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 430

[Docket Number: EERE-2006-STD-0127]

RIN 1904-AB49

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 Department of Energy (DOE) is announcing that it is amending energy conservation standards pertaining to the cooking efficiency of residential gas kitchen ranges and ovens, because it has determined that such standards would be technologically feasible and economically justified and would result in significant conservation of energy, the three primary statutory criteria for adoption of standards under the Energy Policy and Conservation Act (EPCA). DOE is not adopting energy conservation standards pertaining to the cooking efficiency of residential electric kitchen ranges and ovens and microwave ovens, because it has determined that such standards would not be technologically feasible and economically justified. At this point, DOE has decided to defer its decision regarding adoption of amended energy conservation standards for the energy efficiency of commercial clothes washers and standby mode and off mode power consumption by microwave ovens, pending further rulemaking. Finally, DOE is not adopting amended standards for dishwashers and dehumidifiers in this rulemaking, because recent amendments to EPCA have already set standards for those products.

DATES:

The effective date of this rule is June 8, 2009. Compliance with the standards set by today's final rule is required on April 9, 2012.

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 Ms. Brenda Edwards at the above telephone number for additional information regarding visiting the Resource Room. 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), 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/residential/cooking_products.html

FOR FURTHER INFORMATION CONTACT:

Mr. Stephen Witkowski, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-7463. E-mail:

Stephen.Witkowski@ee.doe.gov

.

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

Eric.Stas@hq.doe.gov

or

Michael.Kido@hq.doe.gov

.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule

A. The Standard Levels

1. Statutorily Set Standard Levels for Dehumidifiers and Dishwashers

2. The Standard Levels for the Energy Efficiency of Residential Cooking Products

3. Further Rulemaking for Commercial Clothes Washers and Microwave Ovens

B. Current Federal Standards

C. Benefits and Burdens to Purchasers of Cooking Products

D. Impact on Manufacturers

E. National Benefits

F. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for the Two Appliance Products

3. Further Rulemaking To Consider Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode Power Use and for Commercial Clothes Washers

III. General Discussion

A. Standby Power for Cooking Products

B. Test Procedures

C. Technological Feasibility

1. General

2. Gas Cooking Products—Alternatives to Line-Powered Electronic Ignition Systems

3. Maximum Technologically Feasible Levels

D. Energy Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Consumers and Manufacturers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need of the Nation to Conserve Energy

2. Rebuttable Presumption

IV. Methodology and Discussion of Comments on Methodology

A. Market and Technology Assessment

1. Product Classes

2. Technology Options

3. Excluded Product Classes and Technologies

B. Engineering Analysis

1. Efficiency Levels

2. Manufacturing Costs

C. Life-Cycle Cost and Payback Period Analyses

1. Product Prices

2. Installation Cost

3. Annual Energy Consumption

4. Energy Prices

5. Repair and Maintenance Costs

6. Product Lifetime

7. Discount Rates

8. Effective Date of the Amended Standards

9. Product Energy Efficiency in the Base Case

10. Inputs to Payback Period Analysis

11. Rebuttable Presumption Payback Period

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

1. General

2. Shipments

a. New Construction Shipments

b. Replacements

c. Purchase Price, Operating Cost, and Household Income Impacts

d. Fuel Switching

3. Other Inputs

a. Base-Case Forecasted Efficiencies

b. Standards-Case Forecasted Efficiencies

c. Annual Energy Consumption

d. Site-to-Source Conversion

e. Total Installed Costs and Operating Costs

f. Discount Rates

g. Effects of Standards on Energy Prices

E. Consumer Subgroup Analysis

F. Manufacturer Impact Analysis

G. Employment Impact Analysis

H. Utility Impact Analysis

I. Environmental Assessment

V. Discussion of Other Comments

A. Burdens and Benefits

1. Consideration of the Value of Avoided Environmental Impacts

B. Other Comments

1. Proposed Standards for Conventional Cooking Products

VI. Analytical Results and Conclusions

A. Trial Standard Levels

B. Significance of Energy Savings

C. Economic Justification

1. Economic Impact on Consumers

a. Life-Cycle Costs and Payback Period

b. Consumer Subgroup Analysis

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Manufacturer Employment

c. Impacts on Manufacturers That Are Small Businesses

d. Cumulative Regulatory Burden

3. Net Present Value of Consumer Impacts and National Employment Impacts

4. Impact on Utility or Performance of Products

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

D. Conclusion

1. Overview

2. Conventional Cooking Products

3. Microwave Ovens

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

1. Reasons for the Final Rule

2. Objectives of, and Legal Basis for, the Rule

3. Description and Estimated Number of Small Entities Regulated

4. Description and Estimate of Compliance Requirements

5. Significant Issues Raised by Public Comments

6. Steps DOE Has Taken To Minimize the Economic Impact on Small Manufacturers

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

A. The Standard Levels

DOE notes that this rulemaking originally bundled four separate residential and commercial products (dishwashers, dehumidifiers, electric and gas kitchen ranges and ovens and microwave ovens, and commercial clothes washers). However, as explained in further detail below, various events occurred during the course of the rulemaking which resulted in the consideration of a number of these products separately. For example, Congress set efficiency levels by statute for dishwashers and dehumidifiers, which DOE codified in its regulations through a separate rulemaking (along with numerous other statutory changes). At the notice of proposed rulemaking (NOPR) stage, public commenters made DOE aware of problems with the efficiency data for certain commercial clothes washer models upon which DOE had relied in its analyses. For microwave ovens, public commenters urged DOE to await the impending finalization of the industry standard for measurement of microwave oven standby mode and off mode power consumption before adopting a corresponding DOE test procedure (a prerequisite for an energy conservation standard addressing standby power). DOE believes that both of these developments warrant further rulemaking action. For these reasons, today's final rule is limited to addressing energy conservation standards for the cooking efficiency of electric and gas kitchen ranges and ovens and microwave ovens.

1. Statutorily Set Standard Levels for Dehumidifiers and Dishwashers

As explained in detail in the NOPR in this proceeding, the Energy Policy and Conservation Act, as amended (42 U.S.C. 6291

et

seq.

; EPCA or the Act), initially contained energy conservation standards for dehumidifiers and residential dishwashers, as well as requirements for DOE to amend those standards, and DOE announced it would consider such amendments to those standards in this rulemaking. 73 FR 62034, 62036-40 (Oct. 17, 2008) (the October 2008 NOPR). However, the Energy Independence and Security Act of 2007 (EISA 2007), Public Law No. 110-40, subsequently amended these EPCA provisions in two ways pertinent here. First, EISA 2007 prescribed efficiency standards for dehumidifiers manufactured on or after October 1, 2012 and removed the requirement for a rulemaking to amend the EPCA standards for this product. Second, EISA 2007 prescribed maximum energy and water use levels for residential dishwashers manufactured on or after January 1, 2010, and required completion of a final rule no later than January 1, 2015 to consider amendment of these dishwasher standards. 73 FR 62034, 62038-40 (Oct. 17, 2008). (EISA 2007, section 311(a)(1)-(2); 42 U.S.C. 6295(g)(10) and (cc)) DOE notes that although EISA 2007 did not formally remove the requirement to conduct the current rulemaking, the statutory standards for dishwashers are to become effective well before the effective date of any amended standards that would have arisen from the present rulemaking. Consequently, DOE has not conducted further analysis in this rulemaking of standards for dehumidifiers and residential dishwashers. 73 FR 62034, 62040 (Oct. 17, 2008). Instead, DOE has incorporated into its regulations all of the energy conservation standards prescribed by EISA 2007 for various products and equipment, including those for dehumidifiers and residential dishwashers, in a separate rulemaking notice. 74 FR 12058 (March 23, 2009).

2. The Standard Levels for the Energy Efficiency of Residential Cooking Products

Pursuant to EPCA, any amended energy conservation standard that DOE prescribes for cooking products

1

or commercial clothes washers (collectively referred to in this final rule as “the two appliance products”) 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, the new standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 6316(a)) In today's final rule, DOE has decided to adopt amended energy conservation standards pertaining to the cooking efficiency of residential gas kitchen ranges and ovens pursuant to these criteria. Today's final rule requires that residential gas kitchen ranges and ovens without an electrical supply cord manufactured after April 9, 2012 must not be equipped with a constant burning pilot light. DOE has decided not to adopt energy conservation standards pertaining to the cooking efficiency of residential electric kitchen ranges and ovens and microwave ovens. As explained in further detail below, no cooking efficiency standards for these products were found to be technologically feasible and economically justified.

1

The term “cooking products” as used in this notice refers to residential electric and gas kitchen ranges and ovens, including microwave ovens.

3. Further Rulemaking for Commercial Clothes Washers and Microwave Ovens

DOE has decided to defer its decision regarding whether to adopt amended energy conservation standards for the energy efficiency of commercial clothes washers (CCWs) and for the standby mode and off mode power consumption of microwave ovens, pending further rulemaking. The reasons for DOE's decision are summarized below.

In the October 2008 NOPR, DOE tentatively concluded for CCWs that a standard of 1.76 modified energy factor (MEF) and 8.3 water consumption factor (WF) for top-loading CCWs and a standard of 2.0 MEF and 5.5 WF for front-loading CCWs are technologically feasible and economically justified. 73 FR 62034, 62036 (Oct. 17, 2008). As

discussed in more detail in section II.B.3, DOE received comments on the October 2008 NOPR that questioned the validity of the maximum technologically feasible (max-tech) level that was used in the analysis of top-loading CCWs. DOE has concluded that additional information is required to verify whether the max-tech level specified in the NOPR is appropriate.

Likewise, the October 2008 NOPR tentatively concluded that a standard for microwave oven standby mode and off mode energy consumption would be technologically feasible and economically justified. Therefore, concurrent with the standards NOPR, DOE published in the

Federal Register

a test procedure NOPR for microwave ovens to provide for the measurement of standby mode and off mode power consumption by these products. 73 FR 61134 (Oct. 17, 2008). As discussed in section II.B.3, DOE received comments on the October 2008 NOPR that objected to certain definitions that were included in the proposed microwave oven test procedure amendments. The commenters supported the incorporation of definitions provided in a revision of an industry standard for measuring standby power consumption expected to be completed later this year. DOE has concluded that it should defer consideration of microwave oven energy conservation standards until the revised industry standard becomes available for consideration in the microwave oven test procedure amendments.

DOE intends to complete the rulemaking process for these products and equipment as expected once additional key data and information become available, keeping in mind the relevant statutory deadlines. As discussed in the October 2008 NOPR, 73 FR 62034, 62041 (Oct. 17, 2008), the EISA 2007 amendments to EPCA require DOE to amend the ranges and ovens and microwave oven test procedure to incorporate standby and off mode energy consumption no later than March 31, 2011. (42 U.S.C. 6295(gg)(2)(B)(vi)) For CCWs, EPCA requires that DOE issue a final rule by January 1, 2010, to determine whether the existing energy conservation standards should be amended. (42 U.S.C. 6313(e)(2)(A))

B. Current Federal Standards

DOE established the current energy conservation standards for dishwashers manufactured on or after May 14, 1994, in a final rule published in the

Federal Register

on May 14, 1991 (56 FR 22250). These standards include a requirement that the energy factor (EF) of a standard-size dishwasher must not be less than 0.46 cycles per kilowatt-hour (kWh) and that the EF of a compact-size dishwasher must not be less than 0.62 cycles per kWh. (10 CFR 430.32(f)) Section 311(a)(2) of EISA 2007 established maximum energy and water use levels for dishwashers manufactured on or after January 1, 2010. (42 U.S.C. 6295(g)(10)) Under the amended statute, a standard-size dishwasher shall not exceed 355 kWh/year and 6.5 gallons of water per cycle, and a compact-size dishwasher shall not exceed 260 kWh/year and 4.5 gallons of water per cycle.

EPCA, as amended by the Energy Policy Act of 2005 (EPACT 2005), Public Law 109-58, prescribes the current energy conservation standard for dehumidifiers, shown in Table I.1. (42 U.S.C. 6295(cc)(1); 10 CFR 430.32(v)) Section 311(a)(1) of EISA 2007 amended EPCA to prescribe minimum efficiency levels for dehumidifiers manufactured on or after October 1, 2012. (42 U.S.C. 6295(cc)(2))

Table I.1—Federal Standards for Residential Dehumidifiers

EPACT 2005 standards effective October 1, 2007

Dehumidifier capacity

pints/day

EF

liters/kWh

EISA 2007 standards effective October 1, 2012

Dehumidifier capacity

pints/day

EF

liters/kWh

25.00 or less

1.00

Up to 35.00

1.35

25.01-35.00

1.20

35.01-45.00

1.50

35.01-54.00

1.30

45.01-54.00

1.60

54.01-74.99

1.50

54.01-75.00

1.70

75.00 or more

2.25

Greater than 75.00

2.5

EPCA prescribes the current energy conservation standard for cooking products, which includes a requirement that gas ranges and ovens with an electrical supply cord that are manufactured on or after January 1, 1990, not be equipped with a constant burning pilot light. (42 U.S.C. 6295(h)(1); 10 CFR 430.32(j)) Currently, no mandatory Federal energy conservation standards exist for conventional electric ranges and ovens or for microwave ovens.

EPCA also prescribes standards for CCWs manufactured on or after January 1, 2007, requiring that CCWs have an MEF of at least 1.26 and a WF of not more than 9.5. (42 U.S.C. 6313(e)(1); 10 CFR 431.156)

C. Benefits and Burdens to Purchasers of Cooking Products

In the October 2008 NOPR, DOE considered the impacts on consumers of several trial standard levels (TSLs) related to the cooking efficiency of conventional cooking products and microwave ovens. 73 FR 62034, 62037, 62084-90 (Oct. 17, 2008). In the October 2008 NOPR, DOE tentatively concluded that none of the TSLs for microwave oven cooking efficiency were economically justified. 73 FR 62034, 62119 (Oct. 17, 2008). DOE has reached the same conclusion in today's final rule. Therefore, at this time, DOE is not adopting standards for microwave oven cooking efficiency (EF), so there will be no positive or negative impacts on purchasers of these products.

Also in the October 2008 NOPR, DOE determined that at TSL 1, the economic impacts (

i.e.,

the average life-cycle cost (LCC) savings) on consumers of the proposed standards for conventional cooking products would be positive. (TSL 1 prohibits constant burning pilots for gas appliances but does not change standards for the other product classes.) DOE has reached the same conclusion in today's final rule. Table I.2 presents the impacts on consumers of the energy conservation standards adopted in today's final rule.

Table I.2—Implications of Amended Standards for Consumers

Gas cooktops

Gas standard ovens

New average installed cost

$332

$464.

Estimated installed cost increase

$22

$34.

Lifetime operating cost savings

$37

$43.

Average payback period

3.3 years

7.0 years.

The typical baseline gas cooktop has an installed price of $310 and an average lifetime operating cost of $561, resulting in a total life-cycle cost of $871. To meet the new standards, DOE estimates that the installed price of this product will be $332, an increase of $22. This price increase will be offset by lifetime operating cost savings of $37, resulting in life-cycle cost savings of $15. For gas standard ovens, the typical baseline product has an installed price of $430 and an annual average lifetime operating cost of $406, resulting in a total life-cycle cost of $836. To meet the new standards, DOE estimates that the installed price of this product will be $464, an increase of $34. This price increase will be offset by lifetime operating cost savings of $43, resulting in life-cycle cost savings of $9.

For the subgroup of consumers who do not have access to the electrical grid or whose religious and cultural practices prohibit the use of grid electricity, the amended standards would require use of technologies (

e.g.,

a battery-powered spark-ignition device) that have not yet been certified to meet applicable safety standards. See 42 U.S.C. 6295(o)(2)(B)(i)(VII) and 10 CFR part 430, subpart C, appendix A, sections 4(a)(4)(i) and (iv), and 5(b)(1) and (4). (See sections III.C.2 and VI.D.2 of this notice for further discussion.) Based on its research, DOE expects that certification of such technologies under applicable safety standards will likely be completed when these standards become effective.

D. Impact on Manufacturers

Using a real corporate discount rate of 7.2 percent, DOE estimates the industry net present value (INPV) in 2006$ of the gas cooktop, gas oven, and microwave oven industries to be $288 million, $469 million, and $1.46 billion, respectively, in the absence of new or amended standards. DOE estimates the impact of the cooking efficiency standards adopted in today's final rule on the INPV of manufacturers of these products to be between a 1.73-percent loss and a 4.11-percent loss (−$5 million to −$12 million) for gas cooktop manufacturers and between a 1.56-percent loss and a 2.10-percent loss (−$7 million to −$10 million) for gas oven manufacturers. Because DOE is not adopting standards for cooking efficiency of conventional electric cooking products or microwave ovens (and because consideration of a standby mode and off mode standard for microwave ovens has been deferred), this final rule will have no net impact on manufacturers of these products.

Based on DOE's interviews with manufacturers of cooking products and on comments received on the October 2008 NOPR, DOE determined that two small businesses that manufacture gas cooking products could be disproportionately affected by standards. (See section VII.B of this notice for further discussion.)

E. National Benefits

DOE estimates the standards will save approximately 0.14 quads (quadrillion (10

15

) British thermal units (BTU)) of energy over 30 years (2012-2042). This is equivalent to 2.9 days of U.S. gasoline use.

By 2042, DOE expects the energy savings from the standards to eliminate the need for approximately 62 megawatts (MW) of generating capacity.

2

These energy savings will result in cumulative (undiscounted) greenhouse gas emission reductions of approximately 13.7 million tons (Mt) of carbon dioxide (CO

2

). Based on a methodology developed during 2008, these emission reductions were estimated to represent domestic benefits of $0 to $109 million using a 7-percent discount rate and $0 to $241 million using a 3-percent discount rate, cumulative from 2012 to 2042 in 2007$. The methodology used to develop these estimates is now under review.

2

Because the amended standards affect solely residential gas consumption, the installed power plant generating capacity change represents only 0.005 percent of the total installed generating capacity forecasted for the year 2030. Therefore, both the installed capacity change and its associated emission reductions are negligible. Although effectively negligible, installed generation capacity and emission impacts are still reported in section VI of today's final rule for TSL 1 (the amended standards).

Additionally, the standards will help alleviate air pollution by resulting in approximately 6.1 kilotons (kt)) of nitrogen oxides (NO

X

) cumulative emission reductions at the sites where appliances are used from 2012 through 2042. In addition, the standards would result in power plant NO

X

emissions reductions of 0.6 kt from 2012 to 2042. The total NO

X

emissions reductions at these locations would be an amount equal to $0.7 to $7.3 million using a 7-percent discount rate and $1.5 to $15.4 million using a 3-percent discount rate, in 2006$. The standards would also possibly result in power plant mercury (Hg) emissions reductions of up to 0.15 tons (t) from 2012 to 2042, or an amount equal to $0 to $1.3 million using a 7-percent discount rate and $0 to $2.6 million using a 3-percent discount rate, in 2006$.

The national NPV of the standards is $254 million using a 7-percent discount rate and $706 million using a 3-percent discount rate, cumulative from 2012 to 2042 in 2006$. This is the estimated total value of future savings minus the estimated increased equipment costs, discounted to 2007.

The benefits and costs of today's final rule to the Nation can also be expressed in terms of annualized [2006$] values over the forecast period (2012 through 2042). Using a 7-percent discount rate for the annualized cost analysis, the cost of the standards established in today's final rule is $17 million per year in increased product and installation costs, while the annualized benefits are $37 million per year in reduced product operating costs. Using a 3-percent discount rate, the cost of the standards established in today's final rule is $28 million per year and the benefits are $85 million per year.

F. Conclusion

DOE has evaluated the benefits (energy savings, consumer LCC savings, positive national NPV, and emissions reductions) to the Nation of amended energy conservation standards for gas cooking products and of new cooking efficiency standards for conventional electric cooking products and microwave ovens, as well as the costs of such standards (loss of manufacturer INPV and consumer LCC increases for some users of the cooking products). Based on all available information, DOE has determined that the benefits to the

Nation of the standards for gas cooking products outweigh their costs. 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, gas cooking products that meet the amended standard levels are commercially available or, for the subgroup of consumers without access to the electrical grid or whose religious or cultural practices prohibit the use of grid electricity, are likely to be commercially available at the time the standards become effective.

II. Introduction

A. Authority

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

3

of Title III (42 U.S.C. 6291-6309) provides for the “Energy Conservation Program for Consumer Products Other Than Automobiles.” The program covers consumer products and certain commercial products (all of which are referred to hereafter as “covered products”), including electric and gas kitchen ranges and ovens. (42 U.S.C. 6292(10), 6295(h)) Part A-1

4

of Title III (42 U.S.C. 6311-6317) establishes a similar program for “Certain Industrial Equipment” (referred to hereafter as “covered equipment”), including commercial clothes washers. (42 U.S.C. 6312, 6313(e)) Part A of Title III provides for test procedures, labeling, and energy conservation standards for residential cooking products and certain other types of products, and it authorizes DOE to require information and reports from manufacturers.

3

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

4

This part was originally titled Part C. It was redesignated Part A-1 in the United States Code for editorial reasons.

The National Appliance Energy Conservation Act of 1987 (NAECA), Pub. L. 100-12, amended EPCA to establish prescriptive standards for cooking products. NAECA requires gas ranges and ovens with an electrical supply cord that are manufactured on or after January 1, 1990, not to be equipped with a constant burning pilot light, and requires DOE to conduct two cycles of rulemakings for ranges and ovens to determine if the standards established should be amended. (42 U.S.C. 6295(h)(1)-(2)) The test procedures for cooking products appear at 10 CFR part 430, subpart B, appendix I.

DOE is conducting the present rulemaking for cooking products pursuant to the authority set forth above. The following paragraphs discuss some of the key provisions of EPCA relevant to the standards-setting rulemaking.

EPCA provides criteria for prescribing new or amended standards for covered products. As indicated above, any new or amended standard for cooking products 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)) Additionally, DOE may not prescribe an amended or new standard if DOE determines by rule that such a 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))

EPCA also provides that in deciding whether such a standard is economically justified for covered products, 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 subject to the standard;

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

3. The total projected amount of energy savings likely to result directly from the imposition of the standard;

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

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

6. The need for national energy conservation; and

7. Other factors the Secretary of Energy (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.

EPCA also contains what is commonly known as an “anti-backsliding” provision. (42 U.S.C. 6295(o)(1) and 6316(a)) This provision mandates that the Secretary not prescribe any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. EPCA further provides that the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is “likely to result in the unavailability in the United States of any product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States 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 any type or class of covered product that has two or more subcategories. (42 U.S.C. 6295(q)(1) and 6316(a)) Under this provision, DOE must specify a different standard level than that which applies generally to such type or class of product for any group of products “which have the same function or intended use, if * * * products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether a performance-related feature justifies such a different standard for a group of products, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate. (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 standards for covered products generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c) and 6316(a)) DOE can, however, grant waivers of preemption for particular State laws or regulations, in accordance with the procedures and

other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d) and 6316(a))

B. Background

1. Current Standards

As described in greater detail in the October 2008 NOPR, 73 FR 62034, 62039-40 (Oct. 17, 2008), the current energy conservation standards in EPCA for dishwashers apply to all products manufactured on or after May 14, 1994 (10 CFR 430.32(f)); for dehumidifiers, to all products manufactured on or after October 1, 2007 (42 U.S.C. 6295(cc)(1); 10 CFR 430.32(v)); for cooking products, to all products manufactured on or after January 1, 1990, (42 U.S.C. 6295(h)(1); 10 CFR 430.32(j)); and for CCWs to all equipment manufactured on or after January 1, 2007 (42 U.S.C. 6313(e)(1); 10 CFR 431.156). In addition, EISA 2007 established standards for dishwashers manufactured on or after January 1, 2010 (42 U.S.C. 6295(g)(10)) and for dehumidifiers manufactured on or after October 1, 2012 (42 U.S.C. 6295(cc)(2)). These standards are discussed in section I.B.

2. History of Standards Rulemaking for the Two Appliance Products

As noted above, this rulemaking originally bundled four products (dishwashers, dehumidifiers, residential cooking products, and commercial clothes washers). However, during the course of this rulemaking, Congress set energy conservation standard levels by statute for dishwashers and dehumidifiers as part of EISA 2007. Accordingly, the regulatory history provided below focuses on the two remaining appliance products—residential cooking products and commercial clothes washers.

NAECA amended EPCA to establish the current prescriptive standard requiring gas ranges and ovens with an electrical supply cord not to be equipped with a constant burning pilot light. (42 U.S.C. 6295(h)(1)) In a rulemaking undertaken pursuant to EPCA (42 U.S.C. 6295(h)(2)), DOE issued a final rule in which it found that standards were not justified for electric cooking products and, partially due to the difficulty of conclusively demonstrating the economic impacts of standards for gas-fired ranges and ovens, did not include amended standards for gas-fired ranges and ovens in the final rule. 63 FR 48038 (Sept. 8, 1998).

Section 136(a) and (e) of the Energy Policy Act of 2005 (EPACT 2005), Public Law 109-58, amended EPCA to add CCWs as covered equipment, establish the current standards for such equipment, and require that DOE do two cycles of rulemakings to determine whether these standards should be amended. (42 U.S.C. 6311(1) and 6313(e)) DOE has incorporated these standards into its regulations. 70 FR 60407, 60416 (Oct. 18, 2005); 10 CFR 431.156.

DOE commenced this rulemaking on March 15, 2006, by publishing its framework document for the rulemaking, and then gave notice of a public meeting and of the availability of the document. 71 FR 15059 (March 27, 2006). The framework document described the approaches DOE anticipated using and issues to be resolved in the rulemaking. DOE held the public meeting on April 27, 2006, to present the contents of the framework document, describe the analyses DOE planned to conduct during the rulemaking, obtain public comment on these subjects, and facilitate the public's involvement in the rulemaking. DOE also allowed the submission of written statements after the public meeting. In response, DOE received 11 written statements.

On December 4, 2006, DOE posted two spreadsheet tools for this rulemaking on its Web site. The tools included calculation of the impacts of the candidate standard levels developed for the two appliance products. One tool calculates LCC and payback periods (PBPs); the other—the National Impact Analysis (NIA) Spreadsheet—calculates shipments, national energy savings (NES), and NPV.

On November 15, 2007, DOE published an advance notice of proposed rulemaking (ANOPR) in this proceeding. 72 FR 64432 (November 2007 ANOPR). In the November 2007 ANOPR, DOE described and sought comment on the analytical framework, models, and tools that DOE was using to analyze the impacts of energy conservation standards for the relevant appliance products. In addition, DOE published on its Web site the complete ANOPR technical support document (TSD), which included the results of DOE's preliminary analyses in this rulemaking. In the November 2007 ANOPR, DOE requested oral and written comments on these preliminary results and on a range of other issues, including the measurement of microwave oven standby power consumption and potential CCW product classes. DOE held a public meeting in Washington, DC, on December 13, 2007, to present the methodology and results of the ANOPR analyses, and to receive oral comments from those who attended. The oral and written comments DOE received focused on DOE's assumptions, approach, and analytical results, and were addressed in detail in the October 2008 NOPR.

In the October 2008 NOPR, DOE proposed new energy conservation standards for the two appliance products. 73 FR 62034, 62134 (Oct. 17, 2008). It also provided additional background information on the history of this rulemaking.

Id.

at 62040-41. In conjunction with the October 2008 NOPR, DOE also published on its Web site the complete TSD for the proposed rule, which incorporated the analyses DOE conducted and technical documentation for each analysis. The LCC spreadsheets, national impact analysis spreadsheets, Government Regulatory Impact Model (GRIM) spreadsheets, and regulatory impact analysis (RIA) spreadsheets are also available on DOE's Web site.

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The standards proposed for the two appliance products are presented in Table II.1.

5

Available online at DOE's Web site:

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

.

Table II.1—October 2008 Proposed Energy Efficiency Standards

Product class

Proposed energy conservation standards

Kitchen ranges and ovens:

Gas cooktops/conventional burners

No constant burning pilot lights.

Electric cooktops/low or high wattage open (coil) elements

No standard.

Electric cooktops/smooth elements

No standard.

Gas ovens/standard oven

No constant burning pilot lights.

Gas ovens/self-clean oven

No change to existing standard.

Electric ovens

No standard.

Microwave ovens

Maximum standby power = 1.0 watt.

Commercial clothes washers:

Top-loading commercial clothes washers

1.76 Modified Energy Factor/8.3 Water Factor.

Front-loading commercial clothes washers

2.00 Modified Energy Factor/5.5 Water Factor.

In the October 2008 NOPR, DOE discussed and invited comment specifically on the following topics: (1) The proposed standards for residential gas kitchen ranges and ovens, microwave ovens, and CCWs, as well as DOE's tentative conclusion that standards for residential electric kitchen ranges and ovens other than microwave ovens and gas self-cleaning ovens are not technologically feasible and economically justified; (2) whether battery-powered spark ignition modules are a viable alternative to standing pilots for manufacturers of gas ranges, ovens, and cooktops; (3) the technical feasibility of incorporating microwave oven cooking efficiency with standby mode and off mode power into a single metric for the purpose of developing energy conservation standards; (4) input and data regarding off mode power for microwave ovens; (5) input and data on the utility provided by specific features that contribute to microwave oven standby power, particularly display technologies and cooking sensors that do not require standby power; (6) input and data on control strategies available to allow manufacturers to make design tradeoffs between incorporating standby-power-consuming features such as displays or cooking sensors and including a function to turn power off to these components during standby mode, as well as on the viability and cost of microwave oven control board circuitry that could accommodate transistors to switch off cooking sensors and displays; (7) whether switching or similar modern power supplies can operate successfully inside a microwave oven and the associated efficiency impacts on standby power; (8) the selection of microwave oven standby standard levels for the engineering analysis; (9) input and data on the estimated incremental manufacturing costs, the assumed approaches to achieve each standby level for microwave ovens, and whether any intellectual property or patent infringement issues are associated with the design options presented in the TSD to achieve each standby level; (10) input and data on the estimated market share of microwave ovens at different standby power consumption levels; (11) the appropriateness of using other discount rates in addition to 7 percent and 3 percent real to discount future emissions reductions; and (12) the determination of the anticipated environmental impacts of the proposed rule, particularly with respect to the methods for valuing the expected carbon dioxide (CO

2

) and oxides of nitrogen (NO

X

) emissions savings due to the proposed standards. 73 FR 62034, 62133 (Oct. 17, 2008).

In addition to these topics on which it requested comment specifically, DOE addressed four topics in the October 2008 NOPR: (1) The determination of product classes for both cooking products and CCWs; (2) the adequacy of the residential clothes washer test procedure for CCWs; (3) small business impacts of the proposed cooking products standards; and (4) impacts of the proposed CCW standards on the competitive landscape.

DOE held a public meeting in Washington, DC, on November 13, 2008, to hear oral comments on and solicit information relevant to the proposed rule.

3. Further Rulemaking To Consider Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode Power Use and for Commercial Clothes Washers

Among the responses to the October 2008 NOPR, DOE received a number of comments from interested parties that presented information and arguments for continuing the rulemaking process to consider standards for microwave oven standby mode and off mode power consumption, as well as standards for CCWs. These comments and DOE's response are discussed below.

Regarding microwave oven standby mode and off mode power consumption, interested parties raised concerns over issues associated with the concurrent microwave oven test procedure rulemaking. As mentioned above and discussed in detail in section III.B of today's notice, DOE proposed to amend the microwave oven (MWO) test procedure to incorporate by reference specific clauses of International Electrotechnical Commission (IEC) Standard 62301,

Household electrical appliances—Measurement of standby power

. DOE would have adopted definitions for “standby mode” and “off mode” in accordance with the EISA 2007 amendments to EPCA. 73 FR 62134 (Oct. 17, 2008) (MWO test procedure NOPR).

The Association of Home Appliance Manufacturers (AHAM) raised concerns about the “robustness” of these proposed microwave oven test procedure amendments, and supported continuing the microwave oven energy conservation standards rulemaking to allow additional time for DOE to collect data and to clarify the test procedure. (AHAM, No. 47 at pp. 3 and 5)

6

Whirlpool Corporation (Whirlpool) stated that DOE could perform better data gathering and analysis for a microwave oven standby power standard if DOE used the entire time until the EISA 2007 deadline of March 31, 2011 for a test procedure amendment to incorporate measurement of standby mode and off mode power consumption. Whirlpool and GE Consumer & Industrial (GE) requested that DOE halt the current microwave oven energy conservation standards rulemaking and work with industry to gather and analyze more comprehensive energy performance data. (Whirlpool, No. 50 at pp. 1-2; GE, No. 48 at p. 2) GE further stated that DOE's approach to standby mode and off mode power consumption for microwave ovens could have important implications for other covered products, and that the microwave oven energy conservation standards rulemaking should be postponed to allow DOE to address standby power issues for covered products either through negotiation or through a rulemaking that considers how the definition of “standby power” will affect all appliances, not just microwave ovens. (GE, No. 48 at p. 4)

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A notation in the form “AHAM, No. 47 at pp. 3 and 5” identifies a written comment (1) made by AHAM; (2) recorded in document number 47 that is filed in the docket of this rulemaking (Docket No. EE-2006-STD-0127) and maintained in the Resource Room of the Building Technologies Program; and (3) which appears on pages 3 and 5 of document number 47.

AHAM raised four other concerns about the proposed microwave oven test procedure amendments: (1) Which microwave ovens are covered products; (2) the incorporation of the EPCA

definitions for “standby mode” and “off mode,” which AHAM claims are outdated; (3) the conditions for standby power testing; and (4) the test period for measuring standby power. AHAM stated that there is considerable confusion regarding the definition of microwave ovens as covered products. DOE stated in the microwave oven test procedure NOPR that the test procedure amendments would apply to microwave ovens for which the primary source of heating energy is electromagnetic (microwave) energy, including microwave ovens with or without browning thermal elements designed for surface browning of food. The proposed test procedure amendments would not cover combination ovens (

i.e.

, ovens consisting of a single compartment in which microwave energy and one or more other technologies, such as thermal or halogen cooking elements or convection systems, contribute to cooking the food). 73 FR 62134, 62137 (Oct. 17, 2008). AHAM stated that it had been working to set up negotiations on a microwave oven standby power standard, but that confusion caused by DOE's definition of microwave ovens required AHAM to cancel its efforts until the definition is clarified. (AHAM, No. 47 at p. 3) Whirlpool concurred that the definition of microwave ovens needs to be clarified. It claimed that DOE appears to be creating a new product definition without properly engaging interested parties. (Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29; Whirlpool, No. 50, at pp. 1-2)

7

7

A notation in the form “Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29” identifies an oral comment that DOE received during the November 13, 2008, NOPR public meeting, was recorded in the public meeting transcript in the docket for this rulemaking (Docket No. EE-2006-STD-0127), and is maintained in the Resource Room of the Building Technologies Program. This particular notation refers to a comment (1) made by Whirlpool during the public meeting; (2) recorded in document number 40.5, which is the public meeting transcript that is filed in the docket of this rulemaking; and (3) which appears on page 29 of document number 40.5.

The Appliance Standards Awareness Project (ASAP) commented that it appreciates DOE accelerating development of the microwave oven test procedure ahead of the EISA 2007 deadline of 2011 so that standby power savings can be captured in this round of rulemaking for cooking products. (ASAP, Public Meeting Transcript, No. 40.5 at p. 32)

Regarding definitions of “standby mode” and “off mode,” AHAM and Whirlpool recognize that DOE is using the definitions provided under the EISA 2007 amendments to EPCA, but stated that DOE should consider IEC's recent work in developing the second edition of IEC Standard 62301, particularly the clarifications of the definitions of “standby mode” and “off mode.” AHAM cited the case in which a microwave oven would be plugged in and only energize a light-emitting diode (LED) or some other indication that the unit is in “off mode.” AHAM commented that this would represent a different way for the product to communicate with the consumer that might not be covered under the proposed mode definitions. (AHAM, Public Meeting Transcript, No. 40.5 at pp. 58-60; Whirlpool, Public Meeting Transcript, No. 40.5 at pp. 60-61) In contrast, ASAP stated that the EISA 2007 language defining “standby mode” and “off mode” was reviewed and agreed to by AHAM, and jointly recommended by AHAM and efficiency advocates to Congress. Therefore, ASAP asserted that DOE has definitions that were recommended by interested parties. (ASAP, Public Meeting Transcript, No. 40.5 at p. 64)

In the November 2007 ANOPR, DOE proposed considering a single product class for microwave ovens, encompassing microwave ovens with and without browning (thermal) elements. This product class did not include microwave ovens that incorporate convection systems. DOE stated that it was unaware of any data evaluating the efficiency characteristics of microwave ovens incorporating convection systems, and sought comments and information that would help it evaluate the performance of such products. 72 FR 64432, 64445, 64513 (Nov. 15, 2007). AHAM commented in response that the single product class should be broken up into subcategories according to features that may be different than when the standard was first put into effect. 73 FR 62034, 62049 (Oct. 17, 2008). However, in the October 2008 NOPR, DOE concluded, based on data supplied by AHAM and its own testing, that no features or utilities were uniquely correlated with efficiency that would warrant defining multiple product classes for microwave ovens.

Id.

Therefore, for the purposes of the NOPR analyses, DOE retained a single product class for microwave ovens. No additional data or information was submitted in response to the October 2008 NOPR that would justify amending the definition of the microwave oven product class.

DOE agrees with commenters that it is beneficial to harmonize, where possible, its standards and test procedures with those of other countries and international agencies, particularly in the area of standby power. DOE recognizes that IEC Standard 62301 is an internationally accepted test standard for the measurement of standby power in residential appliances, and that it would be beneficial to many manufacturers to be required to meet only a single standby power standard because they produce microwave ovens for markets in multiple countries. In considering a standby power standard for microwave ovens, along with associated amendments to the microwave oven test procedure, DOE proposed to incorporate language for definitions of “active mode,” “standby mode,” and “off mode” as provided by the EISA 2007 amendments to EPCA. (42 U.S.C. 6295(gg)(1)(A)) However, in directing DOE to amend its test procedures to address standby and off mode power consumption, the EISA 2007 amendments to EPCA allow DOE to amend the EPCA definitions of these modes, while requiring that DOE take “into consideration the most current versions” of IEC Standard 62301 and IEC Standard 62087. (42 U.S.C. 6295(gg)(1)(B) and (2)(A)) In light of these statutory provisions and recognizing the benefits of harmonization, DOE has decided to continue this rulemaking, as to microwave oven standby power standards, until the second edition of IEC Standard 62301 is finalized, which is expected to occur by July 2009. At such time, DOE will consider further modifications to DOE's microwave oven test procedure, particularly the “standby mode” and “off mode” definitions, and, on the basis of such amended test procedures, DOE will analyze potential energy conservation standards for microwave oven standby mode and off mode energy consumption. DOE invites data and information that will allow it to further conduct the analysis for standby and off mode power consumption of microwave ovens. DOE anticipates issuing supplemental notices of proposed rulemaking (SNOPRs) for microwave oven energy conservation standards and the microwave oven test procedure in order to obtain public input on DOE's updated proposals. As part of such SNOPRs, DOE will carefully consider and address any microwave oven-related comments on the October 2008 NOPR that remain relevant.

For CCWs, interested parties raised questions at the November 13, 2008, NOPR public meeting and in written comments on the max-tech level that DOE had identified in the October 2008 NOPR for top-loading units. (See section III.C.3 of this notice for additional discussion of max-tech levels.)

Specifically, at the public meeting, Alliance Laundry Systems (Alliance) questioned the validity of the certification data for the CCW model on which DOE based the max-tech level for top-loading machines. Alliance recommended that DOE, at a minimum, test and confirm the performance of the max-tech model before using it as the basis for assessing technical feasibility for the proposed standards. (Alliance, Public Meeting Transcript, No. 40.5 at pp. 90-92) GE responded that it produces the model in question, and its internal testing confirms that the model meets the max-tech level. (GE, No. 48 at pp. 4-5) GE and Alliance agreed that there would not be consumer acceptance of the technology required to achieve the max-tech level (

i.e.,

whether CCWs incorporating advanced controls in a lightweight, non-rugged platform would be able to withstand the harsher usage in a laundromat or multi-family housing setting compared to a residential installation). (GE, Public Meeting Transcript, No. 40.5 at pp. 173-174; Alliance, Public Meeting Transcript, No. 40.5 at p. 23; Alliance, No. 45 at p. 1; Alliance, No. 45.1 at pp. 3, 7, 13) GE stated that it had received anecdotal consumer questions on the water levels and clothing turnover (

i.e.,

rotation of the clothing from top to bottom in the wash basket) during the cycle utilized by its CCW that meets the top-loading max-tech level. According to GE, while this CCW has achieved the max-tech level during actual use in the on-premises laundry segment,

8

it has not yet been justified as sustainable in commercial laundromats where the units are subject to much tougher conditions, such as overloading. (GE, No. 48 at p. 4)

8

This segment refers to commercial clothes washers that are installed in multi-family housing.

The Multi-Housing Laundry Association (MLA) commented that there is no acceptable CCW currently that can meet the top-loading max-tech level presented in the October 2008 NOPR. According to MLA, previous non-agitator CCWs that could achieve max-tech performance have had poor load capacity, poor wash results, and high maintenance costs. MLA believes that the only way to meet the max-tech requirements would be to have either a cold water wash or such limited amounts of hot water that the clothes would not be effectively cleaned. According to MLA, to meet the max-tech requirements, water in the rinse cycle would be so limited that some soils, detergents, and sand would not be removed. (MLA, No. 49 at p. 4) ASAP stated that DOE's conclusion in the TSD on the max-tech model (

i.e.,

that all higher-efficiency residential clothes washers are impeller-type or do not have traditional agitators) is erroneous, commenting that there are agitator-type residential clothes washers on the market today that perform at higher levels than the CCW max-tech level that DOE has presented in the October 2008 NOPR. (ASAP, Public Meeting Transcript, No. 40.5 at p. 203) Whirlpool commented that the max-tech level cannot be achieved with the technologies implemented on current CCW models, but it believes that technology exists to develop such products by the time standards would become effective. (Whirlpool, No. 50 at p. 3)

EPCA requires DOE to consider the max-tech level in the analysis of efficiency levels for CCW energy conservation standards. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) In the NOPR analysis, DOE determined that the max-tech level for top-loading CCWs, which was analyzed as part of TSL 3, is technologically feasible and economically justified. 73 FR 62034, 62122 (Oct. 17, 2008). However, the comments submitted by Alliance in response to the October 2008 NOPR raised questions on the validity of the max-tech level. (Alliance, Public Meeting Transcript, No. 40.5 at pp. 90-92; Alliance, No. 45 at p. 1; Alliance, No. 45.1 at pp. 4-5) In light of this uncertainty surrounding the performance of the CCW model upon which the top-loading max-tech level was based, DOE tested several units of that model. Preliminary results indicate that the MEF and WF of these units are below and above, respectively, the max-tech levels. Therefore, DOE has decided that it will continue the CCW rulemaking to further evaluate what an appropriate max-tech level should be for top-loading CCWs, and it will revise its analyses for this product class as necessary. DOE anticipates issuing an SNOPR to obtain public input on DOE's updated proposal regarding CCW standards. As part of such SNOPR, DOE will carefully consider and address any CCW-related comments on the October 2008 NOPR that remain relevant.

III. General Discussion

A. Standby Power for Cooking Products

An issue in this rulemaking has been whether DOE should consider power use in the standby and off modes in adopting energy conservation standards for cooking products. As discussed in greater detail in the October 2008 NOPR,

9

EISA 2007 amended EPCA to require that DOE address standby mode and off mode energy consumption both in adopting standards for all covered products (for final rules for new or amended standards adopted after July 1, 2010), including residential ranges and ovens and microwave ovens, and in test procedures for covered products (by March 31, 2011, for cooking products). (42 U.S.C. 6295(gg)) As noted above, these provisions are not yet operative as requirements for residential cooking products.

Id.

9

73 FR 62034, 62041 (Oct. 17, 2008).

Nonetheless, DOE has examined in this rulemaking whether to incorporate standby mode and off mode power consumption in its energy conservation standards for residential cooking products. 73 FR 62034, 62041 (Oct. 17, 2008). Specifically, in the October 2008 NOPR, DOE stated that it does not intend to pursue revision of its standards and test procedures to include standby power use by conventional cooking products at this time, because it lacks data indicating the potential for significant energy savings with respect to such power use.

Id.

at 62041, 62044. Accordingly, DOE tentatively decided to consider test procedure amendments for conventional cooking products in a later rulemaking that meets the March 31, 2011, deadline set by EISA 2007 under 42 U.S.C. 6295(gg)(2)(B). 73 FR 62034, 62041, 62044 (Oct. 17, 2008).

However, DOE did state its intention in the October 2008 NOPR to amend its test procedure for microwave ovens to incorporate a measurement of standby power and to consider inclusion of such power as part of the energy conservation standards rulemaking for the following reasons: (1) Energy use in this mode is a significant proportion of microwave oven energy consumption; and (2) currently, the range of standby power use among microwave ovens suggests that a standard would result in significant energy savings.

Id.

at 62041-42. As already discussed in sections II.B.2 and II.B.3, DOE proposed standards for microwave oven standby power use.

Id.

at 62120, 62134.

In response to the October 2008 NOPR, Whirlpool stated that no test procedure has yet been proposed for conventional cooking product standby power, and that Whirlpool does not have experience with or data available on standby power in these products. It further stated that DOE should request such data promptly to allow adequate time to develop it, noting that display technologies will be an issue. (Whirlpool, Public Meeting Transcript, No. 40.5 at p. 30) DOE expects to

evaluate standby power for conventional cooking products in a future test procedure rulemaking that will meet the EPCA deadline of March 31, 2011, set forth in 42 U.S.C. 6295(gg)(2)(B). 73 FR 62034, 62041 (Oct. 17, 2008). DOE welcomes relevant data to support this rulemaking activity.

Edison Electric Institute (EEI) commented that standby power could effectively be addressed in gas cooking products with constant burning pilots by a performance standard for the energy consumption of the pilot, rather than by a prescriptive standard that would eliminate constant burning pilots altogether. EEI argued that even though energy savings would be reduced using this approach, such savings could still be fairly significant, and manufacturers would have more flexibility in meeting the energy conservation standards. (EEI, Public Meeting Transcript, No. 40.5 at pp. 19-20 and 50-51; EEI, No. 56 at p. 2)

In response, DOE notes as a preliminary matter that it considered EEI's suggestion of reduced input rate pilots as a technology option separately in section IV.A.2. The following responds to EEI's suggestion to consider an energy conservation standard for standby power consumption of ranges and ovens by regulating the performance of constant burning pilots. For standby power in conventional cooking products, the current DOE test procedures already provide a means for measurement of certain standby energy use (

i.e.,

pilot gas consumption in gas cooking products and clock energy consumption in ovens), which is included in the relevant EF metric. However, as explained above, to measure additional standby mode and off mode energy use as directed by EISA 2007, DOE would need to amend the test procedure to provide for more comprehensive measurement of standby mode and off mode power consumption. As discussed above, DOE is not contemplating revision of its standards and test procedures to address standby power use for conventional cooking products at this time. DOE plans to consider such revisions to the test procedure in a later rulemaking which meets the EPCA deadline of March 31, 2011. (42 U.S.C. 6295(gg)(2)(B)(vi)). DOE will also consider standby mode and off mode energy use in its next energy conservation standards rulemaking, as required by the EISA 2007 amendments to EPCA. (42 U.S.C. 6295(gg)(3)).

Further, even if DOE were to implement in this rulemaking the requirements of the EISA 2007 amendments to EPCA regarding standby mode and off mode energy use to conventional cooking products, DOE would be unable to prescribe a separate standard for pilot energy consumption in gas cooking products. The EISA 2007 amendments require that any final rule establishing or revising a standard for a covered product, adopted after July 1, 2010, shall incorporate standby mode and off mode energy use into a single amended or new standard, if feasible. If not feasible, the final rule shall establish a separate standard for standby mode and off mode energy consumption, if justified under 42 U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) Because gas cooking product EF already incorporates gas consumption of the pilot by means of the calculation of annual energy consumption (10 CFR 430.23(i) and 10 CFR part 430, subpart B, appendix I, sections 4.1.2 and 4.2.2), the feasibility of a single metric integrating both active mode and standby mode energy use has clearly been demonstrated. AHAM stated that it strongly advocates, for products other than microwave ovens, that standby power be incorporated in active energy standards as directed by EISA 2007. (AHAM, No. 47 at p. 4) DOE expects to address standby mode and off mode power consumption in future test procedure and standards rulemakings for products other than microwave ovens in accordance with the requirements of the EISA 2007 amendments to EPCA. At such time, DOE will determine whether standby mode and off mode energy use can be incorporated into a new or amended energy conservation standard as directed by 42 U.S.C. 6295(gg)(3).

For microwave ovens, DOE separately considered whether it is feasible to incorporate standby mode and off mode energy use into a single metric. DOE tentatively concluded in the October 2008 NOPR that although it may be mathematically possible to combine energy consumption into a single metric encompassing active (cooking), standby, and off modes, it is not technically feasible to do so at this time because of the high variability in the current cooking efficiency measurement from which the active mode EF and annual energy consumption are derived, and because of the significant contribution of standby power to overall microwave oven energy use. 73 FR 62034, 62042-43 (Oct. 17, 2008). AHAM, Whirlpool, ASAP, and EEI individually, as well as ASAP, American Council for an Energy-Efficient Economy (ACEEE), American Rivers (AR), Natural Resources Defense Council (NRDC), Northeast Energy Efficiency Partnerships (NEEP), Northwest Power and Conservation Council (NPCC), Southern California Gas Company (SCG), San Diego Gas and Electric Company (SDG&E), Southern California Edison (SCE), and Earthjustice (EJ) jointly (hereafter “Joint Comment”) supported the determination that a combined energy metric for microwave ovens is technically infeasible. (AHAM, Public Meeting Transcript, No. 40.5 at pp. 27 and 54-55; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29; ASAP, Public Meeting Transcript, No. 40.5 at p. 53; EEI, Public Meeting Transcript, No. 40.5 at p. 55; Whirlpool, No. 50 at p. 4; AHAM, No. 47 at p. 4; Joint Comment, No. 44 at p. 10)

Giving consideration to its previous findings and this general support from interested parties, DOE expects to maintain the approach, consistent with its preliminary determination, that a separate standby mode and off mode energy use metric should be developed in the continuation of the microwave oven energy conservation standards rulemaking, as discussed in section II.B.3 of this notice.

B. Test Procedures

For the reasons set forth in the October 2008 NOPR, DOE is not pursuing modification of its test procedures for cooking products in conjunction with this rulemaking, other than an amendment to address the standby power consumption of microwave ovens. 73 FR 62034, 62043-44 (Oct. 17, 2008). As to the latter, DOE published an MWO test procedure NOPR in which it proposed (1) to incorporate by reference into its microwave oven test procedure specific clauses from IEC Standard 62301 as to methods for measuring average standby mode and average off mode power consumption; (2) to incorporate into that test procedure pertinent definitions that are set forth in EISA 2007 amendments to EPCA; and (3) to adopt language to clarify the application of certain of the clauses that DOE proposes to incorporate by reference from IEC Standard 62301. 73 FR 62134 (Oct. 17, 2008). In the MWO test procedure NOPR, DOE also proposed a technical correction to an equation in the existing microwave oven test procedure, which concerns energy use in the active mode.

Id

. at 62137, 62141-42.

Largely because of the issues surrounding the MWO test procedure, DOE is continuing the energy conservation standards rulemaking for microwave oven standby mode and off mode power consumption. Therefore, DOE is also continuing to consider microwave oven test procedure amendments that would reflect clarified and expanded definitions of “standby

mode” and “off mode” power, which are expected to be incorporated in the second edition of IEC Standard 62301.

C. Technological Feasibility

1. General

As stated above, any standards that DOE establishes for cooking products must be technologically feasible. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B)) 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).

This final rule considers the same design options as those evaluated in the October 2008 NOPR. (See the final rule TSD accompanying this notice, chapters 3 and 4.) All the evaluated technologies have been used (or are being used) in commercially available products or working prototypes. DOE also has determined that there are products either on 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 notice are technologically feasible.

2. Gas Cooking Products—Alternatives to Line-Powered Electronic Ignition Systems

For gas cooking products, TSL 1 corresponds to the replacement of baseline constant burning (standing) pilots with electronic ignition systems. Line-powered electronic ignition systems are incorporated into many gas cooking products currently on the market, and, thus, this prescriptive standard is clearly technologically feasible. For the consumer subgroup consisting of households without access to electricity, however, TSL 1 would require a battery-powered ignition system. In the October 2008 NOPR, DOE stated that DOE research suggests that battery-powered ignition systems could be incorporated by manufacturers at a modest cost if manufacturers' market research suggested that a substantial number of consumers found such a product attribute to be important. DOE noted that such systems have been incorporated successfully in a range of related appliances, such as instantaneous water heaters. Further, DOE stated it believed that there is nothing in the applicable safety standards that would prohibit such ignition systems from being implemented on gas cooking products. Therefore, DOE stated in the October 2008 NOPR that households that use gas for cooking and are without electricity would likely have technological options that would enable them to continue to use gas cooking if standing pilot ignition systems were eliminated. 73 FR 62034, 62048, 62075, 62130 (Oct. 17, 2008). Numerous interested parties objected to DOE's tentative conclusion for the following reasons.

Safety

. AHAM, Whirlpool, and GE commented that DOE did not address potential safety concerns of eliminating standing pilots, and expressed concern that battery-powered ignition systems would not meet the applicable safety standard, American National Standards Institute (ANSI) Standard Z21.1, “American National Standard for Household Cooking Gas Appliances” (ANSI Z21.1). (AHAM, Public Meeting Transcript, No. 40.5 at pp. 15-16, 48-49; AHAM, No. 47 at p. 2; Whirlpool, No. 50 at p. 4; GE, No. 48 at p. 2) AHAM believes that ANSI Z21.1 would need to be revised to incorporate battery-powered ignition systems for unattended units (

i.e.

, gas ovens), and this would not likely take place before the proposed 2012 effective date of potential standards. (AHAM, No. 47 at p. 2 and p. 4)

The American Gas Association (AGA) and AHAM commented that battery-powered ignition systems are not viable on a residential range because of cost and safety, particularly regarding the need for battery replacement. If a battery is not readily available, these commenters argued that consumers may attempt to light the range with a match or use an extension cord. Furthermore, these commenters suggested that if battery-powered ignition systems are not on the market, the reason may be economics. AGA recommended that DOE use caution before determining viability of such systems. (AGA, Public Meeting Transcript, No. 40.5 at pp. 44-45; AHAM, No. 47 at p. 4) Whirlpool noted that battery-powered ignition systems are subject to failure when the battery is weak or dead, and that the consumer cannot determine battery status. According to Whirlpool, using matches as a backup for ignition is unsafe and would also lead to making matches more accessible to small children. (Whirlpool, No. 50 at p. 4) U.S. Representatives Joseph Pitts and Bill Shuster (Pitts and Shuster) also commented that a safety concern exists if a consumer tries to light a range with matches when the batteries in the ignition system are dead. (Pitts and Shuster, No. 57 at p. 2) Whirlpool, AHAM, and GE expressed concern about the viability of using ignition systems typically designed for outdoor grills in an indoor application, primarily for reasons of potential gas leakage and reliability. (Whirlpool, No. 50 at p. 4; AHAM, No. 47 at p. 4; AHAM, Public Meeting Transcript, No. 40.5 at p. 49; GE, No. 48 at p. 2) Whirlpool stated that, in outdoor applications such as grills, air movement would likely disperse gas if the unit failed to ignite. However, in indoor applications, dispersion is unlikely, thereby resulting in an elevated threat of explosion or suffocation. (Whirlpool, No. 50 at p. 4) Sempra Utilities (Sempra) agreed with AGA about potential safety issues, particularly for low-income consumers. (Sempra, Public Meeting Transcript, No. 40.5 at p. 46) Pacific Gas and Electric (PG&E) responded to Sempra's comment by stating that although DOE cannot compromise safety in considering battery-powered ignition systems, frequently initial cost is weighted too much relative to operating cost. (PG&E, Public Meeting Transcript, No. 40.5 at p. 47) DOE understands PG&E's comment to mean that, even for low-income consumers, a higher cost for a safe, reliable battery-powered ignition system may be economically justified. GE stated there are currently no proven safe, reliable alternative to standing pilots, and until such time as a proven alternative exists, standing pilots should be retained. (GE, No. 48 at pp. 1-2)

Commercial Availability

. AGA and Sempra questioned whether battery-powered ignition systems have been applied to other residential products, such as instantaneous water heaters or furnaces. AGA, Pitts and Shuster, and the National Propane Gas Association (NPGA) recognized that there are recreational vehicle (RV) water heaters and furnaces which use a 12-volt (V) battery ignition system, but they believe this specialty application would be difficult to apply to a domestic range due to cost, safety certification, and other issues. (AGA, Public Meeting Transcript, No. 40.5 at pp. 18, 44, and 93; Sempra, Public Meeting Transcript, No. 40.5 at p. 46; NPGA, No. 52 at p. 2; AGA, No. 46 at p. 2; Pitts and Shuster, No. 57 at p. 2)

EEI asked if there are battery-powered ignition systems in any commercially available indoor gas cooking products on the market. (EEI, Public Meeting Transcript, No. 40.5 at p. 43) AGA and NPGA stated that there are currently no design-certified and listed household products available that incorporate battery-powered ignition systems. According to AGA and NPGA, any presumption that such systems could be incorporated into covered products

raises a host of uncertainties regarding safety, certification, and other issues, and, therefore, goes beyond the scope of this rulemaking. (AGA, No. 46 at p. 2; NPGA, No. 52 at p. 2) Pitts and Shuster commented that battery-powered ignitions systems are not currently on the market because they are not cost effective. (Pitts and Shuster, No. 57 at p. 2) AHAM and GE do not see that there are any other viable technologies to eliminate standing pilots. (AHAM, Public Meeting Transcript, No. 40.5 at p. 48; GE, No. 48 at p. 2) LG Electronics (LG) asked whether DOE considered technologies and products available in other parts of the world. (LG, Public Meeting Transcript, No. 40.5 at p. 47)

Households Without Electricity

. GE and Peerless-Premier Appliance Company (Peerless-Premier) stated that standing pilots provide consumer utility for customers without line power for economic, religious, or other reasons. (GE, Public Meeting Transcript, No. 40.5 at p. 31; GE, No. 48 at p. 2; Peerless Letter, No. 57

10

at pp. 1-2) AGA and NPGA also questioned DOE's assertion that consumer subgroups that are prohibited from using electricity would be allowed to use battery-powered ignition. (AGA, No. 46 at p. 2; NPGA, No. 52 at p. 2)

10

In addition to its comments submitted to DOE, entered into the docket as comment number 42, Peerless-Premier Appliance Co. submitted a letter (Peerless Letter) to Congressman Whitfield of Kentucky regarding the October 2008 NOPR. A copy of the letter was entered into the docket as comment number 55 for this rulemaking in addition to comments that Peerless-Premier submitted directly to DOE.

DOE Response to Comments

. In response to these comments, DOE conducted additional research on battery-powered ignition systems for residential gas cooking products. As an initial matter, DOE could not identify any indoor ranges incorporating such ignition systems that are on the market in the United States. DOE was able to identify a single gas range for sale in the United Kingdom (U.K.) that incorporates a battery-powered ignition system that appeared to meet the functional safety requirements of ANSI Z21.1 (

i.e.

, that the oven main burner is lit by an intermittent gas pilot that is in turn lit by a battery-powered spark igniter.) This ignition system does not require the user to push a separate “light” button at the same time as the control knob is turned to allow pilot gas flow. Such a separate operation would be prohibited under ANSI Z21.1. However, further DOE research determined that the ignition system does not include a safety device to shut off the main gas valve in the event that no flame is detected, which is required by the ANSI standard.

However, as noted from interested parties' comments, there are gas cooking products with battery-powered ignition for RV applications that are available in the United States. DOE determined that the sections in the ANSI safety standards for RV gas cooking products and residential gas cooking products that relate to the ignition system are equivalent. Thus, it could be inferred that a battery-powered ignition system designed for an RV gas range could be integrated into a residential gas range that could meet ANSI Z21.1 requirements. Such certification, though, does not appear to have been obtained thus far. In addition, these ignition systems are powered by 12 V automotive-type batteries and consume enough energy during operation to preclude the use of typical household-scale batteries, such a 1.5 V “AA” or 9 V batteries. Since 12 V batteries must be periodically recharged, this approach would likely not be viable for consumers without household electricity.

DOE next investigated the possibility that battery-powered ignition systems used in other indoor residential appliances in the United States could meet the requirements of ANSI Z21.1, even though they are not currently being incorporated in gas cooking products. DOE identified several such appliances, including a remote-controlled gas fireplace and instantaneous gas water heaters. For these products, the battery-powered ignition systems are required to meet the same or equivalent component-level ANSI safety standards as are required for automatic ignition systems in gas cooking products. DOE contacted several manufacturers of gas cooking products, fireplaces, and instantaneous water heaters, as well as ignition component suppliers, to investigate the technological feasibility of integrating these existing battery-powered ignition systems into gas cooking products that would meet ANSI Z21.1. None of these manufacturers could identify insurmountable technological impediments to the development of such a product. Based on its research, DOE determined that the primary barrier to commercialization of battery-powered ignition systems in gas cooking products has been lack of market demand and economic justification rather than technological feasibility. Therefore, DOE concludes that a gas range incorporating one of these ignition systems could meet ANSI Z21.1. In addition, DOE research suggests that the market niche for gas cooking products equipped with battery-powered ignition systems, which would be created by the proposed gas cooking product standards, would likely attract entrants among ignition component suppliers.

After considering issues regarding safety and commercial availability, DOE concludes that technologically feasible alternative ignition systems to standing pilots in gas cooking products for the small subgroup of households without electricity will likely be available at the time these energy conservation standards are effective. For more information, see chapter 3 of the TSD accompanying this notice.

3. Maximum Technologically Feasible Levels

As required by EPCA under 42 U.S.C. 6295(p)(2), in developing the October 2008 NOPR, DOE identified the design options that would increase the energy efficiency of cooking products. 73 FR 62034, 62045 (Oct. 17, 2008). (See chapter 5 of the NOPR TSD.) DOE did not receive any comments on the maximum technologically feasible levels in the October 2008 proposed rule that would lead DOE to consider changes to these levels. Therefore, for today's final rule, the max-tech levels for all cooking product classes are the max-tech levels identified in the October 2008 NOPR. These levels are provided in Table III.1 below.

Table III.1—October 2008 Proposed Max-Tech Levels for Cooking Products

Product

Max-Tech EF

Gas Cooktops

0.42

Electric Open (Coil) Cooktops

0.769

Electric Smooth Cooktops

0.753

Gas Standard Ovens

0.0583

Gas Self-Clean Ovens

0.0632

Electric Standard Ovens

0.1209

Electric Self-Clean Ovens

0.1123

Microwave Ovens

0.602

D. Energy Savings

DOE forecasted energy savings in its NES analysis through the use of an NES spreadsheet tool, as discussed in the October 2008 NOPR. 73 FR 62034, 62045-46, 62068-74, 62104-05 (Oct. 17, 2008).

One criterion that governs DOE's adoption of standards for cooking products is that the standard must result in “significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B)) While EPCA does not define the term “significant,” a U.S. Court of Appeals, 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 energy conservation standards at each of the TSLs considered for cooking products for today's rule indicate that the energy savings each would achieve are nontrivial. Therefore, DOE considers these savings “significant” within the meaning of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria

As noted earlier, EPCA provides seven factors to evaluate in determining whether an energy conservation standard for covered products is economically justified. (42 U.S.C. 6295(o)(2)(B)(i) The following sections discuss how DOE has addressed these factors in evaluating efficiency standards for cooking products.

a. Economic Impact on Consumers and Manufacturers

DOE considered the economic impact of potential standards on consumers and manufacturers of cooking products. 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.C of this notice and chapter 8 of the TSD accompanying this notice.) DOE investigated the impacts on manufacturers through the manufacturer impact analysis (MIA). (See sections IV.F and VI.C.2 of this notice and chapter 13 of the TSD accompanying this notice.) This factor is discussed in detail in the October 2008 NOPR. 73 FR 62034, 62046, 62057-68, 62075-81, 62085-104, 62128-30 (Oct. 17, 2008).

b. Life-Cycle Costs

DOE considered life-cycle costs of cooking products, as discussed in the October 2008 NOPR. 73 FR 62034, 62046, 62057-68, 62085-91 (Oct. 17, 2008). DOE calculated the sum of the purchase price and the operating expense—discounted over the lifetime of the product—to estimate the range in LCC benefits that consumers would expect to achieve due to standards.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA also requires DOE to consider the total projected energy savings that are expected to result directly from a proposed standard in determining the economic justification of that standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As in the October 2008 NOPR (73 FR 62034, 62045-46, 62068-74, 62104-05 (Oct. 17, 2008)), DOE used the NES spreadsheet results for today's final rule in its consideration of total projected savings that are directly attributable to the standard levels DOE considered.

d. Lessening of Utility or Performance of Products

In considering standard levels, DOE sought to avoid new standards for cooking products that would lessen the utility or performance of such products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) 73 FR 62034, 62046-47, 62107 (Oct. 17, 2008).

e. Impact of Any Lessening of Competition

DOE considers any lessening of competition that is likely to result from standards. Accordingly, as discussed in the October 2008 NOPR (73 FR 62034, 62047, 62107 (Oct. 17, 2008)), DOE requested that the Attorney General transmit to the Secretary a written determination of the impact, if any, of any lessening of competition likely to result from the standards proposed in the October 2008 NOPR, including those for cooking products, 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))

To assist the Attorney General in making such a determination, DOE provided the Department of Justice (DOJ) with copies of the October 2008 proposed rule and the TSD for review. The Attorney General's response is discussed in section VI.C.5 and is reprinted at the end of this rule. (DOJ, No. 53 at pp. 1-2)

f. Need of the Nation To Conserve Energy

In considering standards for cooking products, the Secretary must consider the need of the Nation to conserve energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary benefits of standards are likely to be reflected in improvements to the security and reliability of the Nation's energy system. Standards generally are also likely to result in environmental benefits. As discussed in the proposed rule, DOE has considered these factors in considering whether to adopt standards for cooking products. 73 FR 62034, 62047, 62081-84, 62107-62113, 62130-31 (Oct. 17, 2008).

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 of a product that meets the standard level is less than three times the value of the first-year energy (and, as applicable, water) savings resulting from the standard, as calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analyses generate values that calculate the payback period for consumers of a product meeting potential energy conservation standards, which includes, but is not limited to, the 3-year payback period contemplated under the rebuttable presumption test discussed above. (See chapter 8 of the TSD that accompanies this notice.) However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification).

IV. Methodology and Discussion of Comments on Methodology

DOE used several analytical tools that it developed previously and adapted for use in this rulemaking. One is a spreadsheet that calculates LCC and PBP. Another tool calculates national energy savings and national NPV. DOE also used the GRIM, along with other methods, in its MIA. Finally, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of energy efficiency standards for residential cooking products 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 October 2008 NOPR. DOE used the same general methodology as applied in the October 2008 NOPR, but revised some of the assumptions and inputs for the final rule in response to interested parties' comments. The following paragraphs discuss these revisions.

A. Market and Technology Assessment

When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, and market characteristics. This activity includes both quantitative

and qualitative assessments based primarily on publicly available information. DOE presented various subjects in the market and technology assessment for this rulemaking. (See the October 2008 NOPR and chapter 3 of the NOPR TSD.) These include product definitions, product classes, manufacturers, quantities and types of products sold and offered for sale, retail market trends, and regulatory and nonregulatory programs.

1. Product Classes

In general, when evaluating and establishing energy conservation standards, DOE divides covered products into classes by the type of energy used, capacity, or other performance-related features that affect consumer utility and efficiency. (42 U.S.C. 6295(q)) Different energy conservation standards may apply to different product classes.

Id

.

For cooking products, DOE based its product classes on energy source (

e.g.

, gas or electric) and cooking method (

e.g.

, cooktops, ovens, and microwave ovens). DOE identified five categories of cooking products: gas cooktops, electric cooktops, gas ovens, electric ovens, and microwave ovens. The following discussion provides clarification regarding DOE's selection of product classes for residential cooking products.

In its regulations implementing EPCA, DOE defines a “conventional range” as “a class of kitchen ranges and ovens which is a household cooking appliance consisting of a conventional cooking top and one or more conventional ovens.” 10 CFR 430.2. The November 2007 ANOPR presented DOE's reasons for not treating gas and electric ranges as a distinct product category and for not basing its product classes on that category, primarily based upon DOE's determination that, because ranges consist of both a cooktop and oven, any potential cooktop and oven standards would apply to the individual components of the range. 72 FR 64432, 64443 (Nov. 15, 2007). In the November 2007 ANOPR, DOE defined a single product class for gas cooktops as gas cooktops with conventional burners. 72 FR 64432, 64443-44 (Nov. 15, 2007) For gas ovens, DOE defined two product classes—gas standard ovens with or without a catalytic line and gas self-cleaning ovens. 72 FR 64432, 64445 (Nov. 15, 2007) These product class definitions were maintained in the October 2008 NOPR. 73 FR 62034, 62048 (Oct. 17, 2008).

DOE tentatively concluded in the November 2007 ANOPR that standing pilot ignition systems are not performance-related features that provide unique utility and would, therefore, not warrant a separate product class. 72 FR 64432, 64463 (Nov. 15, 2007). In response to interested parties' comments on this proposed determination, DOE noted in the October 2008 NOPR that the purpose of ignition systems is to ignite the gas when burner operation is needed for cooking, and either standing pilot or electronic ignition provides this function. In addition, DOE concluded from previous analysis that the ability to operate in the event of an electric power outage is not a utility feature that affects performance of gas cooking products. 73 FR 62034, 62048 (Oct. 17, 2008).

DOE notes that the EISA 2007 amendments to EPCA provide an exception from the residential boiler energy conservation standards for “[a] boiler that is manufactured to operate without any need for electricity or any electric connection, electric gauges, electric pumps, electric wires, or electric devices. * * *” (42 U.S.C. 6295(f)(3)(C)) Such units are typically equipped with a standing pilot. The October 2008 NOPR referred indirectly to this exception by stating that DOE addressed it in its residential furnace and boiler rulemaking. 73 FR 62034, 62048 (Oct. 17, 2008). DOE is clarifying this statement in today's final rule as follows. DOE's full rulemaking analysis (conducted prior to passage of EISA 2007) did not result in such an exception in its most recent energy conservation standards rulemaking for residential furnaces and boilers. 72 FR 65136 (Nov. 19, 2007). However, DOE subsequently published a final rule in the form of a technical amendment whose sole purpose was to codify the EISA 2007 amendments to EPCA pertaining to residential furnace and boiler standards set by statute, including the exception above. 73 FR 43611, 43613 (July 28, 2008). Because the July 28, 2008, rule implemented statutory provisions over which the Department had no rulemaking discretion, DOE did not conduct any supporting analysis or provide any input on this boiler exclusion. Congress incorporated this exclusion in the energy conservation standards for boilers, but Congress chose not to include a similar provision for gas cooking products with standing pilots. Accordingly, DOE used the applicable EPCA provisions for determining whether performance-related features warrant separate energy conservation standards (42 U.S.C. 6295(q)(1)), and DOE determined in the October 2008 NOPR that it would be unable to create a similar exception for gas cooking products because there is no unique utility associated with gas cooking products equipped with standing pilot ignition, compared to those with electronic ignition. 73 FR 62034, 62048 (Oct. 17, 2008). DOE based this understanding on its tentative conclusion that there is not expected to be any appreciable difference in cooking performance between gas cooking products with or without a standing pilot and that battery-powered electronic ignitions systems could provide ignition in the absence of line power (

i.e.

, electricity from the utility grid).

Id

.

Through market research for the October 2008 NOPR, DOE determined that battery-powered electronic ignition systems have been implemented in other products, such as instantaneous gas water heaters, barbeques, furnaces, and other appliances, and the use of such ignition systems appeared acceptable under ANSI Z21.1. Therefore, subgroups that prohibit the use of line electricity, or that do not have line electricity available, could still use gas cooking products without standing pilots, assuming gas cooking products would be made available with battery-powered ignition. Thus, DOE concluded that standing pilot ignition systems do not provide a distinct utility and that a separate class for standing pilot ignition systems would not be warranted under 42 U.S.C. 6295(q). 73 FR 62034, 62048 (Oct. 17, 2008).

In response to the October 2008 NOPR, AGA commented that DOE should assign a separate product class to gas cooking products with standing pilots. According to AGA, NPGA, and Pitts and Shuster, DOE acknowledged in the October 2008 NOPR that some religious groups do not allow electricity or adopt it in their area, and that DOE made an exception in EISA 2007 to allow standing pilots for gravity-fed gas boilers for such consumers. These commenters believe that gas ranges with standing pilots should remain available due to their unique utility. (AGA, Public Meeting Transcript, No. 40.5 at pp. 16-18; AGA, No. 46 at p. 2; NPGA, No. 52 at p. 2; Pitts and Shuster, No. 57 at p. 1) NPGA also objected to DOE's determination in the October 2008 NOPR that gas ranges incorporating pilot ignition systems do not provide a unique utility to gas customers, as well as DOE's determination that power outages are not frequent or long enough for residential electricity customers to be affected by the inability to cook food. NPGA and AGA stated that the utility of having an appliance with a standing pilot is important, especially for that segment of the population that cannot use electricity due to religious or

cultural practices or current economic status, or for whom electrical service is unavailable (such as for hunting cabins). (NPGA, No. 52 at p. 2; AGA, No. 46 at p. 2) AGA also stated that the unique consumer utility of an ignition system is conveyed by the installed environment (

i.e.

, whether line electricity is present) rather than by the ignition technology itself. According to AGA, EPCA addresses consumer utility associated with the covered product, not with a specific system or technology used in the product. (AGA, No. 46 at p. 2)

As discussed above, Congress created the exception to the standards in EPCA for residential boilers which operate without the need for electricity (

i.e.

, “gravity-fed gas boilers”). Such an exception was not based on analysis in DOE's most recent energy conservation standards rulemaking for residential furnaces and boilers. Congress did not provide a similar exclusion for gas cooking products with standing pilots. Certain consumer subgroups currently use such gas cooking products due to religious or cultural practices or a lack of access to electrical service. However, DOE continues to believe that the consumer utility that would need to be maintained for these subgroups is the same as for all consumers (

i.e.

, the ability to ignite the cooking product under the nominal conditions of installation, which for these consumer subgroups includes the absence of electrical service.) DOE also considered whether additional utility is conferred by the ability to provide ignition during an atypical event such as a loss of line power for those consumers who have electrical service, but DOE did not receive additional information regarding duration and frequency of power outages that would lead it to conclude that the ability to operate during such an event represents significant utility. Therefore, DOE maintains that there is no unique utility provided by standing pilot ignition systems, and that a separate product class for gas cooking products incorporating standing pilots is not warranted under 42 U.S.C. 6295(q). In making this determination, however, DOE recognizes that achieving safe ignition in gas cooking products for consumer subgroups without electricity in the home in the absence of standing pilot ignition requires an alternative ignition technology that does not rely on line power. As discussed in section III.C.2 of today's notice and chapter 3 of the TSD accompanying it, DOE identified battery-powered ignition systems as a potential alternative to standing pilots, and believes that such systems will likely be commercially available to these consumer subgroups by the time the energy conservation standards are effective.

2. Technology Options

As discussed above in section III.A, EEI suggested that DOE consider methods to reduce the input rate of standing pilot ignition systems in gas cooking products, thereby lowering the product's overall energy consumption, rather than strictly considering a ban on the use of standing pilots. EEI stated that DOE should create a performance standard for standing pilot lights, similar to what was proposed in the October 2008 NOPR for microwave ovens. EEI claimed a performance standard restricting the input rate of standing pilots could save a large fraction of standby energy usage in gas cooking products, while still providing flexibility to manufacturers. (EEI, Public Meeting Transcript, No. 40.5 at pp. 19-20 and 50-51; EEI, No. 56 at p. 2)

In the framework document for this rulemaking, DOE requested comment on a list of technologies, based on its 1996 analysis in the “Technical Support Document for Residential Cooking Products”

11

(1996 TSD), that it would consider for improving the efficiency of cooking products. These technologies did not include the one EEI now suggests (

i.e.

, one reducing the input rate of standing pilot ignition systems.) In response, several interested parties submitted comments on the framework document that indicated the list of technology options was still relevant because there have been no major technological breakthroughs in conventional cooking products since 1996. 72 FR 64432, 64452 (Nov. 15, 2007) No interested parties suggested any additional technologies for DOE to consider. DOE presented this list again in the November 2007 ANOPR, along with the analyses based on efficiency levels derived from the same technology options. 72 FR 64432, 64451-52, 64463-64 (Nov. 15, 2007). DOE did not receive any comments in response to the November 2007 ANOPR which suggested analyzing additional technology options for conventional cooking products. Furthermore, EEI's comments in response to the October 2008 NOPR provided no supporting information to validate the technological feasibility of reduced pilot input rate for improving the energy usage of gas cooking products equipped with standing pilots. DOE research did not identify any commercially available pilots suitable for gas range applications that operate at input rates substantially lower than that assumed for the baseline efficiency levels (117 British thermal units per hour (Btu/h) for gas cooktops and 175 Btu/h for gas ovens.) These baseline pilot input rates are based upon data DOE received as inputs to its analyses presented in the 1996 TSD, and the baseline values are intended to represent average input rates for the distribution of pilots incorporated in baseline ovens and cooktops. DOE does not have information on the distribution of pilot input rates that are associated with the range of ovens and cooktops currently on the market, but DOE believes that pilot capacities are closely related to the specific burner system(s) in each cooking product. DOE concluded that specifying a maximum pilot input rate without consideration of the diversity of such systems would likely raise utility issues, wherein the pilot could potentially fail to perform its required ignition function in some cooking products. For these reasons, DOE is not considering reduced pilot input rates in this rulemaking.

11

Available online at DOE's Web site:

http://www.eere.energy.gov/buildings/appliance_standards/residential/cooking_products_0998_r.html.

3. Excluded Product Classes and Technologies

DOE stated in the November 2007 ANOPR that it lacks efficiency data to determine whether certain designs (

e.g.

, commercial-style cooking products) and certain technologies (

e.g.

, induction cooktops) should be excluded from the rulemaking. 72 FR 64432, 64444-45, 64460 (Nov. 15, 2007). Due to a lack of public comments or other information that would counter DOE's tentative decision to exclude these products and technologies, DOE maintained these proposed exclusions in the October 2008 NOPR. 73 FR 62034, 62048 (Oct. 17, 2008).

AHAM and Whirlpool agree with the proposal to exclude commercial-style cooking products and induction technology. (AHAM, No. 47 at p. 3; Whirlpool, No. 50 at p. 1) In light of these comments in support of the proposal and in the absence of any new information, DOE has decided not to include commercial-style cooking products and induction technology in today's final rule.

B. Engineering Analysis

1. Efficiency Levels

In the November 2007 ANOPR, DOE reviewed and updated the design options and efficiency levels published in the 1996 TSD analysis, an approach generally supported by interested parties. DOE did not receive any

comments on the November 2007 ANOPR regarding omitted cooking technologies and retained all the cooking technologies, design options, and efficiency levels for cooking product energy factor as part of the October 2008 NOPR. 73 FR 62034, 62052 (Oct. 17, 2008).

AGA commented in response to the October 2008 NOPR that DOE did not consider alternative technologies to banning standing pilots, which places a great burden on the justification of pilot ignition products as the baseline technology. AGA stated that DOE had difficulty in defining reasonable design options for these gas products, but that does not justify defining standing pilots as the baseline product. (AGA, No. 46 at p. 3)

In response, DOE notes that baseline products refer to a model or models that have features and technologies typically found in products currently offered for sale. The baseline model in each product class represents the characteristics of products in that class, and typically achieves minimum energy efficiency performance. In the case of gas cooking products that are not equipped with an electrical cord (

i.e.

, gas cooktops and gas standard ovens), minimum energy efficiency performance is associated with products equipped with standing pilot ignition systems. DOE research has not revealed any other design options that would support the definition of different baseline efficiency levels for gas cooktops and gas standard ovens, and DOE did not receive any information on alternative technologies or design options. Therefore, DOE is maintaining the baseline efficiency levels associated with standing pilots for gas cooktops and gas standard ovens in today's final rule.

2. Manufacturing Costs

In the November 2007 ANOPR, DOE estimated a manufacturing cost at each efficiency level in this rulemaking by scaling the manufacturing costs that were provided in the 1996 TSD by the producer price index (PPI).

12

72 FR 64432, 64467-69 (Nov. 15, 2007). DOE retained these same manufacturing costs in the October 2008 NOPR and is also retaining them in today's final rule because it has determined that there has been no significant change in the PPI since the analysis for the November 2007 ANOPR, which used the PPI from 2006. For electric cooking products (including microwave ovens), the PPI increased 1.4 percent between 2006 and 2007, the most recent year for which final PPI values are available from the U.S. Department of Labor's Bureau of Labor and Statistics. The PPI for gas cooking products increased 2.9 percent in that same time period.

12

Please see the following Web site for further information:

http://www.bls.gov/pPI

.

As discussed in the October 2008 NOPR, AGA had commented that DOE underestimated the incremental manufacturing cost of electronic ignition, which for gas cooking products corresponds to efficiency level 1. According to AGA, the Harper-Wyman Co., in 1998 comments to DOE, provided an incremental retail price of $150 for a gas range with electronic ignition relative to a gas range with standing pilot ignition system. AGA argued that this retail price increment stands in sharp contrast to the $37 incremental manufacturing cost estimated by DOE. 73 FR 62034, 62054 (Oct. 17, 2008).

In response to AGA's comments on the November 2007 ANOPR, DOE contacted component suppliers of gas cooking product ignition systems to validate DOE's manufacturing cost estimates. DOE believes that the information collected verified that the costs in the November 2007 ANOPR represented current costs and, therefore, continued in the October 2008 NOPR to characterize the incremental manufacturing costs for the non-standing pilot ignition systems with the estimates developed for the November 2007 ANOPR.

Id.

In response to the October 2008 NOPR, AGA stated it disagrees with DOE's approach for estimating incremental manufacturing costs for electronic ignition. AGA commented that DOE's use of survey data on appliance prices is a poor proxy for manufacturing cost because pricing policy is based on a host of factors (including marginal product demand), not strictly on manufactured cost. Therefore, the commenter stated that it disagrees with DOE's estimate of $37 in incremental cost for electronic ignition. Instead, AGA believes that DOE should use a figure closer to the estimate of $150 previously provided by AGA, which was based on manufacturer estimates for redesign of pilot ignition products. AGA also stated that DOE should examine the impact on consumers, not on the manufacturer's costs. (AGA, Public Meeting Transcript, No. 40.5 at pp. 17-18; AGA, No. 46 at p. 4)

For this final rule, DOE conducted further research regarding retail prices for comparable gas ranges with standing pilot and electronic ignition systems. A comparison of manufacturer suggested retail prices for four brands showed a price differential ranging from $0 to $50 for a consumer to purchase a gas range with an electronic ignition system, rather than a standing pilot, from the same manufacturer. (See chapter 3 of the TSD accompanying this notice.) DOE recognizes that manufacturer pricing takes many factors into account, but the consistency of the price increments among four different manufacturers suggests that DOE's estimate of $37 for a manufacturing cost increment to eliminate standing pilots in a gas range has greater validity than an increment of $150. DOE further notes that, according to AGA's comments on the November 2007 ANOPR, the $150 estimate was provided by Harper-Wyman Co. in 1998. DOE believes that its own discussions with ignition component suppliers during the ANOPR phase of this rulemaking may represent more current technologies and costs. Therefore, DOE has decided to retain the proposed incremental manufacturing costs in today's final rule.

C. Life-Cycle Cost and Payback Period Analyses

The purpose of the LCC and PBP analyses is to evaluate the economic impacts of possible new energy conservation standards for cooking products on individual consumers. The LCC is the total consumer expense over the life of the product, including purchase and installation expense and operating costs (energy 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 purchasing a higher efficiency product through energy savings. To calculate LCC, DOE discounted future operating costs to the time of purchase and summed them over the lifetime of the product. DOE measured the change in LCC and the change in PBP associated with a given efficiency level relative to a base-case forecast of product 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 product prices, installation costs, annual household energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates.

DOE calculated the LCC and payback periods for cooking products for a nationally representative set of housing units, which was selected from the Energy Information Administration (EIA) Residential Energy Consumption

Survey (RECS).

13

Similar to the October 2008 NOPR, the analysis for today's final rule used the 2001 RECS. (EIA had not yet released the 2005 RECS when the analysis was performed. Although DOE was unable to use the most recent RECS, the 2001 version still offers a relatively recent national representation of how consumers utilize cooking products. Also, no other public survey provides a representative national household sample indicating how frequently consumers use their cooking appliances.) By using a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with cooking product use.

13

U.S. Department of Energy—Energy Information Administration,

Residential Energy Consumption Survey, 2001 Public Use Data Files (2001).

Available at:

http://www.eia.doe.gov/emeu/recs/recs2001/publicuse2001.html

.

For each sample household, DOE determined the energy consumption for the cooking product and the energy price. DOE calculated the LCC associated with a baseline cooking product for each household. To calculate the LCC savings and PBP associated with products meeting higher efficiency standards, DOE substituted the baseline unit with a more efficient design.

Table IV.1 summarizes the approaches and data DOE used to derive the inputs to the LCC and PBP calculations for the October 2008 NOPR, and the changes it made for today's final rule. For this final rule, DOE did not introduce changes to the LCC and PBP analyses methodology described in the October 2008 NOPR. However, DOE revised its energy prices and energy price forecasts based upon the most recently available data from EIA. Chapter 8 of the TSD accompanying this notice contains detailed discussion of the methodology utilized for the LCC and PBP analyses, as well as the inputs developed for the analyses.

Table IV.1—Summary of Inputs and Key Assumptions in the LCC and PBP Analyses

Inputs

October 2008 NOPR

Changes for the final rule

Affecting Installed Costs

Product Price

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

No change.

Installation Cost

Baseline cost based on RS Means

Mechanical Cost Data

, 2008.

14

Based the percentage of households with gas cooking products that would need to install an electrical outlet on requirements in the National Electrical Code (NEC). Determined that only households built before 1960 would require the installation of an outlet. Overall, estimated that 10 percent of households with gas standard ovens and 4 percent of households with gas cooktops would need to install an electrical outlet to accommodate designs that require electricity. Based electrical outlet installation costs on requirements in the NEC

No change.

Affecting Operating Costs

Annual Energy Use

Based on recent estimates from the 2004 “California Residential Appliance Saturation Survey”

15

(RASS) and the Florida Solar Energy Center

16

(FSEC). Used 2001 RECS data to establish the variability of annual cooking energy consumption. Included standby power consumption for microwave ovens

No change.

Energy Prices

Electricity: Based on EIA's 2006 Form 861 data.

17

Natural Gas: Based on EIA's 2006

Natural Gas Monthly

18

Variability: Regional energy prices determined for 13 regions

Electricity: Updated using EIA's 2007 Form 861 data.

Natural Gas: Updated using EIA's 2007

Natural Gas Monthly.

Variability: No change.

Energy Price Trends

Forecasted with EIA's

Annual Energy Outlook (AEO) 2008

Reference Case forecasts updated with EIA's

AEO2009

Early Release.

19

AEO2009

Early Release

does not provide High-Growth and Low-Growth forecasts, Scaled AEO2008 High-Growth and Low-Growth forecasts by the ratio of AEO2009 and AEO2008 Reference Case forecasts to estimate high-growth and low-growth price trends.

Repair and Maintenance Costs

For gas cooktops and standard ovens, accounted for increased costs associated with glo-bar or electronic spark ignition systems relative to standing pilot ignition systems. For all standard levels for all other product classes, estimated no change in costs between products more efficient than baseline products

No change.

Affecting Present Value of Annual Operating Cost Savings

Product Lifetime

Based on data from

Appliance Magazine

,

20

past DOE TSDs, and the California Measurement Advisory Committee (CALMAC).

21

Variability and uncertainty characterized with Weibull probability distributions

No change.

Discount Rates

Approach based on the finance cost of raising funds to purchase appliances either through the financial cost of any debt incurred to purchase products, or the opportunity cost of any equity used to purchase products. Primary data source is the Federal Reserve Board's

Survey of Consumer Finances

(SCF) for 1989, 1992, 1995, 1998, 2001, and 2004

22

No change.

Affecting Installed and Operating Costs

Effective Date of New or Amended Standards

2012

No change.

Base-Case Efficiency Distributions

Gas cooktops: 7% at baseline; 93% with electronic spark ignition

No change.

Gas standard ovens: 18% at baseline; 74% with glo-bar ignition; 8% with electronic spark ignition

No change.

Microwave ovens: 100% at baseline EF

No change.

All other cooking products: 100% at baseline

No change.

1. Product Prices

To calculate the product prices faced by consumers, DOE multiplied the manufacturing costs developed from the engineering analysis by the supply chain markups it developed (along with sales taxes). To calculate the final installed prices, DOE added installation costs to the consumer product prices. In response to the October 2008 NOPR, interested parties provided no additional comment on DOE's methods for establishing consumer product prices. As a result, DOE used the same supply chain markups for the final rule that were developed for the October 2008 NOPR. See chapter 7 of the TSD accompanying this notice for additional information.

14

RS Means,

Mechanical Cost Data

(30th Annual Edition) (2008). Available for purchase at

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

15

Please see the following Web site for further information:

http://www.energy.ca.gov/appliances/rass/.

16

Please see the following Web site for further information:

http://www.fsec.ucf.edu/en/.

17

Please see the following Web site for further information:

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

18

Please see the following Web site for further information:

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

19

Please see the following Web site for further information:

http://www.eia.doe.gov/oiaf/aeo/index.html?featureclicked=1&.

20

Please see the following Web site for further information:

http://www.appliancemagazine.com.

21

Please see the following Web site for further information:

http://www.calmac.org.

22

Please see the following Web site for further information:

http://www.federalreserve.gov.

2. Installation Cost

Installation costs include labor, overhead, and any miscellaneous materials and parts. For the October 2008 NOPR and today's final rule, DOE used data from the “RS Means Mechanical Cost Data, (2008),” on labor requirements to estimate installation costs for cooking products.

For the October 2008 NOPR, DOE did not include an installation cost for microwave ovens. Electrolux stated that over-the-range (OTR) microwave ovens do have an installation cost. (Electrolux, Public Meeting Transcript, No. 40.5 at p. 123) DOE acknowledges that OTR microwave ovens incur installation costs. However, as noted below, because DOE estimated that the installation cost does not change with product efficiency, the omission of this cost for microwave ovens has no effect on the LCC saving and PBP results.

For many cooking products, DOE estimated that installation costs would be the same for different efficiency levels. For gas cooktops and gas standard ovens, DOE evaluated the impact that eliminating standing pilot ignition systems would have on the installation cost. Peerless-Premier stated that eliminating pilots would affect customers who live in older houses, apartments, and manufactured homes without a power receptacle located at the range site. (Peerless-Premier, No. 42 at pp. 1-2) For the October 2008 NOPR and today's final rule, DOE considered the percentage of households with gas ranges, cooktops, and ovens that would require the installation of an electrical outlet in the kitchen to accommodate a gas cooking product without standing pilot ignition, as well as the cost of installing an electrical outlet.

For the October 2008 NOPR, DOE reviewed the gas oven and gas cooktop household samples to establish which houses may require installation of an outlet. DOE was able to determine the composition of the household sample of particular vintage (year built) groupings by conducting an assessment of National Electrical Code (NEC) requirements over time to help determine which homes may need an electrical outlet to accommodate a gas cooking product that requires electricity. Because the NEC requires spacing electrical outlets every 6 feet for homes built since 1960, DOE concluded that homes built after 1959 would not need an additional outlet. Pre-1960 homes represent 57 percent of the standard gas oven sample and 54 percent of the gas cooktop sample. Based on shipments data of gas cooking products indicating that fewer than 7 percent and 18 percent of gas cooktops and standard ovens, respectively, came equipped with standing pilots, DOE also concluded that many pre-1960 homes already have a gas cooking product without standing pilot ignition, which implies that they would not need to install an additional outlet.

The Joint Comment asserted that DOE erroneously assumed that 100 percent of pre-1960 homes with gas cooktops and ovens do not have adequate electrical outlets, without regard to the extensive number of kitchens that have been remodeled since 1960. (Joint Comment, No. 44 at p. 11) EEI made a similar point. (EEI, Public Meeting Transcript, No. 40.5 at pp. 111-112) In response, DOE did not assume that all pre-1960 homes with gas cooktops and gas ovens would require an electrical outlet. Rather, it concluded that only those households that currently have a gas cooking product with standing pilot ignition would need to install an electrical outlet to accommodate a gas cooking product without standing pilot ignition. Based on the percentage of recent shipments of gas cooking products with standing pilots and the fraction of the household sample built

before 1960, DOE estimated that 10 percent of the overall gas standard oven household sample would need to install an electrical outlet to accommodate a gas standard oven that requires electricity to operate. It is worth noting that some portion of gas cooking products with standing pilot ignition is evidently purchased by consumers in post-1959 homes, even though they have an electrical outlet adequate to accommodate a gas cooking product without standing pilot ignition.

AGA and AHAM stated that DOE's approach should not consider all gas cooking product consumers, but only the market for gas cooking products that utilize standing pilot ignition systems. They believe the resulting weighted-average installation cost for all gas cooking products would be greater than DOE's estimate. (AGA, No. 46 at pp. 3-4; AHAM, No. 47 at p. 2) As described above, DOE did estimate the share of the gas oven and gas cooktop household samples that still use standing pilot ignition systems, and further estimated the fraction of those homes that may require installation of an outlet to accommodate a gas cooking product that requires electricity to operate. DOE correctly calculated the respective weighted-average installation costs for all homes with either gas cooktops or ovens, although the weighted averages are reported for informational purposes only and do not directly figure into the LCC calculations. For further details on the development of the electrical outlet installation cost and the percentage of households requiring an outlet, see chapter 8 of the TSD accompanying this notice.

3. Annual Energy Consumption

In the October 2008 NOPR, DOE based its estimates of annual energy use for cooking products (except microwave ovens) on results from the 2004 California Residential Appliance Saturation Survey (RASS) and the Florida Solar Energy Center (FSEC.). For today's final rule, DOE continued to rely on these sources, because they are the latest available public sources describing the field consumption of cooking products. In addition, DOE continued to use the 2001 RECS data to establish the variability of annual energy consumption for cooktops and ovens. The 2001 RECS is the most recently available public data source that indicates the variability of cooking product usage in U.S. households.

For microwave ovens, DOE used the 2004 RASS to estimate the product's annual energy consumption, and it used the 2001 RECS data to establish the variability of annual cooking energy consumption. For today's final rule, DOE continued to use the above approaches. As noted above, the 2004 RASS is the latest available public data source describing the average field consumption of microwave ovens, and the 2001 RECS is the most recently available public data source that indicates the variability of microwave oven usage in U.S. households. See chapter 6 of the TSD accompanying this notice for further details.

4. 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 Census divisions containing one of these large States, DOE calculated the regional average values minus the data for the large State.

DOE estimated residential electricity prices for each of the 13 geographic areas based on data from EIA Form 861,

Annual Electric Power Industry Report.

DOE calculated an average residential electricity price by first estimating an average residential price for each utility by dividing the residential revenues by residential kilowatt-hour sales and then calculating a regional average price by weighting each utility with customers in a region by the number of residential consumers served in that region. The calculations for today's final rule used the most recent available data from 2007.

DOE estimated residential natural gas prices in each of the 13 geographic areas based on data from the EIA publication

Natural Gas Monthly.

For the October 2008 NOPR, DOE used the data for 2006 to calculate an average summer and winter price for each area. For today's final rule, DOE used 2007 data from the same source. DOE calculated an average natural gas price 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. This method differs from the method used to calculate electricity prices, because EIA does not provide consumer-level or utility-level data on gas consumption and prices.

To estimate the trends in electricity and natural gas prices for the October 2008 NOPR, DOE used the price forecasts in EIA's

Annual Energy Outlook (AEO) 2008.

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

AEO2008.

For today's final rule, DOE updated its energy price forecasts to those in the

AEO2009

Early Release. 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 after 2030.

The spreadsheet tools used to conduct the LCC and PBP analyses 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

AEO2009

Early Release provides only forecasts for the reference case. Therefore, for the final rule, DOE scaled the

AEO2008

high-growth case or low-growth forecasts by the ratio of

AEO2009

and

AEO2008

reference case forecasts to estimate high-growth and low-growth price trends.

The Joint Comment recommended that DOE conduct a sensitivity analysis using other forecasts in addition to the

AEO,

as they believe that the

AEO

has estimated lower electricity prices than most other forecasts. (Joint Comment, No. 44 at p. 11) As mentioned above, DOE included the

AEO's

high-growth case and low-growth case price forecasts in its spreadsheet tools to estimate the sensitivity of the LCC and PBP results to different energy price forecasts.

AEO's

high-economic-growth and low-economic-growth cases show the effects of alternative economic growth assumptions on the energy market projections. In the high-growth case, real gross domestic product (GDP) growth averages 3.0 percent per year, as a result of higher assumed growth rates for the labor force, non-farm employment, and non-farm labor productivity. With higher productivity gains and employment growth, inflation and interest rates are lower than in the reference case. In the low-growth case, growth in real GDP is 1.8 percent per year, as a result of lower assumed growth rates for the labor force, non-farm employment, and labor productivity. Consequently, the low-growth case shows higher inflation and interest rates and slower growth in industrial output and employment than are projected in the reference case. DOE believes the

AEO

alternative forecasts provide a suitable range that brackets the forecasts resulting from other energy-economy models. In addition, the Joint Comment provides no specific information on any other forecasts or on why

AEO's

high-growth and low-growth cases do not provide a reasonable range of forecasts. As a result, DOE has concluded that

AEO's

high-growth and low-growth cases provide an adequate basis to examine the sensitivity of LCC and PBP results to other price forecasts.

The Joint Comment stated that to realistically depict energy prices in the future, DOE must consider the impact of carbon control legislation, since such legislation is very likely. The Joint Comment also noted that there are regional cap-and-trade programs in effect in the Northeast (Regional Greenhouse Gas Initiative (RGGI)) and the West (Western Climate Initiative (WCI)) that will affect the price of electricity but are not reflected in the

AEO

energy price forecasts. (Joint Comment, No. 44 at p. 12) Earthjustice stated that Federal caps will likely be in place by the time new standards become effective, so DOE should increase its electricity prices to reflect the cost of complying with emission caps. (Earthjustice, Public Meeting Transcript, No. 40.5 at pp. 195-196) In response, DOE notes that the shape of Federal carbon control legislation, and the ensuing cost of carbon mitigation to electricity generators, is as yet too uncertain to incorporate into the energy price forecasts that DOE uses. The costs of carbon mitigation to electricity generators resulting from the regional programs are also very uncertain over the forecast period for this rulemaking. Even so, EIA did include the effect of the RGGI in its

AEO2009

Early Release energy price forecasts, but WCI did not provide sufficient detail for EIA to model the impact of the WCI on energy price forecasts. Therefore, the energy price forecasts used in today's final rule do include the impact of one of the two regional cap-and-trade programs to the extent possible.

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 product.

For the October 2008 NOPR, DOE contacted six contractors in different States to estimate whether repair and maintenance costs differ between standing pilot and non-standing pilot ignition systems. Based on the contractors' input, DOE determined that standing pilots are less costly to repair and maintain than either electric glo-bar/hot surface ignition systems (used in most gas ovens) or electronic spark ignition systems (used in gas cooktops and a small percentage of gas ovens); that standing pilot ignition systems require repair and maintenance every 10 years to clean valves; and that electric glo-bar/hot surface ignition systems require glo-bar replacement approximately every 5 years. 73 FR 62034, 62064 (Oct. 17, 2008). Electrolux stated that its testing indicates that glo-bar ignition systems tend to hold their life, but it did not provide data to support this point. (Electrolux, Public Meeting Transcript, No. 40.5 at p. 112) In the absence of new data from Electrolux, DOE decided to continue to use the information provided by the contractors from which it collected data. In the case of electronic ignition systems, control modules tend to last about 10 years. The electrodes/igniters can fail because of hard contact from pots or pans, although failures are rare.

Based on the above findings, DOE estimated an average cost comprised of a mix of maintenance and repair costs. For standing pilot ignition systems, DOE estimated a cost of $126 occurring in the tenth year of the product's life. For electric glo-bar/hot surface ignition systems, DOE estimated an average cost of $147 occurring every fifth year during the product's lifetime. For electronic spark ignition systems, DOE estimated an average cost of $178 occurring in the tenth year of the product's life. AGA generally agreed with DOE's approach for consideration of maintenance of standing pilots and electronic ignition systems. However, AGA suggested that DOE use the incremental manufacturing cost for electronic ignition systems as a basis for developing the maintenance costs for these systems. Using this approach, AGA reasoned that the resultant maintenance costs would be higher than DOE estimated. (AGA, No. 46 at p. 4) DOE's approach resulted in a combined maintenance and repair cost that is well above the incremental manufacturing cost for electronic ignition systems. Therefore, DOE retained its approach for estimating electronic ignition maintenance costs for today's final rule as it captures more costs than solely the manufacturing costs of the electronic ignition components. See chapter 8 of the TSD accompanying this notice for further information regarding these estimates.

6. Product Lifetime

For the October 2008 NOPR and today's final rule, DOE used a variety of sources to establish low, average, and high estimates for product lifetime. DOE established average product lifetimes of 19 years for conventional electric and gas cooking products and 9 years for microwave ovens. DOE characterized residential cooking product lifetimes with Weibull probability distributions. See chapter 8 of the TSD accompanying this notice for further details on the sources used to develop product lifetimes, as well as the use of Weibull distributions.

7. Discount Rates

To establish discount rates for cooking products for the October 2008 NOPR and today's final rule, DOE derived estimates of the finance cost of purchasing these appliances. Because the purchase of products for new homes entails different finance costs for consumers than the purchase of replacement products, DOE used different discount rates for new construction and replacement installations.

DOE estimated discount rates for new-housing purchases using the effective real (after inflation) mortgage rate for homebuyers. This rate corresponds to the interest rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation. DOE used the Federal Reserve Board's Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, and 2001 mortgage interest rates. After adjusting for inflation and interest tax deduction, effective real interest rates on mortgages across the six surveys averaged 3.2 percent.

For replacement purchases, DOE's approach for deriving discount rates involved identifying all possible debt or asset classes that might be used to purchase replacement products, including household assets that might be affected indirectly. DOE estimated the average shares of the various debt and equity classes in the average U.S. household equity and debt portfolios using data from the SCFs from 1989 to 2004. DOE used the mean share of each class across the six sample years (1989, 1992, 1995, 1998, 2001, 2004) as a basis for estimating the effective financing rate for replacement products. DOE estimated interest or return rates associated with each type of equity and debt using SCF data and other sources. The mean real effective rate across the classes of household debt and equity, weighted by the shares of each class, is 5.6 percent.

See chapter 8 of the TSD accompanying this notice for further details on the development of discount rates for cooking products.

8. Effective Date of the Amended Standards

The effective date is the future date when parties subject to the requirements of a new standard must begin compliance. DOE assumes that any new energy conservation standards adopted in this rulemaking would become effective 3 years after the final rule is published in the

Federal Register

. Therefore, for the purpose of the analysis, the amended standard is

assumed to be effective March 2012. DOE calculated the LCC for the appliance consumers as if they would purchase a new product in the year the standard takes effect.

9. Product Energy Efficiency in the Base Case

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

i.e.

, the case without new energy conservation standards). DOE refers to this distribution of product of efficiencies as a base-case efficiency distribution.

Using the base-case efficiency distributions, DOE assigned a specific product efficiency to each sample household. If a household were assigned a product efficiency greater than or equal to the efficiency of a specific standard level under consideration, the LCC calculation would show that this household would not be affected by that standard level.

Unfortunately, little is known about the distribution of cooking product efficiencies that consumers currently purchase. Whirlpool stated that it is not aware of data on the number of consumers purchasing electric cooking products that are more efficient than the baseline products in the analysis. (Whirlpool, No. 50 at p. 4) In the absence of any additional data for electric cooking products and gas self-cleaning ovens, DOE continued to estimate that 100 percent of the market will be at the baseline efficiency levels in 2012.

For gas cooktops and gas standard ovens, available data allowed DOE to estimate the percentage of units sold that have standing pilot lights. DOE developed the market share of gas standard ovens with standing pilots based on actual shipments data, the most recent being data from the Appliance Recycling Information Center (ARIC) for 1997, 2000, and 2004.

23

Based on the ARIC data, the entire market share of products without standing pilots should be allocated to standard level 1 (products with glo-bar ignition). But based on information collected from contractors, DOE estimated that 10 percent of products without standing pilots use spark ignition systems. As a result, DOE allocated 90 percent of the market share of products without standing pilots to standard level 1 (with glo-bar ignition) and the remaining 10 percent to standard level 1a (with spark ignition).

23

Appliance Recycling Information Center, INFOBulletin #8, “Applications in Appliances” (March 2005). Please see the following Web site for further information:

http://www.aham.org/industry/ht/action/GetDocumentAction/id/5370

.

Table IV.2 shows the market shares of the efficiency levels in the base case for gas cooktops and gas standard ovens. Standard level 1 represents products without standing pilot light ignition systems.

Table IV.2—Gas Cooktops and Gas Standard Ovens: Base Case Market Shares

Gas cooktops

Standard level

EF

Market share

%

Gas standard ovens

Standard level

EF

Market share

%

Baseline

0.156

6.8

Baseline

0.0298

17.6

1

0.399

93.2

1*

0.0536

74.2

2

0.420

0

2

0.0566

0

3

0.0572

0

4

0.0593

0

5

0.0596

0

6

0.0600

0

1a*

0.0583

8.2

* For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are used for the same purpose—to eliminate the need for a standing pilot—but the technologies for each design are different. Candidate standard level 1 is a hot surface ignition device, whereas candidate standard level 1a is a spark ignition device.

For microwave ovens, very little is known about the distribution of product efficiencies that consumers currently purchase. For the October 2008 NOPR and the final rule, DOE estimated that 100 percent of the microwave oven market is at the baseline efficiency level (EF = 0.557).

10. Inputs to Payback Period Analysis

The payback period is the amount of time (expressed in years) it takes the consumer to recover the additional installed cost of more efficient products through operating cost savings compared to baseline products. The simple payback period does not account for changes in operating expense over time or the time value of money. Payback periods greater than the life of the product mean that the increased total installed costs are not recovered in reduced operating expenses.

The inputs to the PBP calculation are the total installed cost of the product to the customer for each efficiency level and the annual (first-year) operating expenditures for each efficiency level. The PBP calculation uses the same inputs as the LCC analysis, except that energy price trends and discount rates are not needed.

11. 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 expected to take effect—in this case, 2012.

DOE also received comments addressing the topic of using a rebuttable presumption payback period to establish the economic justification of an energy conservation standard level. The Joint Comment and Earthjustice stated that DOE's view that consideration of a full range of impacts is necessary because the rebuttable presumption payback period criterion is not sufficient for determining economic justification does not reflect the extent to which the rebuttable presumption analysis constrains DOE's authority to reject standards based on economic impacts. (Joint Comment, No. 44 at appendix B, p. 1; Earthjustice, Public Meeting Transcript, No. 40.5 at p. 130) The Joint Comment claimed that in 42 U.S.C. 6295(o)(2)(B)(iii), Congress erected a significant barrier to DOE's rejection, on the basis of economic justifiability, of standard levels to which the rebuttable presumption applies. These commenters also claimed that the fact that DOE seems to prefer to proceed under the seven-factor test contained in 42 U.S.C. 6295(o)(2)(B)(i) is not pertinent. The Joint Comment agreed with DOE that analysis under the seven factor test is necessary and has typically supported standards with paybacks longer than 3 years. However, the Joint Comment stated that DOE's decision-making must reflect the expressed intent of Congress that the highest standard level resulting in cost recovery within 3 years constitutes the presumptive lowest standard level that DOE must adopt (Joint Comment, No. 44 at appendix B, pp. 1-2)

DOE does consider both the rebuttable presumption payback criteria, as well as a full analysis including all seven relevant statutory criteria under 42 U.S.C. 6295(o)(2)(B)(i) when examining potential standard levels. However, DOE believes that the commenters are misinterpreting the statutory provision in question. The Joint Comment and Earthjustice present one possible reading of an ambiguous provision (

i.e.

, that DOE need not look beyond the results of the rebuttable presumption inquiry), but DOE believes that such an approach is neither required nor appropriate, because it would ask the agency to potentially ignore other relevant information that would bear on the selection of the most stringent standard level that meets all applicable statutory criteria. The commenters' interpretation would essentially restrict DOE from being able to rebut the findings of the preliminary presumptive analysis. However, the statute contains no such restriction, and such an approach would hinder DOE's efforts to base its regulations on the best available information.

Similarly, DOE believes that the Joint Comment misreads the statute in calling for a level that meets the rebuttable presumption test to serve as a minimum level when setting the final energy conservation standard. To do so would not only eliminate the “rebuttable” aspect of the presumption but would also lock in place a level that may not be economically justified based upon the full complement of statutory criteria. DOE is already obligated under EPCA to select the most stringent standard level that meets the applicable statutory criteria, so there is no need to tie the same requirement to the rebuttable presumption.

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

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, product costs, and NPV for each product class from 2012 through 2042. The forecasts provide annual and cumulative values for all four parameters. In addition, DOE incorporated into its NIA spreadsheet the ability to analyze sensitivity of the results to forecasted energy prices and product efficiency trends.

Table IV.3 summarizes the approach and data DOE used to derive the inputs to the NES and NPV analyses for the October 2008 NOPR and the changes made in the analyses for today's final rule. A discussion of the inputs and the changes follows. (See chapter 11 of the TSD accompanying this notice for further details.)

Table IV.3—Approach and Data Used to Derive the Inputs to the National Energy Savings and NPV Analyses

Inputs

October 2008 NOPR

Changes for the final rule

Shipments

Annual shipments from Shipments Model

See Table IV.4.

Effective Date of Standard

2012

No change.

Base-Case Forecasted Efficiencies

Shipment-weighted efficiency (SWEF) determined in the year 2005. SWEF held constant over forecast period of 2005-2042

No change.

Standards-Case Forecasted Efficiencies

“Roll-up” scenario used for determining SWEF in the year 2012 for each standards case. SWEF held constant over forecast period of 2012-2042

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 Cost per Unit

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

No change.

Repair Cost and Maintenance Cost per Unit

Incorporated changes in repair costs for non-standing pilot ignition systems

No change.

Escalation of Energy Prices

AEO2008

forecasts (to 2030) and extrapolation to 2042

Updated to

AEO2009 Early Release

forecasts for the Reference Case.

AEO2009 Early Release

does not provide High-Growth and Low-Growth forecasts; scaled

AEO2008

High-Growth and Low-Growth forecasts by the ratio of

AEO2009

and

AEO2008

Reference Case forecasts to estimate high-growth and low-growth price trends.

Energy Site-to-Source Conversion

Conversion varies yearly and is generated by DOE/EIA's National Energy Modeling System (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 percent real

No change.

Present Year

Future expenses are discounted to year 2007

No change.

2. Shipments

The shipments portion of the NIA spreadsheet is a model that uses historical data as a basis for projecting future shipments of the appliance products that are the subject of this rulemaking. In projecting shipments, DOE accounted for three market segments: (1) New construction, (2) existing buildings (

i.e.

, replacing failed products), and (3) early replacements. DOE used the early replacement market segment to calibrate the shipments model to historical shipments data. For purposes of estimating the impacts of prospective standards on product 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.4 summarizes the approach and data DOE used to derive the inputs to the shipments analysis for the October 2008 NOPR and the changes it made for today's final rule. A discussion of the inputs and the

changes follows.

24

Association of Home Appliance Manufacturers,

2005 Major Appliance Fact Book.

Available for purchase at

http://www.aham.org/ht/d/ProductDetails/sku/40471101603

.

Table IV.4—Approach and Data Used To Derive the Inputs to the Shipments Analysis

Inputs

October 2008 NOPR

Changes for the final rule

Number of Product Classes

Seven classes for conventional cooking products; one class for microwave ovens

No change.

New Construction Shipments

Determined by multiplying housing forecasts by forecasted saturation of cooking products for new housing. Housing forecasts based on

AEO2008

projections. New housing product saturations based on EIA's 2001 RECS. Forecasted saturations maintained at 2001 levels

No change in approach. Housing forecasts updated with EIA

AEO2009

Early Release forecasts for the Reference Case.

AEO2009

Early Release does not provide High-Growth and Low-Growth forecasts, Scaled

AEO2008

High-Growth and Low-Growth forecasts by the ratio of

AEO2009

and

AEO2008

Reference Case forecasts to estimate high-growth and low-growth housing trends.

Replacements

Determined by tracking total product 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.

Early Replacements

Used to calibrate Shipments Model to historical shipments data; 2 percent of the surviving stock per year is retired early

No change.

Historical Shipments

Data sources include AHAM data submittal, AHAM

Fact Book

,

24

and

Appliance Magazine

No change.

Purchase Price, Operating Cost, and Household Income Impacts Due to Efficiency Standards

For microwave ovens only, 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

No change.

Fuel Switching

Not considered

No change.

a. New Construction Shipments

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

AEO2008

through 2030 for the October 2008 NOPR. For today's final rule, DOE used the projections from EIA's

AEO2009

Early Release Reference Case. Because EIA had not yet released the 2005 RECS when the analysis was performed, DOE continued to use the 2001 RECS to establish cooking product market saturations for new housing.

b. Replacements

DOE estimated replacements using product retirement functions developed from product lifetimes. For the October 2008 NOPR and today's final rule, DOE used retirement functions based on Weibull distributions.

To calibrate each shipments model against historical shipments, DOE established an early replacement market segment. For the October 2008 NOPR and today's final rule, DOE determined that 2 percent of the surviving stock per year was replaced early.

c. Purchase Price, Operating Cost, and Household Income Impacts

To estimate the combined effects on microwave oven shipments of increases in product purchase price and decreases in product operating costs due to new efficiency standards, DOE conducted a literature review and a statistical analysis on appliance price, efficiency, and shipments data for the October 2008 NOPR. DOE used purchase price and efficiency data specific to residential refrigerators, clothes washers, and dishwashers between 1980 and 2002 from AHAM

Fact Books

25

to conduct regression analyses. DOE chose this particular set of appliances because of the availability of data to determine a price elasticity. These data indicate that there has been a rise in appliance shipments and a decline in appliance purchase price and operating costs over the time period. Household income has also risen during this time. To simplify the analysis, DOE combined the available economic information into one variable, termed the “relative price,” and used this variable in an analysis of market trends and to conduct a regression analysis. DOE's regression analysis suggests that the relative short-run price elasticity of demand, averaged over the three appliances, is −0.34. For example, a relative price increase of 10 percent results in a shipments decrease of 3.4 percent. Because the relative price elasticity incorporates the impacts from three effects (

i.e.

, purchase price, operating cost, and household income), the impact from any single effect is mitigated by changes in the other two effects.

25

DOE used average purchase price and efficiency data provided in the 1987, 1988, 1993, 1995, 2000, and 2003 Fact Books.

Because DOE's forecast of shipments and national impacts due to standards spans 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. For the October 2008 NOPR, DOE incorporated a 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 become less sensitive over time to the initial change in the product's relative price. As implemented in the modeling of shipments forecasts, DOE estimates that the initial increase in purchase price due to a standard will have a more significant impact on product shipments in the short term than over the long term (

i.e.

, fewer consumers will forego appliance purchases years after the standards have been in place than when the standards initially take effect.) DOE received no comments on its analysis to estimate the combined effects of increases in product purchase price and decreases in operating costs on microwave oven shipments and, therefore, retained the approach for the final rule.

In contrast, DOE determined that the combined market of conventional electric and gas cooking products (

i.e.

, other than microwave ovens) is completely saturated. Thus, DOE assumed for the October 2008 NOPR that the considered standard levels would neither affect shipments nor cause shifts in electric and gas conventional cooking product market shares. 73 FR 62034, 62071 (Oct. 17, 2008). Because DOE received no comments on its approach, it continued to use it for today's final rule.

d. Fuel Switching

In the October 2008 NOPR, DOE concluded that the probability that the considered standard levels would cause shifts in electric and gas conventional cooking product market shares was sufficiently low that it was not necessary to consider it. 73 FR 62034, 62071-72 (Oct. 17, 2008). DOE received no comments on this issue and, therefore, retained the approach for today's final rule.

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 products 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 October 2008 NOPR, DOE first determined the distribution of product efficiencie

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