats used in the SNOPR were based upon the input of industry experts consulted in a comprehensive study conducted by the Consortium for Energy Efficiency in

1998.

29

Although the report was conducted over 10 years ago, it was the most reliable data source for developing a market split for CCW shipments that was available. DOE notes that Alliance believes that this split is generally representative of the industry. However, because the assumed shares of laundromats and multi-family housing in shipments have a significant effect on the NIA results, DOE conducted a sensitivity analysis in which it used the data in Alliance's 2008 10K report, coupled with a number of assumptions and input from Whirlpool, to estimate the shares of laundromats and multi-family housing in shipments of CCWs in 2008. The analysis, which is described in appendix 11C of the final rule TSD, yields an estimate of a 66 percent share for multi-family housing and a 34 percent share for laundromats. Using these shares increases national energy savings by approximately 9 percent (compared to the savings when using the 15 percent and 85 percent shares), and increases the NPV of consumer benefit by approximately 12 percent under TSLs 3, 4, and 5.

29

Consortium for Energy Efficiency,

Commercial Family-Sized Washers: An Initiative Description of the Consortium for Energy Efficiency

(1998). This document is available at:

http://

www.cee1.org/com/cwsh/cwsh-main.php3.

a. New Construction Shipments

To determine new construction shipments, DOE used a forecast of new housing coupled with equipment market saturation data for new housing. For new housing completions and mobile home placements, DOE adopted the projections from EIA's

AEO 2009

April Release Reference Case through 2030 for the November 2009 SNOPR and today's final rule. For CCWs, DOE relied on new construction market saturation data from the above-mentioned CEE report.

b. Replacements and Non-Replacements

DOE estimated replacements using equipment retirement functions developed from equipment lifetimes. For the November 2009 SNOPR and today's final rule, DOE used retirement functions based on Weibull distributions. DOE determined that the growth of in-unit washer saturations in the multi-family stock over the last 10 years was likely caused by conversions of rental property to condominiums, resulting in the gradual phase-out or non-replacement of failed CCWs in common-area laundry facilities. As a result, DOE used the average percent of non-replacements over the period between 1999 and 2005 (18 percent) and maintained it over the entire forecast period. The effect of maintaining non-replacements at 18 percent results in forecasted CCW shipments staying relatively flat during the forecast period.

c. Impacts of Standards on Shipments

To estimate the combined effects on CCW shipments from increases in equipment purchase price and decreases in equipment operating costs due to amended efficiency standards, DOE relied on a literature review and a statistical analysis that it has conducted on a limited set of appliance price, efficiency, and shipments data. DOE used purchase price and efficiency data specific to residential refrigerators, clothes washers, and dishwashers between 1980 and 2002 to conduct regression analyses. DOE's analysis suggests that the “relative” short-run price elasticity of demand, averaged over the three appliances, is −0.34. Because DOE's forecast of shipments and impacts due to standards spans over 30 years, DOE also considered how the relative price elasticity is affected once a new standard takes effect. After the purchase price change, price elasticity becomes more inelastic over the years until it reaches a terminal value. DOE incorporated a change in relative price elasticity change that resulted in a terminal value of approximately one-third of the short-run elasticity. In other words, DOE determined that consumer purchase decisions, in time, become less sensitive to the initial change in the equipment's relative price.

NPCC suggested that it might be useful for DOE to compare the relative price elasticity approach used for CCWs with the shipments model that was used in the previous rulemaking for RCWs. (NPCC, Public Meeting Transcript, No. 67.4 at pp. 97-98) The approach that was used in the previous rulemaking for RCWs modeled consumer purchase decisions in terms of probabilities that typically depend on the type of stock, the age of the clothes washer, the incremental cost of the decision, and market conditions. The dependence of decision probabilities on price and market conditions was given by a standard econometric logic equation. In the present rulemaking for CCWs, DOE did not use such an approach, in part because it requires detailed information on consumer decision making, which is not available in the case of CCWs.

For its November 2009 SNOPR as well as today's final rule, DOE estimated that price increases due to standards would lead to reductions in unit shipments for both top-loading and front-loading CCWs. DOE analyzed the impacts of increased purchase prices for each equipment class independently of the other. Because the price impacts for more efficient top-loaders are higher than those for more efficient front-loaders, DOE estimated that sales would decrease more for top-loading CCWs than for front-loaders.

DOE did not explicitly model potential switching between top-loaders and front-loaders due to lack of information on the appropriate cross-price elasticity. Whirlpool commented that there are considerable between-class switching costs which would act against class switching by purchasers of commercial clothes washers. (Whirlpool, No. 67.11 at p. 2) DOE notes the comment by Whirlpool but it believes that there is uncertainty regarding the extent of switching that could result from changes in the price differential between top-loaders and front-loaders.

3. Other Inputs

a. Base-Case Forecasted Efficiencies

A key input to the calculations of NES and NPV are the energy efficiencies that DOE forecasts for the base case (without new standards). The forecasted efficiencies represent the annual shipment-weighted energy efficiency (SWEF) of the equipment under consideration over the forecast period (

i.e.,

from the estimated effective date of a new standard to 30 years after that date).

For the November 2009 SNOPR, DOE first determined the distribution of equipment efficiencies currently in the marketplace to develop a SWEF for each equipment class for 2005. Using the SWEF as a starting point, DOE developed base-case efficiencies based on estimates of future efficiency increase. From 2005 to 2013 (2013 being the estimated effective date of a new standard), DOE estimated that there would be no change in the SWEF (

i.e.,

no change in the distribution of equipment efficiencies). Because there are no historical data to indicate how equipment efficiencies have changed over time, DOE estimated that forecasted efficiencies would remain at the 2013 level until the end of the forecast period. DOE recognizes the possibility that equipment efficiencies may change over time (

e.g.,

due to voluntary efficiency programs such as ENERGY STAR). But without historical information, DOE had no basis for estimating how much the equipment efficiencies may change. For today's final rule, DOE maintained its estimate that the SWEF would remain constant from 2005 through the end of the forecast period.

b. Standards-Case Forecasted Efficiencies

For its determination of each of the cases with alternative standard levels (“standards cases”), DOE used a “roll-up” scenario in the November 2009 SNOPR to establish the SWEF for 2013. In a roll-up scenario, equipment efficiencies in the base case which do not meet the standard level under consideration are projected to roll-up to meet the new standard level. Further, all equipment efficiencies in the base case that are above the standard level under consideration are not affected by the standard. The same scenario is used for the forecasted standards-case efficiencies as for the base-case efficiencies, namely, that forecasted efficiencies remained at the 2013 efficiency level until the end of the forecast period, as DOE has no data to reasonably estimate how such efficiency levels might change over the next 30 years. By maintaining the same rate of increase for forecasted efficiencies in the standards case as in the base case (

i.e.,

no change), DOE retained a constant efficiency difference between the two cases over the forecast period. Although the no-change trends may not reflect what would happen to base-case and standards-case equipment efficiencies in the future, DOE believes that maintaining a constant efficiency difference between the base case and standards case provides a reasonable estimate of the impact that standards have on equipment efficiency. It is more important to accurately estimate the efficiency difference between the standards case and base case, than to accurately estimate the actual equipment efficiencies in the standards and base cases. DOE retained the approach used in the November 2009 SNOPR for today's final rule.

c. Annual Energy Consumption

The annual energy consumption per unit depends directly on equipment efficiency. For the November 2009 SNOPR and today's final rule, DOE used the SWEFs associated with the base case and each standards case, in combination with the annual energy data, to estimate the shipment-weighted average annual per-unit energy consumption under the base case and standards cases. The national energy consumption is the product of the annual energy consumption per unit and the number of units of each vintage, which depends on shipments.

As noted above in section IV.D, DOE used a relative price elasticity to estimate standards-case shipments for CCWs. As a result, shipments forecasted under the standards cases are lower than under the base case. To avoid the inclusion of energy savings from reduced shipments, DOE used the standards-case shipments projection and the standards-case stock to calculate the annual energy consumption in the base case. For CCWs, any drop in shipments caused by standards is estimated to result in the purchase of used machines. As a result, the standards-case forecast explicitly accounted for the energy and water consumption of new standard-compliant CCWs and also used machines coming into the market due to the drop in new equipment shipments.

DOE retained the use of the base-case shipments to determine the annual energy consumption in the base case and the approach used in the November 2009 SNOPR for today's final rule.

d. Site-to-Source Conversion

To estimate the national energy savings expected from appliance standards, DOE uses a multiplicative factor to convert site energy consumption (energy use at the location where the appliance is operated) into primary or source energy consumption (the energy required to deliver the site energy). For the November 2009 SNOPR and today's final rule, DOE used annual site-to-source conversion factors based on the version of NEMS that corresponds to the

AEO 2009

March Release version. These conversion factors account for natural gas losses from pipeline leakage and natural gas used for pumping energy and transportation fuel. For electricity, the conversion factors vary over time due to projected changes in generation sources (

i.e.,

the power plant types projected to provide electricity to the country). Since the

AEO

does not provide energy forecasts that go beyond 2030, DOE used conversion factors that remain constant at the 2030 values throughout the remainder of the forecast.

In response to a request from the DOE, Office of Energy Efficiency and Renewable Energy (EERE), the National Research Council (NRC) appointed a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” to conduct a study called for in section 1802 of EPACT 2005.

30

The fundamental task before the committee was to evaluate the methodology used for setting energy efficiency standards and to comment on whether site (point-of-use) or source (full-fuel-cycle) measures of energy efficiency better support rulemaking to achieve energy conservation goals. The NRC committee defined site (point-of-use) energy consumption as reflecting the use of electricity, natural gas, propane, and/or fuel oil by an appliance at the site where the appliance is operated, based on specified test procedures. Full-fuel-cycle energy consumption was defined as including, in addition to site energy use, the energy consumed in the extraction, processing, and transport of primary fuels such as coal, oil, and natural gas; energy losses in thermal combustion in power-generation plants; and energy losses in transmission and distribution to homes and commercial buildings.

30

The National Academies, Board on Energy and Environmental Systems, Letter to Dr. John Mizroch, Acting Assistant Secretary, U.S. DOE, Office of EERE from James W. Dally, Chair, Committee on Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards, May 15, 2009.

In evaluating the merits of using point-of-use and full-fuel-cycle measures, the NRC committee noted that DOE uses what the committee referred to as “extended site” energy consumption to assess the impact of energy use on the economy, energy security, and environmental quality. The extended site measure of energy consumption includes the generation, transmission, and distribution but, unlike the full-fuel-cycle measure, does not include the energy consumed in extracting, processing, and transporting primary fuels. A majority of members on the NRC committee believe that extended site energy consumption understates the total energy consumed to make an appliance operational at the site. As a result, the NRC committee's primary general recommendation is for DOE to consider moving over time to use of a full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts, especially levels of greenhouse gas emissions, and to providing more comprehensive information to the public through labels and other means, such as an

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