[Federal Register Volume 65, Number 51 (Wednesday, March 15, 2000)]
[Proposed Rules]
[Pages 14128-14161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6106]
[[Page 14127]]
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Part V
Department of Energy
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Office of Energy Efficiency Efficiency and Renewable Energy
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10 CFR Part 430
Energy Conservation Program for Consumer Products; Fluorescent Lamp
Ballast Energy Conservation Standards; Proposed Rule
Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 /
Proposed Rules
[[Page 14128]]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 430
[Docket Number EE-RM-97-500]
RIN 1904-AA75
Energy Conservation Program for Consumer Products: Fluorescent
Lamp Ballasts Energy Conservation Standards
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy
ACTION: Notice of proposed rulemaking and public hearing.
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SUMMARY: The Energy Policy and Conservation Act, as amended, prescribes
energy conservation standards for certain major household appliances,
and requires the Department of Energy (DOE, Department, or we) to
administer an energy conservation program for these products. The
National Appliance Energy Conservation Amendments of 1988 require DOE
to consider amending the energy conservation standards for fluorescent
lamp ballasts. The Department conducted several analyses regarding the
energy savings, benefits and burdens of amended energy conservation
standards for fluorescent lamp ballasts and has shared the results of
these analyses with all stakeholders. Based on these analyses, several
of the major stakeholders, including manufacturers and energy
efficiency advocates, submitted to the Department a joint proposal for
the highest standard level which they believe to be technically
feasible and economically justified. Based on our review of this
proposal and our analyses, we believe the standards they proposed are
technically feasible and economically justified. Therefore, today we
propose to amend the energy conservation standard for fluorescent lamp
ballasts for commercial and industrial applications as recommended in
the joint proposal and announce a public hearing.
DATES: Comments must be received on or before May 29, 2000. The
Department requests 10 copies of the written comments and, if possible,
a computer disk. Oral views, data, and arguments may be presented at
the public hearing to be held in Washington, D.C., beginning at 9:00
a.m. on April 18, 2000.
Requests to speak at the hearing must be received by the Department
no later than 4:00 p.m., April 3, 2000. Copies of statements to be
given at the public hearing must be received by the Department no later
than 4:00 p.m., April 6, 2000. The DOE panel will read the statements
in advance of the hearing and would appreciate the oral presentations
to be limited to a summary of the statement. The length of each oral
presentation is limited to 15 minutes.
ADDRESSES: The hearing will be held at the U.S. Department of Energy,
Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW,
Washington, DC. Written comments, oral statements, and requests to
speak at the hearing are to be submitted to Brenda Edwards-Jones, U.S.
Department of Energy, Office of Energy Efficiency and Renewable Energy,
Energy Conservation Program for Consumer Products: Fluorescent Lamp
Ballasts, Docket No. EE-RM-97-500, 1000 Independence Avenue, S.W.,
Washington, D.C. 20585-0121.
Copies of the public comments received, the Technical Support
Document (TSD) and the transcript of the public hearing may be read at
the DOE Freedom of Information Reading Room, U.S. Department of Energy,
Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW,
Washington, DC 20585, (202) 586-3142, between the hours of 9:00 a.m.
and 4:00 p.m., Monday through Friday, except Federal holidays. Copies
of the TSD may be obtained from: U.S. Department of Energy, Office of
Energy Efficiency and Renewable Energy, Forrestal Building, Mail
Station EE-41, 1000 Independence Avenue, SW, Washington, DC 20585.
(202) 586-9127. Copies of the analysis can also be found on the Codes
and Standards Internet site at: http://www.eren.doe.gov/buildings/
codes__standards/applbrf/ballast.html.
For more information concerning public participation in this
rulemaking proceeding see Section VII, ``Public Comment Procedures,''
of this Notice.
FOR FURTHER INFORMATION CONTACT: Carl Adams, U.S. Department of Energy,
Office of Energy Efficiency and Renewable Energy, EE-41, 1000
Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-9127, or
Eugene Margolis, U.S. Department of Energy, Office of General Counsel,
GC-72, 1000 Independence Avenue, SW, Washington, DC 20585, (202) 586-
9507.
SUPPLEMENTARY INFORMATION:
I. Introduction
a. Authority
b. Background
II. General Discussion
a. Test Procedures
b. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
c. Energy Savings
1. Determination of Savings
2. Significance of Savings
d. Rebuttable Presumption
e. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Life-Cycle Costs
3. Energy Savings
4. Lessening of Utility or Performance of Products
5. Impact of Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
III. Methodology
a. Life-Cycle-Cost Spreadsheet
b. National Energy Savings Spreadsheet
c. Manufacturer Impact Analysis and Government Regulatory Impact
Model (GRIM)
d. NEMS Environmental Analysis
IV. Discussion of Comments
V. Analytical Results
a. Efficiency Levels Analyzed
b. Significance of Energy Savings
c. Payback Period
d. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Life-Cycle Cost
3. Energy Savings, Net Present Value and Net National Employment
4. Lessening of Utility or Performance of Products
5. Impact of Lessening of Competition
6. Need of the Nation to Save Energy
7. Other Factors
e. Conclusion
VI. Procedural Issues and Regulatory Reviews
a. Review Under the National Environmental Policy Act
b. Review Under Executive Order 12866, ``Regulatory Planning and
Review''
c. Review Under the Regulatory Flexibility Act
d. Review Under the Paperwork Reduction Act
e. Review Under Executive Order 12988, ``Civil Justice Reform''
f. ``Takings'' Assessment Review
g. Review Under Executive Order 13132
h. Review Under the Unfunded Mandates Reform Act
i. Review Under the Treasury and General Government
Appropriation Act of 1999
j. Review Under the Plain Language Directives
VII. Public Comment Procedures
a. Participation in Rulemaking
b. Written Comment Procedures
c. Public Hearing
1. Procedure for Submitting Requests to Speak
2. Conduct of Hearing
I. Introduction
a. Authority
Part B of Title III of the Energy Policy and Conservation Act,
Public Law 94-163, as amended by the National Energy Conservation
Policy Act, Public Law
[[Page 14129]]
95-619, by the National Appliance Energy Conservation Act, Public Law
100-12, by the National Appliance Energy Conservation Amendments of
1988, Public Law 100-357, and the Energy Policy Act of 1992, Public Law
102-486 \1\ created the Energy Conservation Program for Consumer
Products other than Automobiles. The consumer products subject to this
program (often referred to hereafter as ``covered products'') include
fluorescent lamp ballasts.
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\1\ Part B of Title III of the Energy Policy and Conservation
Act, as amended by the National Energy Conservation Policy Act, the
National Appliance Energy Conservation Act, the National Appliance
Energy Conservation Amendments of 1988, and the Energy Policy Act of
1992, is referred to in this notice as the ``Act.'' Part B of Title
III is codified at 42 U.S.C. 6291 et seq. Part B of Title III of the
Energy Policy and Conservation Act, as amended by the National
Energy Conservation Policy Act only, is referred to in this notice
as the National Energy Conservation Policy Act.
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Under the Act, the program consists essentially of three parts:
Testing, labeling, and Federal energy conservation standards. The
Department, in consultation with the National Institute of Standards
and Technology, amends or establishes new test procedures for each of
the covered products. Section 323. The test procedures measure the
energy efficiency, energy use, or estimated annual operating cost of a
covered product during a representative average use cycle or period of
use. They must not be unduly burdensome to conduct. Section 323 (b)(3).
A test procedure is not required if DOE determines by rule that one
cannot be developed. Section 323(d)(1). Test procedures appear at 10
CFR part 430, subpart B.
The Federal Trade Commission (FTC) prescribes rules governing the
labeling of covered products after DOE publishes test procedures.
Section 324(a). The FTC labels indicate the annual operating cost for
the particular model and the range of estimated annual operating costs
for other models of that product. Section 324(c)(1). Disclosure of
estimated operating cost is not required if the FTC determines that
such disclosure is not likely to assist consumers in making purchasing
decisions, or is not economically feasible. In such a case, the FTC
must require a different useful measure of energy consumption. Section
324(c). At the present time, there are Federal Trade Commission rules
requiring labels for the following products: Room air conditioners,
furnaces, clothes washers, dishwashers, water heaters, refrigerators,
refrigerator-freezers and freezers, central air conditioners and
central air conditioning heat pumps, and fluorescent lamp ballasts.
The National Appliance Energy Conservation Amendments of 1988
prescribed Federal energy conservation standards for ballasts. Section
325(g). The Act specifies that the standards are to be reviewed by the
Department no later than January 1, 1992. Section 325(g)(7)(A).
Any new or amended standard must be designed so as to achieve the
maximum improvement in energy efficiency that is technologically
feasible and economically justified. Section 325(o)(2)(A).
Section 325(o)(2)(B)(i) provides that before DOE determines whether
a standard is economically justified, it must first solicit comments on
a proposed standard. After reviewing comments on the proposal, DOE must
then determine that the benefits of the standard exceed its burdens,
based, to the greatest extent practicable, on a weighing of the
following seven factors:
(I) The economic impact of the standard on the manufacturers and
on the consumers of the products subject to such standard;
(II) The savings in operating costs throughout the estimated
average life of the covered product in the type (or class) compared
to any increase in the price of, or in the initial charges for, or
maintenance expenses of, the covered products which are likely to
result from the imposition of the standard;
(III) The total projected amount of energy savings likely to
result directly from the imposition of the standard;
(IV) Any lessening of the utility or the performance of the
covered products likely to result from the imposition of the
standard;
(V) 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;
(VI) The need for national energy conservation; and
(VII) Other factors the Secretary considers relevant.
In addition, section 325(o)(2)(B)(iii) establishes a rebuttable
presumption of economic justification in instances where the Secretary
determines that ``the additional cost to the consumer of purchasing a
product complying with an energy conservation standard level will be
less than three times the value of the energy * * * savings during the
first year that the consumer will receive as a result of the standard,
as calculated under the applicable test procedure * * *'' The
rebuttable presumption test is an alternative path to establishing
economic justification.
Section 327 of the Act addresses the effect of Federal rules on
State laws or regulations concerning testing, labeling, and standards.
Generally, all such State laws or regulations are superseded by the
Act. Section 327(a)-(c). Exemptions to this general rule include: (1)
State standards prescribed or enacted before January 8, 1987, and
applicable to appliances produced before January 3, 1988 (section
327(b)(1)); (2) State procurement standards which are more stringent
than the applicable Federal standard (Section 327(b)(3) and (f)(1)-
(4)); (3) State regulations banning constant burning pilot lights in
pool heaters (Section 327(b)(4)); and (4) State standards for
television sets effective on or after January 1, 1992, may remain in
effect in the absence of a Federal standard for such product (Section
327(b)(6) and 327(c)).
b. Background
The National Energy Conservation Policy Act,\2\ which amended the
Energy Policy and Conservation Act, required DOE to establish mandatory
energy efficiency standards for each of the 13 covered products. These
standards were to be designed to achieve the maximum improvement in
energy efficiency that was technologically feasible and economically
justified.
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\2\ The consumer products covered by the National Energy
Conservation Policy Act included: Refrigerators and refrigerator-
freezers; freezers; dishwashers; clothes dryers; water heaters; room
air conditioners; home heating equipment not including furnaces;
television sets; kitchen ranges and ovens; clothes washers;
humidifiers and dehumidifiers; central air conditioners; and
furnaces.
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The National Energy Conservation Policy Act provided, however, that
no standard for a product be established if there were no test
procedure for the product, or if DOE determined by rule either that a
standard would not result in significant conservation of energy, or
that a standard was not technologically feasible or economically
justified. In determining whether a standard was economically
justified, the Department was directed to determine whether the
benefits of the standard exceeded its burdens by weighing the seven
factors discussed above.
The National Appliance Energy Conservation Act, which became law on
March 17, 1987, amended the Energy Policy and Conservation Act in part
by: Redefining ``covered products'' (specifically, refrigerators,
refrigerator-freezers, and freezers were combined into one product type
from two; humidifiers and dehumidifiers were deleted; and pool heaters
were added); establishing Federal energy conservation standards for 11
of the 12 covered products; and creating a schedule, according to which
each standard is to be reviewed to determine
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if an amended standard is required. It also established the rebuttable
presumption test of economic justification.
The National Appliance Energy Conservation Amendments of 1988,
which became law on June 28, 1988, established Federal energy
conservation standards for fluorescent lamp ballasts. These amendments
also created a review schedule for DOE to determine if any amended
standard for fluorescent lamp ballasts is required.
The Energy Policy Act of 1992, which became law on October 24,
1992, addressed various commercial appliances and equipment.
As directed by the Act, DOE published an advance notice of proposed
rulemaking for fluorescent lamp ballasts, as well as a variety of other
consumer products. (55 FR 39624, September 28, 1990). The advance
notice presented the product classes that DOE planned to analyze, and
provided a detailed discussion of the analytical methodology and
analytical models that the Department expected to use in performing the
analysis to support this rulemaking.
Pursuant to section 325 of the Act, DOE proposed to revise the
energy conservation standards applicable to fluorescent lamp ballasts,
as well as a variety of other consumer products. 59 FR 10464 (March 4,
1994). On January 31, 1995, the Department published a Rulemaking
Determination that, based on comments received, it would issue a
revised notice of proposed rulemaking for fluorescent lamp ballasts. 60
FR 5880 (January 31, 1995).
A moratorium was placed on publication of proposed or final rules
for appliance efficiency standards as part of the FY 1996
appropriations legislation. Pub. L. 104-134. That moratorium expired on
September 30, 1996.
On July 15, 1996, the Department published a Process Improvement
Rule establishing procedures, interpretations and policies to guide the
Department in the consideration of new or revised appliance efficiency
standards (Procedures for Consideration of New or Revised Energy
Conservation Standards for Consumer Products). 61 FR 36974.
The Department conducted numerous meetings, workshops and
discussions regarding energy efficiency standards for fluorescent lamp
ballasts resulting in the publication of a Draft Report on Potential
Impact of Possible Energy Efficiency Levels for Fluorescent Lamp
Ballasts, July, 1997; a Summary of Inputs for the Technical Support
Document: Energy Efficiency Standards for Fluorescent Lamp Ballasts,
April 20, 1998; and a Ballast Manufacturer Impact Analysis Analytical
Approach, April 10, 1998. 62 FR 38222 (July 17, 1997) and 63 FR 16706
(April 6, 1998). A workshop was conducted on these analyses and
documents on April 28, 1998. 63 FR 16706 (April 6, 1998). Based on
comments and the growing popularity of electronic ballasts with T8
lamps, the Department solicited further comments specifically on the
issue of whether market shifts (e.g., from T12 to T8 lamps) should be
considered in determining the impact of an energy conservation standard
on commercial and industrial consumers, manufacturers and the nation.
63 FR 58330 (October 30, 1998). Further comments on the above analyses,
and modifications resulting from those comments, culminated in
publishing a revised analysis on the Codes and Standards Internet site
(http://www.eren.doe.gov/buildings/codes__standards/applbrf/
ballast.html) in April of 1999. We also conducted a workshop reviewing
this analysis on June 1, 1999. 64 FR 24634 (May 7, 1999). On the basis
of comments received on these documents, DOE reviewed its analysis and
prepared a TSD.
On October 12 and 13, 1999, the National Electrical Manufacturers
Association convened a meeting where its members negotiated with
representatives of the American Council for an Energy Efficient
Economy, the Natural Resources Defense Council, the Alliance to Save
Energy and the Oregon Energy Office to produce a joint comment proposal
for amended fluorescent lamp ballast standards. (Hereafter referred to
as the Joint Comment.) We have evaluated the impacts of the joint
comment proposal and those results are presented in Appendix E of the
TSD.
II. General Discussion
a. Test Procedures
The Act provides that no standard for a product be established if
there is no test procedure for the product. The Amendments of 1988 set
forth test procedures and energy conservation standards for fluorescent
lamp ballasts. Based upon the Amendments of 1988, the Department
established Federal test procedures for fluorescent lamp ballasts. 56
FR 18682 (April 24, 1991). As of the effective date of the energy
conservation standards (ballasts manufactured on or after January 1,
1990; sold by the manufacturer on or after April 1, 1990; or
incorporated into a luminaire by a luminaire manufacturer on or after
April 1, 1991), all ballasts, be they energy efficient magnetic,
cathode cutout or electronic, for use in connection with F40T12, F96T12
or F96T12HO lamps, are required to meet a ballast efficacy factor as
measured by the Federal test procedures. No one has petitioned DOE
indicating the Department's test procedures were inadequate for testing
fluorescent lamp ballasts using the above technologies. Since these are
the same technologies considered in today's proposed rule, the
Department considers the current Federal test procedures applicable and
appropriate for today's proposed rule. Furthermore, stakeholders
commenting in the Joint Comments stated that they consider the current
Federal test procedures applicable and appropriate for the new
recommended ballast standards. (Joint Comment, No. 91 at 6).
b. Technological Feasibility
1. General
There are lamp ballasts in the market at all of the efficiency
levels analyzed in today's notice. The Department, therefore, believes
all of the efficiency levels discussed in today's notice are
technologically feasible.
2. Maximum Technologically Feasible Levels
The Act requires the Department, in considering any new or amended
standards, to consider those that ``shall be designed to achieve the
maximum improvement in energy efficiency * * * which the Secretary
determines is technologically feasible and economically justified.''
(Section 325 (o)(2)(A)). Accordingly, for each class of product under
consideration in this rulemaking, a maximum technologically feasible
(max tech) design option was identified.
Ballast efficiency is expressed as a ballast efficacy factor, BEF.
It is equal to BF/W, where BF is the ballast factor expressed as a
percentage (e.g., 90, not 0.90) and W is the input power to the ballast
in ANSI (American National Standards Institute) C82.2-1984 in Watts.
The most efficient technology presently available is a high frequency
electronic ballast; this is considered the maximum technologically
feasible (MTF) design for this analysis. The operation at high
frequency (20 Kilohertz (kHz) or more) increases the lamp efficacy and
also allows for lower ballast losses.
For each product class and technology that we analyzed, there is a
range of efficiencies in the marketplace. In consideration of this
range, we used a different approach to selecting BEF level for the
purposes of today's analysis than
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for the setting of the trial standard levels. The analysis represents
the probable average savings from a movement from the base case to the
MTF option (electronic ballast), which itself has a range of BEFs. In
contrast, the proposed trial standards set BEF levels that allow the
large majority of electronic ballasts to meet the standard. The
following paragraph explains the two approaches in more detail.
For the analysis of electronic ballasts, we chose the median (50
percentile) BEF as the value to use from the electronic ballast product
data supplied by the National Electrical Manufacturers Association
(NEMA). These data are found in Appendix A of the TSD. For each product
class, about half of the ballasts on the market have efficiencies
greater and half lower than the level chosen for the analysis.
Therefore, the unit energy consumption calculated for a ballast at the
median efficiency will result in an energy use close to the average for
that product class. The Department believes this median approach
properly reflects the energy savings impact from using electronic
ballasts rather than magnetic ballasts.
For the purpose of setting efficiency standards, the Department
chose not to differentiate within a technology (such as electronic high
frequency ballasts) and decided to choose BEF levels that the vast
majority of models would be able to meet. Therefore, for electronic
ballasts in each product class, we chose the 10 percentile BEF level of
efficiency. This means that 90 percent of the existing electronic
ballast models can meet the standard being considered. In order to
clearly show the differences in these BEFs, we report in the table
below both the proposed standard level BEF (10th percentile) and the
corresponding analysis level BEF (50th percentile) for each product
class analyzed.
Electronic Fluorescent Lamp Ballast Efficacy Factors \3\
------------------------------------------------------------------------
Analysis BEF Standards BEF
Application for operation of (50th percentile) (10th percentile)
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One F40 T12/40-watt lamp........ 2.34 2.29
Two F40 T12/40-watt lamps....... 1.19 1.17
Three F40 T12/40-watt lamps..... 0.78 0.76
Two F96 T12/40-watt lamps....... 0.65 0.63
Two F96 T12HO/40-watt lamps..... 0.43 0.39
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Another consideration in choosing MTF levels is that experience
shows that there is some variation in the BEFs of ``identically''
manufactured electronic ballasts of any product class. As indicated in
Table A.3, Appendix A of the TSD, there is sometimes only a small
spread between the 10 and 50 percentile BEFs. By choosing the standard
level at the 10th percentile rather than the 50 percentile level, the
Department is allowing manufacturing tolerance to the ballast
manufacturers.
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\3\ It should be noted the analyses were performed assuming
energy saver lamps and the values in the table below are for full-
wattage T12 lamps. Table 3.5 in the TSD contains both watts and BEF
values for various ballast types operating T12 energy saver lamps.
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c. Energy Savings
1. Determination of Savings
The Department forecasted energy savings through the use of a
national energy savings (NES) spreadsheet, which forecasted energy
savings over the period of analysis for candidate standards relative to
the base case. The Department quantified the energy savings that would
be attributable to a standard as the difference in energy consumption
between the candidate standards case and the base case. The base case
represents the forecast of energy consumption in the absence of amended
mandatory efficiency standards.
The NES spreadsheet model is described in section III.b of this
notice, infra, and also in Appendix B of the TSD. One of the very
important inputs to the model is the forecast of magnetic ballast
shipments in the absence of amended mandatory standards. Two shipments
scenarios (shipments of magnetic ballasts decline until 2015 and
shipments decline until 2027) were examined to attempt to cover the
range of possibilities for market shares of electronic and magnetic
ballasts (see Chapter 5 of the TSD). Additionally, in evaluating the
joint comment proposal, the Department used a third shipment scenario
(flat magnetic ballast shipment forecast) as the upper bound as
described in Appendix E of the TSD.
The NES spreadsheet model first calculates the energy savings in
site energy or kilowatt-hours (kWh). Site energy is the energy directly
consumed at building sites by the lamp/ballast systems of interest. The
energy savings to the nation is expressed in quads, that is,
quadrillions of British thermal units (Btus). This is the source energy
needed to generate and transmit the electricity consumed. A time series
of conversion factors is used to convert site energy (kWh) to source
energy (Btu). Chapter 5 of the TSD contains a table of these conversion
factors, which are derived from DOE/EIA's Annual Energy Outlook 1999.
2. Significance of Savings
Under section 325(o)(3)(B) of the Act, the Department is prohibited
from adopting a standard for a product if that standard would not
result in ``significant'' energy savings. While the term
``significant'' has never been defined in the Act, the U.S. Court of
Appeals, in Natural Resources Defense Council v. Herrington, 768 F.2d
1355, 1373 (D.C. Cir. 1985), concluded that Congressional intent in
using the word ``significant'' was to mean ``non-trivial.''
d. Rebuttable Presumption
The National Appliance Energy Conservation Act established new
criteria for determining whether a standard level is economically
justified. Section 325(o)(2)(B)(iii) states:
If the Secretary finds that the additional cost to the consumer
of purchasing a product complying with an energy conservation
standard level will be less than three times the value of the energy
* * * savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure, there shall be a rebuttable presumption that such
standard level is economically justified. A determination by the
Secretary that such criterion is not met shall not be taken into
consideration in the Secretary's determination of whether a standard
is economically justified.
If the increase in initial price of an appliance due to a
conservation standard would repay itself to the consumer in energy
savings in less than three years, then we presume that such standard is
economically justified.\4\ This
[[Page 14132]]
presumption of economic justification can be rebutted upon a proper
showing.
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\4\ For this calculation, the Department calculated cost-of-
operation based on the DOE test procedures with assumed usage shown
in Table 3.5 of the TSD. Commercial and industrial consumers that
use the ballasts less hours will experience a longer payback while
those that use them more will have a shorter payback.
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e. Economic Justification
As noted earlier, Section 325(o)(2)(B)(i) of the Act provides seven
factors to be evaluated in determining whether a conservation standard
is economically justified.
1. Economic Impact on Manufacturers and Consumers
The July 1996 Process Improvement Rule established procedures,
interpretations and policies to guide the Department in the
consideration of new or revised appliance efficiency standards
(Procedures for Consideration of New or Revised Energy Conservation
Standards for Consumer products). 61 FR 36974 (July 15, 1996). Key
objectives of the rule have direct bearing on the implementation of
manufacturer impact analyses. First, the Department will utilize an
annual cash flow approach in determining the quantitative impacts on
manufacturers. This includes a short-term assessment based on the cost
and capital requirements during the period between the announcement of
a regulation and the time when the regulation comes into effect, and a
long-term assessment. Impacts analyzed include industry net present
value, cash flows by year, changes in revenue and income, and other
measures of impact, as appropriate. Secondly, the Department will
analyze and report the impacts on different types of manufacturers,
with particular attention to impacts on small manufacturers. Thirdly,
the Department will consider the impact of standards on domestic
manufacturer employment, manufacturing capacity, plant closures and
loss of capital investment. Finally, the Department will take into
account cumulative impacts of different DOE regulations on
manufacturers.
For consumers, measures of economic impact are the changes in
purchase price and annual energy expense. The purchase price and annual
energy expense, i.e., life-cycle cost, of each standard level are
presented in Chapter 4 of the Technical Support Document (TSD). Under
section 325 of the Act, the life-cycle cost analysis is a separate
factor to be considered in determining economic justification.
Additionally, the Department has decided to consider, under factor
seven, ``other factors the Secretary considers relevant,'' the life-
cycle cost impacts on those subgroups of commercial and industrial
consumers who, if forced by standards to purchase electronic ballasts,
would choose to switch from T12 to T8 lighting systems.
2. Life-Cycle Costs
One measure of the effect of proposed standards on consumers is the
change in operating expense as compared to the change in purchase
price, both resulting from standards. This is quantified by the
difference in the life-cycle costs between the baseline and the more
efficient technologies for the lamp/ballast combinations analyzed. The
life-cycle cost is the sum of the purchase price and the operating
expense, including installation and maintenance expenditures,
discounted over the lifetime of the appliance.
For each lamp/ballast combination, we calculated the life-cycle
costs for three technologies: energy efficient magnetic, cathode cutout
and electronic ballasts. We used real discount rates of 4, 8 and 15
percent for the calculations. The assumption is that the consumer
purchases the ballast in 2003. Price forecasts are taken from the 1999
Annual Energy Outlook of the Energy Information Administration (DOE/
EIA-0383). For the probability-based life-cycle cost analysis, we used
a distribution of marginal electricity prices for a data base of
commercial buildings (see Chapter 4 and Appendix B of the TSD). The
life-cycle cost calculations include ballast and lamp costs (purchase
prices and installation costs for both and replacement costs for lamps
only) and annual electricity costs of the lamp/ballast system operation
over the lifetime of the ballast. Chapter 4 of the TSD contains the
details of the life-cycle cost calculations including those considered
under factor seven below, infra.
3. Energy Savings
While significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, the Act
requires DOE, in determining the economic justification of a standard,
to consider the total projected energy savings that are expected to
result directly from revised standards. The Department used the NES
spreadsheet results, discussed earlier, in its consideration of total
projected savings. The savings are provided in Section V of this
notice.
4. Lessening of Utility or Performance of Products
This factor cannot be quantified. In establishing classes of
products and design options and by providing exemptions, the Department
tried to eliminate any degradation of utility or performance in the
products under consideration in this rulemaking.
An issue of utility that was considered was the possibility of
interference with certain equipment, such as medical monitoring
equipment, caused by the high frequency of electronic ballasts. To
prevent any interference that cannot be solved by electronic ballast
designers, the Department is not establishing a standard for T8
ballasts, thereby allowing magnetic T8 ballasts for such applications.
5. Impact of Lessening of Competition
It is important to note that this factor has two parts; on the one
hand, it assumes that there could be some lessening of competition as a
result of standards; and on the other hand, it directs the Attorney
General to gauge the impact, if any, of that effect.
In order to assist the Attorney General in making such a
determination, the Department has provided the Attorney General with
copies of this notice and the Technical Support Document for review.
6. Need of the Nation To Conserve Energy
We report the environmental effects from each standard level for
each product under this factor in Section V of this notice.
7. Other Factors
This provision allows the Secretary of Energy, in determining
whether a standard is economically justified, to consider any other
factors that the Secretary deems to be relevant. Under this factor, the
Secretary has decided to consider the life-cycle cost impacts on those
subgroups of consumers who, if forced by standards to purchase
electronic ballasts, would choose to switch from T12 to T8 lighting
systems. This analysis is part of the Department's continuing effort to
study the economic impact of standards on consumers. While the
Department does not believe it can set standard levels based on
consumer purchasing behavior given the findings of the court in Natural
Resources Defense Council v. Herrington, 768 F. 2d 1355, 1406-07 (D.C.
Cir. 1985), where the court stated that ``the entire point of a
mandatory program was to change consumer behavior'' and ``the fact that
consumers demand short payback periods was itself a major cause of the
market failure that Congress hoped to correct,'' the Department will
consider and evaluate the impact of likely consumer actions.
The Secretary has also decided to consider the Joint Comment. This
[[Page 14133]]
proposal segments the ballast market by defining replacement ballasts
and proposes extended implementation dates for all segments of the
ballast market to comply with the new standards. The proposal also
includes certain exemptions. All of these proposals are oriented toward
mitigating financial impacts on manufacturers and ensuring a minimal
level of disruption to the ballast replacement marketplace.
III. Methodology
The Process Rule outlines the procedural improvements identified by
the interested parties. 61 FR 36974. The process improvement effort
also included a review of the: (1) Economic models; (2) analytical
tools; (3) methodologies; (4) non-regulatory approaches; and (5)
prioritization of future rules.
The Department developed two new spreadsheet tools to meet the
objectives of the Process Rule. The first spreadsheet calculates Life-
Cycle-Cost (LCC) and Payback. The second calculates national energy
savings (NES). We tailored versions of these two spreadsheets for the
ballast analyses. The Department also completely revised the
methodology used in assessing manufacturer impacts including the
adoption of the Government Regulatory Impact Model (GRIM).
Additionally, DOE has developed a new approach using the National
Energy Modeling System (NEMS) to estimate impacts of ballast energy
efficiency standards on electric utilities and the environment. The
Department used a version of Energy Information Administration's (EIA)
NEMS for the utility and environmental analyses. NEMS simulates the
energy economy of the U.S. and has been developed over several years by
the EIA primarily for the purpose of preparing the Annual Energy
Outlook (AEO). NEMS produces a widely-known baseline forecast for the
U.S. through 2020 that is available in the public domain. The version
of NEMS used for appliance standards analysis is called NEMS-BRS \5\,
and is based on the AEO99 version with minor modifications. NEMS offers
a sophisticated picture of the effect of standards since its scope
allows it to measure the interactions between the various energy supply
and demand sectors and the economy as a whole.
---------------------------------------------------------------------------
\5\ EIA approves use of the name NEMS to describe only an AEO
version of the model without any modification to code or data.
Because our analysis entails some minor code modifications and the
model is run under various policy scenarios that deviate from AEO
assumptions, the name NEMS-BRS refers to the model as used here.
---------------------------------------------------------------------------
a. Life-Cycle-Cost Spreadsheet
This section describes the LCC spreadsheet model used for analyzing
the economic impacts of possible standards on individual commercial and
industrial consumers. Details of the spreadsheet model can be found in
Appendix A. We conduct the LCC analysis with a spreadsheet model
developed in Microsoft Excel for Windows 95. When combined with Crystal
Ball (a commercially available software program), the LCC model can use
a Monte Carlo simulation to perform the analysis by incorporating
uncertainty and variability considerations. The spreadsheet is
organized so that ranges (distributions) can be entered for each input
variable needed to perform the calculations. The LCC output can be
either a point value when we use the average value of the inputs or a
distribution when we use distributions for some or all of the inputs.
In the analyses described in this notice, we used distributions for the
most important input variables.
The life-cycle cost calculations include ballast and lamp costs
(purchase price and installation cost for both and replacement cost for
lamps only) and annual electricity costs of the lamp/ballast system
operation over the lifetime of the ballast. The inputs to the life-
cycle cost analysis include: The year standards take effect, the
discount rate, the electricity price projections, ballast prices,
annual lighting hours, ballast life, ballast input power, and initial
and lamp replacement costs. Chapter 4 of the TSD contains the details
of the life-cycle cost calculations.
In certain cases (when a T8 lamp/ballast system is considered as
replacing a T12 lamp/ballast system), an additional input (mean lamp
lumens) was required. We used this input to normalize the unequal light
outputs for the two lamp types.
b. National Energy Savings Spreadsheet
In order to make the analysis more accessible and transparent to
all stakeholders, we developed a spreadsheet model that uses Excel in
Windows 95 to calculate the national energy savings (NES) and the
national economic costs and savings from new standards. We can change
input quantities within the spreadsheet. For example, one can easily
change the ballast prices. Unlike the LCC analysis, the NES spreadsheet
does not use distributions for inputs or outputs. We conduct
sensitivities by running different scenarios.
DOE uses the NES spreadsheet to perform calculations of national
energy savings based on user inputs similar to those for the LCC
spreadsheet. The national energy savings, energy cost savings,
equipment costs and net present value of benefits for several product
classes are forecast from the chosen start year through 2030. The
forecasts provide annual and cumulative values for all four output
parameters.
The Department calculates the national energy savings by
subtracting energy use under a standards scenario from energy use in a
base case (no standards scenario). Energy use is reduced when an energy
efficient magnetic (EEM) ballast is replaced by either a cathode cutout
(CC) or an electronic ballast. For CC standards, the user can specify
what percent of EEM ballasts are converted to electronic and what
percent to CC. For an electronic standard, the user can specify what
percent of EEM ballasts are converted to T12 or T8 electronic. Unit
energy savings for each product class are the same as calculated in the
LCC spreadsheet. Additional information about the NES spreadsheet can
be found in Chapter 5 and Appendix B of the TSD.
User inputs include: (1) A choice from among several electricity
price projections; (2) effective date of the ballast standard; (3)
discount rate and discount year; (4) a shipments forecast; and (5)
ballast assumptions. Ballast assumptions include inputs such as annual
lighting hours and ballast prices. Additionally, we use a time series
of conversion factors to change from site to source energy.
One of the more important components of any estimate of future
impact is shipments. Forecasts of shipments for the base case and
standards case were used as inputs to the NES spreadsheet. The
shipments portion of the spreadsheet forecasts EEM ballast shipments
from 1997 to 2030. One base case scenario assumes decreasing shipments
of EEM ballasts until the year 2015. Another base case scenario assumes
decreasing shipments until the year 2027. The decreasing shipments
scenarios are determined by one user input: The year by which EEM
ballast shipments decrease to 10 percent of the 1997 value. The
decrease in EEM shipments is linear. Once that 10 percent value is
reached, shipments remain at that value through 2030. Additional
details on the various shipments forecasts are provided in Chapter 5 of
the TSD.
[[Page 14134]]
c. Manufacturer Impact Analysis and Government Regulatory Impact Model
(GRIM)
The manufacturer analysis estimates the financial impact of
standards on manufacturers and calculates impacts on employment and
manufacturing capacity.
Prior to initiating the detailed manufacturing impact analysis for
the ballast rulemaking, the Department prepared a document titled
``Ballast Manufacturer Impact Analysis Analytical Approach.'' This
document was presented at a public workshop held on April 28, 1998. We
developed the approach from the general framework for Manufacturing
Impact Analyses presented by the Department in March 1997 and modified
for its application to the ballast rule. The document outlined
procedural steps and identified issues for consideration.
As proposed in the Approach document, the manufacturer impact
analyses (MIA) was conducted in four phases. Phase 1, Industry Profile
and Issue Definition, consisted of two activities, namely, preparation
of an industry characterization and the conduct of an issue
identification workshop. The second phase, ``Strawman'' Industry Cash
Flow, had as its focus the larger industry. In this phase, the GRIM was
used to prepare a ``strawman'' industry cash flow analysis. Here the
Department used publicly available information developed in Phase 1 to
adapt the GRIM model structure to facilitate the analysis of new
ballast standards. In the Phase 3, Sub-Group Impact Analysis,
individual manufacturers used the strawman cash flow as a template from
which individual company level cashflows were developed from GRIM.
Phase 3 also entailed the documentation of additional impacts on
employment and manufacturing capacity through an interview process.
Finally in Phase 4, Industry Cash Flow, individual cash flows were
aggregated into three groups, one including all manufacturers, a second
including full line manufacturers of magnetic and electronic ballasts,
and a third including manufacturers producing only electronic ballasts.
1. Phase 1, Industry Profile and Issue Definition
Phase 1 of the Manufacturer Impact Analysis consisted of two
activities, namely, preparation of an Industry Characterization, and
the conduct of an issue analysis workshop. Prior to initiating the
detailed impact studies, the Department received input on the present
and past structure and market characteristics of the ballast industry.
This activity involved both quantitative and qualitative efforts to
assess the industry and products to be analyzed. Issues addressed
included manufacturer market shares and characteristics; trends in
number of firms; the financial situation of manufacturers; and trends
in ballast characteristics and markets.
We presented publicly available quantitative data published by U.S.
Bureau of Census with regards to the ballast industry at the April 28,
1998, workshop. These reports include such statistics as the number of
companies, manufacturing establishments, employment, payroll, value
added, cost of materials consumed, capital expenditures, product
shipments, and concentration ratios.
To further assist in performing the Industry Profile and to define
key issues, the Department conducted a series of interviews with
ballast manufacturers in late 1996 and early 1997. DOE distributed
summaries of these interviews at the ``Public Workshop on the Revised
Life Cycle Cost and Engineering Analysis of Fluorescent Lamp
Ballasts,'' held on March 18, 1997.
The interviews and review of public literature suggested that the
following guidelines be followed to assess the impacts of a new ballast
standard. First, the Manufacturer Impact Analysis should be performed
on a company-by-company basis and the industry impact constructed from
an aggregation of impacts on individual companies. Second, the analysis
should recognize the increasingly global nature of the ballast
industry. Gains or losses in U.S. sales will have consequences for
manufacturers regardless of where their production facilities are
located. Where possible, the analysis should be structured to assess
impacts at U.S. National, North American, and Global levels. Finally,
the Manufacturer Impact Analysis should include consideration of direct
industry suppliers and luminaire and lamp manufacturers. The Department
recognized that manufacturers do not operate in isolation and that
changes in production levels or economic health of a manufacturer can
have significant impacts on its suppliers and other trade allies.
2. Phase 2, ``Strawman'' Industry Cash Flow
Phase 2 of the manufacturer analyses has as its focus the
``larger'' industry. As such, this phase resembles the Department's
past practice of modeling a ``prototypical'' firm with average industry
values. The analytical tool used for calculating the financial impacts
of standards on manufacturers is the GRIM. In phase 2, we used GRIM to
perform a ``strawman'' industry cash flow analysis. Section III.c
below, describes briefly the GRIM's operating principles.
Given the relatively small number of firms in the industry, the
Department proposed to create an Industry Cash Flow Analysis using a
``bottom-up'' approach. Essentially, each manufacturer was asked to
provide its own cash flow analysis to be aggregated with all other
manufacturer submittals.
In order to facilitate individual manufacturer analysis, the
Department prepared ``strawman'' scenarios for a ``prototypical''
manufacturer from publicly available financial information.
Manufacturers then performed their individual cash flows by modifying
relevant parameters in the strawman to meet their own situation (price,
cost, financial, shipments, etc.).
For the strawman, the Department prepared a list of financial
values to be used in the GRIM industry analysis. We estimated these by
studying publicly available financial statements of fluorescent lamp
ballast manufacturers. A detailed definition of financial inputs and
their values for a ``prototypical'' ballast manufacturer is contained
in Attachment C of the document, entitled ``Financial Inputs to GRIM
for the Ballast Rulemaking Analysis.'' We derived strawman values for
prices from the Bureau of Census' Current Industrial Reports (CIRs).
The dollar value of ballast shipments from factories is divided by the
quantity of ballasts shipped to arrive at the per unit manufacturer
price. In order to estimate manufacturing costs-labor, materials,
depreciation/tooling, etc.--from the average manufacturer prices
obtained from CIRs, we developed a typical ballast industry cost
structure from publicly available information from the Census of
Manufacturers (CMs) and from transformer industry statistics (SIC#
3612), and which we obtained from Robert Morris Associates (RMA)
reports. Finally in preparing the draft industry cash flow analysis,
the Department used the same ballast shipment scenarios developed for
the NES spreadsheet.
3. Phase 3, Sub-Group Impact Analysis
The Department conducted detailed interviews with ballast
manufacturers representing over 95 percent of domestic ballast sales to
gain insight into the potential impacts of standards. During these
interviews, the Department solicited the information necessary to
[[Page 14135]]
evaluate cashflows and to assess employment and capacity impacts.
The interview process had a key role in the manufacturer impact
analyses, since it provided an opportunity for manufacturers to express
privately their views on important issues and provide confidential
information needed to assess financial, employment and other business
impacts. To support the development of company cashflows, the interview
guide solicited information on the possible impacts of new standards on
manufacturing costs, product prices, and sales. The evaluation of the
possible impacts on direct employment, and assets also drew heavily on
the information gathered during the interviews. The interview guide
solicited both qualitative and quantitative information. We requested
supporting information whenever applicable.
DOE asked interview participants to identify all confidential
information provided in writing or orally. Approximately two weeks
following the interview, we provided an interview summary to give
manufacturers the opportunity to confirm the accuracy and protect the
confidentiality of all collected information.
4. Phase 4, Industry Cash Flow
As previously described, we used the GRIM spreadsheet and an
interview guide to perform the ballast Manufacturer Impact Analysis on
a company-by-company basis. This process has the benefit of enabling
the impacts of standards to be evaluated at multiple levels of
aggregation. The total industry impact was constructed from an
aggregation of impacts on individual companies. The Department
aggregated the individual cash flows into three groups, one including
all manufacturers, a second including full line manufactures of
magnetic and electronic ballasts only, and a third group including
manufacturers producing only electronic ballasts. This aggregation
scheme was selected as the most representative of the range of impacts
on individual manufactures compared to the industry aggregate values.
5. GRIM Spreadsheet
A change in standards affects a manufacturer's cashflow in three
distinct ways. Increased levels of standards will: (1) Require
additional investment; (2) raise production costs; and (3) affect
revenue through higher prices and, possibly, lower quantities sold. To
quantify these changes, the Department performs an industry and
manufacturer cashflow analyses using the GRIM.
The GRIM analysis uses a number of inputs--annual ballast
shipments; ballast prices; manufacturer costs such as materials and
labor, selling and general administration costs, taxes, and capital
expenditures--to arrive at a series of annual cash flows beginning from
before implementation of standards and continuing explicitly for
several years after implementation. The measure of industry net present
values are calculated by discounting the annual cash flows from the
period before implementation of standards to some future point in time.
Additional information about the GRIM spreadsheet can be found in
Chapter 6 of the TSD.
d. NEMS Environmental Analysis
The environmental analysis provides estimates of changes in
emissions of nitrogen oxides (NOX) and carbon from carbon
dioxide (CO2). The Department used NEMS-BRS for the
fluorescent ballast environmental analyses (as well as the utility
analyses). NEMS-BRS is run similar to the AEO99 NEMS except that
commercial lighting energy usage is reduced by the amount of energy
(electricity) saved due to proposed ballast standards. The input of
energy savings are obtained from the NES spreadsheet. For the
environmental analysis, the output is the forecasted physical
emissions. The net benefits of the standard is the difference between
emissions estimated by NEMS-BRS and the AEO99 Reference Case.
The environmental analysis is relatively straightforward from NEMS-
BRS. Carbon emissions are tracked in NEMS-BRS using a detailed carbon
module that provides robust results because of its broad coverage of
all sectors and inclusion of interactive effects. The only form of
carbon tracked by NEMS-BRS is CO2. However, in this report
the carbon savings are reported as elemental carbon.
The two airborne pollutant emissions that have been reported in
past analyses, SO2 and NOX, are reported by NEMS-
BRS. NOX results are based on forecasts of compliance with
existing legislation. In the case of SO2, the Clean Air Act
Amendments of 1990 set an emissions cap on all power generation. The
attainment of this target, however, is flexible among generators and is
enforced by applying market forces, through the use of emissions
allowances and tradable permits. As a result, accurate simulation of
SO2 trading tends to imply that physical emissions effects
will be zero because emissions will always be at, or near, the ceiling.
This fact has caused considerable confusion in the past. There is
virtually no real possible SO2 environmental benefit from
electricity savings as long as there is enforcement of the emission
ceilings. Please see Appendix D of the TSD for a discussion of this
issue.
Alternative price forecasts corresponding to the high and low
economic growth side cases found in AEO99 have also been generated for
use by NES and will be explored in a similar fashion with NEMS-BRS
runs.
IV. Discussion of Comments
As noted above, the DOE proposed to revise the energy conservation
standards applicable to fluorescent lamp ballasts on March 4, 1994. On
January 31, 1995, the Department published a rulemaking determination
that, based on comments received, it would issue a revised notice of
proposed rulemaking for fluorescent lamp ballasts. Since that time, the
Department conducted numerous meetings, workshops and discussions
regarding energy efficiency standards for fluorescent lamp ballasts,
resulting in a Draft Report on Potential Impact of Possible Energy
Efficiency Levels for Fluorescent Lamp Ballasts, July, 1997; Summary of
Inputs for the Technical Support Document: Energy Efficiency Standards
for Fluorescent Lamp Ballasts, April 20, 1998; and Ballast Manufacturer
Impact Analysis Analytical Approach, April 10, 1998. 62 FR 38222 (July
17, 1997) and 63 FR 16706 (April 6, 1998). A workshop was conducted on
these analyses and documents on April 28, 1998. 63 FR 16706 (April 6,
1998). Based on comments and the growing popularity of electronic
ballasts with T8 lamps, the Department solicited further comments
specifically on the issue of whether market shifts (e.g., from T12 to
T8 lamps) should be considered in determining the impact of an energy
conservation standard on commercial and industrial consumers,
manufacturers and the nation. 63 FR 58330 (October 30, 1998). Further
comments on the above analyses, and modifications resulting from those
comments, culminated in publishing an analysis on the Codes and
Standards Internet site (http://www.eren.doe.gov/buildings/
codes__standards/applbrf/ballast.html) in April of 1999. We also
conducted a workshop on that analysis on June 1, 1999. 64 FR 24634 (May
7, 1999). These analyses presented the impacts of standards on
consumers, the nation and manufacturers. The Department considers all
comments regarding this rulemaking made prior to the three documents
and posted revised analyses listed above, to have been resolved or
contained within comments pertaining to those documents. Therefore, in
today's notice of proposed
[[Page 14136]]
rulemaking, the Department is only addressing comments made relative to
those documents. Additionally, the National Electrical Manufacturers
Association (NEMA), the American Council for an Energy Efficient
Economy (ACEEE), the Natural Resources Defense Council (NRDC), the
Alliance to Save Energy (Alliance) and the Oregon Energy Office
(Oregon) submitted a joint comment for amended fluorescent lamp ballast
standards. (Joint Comment, No. 91). While these stakeholders had
previously commented on the above three documents and the web posting,
the Department assumes, based on their joint comment, that it
supercedes their previous comments. Therefore, their previous comments
are not addressed in today's notice.
Life Cycle Cost Parameters
Electricity price: The Edison Electric Institute and Mr. Glenn
Schleede raised questions about the electricity prices used in the 1997
Report, particularly about the possible effects of increased
competition in the utility industry on prices. (EEI, No. 12 at 2-3 and
Schleede, No. 15 at 4-8 and 13-20 and No. 21 at 2-4).
To reflect increased competition in the electricity industry due to
restructured markets, the AEO99 reference case assumes a transition to
competitive retail pricing in five regions--California, New York, New
England, the Mid-Atlantic Area Council (consisting of Pennsylvania,
Delaware, New Jersey, and Maryland), and the Mid-America Interconnected
Network (consisting of Illinois and parts of Wisconsin and
Missouri).\6\ The specific restructuring plans differ from State to
State and utility to utility, but most call for a transition period
during which customer access will be phased in.
---------------------------------------------------------------------------
\6\ For more information on restructuring assumptions, please
see pp. 14-15 of the AEO99.
---------------------------------------------------------------------------
The transition period reflects the time needed for the
establishment of competitive market institutions and the recovery of
stranded costs as permitted by regulators. The region-wide 10 percent
rate reduction required in California is represented. For the other
regions it is assumed that competition will be phased in between 1999
and 2007, with fully competitive prices beginning in 2008. In all the
competitively priced regions, the generation price (the price for the
energy alone) is set by the marginal cost of generation. Transmission
and distribution prices are assumed to remain regulated.
Several comments, including EEI and Mr. Schleede suggested marginal
electricity rates should be used instead of average values. (EEI, No.
12 at 2, Schleede, No. 15 at 6 and No. 21 at 3, CDA, No. 25 at 2 and
NEMA, No. 27 at 20-21). Mr. Schleede also suggested that instead of
using one electricity price for all years of the analysis, a projection
of future electricity prices should be used. (Schleede, No. 15 at 5).
In response to comments on marginal energy prices, we performed a
separate analysis, whose goal was to generate marginal electricity
prices for the commercial sector. Because of the large number of
electric utilities in the U.S., we chose a small subset of electric
utilities for this analysis. We analyzed the electric bills (with and
without standards) of a large number of commercial buildings in each of
these utility districts. In the TSD (see Chapter 4), we show how a
distribution of marginal electricity prices was obtained from this
analysis of rate schedules for 24 utilities for the year 1997. We
projected these marginal prices for each future year of the analysis by
using the rate of decrease in the EIA Annual Energy Outlook 1999, as
shown in Table 4.2 in Chapter 4 of the TSD. Alternative electricity
price scenarios shown in Table 4.2 are also available to users of the
Life Cycle Cost and National Energy Savings spreadsheets.
Mr. Schleede indicated that the sensitivity analysis, which
considered the full distribution of U.S. commercial electricity prices,
was an improvement over the previous practice of just using a point
estimate. (Schleede, No. 21 at 1).
Additional comments on marginal electricity prices were received
after the posting of analysis results on the DOE web site in April of
1999.
Mr. Schleede stated DOE and its contractors have continued their
ambivalence about removing fixed costs from the life cycle cost
calculations. (Schleede, No. 76 at 1).
Mr. Schleede is incorrect. We have used marginal electricity prices
for all life-cycle cost savings calculations and there are no fixed
costs in the marginal electricity prices used as described in Appendix
B of the TSD.
EEI does not agree with the calculations of ``epsilon'' values as
shown in the April 1999 text report entitled Life Cycle Cost Results.
EEI would like to see how DOE handled the issues of lighting load
factors (e.g., the amount of lighting actually used during the day,
such as 90 percent of the fixtures) which affect kWh energy reductions,
and coincidence and diversity factors which will affect the kW demand
reductions (and their economic impact). (EEI, No.48 at 2).
The Department describes the method in Appendix B of the TSD,
Marginal Energy Prices report: Demand Decrement Due to Standards--The
Role of Lighting Coincidence and Diversity.
EEI commented that a line in the LCC results writeup reads ``the
change in the bill divided by the change in energy usage yields the
marginal electricity price.'' EEI stated that this is not analytically
correct. For commercial (and industrial) customers, there is a marginal
kWh price and a marginal kW price that should not be ``blended'' for a
cost analysis. The change in the kWh energy portion cost of the bill
divided by the change in energy usage yields the marginal kWh energy
price, and the change in the kW demand cost of the bill divided by the
change in the peak kW demand (monthly and/or on-peak) yields the
marginal kW demand price. These two marginal costs are separate and
calculated differently. (EEI, No. 48 at 4).
The bill is a combination of the kWh (energy) and kW (demand)
components, and the Department calculated them separately in order to
derive the marginal electricity prices. The use of a proportional
demand decrement (calculated as explained in Appendix B of the TSD,
Marginal Energy Prices) enabled DOE to calculate each of the
contributions to bill savings associated with kWh savings and kW
savings.
Published sources for average commercial prices (defined as
revenues from energy and demand charges combined, divided by energy
sales) are expressed on a per kWh basis, ``blending'' the energy and
demand charges. For consistency with those sources of projected
commercial energy prices, the Department sees no practical alternative
to including the kW (demand) savings component, expressed on a per kWh
basis, in the derivation of marginal commercial prices.
EEI stated it is not sure how DOE performed the calculation of
epsilons for industrial customers, as only the procedure for commercial
customers was outlined in the text report (DOE web posting of April,
1999). (EEI, No. 48 at 4).
The epsilon distribution calculated for the commercial sector was
also used for calculating the industrial marginal electricity prices
from the industrial average electricity prices.
EEI stated that DOE used the ``average'' electric price, rather
than the marginal electricity price, on the spreadsheet under the
``Results'' tab. This has the result of showing more favorable results
for life cycle cost savings, paybacks, and the globalized
[[Page 14137]]
percentage of winners and losers. (EEI, No. 48 at 4).
The results (life-cycle cost savings, payback and percent winners
and losers) are calculated using marginal prices applied to electricity
savings. The sheet titled ``Results'' in the LCC version 4 spreadsheet
does use average values for the purpose of calculating a life-cycle
cost for each technology. However, this sheet was only provided as a
check to allow the user to estimate LCC and payback periods using
average values and then compare them to the results obtained with
distributions (in Crystal Ball) for the main inputs. We will relabel
the ``Results'' sheet to ``LCC and Payback Periods Using Average Values
for All Inputs'' to avoid confusion in any future analysis.
Mr. Schleede stated that electricity prices are falling faster than
the EIA forecast in Annual Energy Outlook, 1998 and 1999 Reference
cases. (Schleede, No. 76 at 1).
DOE used the EIA forecast over the period 2003-2030. The rate of
decrease over the last few years is influenced by electricity
deregulation and seems unlikely to translate into a 27 year trend.
Mr. Schleede stated that there is a wide variation in electricity
prices and many people and organizations would be forced to incur
higher life cycle costs if DOE proceeds with ballast standards.
(Schleede, No. 76 at 1).
The Department uses a distribution of electricity prices as input
to its LCC analysis and reports the percentage of end-users with higher
and lower LCC from ballast standards.
Annual Lighting Hours: The values we used for annual lighting hours
in the 1997 Report were based on average values from energy audits
performed by Xenergy, Inc. on over 25,000 buildings between 1990 and
1994, as described in Section A.4 of the 1997 Report.
EEI asked that a +/- range be given for the average annual
operating hours. (EEI, No. 12 at 3).
We are using ranges of annual lighting operation hours, as shown in
Figures 4.4 through 4.9 of the TSD, in calculating consumer life cycle
costs. These distributions range from less than 200 hours of use to
over 8,000 hours.
Other LCC Inputs: EEI asked if U-tube lamps were included. (EEI,
No. 12 at 3).
U-tube lamps are driven by the same ballasts as straight-tube
lamps; therefore, we did not conduct separate LCC analyses for them
(the wattages and lamp prices are only slightly different). Ballasts
that drive U-tube lamps are included in the NEMA data to generate
shipments data for the NES (see National Energy Savings below).
EEI suggested that F96T8 lamp ballasts be included in the analysis.
(EEI, No. 12 at 3). Other comments, on the limited re-opening of the
record, also suggested including 8-foot T8 ballasts. (Osram Sylvania
Inc, No. 34 at 3 and Motorola Lighting Inc., No. 33 at 2 and ACEEE, No.
77 at 3).
Since F96T8 lamp/ballast systems have small market shares, the
Department did not collect data and analyze them separately or include
them in today's proposed rule.
International Consulting Services (ICS) asked that the faster lumen
depreciation of T8s be taken into account. (ICS, No. 17 at 5).
The Lighting Upgrade Manual published by EPA's Green Lights Program
(EPA-430-B-95-009), February 1997 edition, Lighting Maintenance
section, page 3, has a graph of lamp lumen depreciations. The four-foot
T8 lamps have a flatter lamp lumen depreciation curve than do the four-
foot T12 lamps, showing that T8s have slower lumen depreciation than
T12. The same is true for the eight-foot T12 and T8 lamps. However, we
did not consider this effect in the LCC analysis, as it does not
generally impact lamp lifetime or relamping times, and, therefore, does
not affect the result of the analysis.
National Energy Impacts
In the 1997 Report, we used the COMMEND model to project ballast
sales and National Energy Impacts. In response to comments that COMMEND
was difficult to understand and use, we developed a spreadsheet
calculation tool for use in the TSD analyses as was previously
discussed under Methodology. We used the NES spreadsheet to estimate
national energy savings and economic parameters.
We divided the comments received on national energy impacts into
five categories: COMMEND-related comments, the NES model and approach,
shipments and market shares, lighting/HVAC (heating, ventilating, and
air conditioning) interactions, and non-regulatory programs.
COMMEND-Related Comments
Several issues on COMMEND (e.g., ballast sales) were raised by
comments. Since today's analysis uses the NES spreadsheet model instead
of COMMEND, these issues are no longer relevant and are not addressed.
Non-Regulatory Programs
EEI suggested that the impacts of voluntary efficiency programs
should be more adequately taken into account. It also observed that
although the dollar amount spent on Demand Side Management (DSM)
programs has declined in recent years, the numbers of ballasts
installed because of DSM programs may still have remained the same or
even increased, since the price differential between magnetic and
electronic ballasts has gone down (EEI, No. 12 at 1).
Since the NES spreadsheet that we used to calculate energy savings
requires projections of future ballast shipments as an input, we must
make some assumptions concerning the annual shipments of energy
efficient magnetic (EEM) ballasts under a scenario of no amended
standards. Since it is not possible to know how these shipments will
change in the future, the Department decided to analyze several
possible future scenarios. The influence of non-regulatory programs on
magnetic ballast shipments is implicitly accounted for in these
shipment scenarios (described in Chapter 5 of the TSD and also later in
this proposed rule). Scenarios in which magnetic ballast shipments
continue to decline over time, reflect some level of continued impact
of non-regulatory incentive programs. See section V below for a more
detailed description of the assumptions of these scenarios.
Since the release of the 1997 Report, the Department has undertaken
a more detailed analysis of non-regulatory program impacts on the
ballast market by studying utility DSM program impacts, ASHRAE/IES
building code impacts, EPA Green Lights/EPA-DOE Energy Star Buildings,
and DOE FEMP programs. We conducted a study \7\ to estimate the number
of fluorescent ballasts affected by DSM rebates from 1992 to 1997. We
combined detailed analysis of data on spending amounts and units
receiving rebates from several major utilities, accounting for up to 30
percent of the national total, with EIA estimates of national energy
efficiency spending to produce estimates of ballasts rebated. Results
indicate that the number of rebates and the percentage of the ballast
market affected by rebates have both declined since 1995, at the same
time that the magnetic ballast market began to level off. Under EPACT,
the states are upgrading their building codes to match the lighting
provisions in ASHRAE/IES Standard 90.1-1989. When revised as Standard
90.1-1999, the code's lower lighting power density limits will be an
incentive for increasing use of electronic
[[Page 14138]]
ballasts. DOE is preparing a new code for Federal buildings that will
also encourage the use of electronic ballasts. The EPA programs (first
Green Lights and now the EPA-DOE Energy Star Buildings) provide
voluntary incentives for lighting upgrades that include electronic
ballasts. The DOE FEMP Procurement Challenge and Federal Relighting
Initiative are having modest but important impacts increasing the
market share for electronic ballasts purchased for Federal buildings.
Other programs such as the Voluntary Luminaire Program created by the
National Lighting Collaborative under EPACT, NEMA's Energy Cost Savings
Council, DOE's Rebuild America, and DOE's Lighting Technology Roadmap
also provide incentives to move the market toward more efficient
fluorescent ballasts.
---------------------------------------------------------------------------
\7\ Busch, Chris, Turiel, I., Atkinson, B.A., McMahon, J.E.,
Eto, J.H. 1999. ``DSM Rebates for Electronic Ballasts: National
Estimates (1992-1997) and Assessment of Market Impact.'' Lawrence
Berkeley National Laboratory.
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Utility and Environmental Analyses
The NEMS has been used to estimate impacts of ballast energy
efficiency standards on electric utilities. The Department used a
version of EIA's NEMS, called NEMS-BRS, for the utility and
environmental analyses. NEMS simulates the energy economy of the U.S.
and has been developed over several years by the EIA primarily for the
purpose of preparing the Annual Energy Outlook (AEO). NEMS produces a
widely-known baseline forecast for the U.S. through 2020 that is
available in the public domain. NEMS-BRS offers a picture of the effect
of standards since its scope allows it to measure the interactions
between the various energy supply and demand sectors and the economy as
a whole.
Fuels for Electricity Generation: EEI pointed out that projections
for oil and gas generation after 1995 are available from GRI, EPRI, and
EIA, and DOE could use them in its analysis (EEI, No. 12 at 3).
Most analyses use EIA data such as electric utility fuel prices as
a starting point. The important result for estimating the effect of
standards on utility costs is not the overall fuel mix, but the
marginal effect on fuel consumption and power plant construction.
EEI stated that the values used for the heat rate (for conversion
of electricity from site to source energy) are overstated. It indicated
that the analysis is using the total U.S. generation capacity (not a
marginal capacity type of analysis) and is using EIA methodology. EEI
asserts the values are overstated for the following reason: EIA assigns
the same heat rate of fossil-fuel power plants to renewable power
plants. This assumption creates an artificial heat rate for
hydroelectric, wind, solar, biomass, and other forms of renewable
energy. For the approximately 10 percent (and growing) portion of
renewable electricity generation, EIA assigns a value of over 10,000
Btu/kWh to generation that has 0 Btu/kWh or 3,412 Btu/kWh. EEI states
this factor alone leads to an overstatement of primary energy savings.
In addition, EEI asserts that with the advent of restructuring, there
are many new technologies that could lower the overall heat rate at a
much quicker rate than shown in the 1999 Annual Energy Outlook (AEO).
EEI proposes that the lower end of the ranges for national energy
savings should be significantly lower to account for this possibility.
(EEI, No. 48 at 3).
Table 5.3 in the TSD shows the site-to-source heat rates used in
our analysis for the period 2003-2030. They are average rates for the
commercial sector obtained from AEO99. We have compared these values to
marginal values we obtained from a NEMS analysis. The marginal heat
rate is the change in fuel delivered to generating stations divided by
the change in electricity sales. For the NEMS analysis, we only
considered thermal generation. For most years in the analysis period,
the marginal heat rate was lower than the average heat rate. Overall,
if we had used a marginal heat rate rather than the average heat rate,
source quads would be reduced by about 4 percent.
EEI is in agreement with the analysis showing a declining heat rate
over the analysis period. However, it asserts the values shown in AEO
1999 should be considered to be the high end of the range of inputs for
the analysis period. (EEI, No. 48 at 3).
Other scenarios will show a faster rate of decline in heat rates
over the next 20-30 years. The Department executed its analysis using
the AEO99 Reference Case. The average heat rate extracted from AEO99
and used in the analysis declines from 10,871 Btu/kWh in year 2001 to
9,196 Btu/kWh in year 2030. This is equivalent to increasing the energy
conversion efficiency of thermal power generation from 31 percent to
almost 37 percent. This is a major assumed improvement, especially
given that many generating assets in place today will still be serving
marginal duty cycles during most of the forecast period.
Conservation Load Factor: EEI also stated that it was not clear how
the Conservation Load Factor (CLF) was calculated, and asked if it was
calculated on a regional level first and then aggregated, or at the
national level only. (EEI, No. 12 at 3).
The CLF is not used in the NEMS analysis so this question is no
longer relevant.
SO2 and NOX emissions: EEI suggested that
because SO2 and NOX emissions have declined over
the past several years, marginal emissions due to energy savings will
be lower than average emissions. (EEI, No. 12 at 3).
Total emissions of SO2 are unlikely to be affected by
any policy, such as efficiency standards, because emissions are capped
by legislation. The actual reduction in NOX emissions will
be determined by which marginal thermal generation is reduced through
lower electricity sales. Most new capacity is likely to be both
efficient and clean, and therefore operate at low marginal cost high in
the dispatch order (i.e., utilities will dispatch the newer, cleaner
sources before going to the older, more expensive sources). Generation
from these new resources is therefore unlikely to be reduced by a
reduction in electricity sales. On the contrary, it is likely that the
displaced generation will be from older, dirtier plants low in the
dispatch order.
Appliance Standards Environmental and Utility Model (ASEUM): EEI
and Mr. Schleede concurred that the ASEUM model's methodology may be
outdated in an era of deregulated utilities that are unlikely to remain
vertically integrated. (EEI, No. 12 at 4 and Schleede, No. 15 at 7-8).
It is true that the electric utility industry is undergoing a
radical restructuring, and the assumptions of cost recovery underlying
ASEUM are becoming dated. We agree that we needed other methodologies
to carry out the utility analysis, and we used the NEMS-NAECA for this
purpose.
Ballast Market Shift (From T12 Magnetic to T8 Electronic)
The 1997 Report, and all previous analyses, analyzed the impact of
an electronic ballast standard by essentially assuming that users of
magnetic ballasts with T12 lamps would switch to electronic ballasts
with T12 lamps if the former ballast type became obsolete. As described
in the Notice of Limited Reopening of the Record and Opportunity for
Public Comment, the Department solicited comments on consideration of
consumers who might choose electronic ballast T8 systems over
electronic ballast T12 systems and consumers who might choose
electronic ballasts over cathode cutout ballasts. 63 FR 58330 (October
30, 1998). DOE asked for comments on certain aspects of both the
electronic ballast and the cathode cutout ballast standard levels:
Whether a market shift from magnetic T12
[[Page 14139]]
ballasts to electronic T8 ballasts is likely, the extent of such a
shift, and whether the impacts of these shifts should be considered.
In the Joint Comment, the stakeholders stated that they assumed 95
percent of consumers of electronic ballasts would switch from T12 to T8
lamps. (Joint Comment, No. 91 at 8).
Northwest Energy Efficiency Alliance (NEEA) stated that in its
region with a mature market for electronic ballasts, the standard
practice in new construction/renovation is a fixture with an electronic
T8 ballast; this results partially from building codes as well as from
economics. Cathode cutout systems are rare, with customers selecting
electronic ballasts instead because of energy-efficiency, light
quality, and the ability to drive multiple lamps. (NEEA, No. 38 at 1-
2).
The Tennessee Valley Authority (TVA) explained that its procedure
is to replace failed magnetic T12 ballasts with electronic T12 ballasts
because of availability, cost (when the lighting hours are too short
for a good payback with a T8 system); and maintenance (if only part of
the ballasts in a space need replacement, the T12 lamps are retained).
For major system replacement, electronic T8 systems were considered the
first option. (TVA, No. 36 at 1).
The statute requires the Department to establish different classes
where appropriate, and today's proposed rule would prescribe separate
ballast efficacy factors for each lamp-ballast combination. To
determine economic impact on manufacturers and consumers, DOE looks to
reasonably predict likely market impacts. That is, some consumers with
T12 lamps and magnetic ballasts would switch to T8 lamps with
electronic ballasts if the magnetic T12 ballast was eliminated.
Furthermore, the Secretary has determined to examine the impact of this
consumer sub-group under economic factor 7.
Mr. Glenn Schleede comments that DOE has continued its long-
standing practice of giving little consideration to the interests of
real consumers who end up bearing the burden of energy efficiency
standards. (Schleede, No. 76 at 2).
The Department believes it has considered the interests of real
consumers, and any burdens on them, by including the full range of
electric prices, ballasts prices, operating life and ballast life that
consumers will experience and calculating the full range of impacts on
consumers. Furthermore, we studied the economic impact of the standard
on consumers by considering and evaluating likely consumer actions. As
a result, we are presenting impacts on consumers moving from T12 lamps
with magnetic ballasts to T12 lamps with electronic ballasts and also
consumers moving from T12 lamps with magnetic ballasts to T8 lamps with
electronic ballasts. Both of these likely occurrences arise from the
consumer not being able to buy a T12 magnetic ballast under the
standard being proposed. However, while modeling and giving
consideration to consumer actions, the Department does not believe it
can set standard levels based on consumer purchasing behavior given the
conclusions of the court in Natural Resources Defense Council v.
Herrington, 768 F. 2d 1355, 1406-07 (D.C. Cir. 1985), where the court
stated that ``the entire point of a mandatory program was to change
consumer behavior'' and ``the fact that consumers demand short payback
periods was itself a major cause of the market failure that Congress
hoped to correct.''
Manufacturer Impact Analysis
The general MIA methodology presented by the Department in March
1997, was developed with substantive input from ballast manufacturers
on issues relevant to the ballast rulemaking. Ballast manufacturers
provided very useful insights that resulted in the incorporation of new
factors for consideration in the analysis of manufacturer impacts,
namely impacts on domestic manufacturer employment, manufacturing
capacity, plant closures and loss of capital investment. Cooperation
from ballast manufacturers also helped DOE in proposing the interview
guide approach as a critical MIA tool for identifying issues relevant
to each individual manufacturer. The ballast rulemaking was the first
for which DOE conducted one-on-one interviews with the manufacturers.
This process helped DOE appreciate the usefulness of this methodology
for assessing qualitative impacts.
The Department of Energy held a public workshop on April 28, 1998,
to present information and invite comment on several topics relating to
energy-efficiency standards for fluorescent lamp ballasts. One major
topic for discussion was the Manufacturer Impact Analysis (MIA). In
developing the Manufacturer Impact Analysis document for the April 28,
1998, workshop, DOE tried to address the concerns that ballast
manufacturers raised with the Department in previous meetings or
through personal interviews. In addition to tailoring the GRIM
spreadsheet to the ballast rulemaking, DOE developed a revised
questionnaire to capture all issues relevant specifically to the
ballast industry and its suppliers.
Subsequent to the April 28 workshop, the Department met with
industry representatives to discuss the rationale for using the cash
flow analysis methodology to measure financial impacts. The Department
also reviewed details of the spreadsheet calculations at this meeting.
The discounted cash flow approach is a widely used technique for
evaluating a company's value (Net Present Value (NPV)), and is
frequently used in capital budgeting decisions for evaluating capital
spending proposals. It is also used for evaluating financial impacts of
plant closures and business restructuring. The Department agreed to
revise GRIM to add features that explicitly provide the capability to
include one-time charges such as plant closures and asset write-offs.
The Department believes that the modified GRIM accurately captured
the financial impacts of a step change in technology. In contrast to
other appliance rulemakings that make only incremental changes to
standard levels, this rulemaking would result in standards based on a
completely new technology. To comply with final standards,
manufacturers would be required to make significantly higher capital
investments (e.g., new plants, equipment and production processes). The
capital investment numbers input into GRIM reflect this step change in
technology and produce negative impacts on the manufacturer's cash
flows. Furthermore, the Subgroup Impact Analysis proposed in the MIA
methodology and carried out in part through interviews with
manufacturer representatives considered impacts on employment,
manufacturing capacity and competitive effects due to an electronic
ballast standard.
To ensure that the manufacturer impact analysis captured the
potential impacts of a radically transformed ballast market, the
Department and NEMA members developed a scenario analysis methodology
to be included in the ballast MIA. In creating their projections for
future revenues and profit margins, manufacturers were asked to
consider two different competition scenarios. In the first scenario, it
was assumed that manufacturers would maintain their current market
share. In the second scenario, we asked manufacturers to consider the
impact of a new entrant in the industry which would capture a 15
percent share. Under the new entrant scenario, we redistributed market
shares
[[Page 14140]]
and manufacturers were able to define new prices and costs (gross
margins). The competition scenario analysis is described in greater
detail in the TSD. Additional scenarios were constructed assuming a
status quo in profit margins, the ``existing dynamics'' scenario, and a
new entrant in the magnetic ballast market, or ``magnetic new entrant''
scenario.
We conducted the GRIM analysis and other elements of the MIA
separately for each manufacturer. To report a representative variation
in impacts between manufacturer sub groups while maintaining the
confidentiality of individual manufacturers, DOE constructed three
different cashflows: One for manufacturers of both magnetic and
electronic ballasts, a second for manufacturers producing electronic
ballasts only, and a third that combines both sub groups of
manufacturers. Likewise, we evaluated employment and manufacturing
capacity effects from an electronic ballast standard on a company-by-
company basis and reported them for both subgroups. To the extent
consistent with the confidentiality concerns of individual
manufacturers, we reported important variations between manufacturers
within subgroups qualitatively. The analysis results include a
discussion of the impacts of the cashflow results on the business
prospects of manufacturers in each subgroup, with reference to specific
manufacturers where permitted by these manufacturers.
For the participating manufacturers, the GRIM analysis did not
distinguish plants located outside the United States from United
States' plants. We calculated employment impacts for these same firms
and reported separate results for domestic and Mexican plants.
We performed a detailed analysis of the impacts of an electronic
ballast standard on ballast manufacturer suppliers. This analysis
included a quantitative evaluation of manufacturer cashflows and jobs.
In total, 30 firms were invited to participate in interviews. Seventeen
of these suppliers served magnetic ballast production, eleven
electronic ballast production, and six served both magnetic and
electronic markets. Nineteen organizations that serve magnetic ballast
applications participated in interviews. Eight organizations that serve
electronic ballast applications participated in interviews. In total,
nine plant tours were held, five of which were at suppliers of magnetic
products and four of which were tours of electronic supplier plants.
The analysis demonstrated that the organizations interviewed provided a
representative group of supplier industries, which we used to evaluate
the impacts on supplier industries as a whole.
Additionally we visited one lamp manufacturer's fluorescent lamp
plant and interviewed plant and corporate representatives. The
Department decided to gather and analyze information on manufacturer
impacts from other lamp manufacturers as well, and an analysis of this
information is presented in Section V.
NEMA commented that the manufacturer impacts reported for a
standard that began in the year 2003 were too severe and that standards
that produced such impacts could not be economically justified. (NEMA,
No. 85). NEMA, as a part of the Joint Comment, commented that their
proposed staggered implementation dates mitigate such adverse impacts.
(Joint Comment, No. 91 at 7).
Standards Proposals
NEMA described new market data on ballasts, as well as percentage
of lamps driven by magnetic and electronic ballasts. This shows that
electronic ballast penetration of the total commercial and industrial
lighting market has increased to 55 percent of total ballast shipments
in 1998. Electronic ballast market penetration has increased from 44
percent to 62 percent in 1998, when measured by the more relevant
criteria of the number of lamps operated. For ballasts used only in
commercial and industrial new construction, renovations and retrofits
in 1998, electronic ballast penetration has increased to 63 percent,
measured by ballast shipments, and to 70 percent measured by the number
of lamps operated. (NEMA, No. 50 at 26 and Attachment B and NEMA, No.
85 at 44). ACEEE agreed with NEMA that the percentage of lamps
ballasted electronically is the most important figure; however, the
growth rate during 1993-1995 of 9 percent was larger than the growth
rate of 2.8 percent from 1995 to 1998, supporting the ``Decreasing
Shipments to 2027'' base case. (ACEEE, No. 77 at 9-10). Oregon Office
of Energy noted that the magnetic ballast shipments increased in 1997
and remained stable in 1998, casting doubt on the base case scenarios
that show steady decline of magnetic ballasts (Oregon, No. 81 at 5 and
7). The CEC also stated that a national standard would complement
California's Title 24 building code policies by ensuring that savings
are realized in retrofit applications as well as new construction.
(CEC, No. 82 at 1).
Additionally, the Department received comments from the Vermont
Residential Energy Efficiency Program, Conservation and Renewable
Energy Systems, Broward County Florida, Alto Manufacturing Company,
Rocky Mountain Chapter of the Sierra Club, State of Vermont, California
Energy Commission, Northeast Energy Efficiency Partnerships, Pacific
Gas and Electric, Northwest Energy Efficiency Alliance, Sacramento
Municipal Utility District, Boston Edison, Eastern Utilities, Green
Mountain Power, New York Power Authority, Eugene Water and Electric
Board and 35 private citizens urging the Department to establish
standards requiring electronic ballasts citing the delay in
promulgating this rulemaking, the phasing out of utility incentive
programs for ballasts, the energy savings and environmental and
economic benefits.
In commenting on the possibility of a market shift, Osram Sylvania
(OSI) proposed that the Department separately consider each of the
three major ballast market segments: OEM (fixtures for new
construction/renovation), Retrofit (early replacement of systems) and
Replacement (existing ballast replacement at failure). The first two
markets are appropriate for electronic T8 systems, while the third has
existing reduced-wattage lamps that are incompatible with electronic
ballasts.
OSI commented that 34-Watt lamps are incompatible with electronic
ballasts because of their conductive coating that facilitates starting
with magnetic ballasts. It stated that technical solutions were
possible but impractical: ``Smart'' ballasts that overcome the problem
for the 34-Watt lamp would not be compatible with 40-Watt high CRI
lamps that meet the EPACT lamp standards and would be expensive; design
of 34-Watt lamps without the conductive coating would be expensive;
controlling the resistance of the conductive coating to allow
compatibility with both ballast types would be unreliable over the
range of lamps and over their normal lives, since the coating varies
widely for any manufacturer and between manufacturers. The expenditure
of resources by lamp manufacturers to design a lamp to meet this need
would promote an obsolete system when the market should be moving
toward T8 systems. OSI also stated that the lamp industry has the
capacity to handle a market transition from a mixture of T12 to T8
lamps toward T8 lamps over a 3-year period, but would require a multi-
million dollar capital investment and additional time to handle a more
widespread transition for all market sectors. (OSI, No. 34 at 2-5).
[[Page 14141]]
A rapid shift to electronic ballasts would require lamp companies
to make special adjustments to the lamps, or would drive end-users to
purchase full-wattage T12 lamps. (OSI, No. 34 at 2 and OSI, No. 84 at
1). OSI recommended that BEFs be developed for 4-foot and 8-foot
systems that disallow magnetic and cathode cutout ballasts (with
several exemptions listed below) and that a standard with these BEFs be
applied to OEM and retrofit ballasts 3 years after the standards
publication date. Application of the standard BEFs to the replacement
market would be delayed for 5 years beyond the effective date (a total
of 8 years from publication), allowing development of retrofit
incentive programs for building owners and allowing lamp manufacturers
greater transition time for T8 lamp manufacture. Proposed exemptions
include residential luminaires for T8 or smaller diameter lamps,
dimming ballasts, 8-foot High Output, low-temperature, outdoor,
magnetic ballasts, non-lighting applications, and ballasts with
unresolved or unanticipated interference issues per application to the
Department by a manufacturer or trade association. (OSI, No. 34 at 1-
3).
Five comments supported the proposal by OSI to varying degrees.
(Motorola Lighting Inc (MLI), No. 33 at 1-2, Holophane, No. 39 at 1-2,
Lightolier, No. 40 at 1, and ASE No. 41 at 3, and Peerless Lighting,
No. 52 at 1-3).
Motorola supported the proposal by OSI and recommended the
application of new BEFs to the OEM and retrofit market at the earliest
possible date. (MLI, No. 33 at 1). Motorola agreed with delaying the
application of BEFs to the replacement market, but recommended a delay
of two years rather than five years from the effective date. Further,
it urged that BEFs for T8 magnetic ballasts be developed, and that all
of the BEF levels be achievable by major ballast manufacturers. (MLI,
No. 33 at 2). Holophane supported the OSI proposal, particularly the
approach recognizing systems rather than components. It proposed that
exemptions include dimming ballasts, 8-foot High Output outdoor
ballasts, and special ballasts addressing interference issues. The
luminaire manufacturers will be able to incorporate electronic ballasts
as long as the ballast manufacturers can meet the demand; the only
impact on their market will be the adjustment of lighting levels from
fixtures with the new systems. Holophane recommended a delay of
application of BEFs for the replacement market for ``a reasonable
period of time.'' (Holophane, No. 39 at 1). Lightolier noted that 80
percent of its fixtures use electronic ballasts for T8 or T5 lamps; of
the remainder, intended for the distributor/contractor market, less
than half use electronic ballasts. Lightolier recommended that the
Department give serious consideration to the OSI proposal. (Lightolier,
No. 40 at 1). Peerless agreed with the analysis of the two market
segments, stated that disallowing magnetic ballasts would have short-
term repercussion including the development of T12 electronic ballasts
for a short-term market, and that a delay period would allow the lamp
manufacturing industry to adjust to the increased T8 market. (Peerless,
No. 53 at 1-3). ASE urged that the analysis consider the separate
effects on the 3 different market channels, and supported OSI's
proposal for a time-limited exemption for replacement ballasts if such
an approach is administratively feasible. (ASE, No. 41 at 2-3).
The Department decided to analyze the five and two year delay
standards proposal suggested above. The description and results of this
analysis are shown in section V of this notice.
The Joint Comment presented the Department with a proposal for
segmenting the market and extending the implementation dates to
mitigate the burdens to acceptable levels while maintaining most of the
benefits of standards. For example, the phase-in period for the
standards proposed in the Joint Comment is approximately five years,
until April 1, 2005. This allows the manufacturers and the marketplace
additional time to make an orderly transition from energy efficient
magnetic ballasts to the more efficient ballasts that would be required
if today's proposal were adopted. In addition, the Joint Comment
proposed an additional five-year phase in for standards for ballasts
intended for replacement market. While it is generally impossible to
distinguish a ballast for the replacement market from one used in new
construction or renovation, the Joint Comment recommends that
replacement ballasts be labeled for replacement use, have output leads
which, when fully extended, are less than the length of the lamp it is
intended to operate and they are shipped in packages of ten or less.
DOE agrees replacement ballasts, as proposed by the Joint Comment would
not likely be used other than to replace an existing ballast. In
addition to the above, the Joint Comment also proposed limiting the
exemptions relative to the extant standards. For example, the standards
found in the National Appliance Energy Conservation Amendments of 1988
provided exemptions for cold temperature and dimming ballasts. The
Joint Comment proposed limiting the exemption for cold temperature
ballasts to those capable of being dimmed to 50 percent or less of its
maximum output and the cold temperature ballast exemption would be
limited to ballasts for use with two F96T12HO lamps at an ambient
temperature of -20 deg.F and which is for use with outdoor signs. The
recommended changes to the dimming and cold temperature exemptions will
result in the standards being applied to products previously not
subject to the standards. The standard for two F96T12HO lamps has not
been modified, however, since it would apply to more products, the
changes proposed by the Joint Comment will result in higher energy
savings for this product class than if the standards were raised, but
applied with the extant exemption. (Joint Comment, No. 91 at 5).
V. Analytical Results
a. Efficiency Levels Analyzed
The Department utilized two base case forecasts of shipments of
magnetic ballasts without standards as follows:
Base Case: Decreasing Shipments to 2015 (5 percent reduction)
In this base case, we assumed magnetic ballast shipments after 1997
decrease at the rate at which most magnetic ballasts declined from 1993
through 1997, reaching a base level by 2015. This rate of decreasing
magnetic ballasts shipments represents a reduction of approximately 5
percent per year relative to 1997 shipments. The base level represents
10 percent of the magnetic ballast shipments in 1997 for each ballast
class, and is carried out to 2030. This base case assumes that non-
regulatory programs as well as market forces result in the same rate of
transition to electronic ballasts as observed from 1993 through 1997.
Base Case: Decreasing Shipments to 2027 (3 percent reduction)
In this base case, we assumed magnetic ballast shipments decrease
at a slower rate, reaching the same base level by 2027. This rate of
decreasing magnetic ballasts shipments roughly represents a reduction
of 3 percent per year relative to 1997 shipments. The base level
represents 10 percent of the magnetic ballast shipments in 1997 for
each ballast class, and is carried out to 2030. This base case assumes
that non-regulatory programs and market forces affect a slower rate of
transition to electronic ballasts than observed in recent years.
[[Page 14142]]
The Department also analyzed the impact of two trial standard
levels; one was for electronic ballasts and the other for cathode
cutout ballasts.
Electronic Ballast Standards Scenarios
We also evaluated the following scenarios to capture the range of
national impacts from likely consumer choices (scenarios 1 and 2) and
to evaluate suggested implementation schemes presented in comments
(scenarios 3 and 4) for electronic ballast standards:
Scenario 1. This scenario assumes that 100 percent of magnetic T12
ballasts are converted to electronic T12 ballasts. This scenario is
intended to model the impacts of minimal compliance with the standard
in regard to commercial and industrial consumer choice.
Scenario 2. This scenario assumes that all magnetic T12 ballasts
are converted to electronic ballasts, with 5 percent becoming T12
ballasts and 95 percent becoming T8 ERS ballasts. This scenario is
intended to model the trends in the current market where nearly all (95
percent) of electronic ballasts purchased from 1993--1997 have been T8
ballasts.
Scenario 3. This scenario assumes that the new/renovation luminaire
market segment converts all magnetic T12 ballasts to electronic T8
ballasts starting on the effective date. We assume that this segment
comprises 70 percent of the total magnetic T12 ballast market, based on
the current luminaire market. The remaining 30 percent assumed
replacement market has an additional delay of 5 years, after which
these ballasts are converted to electronic ballasts, with 5 percent
becoming T12 ballasts and 95 percent becoming T8 ballasts. This
scenario allows a differing impact of the standards on these two market
segments by providing an additional adjustment period for the
replacement market for users in existing buildings and on lamp
manufacturers to prepare for the new ballast type and market shift.
Scenario 4. This scenario has identical assumptions to scenario 3,
except that the additional delay period for the replacement market is 2
years.
We compared each of the above four standard level forecasts with
that of the two different base cases. We denoted forecasts under the
``Decreasing Shipments to 2015'' base case as scenarios 1A, 2A, 3A, and
4A. We called forecasts runs with the ``Decreasing Shipments to 2027''
base case scenarios 1B, 2B, 3B, and 4B.
Cathode Cutout Trial Standards
For cathode cutout standards, we also evaluated the following
scenarios to capture the range of national impacts from likely consumer
choices for a possible cathode cutout standard:
Scenario 5. This scenario assumes that 100 percent of magnetic T12
ballasts are converted to cathode cutout T12 ballasts. The exception is
the F96T12 ballast class, for which there is no cathode cutout option.
These ballasts are assumed to remain as magnetic ballasts under the
standards. This scenario is intended to model the impacts of minimal
compliance with the standard in regard to commercial and industrial
consumer choice.
Scenario 6. This scenario assumes that the 30 percent replacement
market T12 ballasts are converted to cathode cutout T12 ballasts, and
the 70 percent new/renovation market T12 ballasts are converted to
electronic ballasts, with 5 percent of the electronic ballasts becoming
T12 ballasts and 95 percent becoming T8 ballasts.
We denoted forecasts run with the Decreasing Shipments to 2015 base
case as 5A and 6A. We called forecasts run with the Decreasing
Shipments to 2027 base case Scenario 5B and 6B.
Joint Comment
In addition, we evaluated two scenarios based on the standards
recommended by the Joint Comment: Decreasing magnetic ballast shipments
to 2015 and decreasing magnetic ballast shipments to 2027. In
evaluating the joint comment proposal, the Department also used a third
shipment scenario (flat magnetic ballast shipment forecast) as the
upper bound as described in Appendix E of the TSD.
b. Significance of Energy Savings
To estimate the energy savings through the year 2030 due to revised
standards, we compared the energy consumption of ballasts under the
base case to the energy consumption of ballasts complying with the
standard. As discussed above, there are eight electronic ballast
standards scenarios and four cathode cutout standards scenarios.
The results presented in Tables V.1a and V.1b use the AEO Reference
Case forecast. (The TSD shows the results for the AEO High and Low
cases, with total benefits respectively higher and lower than those for
the Reference Case.) The tables show the energy savings for each of the
standards scenarios.
Table V.1A.--Energy Savings From Electronic Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electronic standards for units sold from 2003 to 2030
---------------------------------------------------------------------------------------------------------------------------------------------------------
Scen 1A T12 Scen 1B T12 Scen 2A T12/ Scen 2B T12/ Scen 3A Scen 3B Scen 4A Scen 4B
Scenario Decr2015 Decr2027 T8 Decr2015 T8 Decr2027 Decr2015 Decr2027 Decr2015 Decr2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Quads Saved.............................. 1.01 1.79 1.66 2.93 1.43 2.66 1.57 2.84
Total Quads Saved w/HVAC....................... 1.08 1.9 1.76 3.12 1.52 2.82 1.67 3.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.1B.--Energy Savings From Cathode Cutout Standards
----------------------------------------------------------------------------------------------------------------
Cathode cutout standards for units sold from 2003 to 2030
-----------------------------------------------------------------------------------------------------------------
Scen 5A 100% Scen 5B 100% Scen 6A 37% CC Scen 6B 37% CC
Scenario CC Decr2015 CC Decr2027 Decr2015 Decr2027
----------------------------------------------------------------------------------------------------------------
Total Quads Saved............................... 0.48 0.85 1.12 1.98
Total Quads Saved w/HVAC........................ 0.51 0.91 1.19 2.11
----------------------------------------------------------------------------------------------------------------
[[Page 14143]]
The Department finds that each of the standards scenarios
considered above would result in a significant conservation of energy.
Energy savings from the electronic ballast standards scenarios range
from 1.01 Quads to 2.93 Quads of source energy without considering HVAC
savings. The energy savings are larger for the slower decreasing
shipments forecast to 2027 compared to those with the faster decreasing
shipments forecast to 2015. Energy savings for scenario 2 with T8
electronic ballasts are almost 65 percent greater than those for
scenario 1 with T12 electronic ballasts. For scenario 3, the five-year
phase-in period causes a savings reduction of around 10 to 15 percent
from that of scenario 2. For scenario 4, the 2-year phase-in period
results in a savings reduction of about 5 percent from scenario 2. For
the cathode cutout standards scenarios, energy savings range from 0.48
Quads to 1.98 Quads without considering HVAC savings. The scenario 6
savings from partial conversion to electronic ballasts are about 2.3
times higher than those of scenario 5. The additional HVAC savings
increase the total energy savings for all levels by 6.25 percent.
In Table V.2, we present the energy savings of the Joint Comment.
The results use the AEO Reference Case forecast with the energy savings
from 2005 to 2030. The energy savings of the Joint Comment range from
1.20 Quads to 2.32 Quads without considering HVAC savings.
Table V.2.--Energy Savings, Resulting From Joint Comment
------------------------------------------------------------------------
Energy savings, resulting from joint comment, for units sold from 2005
to 2030
-------------------------------------------------------------------------
Scenario Dec 2015 Dec 2027
------------------------------------------------------------------------
Total Quads Saved....................... 1.20 2.32
Total Quads Saved w/ HVAC............... 1.27 2.46
------------------------------------------------------------------------
c. Payback Period
The Act requires the Department to examine payback periods to
determine if the three year rebuttable presumption of economic
justification applies. In Table V.3, we list the median payback periods
for product classes and design options. While we did not analyze the
effect of a two-year delay in the effective date of the comments as
found in the Joint Comment, because the cost of energy varies little
between the two years (2003 and 2005), we believe the paybacks shown
below are representative of a 2005-effective standard as well.
Table V.3.--Summary of Payback Period
----------------------------------------------------------------------------------------------------------------
Median
Product class Design option Sector payback
(yrs)
----------------------------------------------------------------------------------------------------------------
1F40..................................... T12 CC..................... Commercial................. 24.8
T12 ERS.................... Commercial................. 6.4
2F40..................................... T12 CC..................... Commercial................. 10.7
T12 ERS.................... Commercial................. 5.4
3F40..................................... T12 CC..................... Commercial................. 9.9
Tandem-Wired............................. T12 ERS.................... Commercial................. 6.4
3F40..................................... T12 CC..................... Commercial................. 11.5
Not Tandem-Wired......................... T12 ERS.................... Commercial................. 3.3
4F40..................................... T12 CC..................... Commercial................. 9.3
T12 ERS.................... Commercial................. 4.8
2F96..................................... T12 EIS.................... Commercial................. 5.9
T12 EIS.................... Industrial................. 8.8
2F96HO................................... T12 CC..................... Commercial................. 2.1
T12 ERS.................... Commercial................. 2.4
T12 CC..................... Industrial................. 5.4
T12 ERS.................... Industrial................. 3.1
----------------------------------------------------------------------------------------------------------------
d. Economic Justification
1. Economic Impact on Manufacturers and Consumers
We performed a Manufacturer Impact Analysis (MIA) to determine the
impact of standards on manufacturers. The complete analysis is Chapter
6 of the TSD. In general, manufacturers of ``affected'' magnetic
ballasts and their suppliers would be negatively impacted. Also, most
ballast manufacturers reported that they would add additional
electronic ballast capacity to meet a new standard. None of the
manufacturers stated that they would leave the industry or go out of
business as a result of an electronic ballast standard. Commercial and
industrial consumers will also be affected by increased ballast
standards in that they will experience higher purchase prices for
ballasts and lower operating costs for lighting systems. These impacts
are best captured by changes in life cycle costs which are discussed in
section V.d.2.
Ballast Manufacturer Analysis
In conducting the analysis, we conducted detailed interviews with
seven ballast manufacturers that together supply more than 95 percent
of the domestic magnetic and electronic ballast markets. The interviews
provided valuable information used to evaluate the impacts of a new
standard on manufacturers' cash flows, manufacturing capacities and
employment levels. The MIA was performed on a company-by-company basis.
We elected to group manufacturers exhibiting similar product mix
characteristics, as this represents the most comprehensive way of
reporting the variation of impacts on different manufacturers while
ensuring the confidentiality of individual manufacturers' positions.
Based on
[[Page 14144]]
information obtained from manufacturer interviews, we divided the
manufacturers into two sub-groups:
Table V.4.--Ballast Manufacturer
------------------------------------------------------------------------
Sub-group 1 Manufacturers of both Sub-group 2 Manufacturers that
magnetic and electronic ballasts produce only electronic ballasts
------------------------------------------------------------------------
Advance Transformer Company Howard Industries.
MagneTek, Inc. Motorola Lighting, Inc.
Robertson Worldwide Osram Sylvania Products Inc.
SLi Lighting/PowerLighting Products
------------------------------------------------------------------------
Impacts on the entire industry were obtained by aggregating the
impacts on the two sub-groups.
Impacts on Ballast Manufacturer Cash Flows
As summarized, four cash flows were calculated for each shipment
forecast. Manufacturers worked with us to develop their most likely
cash flow impacts for both the 2015 and 2027 Industry shipment
scenarios. These cash flows are identified by the name ``Manufacturer
Submittal.'' In developing cash flow estimates under the Manufacturer
Submittal scenario it is assumed that manufacturers retain their 1997
shares of the electronic market in the new electronic market. The
``Electronic Ballast New Entrant'' scenario was devised in order to
capture the likely cash flow impacts resulting from the redistribution
of market shares among the existing manufacturers as a new entrant
gains a 15 percent market share of the new electronic market. A
``Magnetic Ballast New Entrant'' Scenario was also developed to analyze
the potential impact of a new entrant(s) in the magnetic ballast
industry. This scenario captures possible cash flow impacts resulting
from the redistribution of market shares among the existing
manufacturers as a new entrant gains a 15 percent share of the magnetic
ballast market. Finally, in order to evaluate how assumptions
concerning future market dynamics contributed to the impacts reported
in the Manufacturer Submittal scenario, we prepared a separate cash
flow that assumes no change in magnetic and electronic ballast profit
margins before and after standard: the ``Existing Dynamics'' scenario.
The four scenarios are summarized below:
Manufacturer Submittal: Cash flows and net present value (NPV) were
calculated using manufacturer prices, manufacturing costs, operating
margins, capital investment estimates, and other financial parameters
as provided by the individual manufacturers. This scenario reflects
each manufacturer's expectation of its ``most likely'' future
profitability under new standards with the constraint that it assumes
that its electronic ballast market share remains at the 1997 level.
Electronic Ballast New Entrant: This scenario assumes that one or
more new entrants will capture 15 percent of the new electronic ballast
market. Manufacturer market shares in the 1997 electronic market are
redistributed to accommodate the new market entrant(s).
Magnetic Ballast New Entrant: This scenario assumes that one or
more new entrants will capture 15 percent of the magnetic ballast
market beginning in the year 2000, both in the Base Case and the
Standards Case. This assumption is supported by the fact that a few of
the existing electronic ballast manufacturers have publicly announced
plans to manufacture and/or source magnetic ballasts in the U.S.,
irrespective of a DOE standard. Existing manufacturer market shares in
the 1997 magnetic ballast market are redistributed to accommodate the
new market entrant(s). Furthermore, this scenario assumes that the new
entrant(s) will result in increased competition, which will reduce the
profitability of the magnetic ballast business from its current levels
to those seen in the more competitive electronic ballast business post-
standards.
Existing Dynamics: This scenario assumes that there will be no
change in competitive dynamics when an electronic ballast standard
comes into effect, and hence electronic ballast manufacturer market
shares and profit margins in the case of a standard will remain similar
to their values in the absence of a standard.
Tables V.5 and V.6 summarize the financial impacts for the four
scenarios under the two base case forecasts of shipments. The impacts
reported are the change in NPV and this change as a percentage of the
industry value represented by the cash flow generated by all (magnetic
and electronic) ballast shipments in the regulated product classes.
Note that for the industry results, the Electronic Ballast New Entrant
scenario is the same as the Manufacturer Submittal scenario because the
new entrant(s) cash flow was modeled using shipment weighted average
financial parameters of all existing electronic ballast manufacturers.
Table V.5.--Cash Flow Impacts of an Electronic Ballast Standard Under the 2015 (5% Decline) Shipment Scenario
----------------------------------------------------------------------------------------------------------------
Base case NPV Standard case Change in NPV Change in NPV
Scenarios ($mil) NPV ($mil) ($mil) (%)
----------------------------------------------------------------------------------------------------------------
Cash flow impacts on business represented by all regulated product classes--Magnetic and Electronic
----------------------------------------------------------------------------------------------------------------
Sub-group 1 (magnetic and electronic producers)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 288.9 198.9 -90.0 -31
Electronic Ballast, New Entrant................. 288.9 199.1 -89.8 -31
Magnetic Ballast, New Entrant................... 216.2 161.6 -54.6 -25
Existing Dynamics............................... 288.9 219.0 -69.9 -24
----------------------------------------------------------------------------------------------------------------
Sub-group 2 (electronic only producers)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 131.7 152.0 20.3 15
Electronic Ballast, New Entrant................. 131.7 145.8 14.1 11
[[Page 14145]]
Magnetic Ballast, New Entrant................... 131.7 152.0 20.3 15
Existing Dynamics............................... 131.7 141.0 9.3 7
----------------------------------------------------------------------------------------------------------------
Electronic Ballast New Entrant
----------------------------------------------------------------------------------------------------------------
Electronic Ballast, New Entrant................. 0.0 6.0 6.0 -
----------------------------------------------------------------------------------------------------------------
Magnetic Ballast New Entrant
----------------------------------------------------------------------------------------------------------------
Magnetic Ballast, New Entrant................... 4.5 2.0 -2.5 -55
----------------------------------------------------------------------------------------------------------------
Industry
(Sub-group 1 + Sub-group 2)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 420.6 350.9 -69.7 -17
Electronic Ballast, New Entrant................. 420.6 350.9 -69.7 -17
Magnetic Ballast, New Entrant................... 352.4 315.6 -36.8 -10
Existing Dynamics............................... 420.6 359.9 -60.7 -14
----------------------------------------------------------------------------------------------------------------
Table V.6.--Cash Flow Impacts of an Electronic Ballast Standard Under the 2027 (3% Decline) Shipment Scenario
----------------------------------------------------------------------------------------------------------------
Base case NPV Standard case Change in NPV Change in
Scenarios ($mil) NPV ($mil) ($mil) NPV(%)
----------------------------------------------------------------------------------------------------------------
Cash flow impacts on business represented by all regulated product classes--Magnetic and Electronic
----------------------------------------------------------------------------------------------------------------
Sub-group 1 (magnetic and electronic producers)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 318.3 204.6 -113.7 -36
Electronic Ballast, New Entrant................. 318.3 204.9 -113.4 -36
Magnetic Ballast, New Entrant................... 220.9 161.7 -59.2 -27
Existing Dynamics............................... 318.3 224.7 -93.6 -29
----------------------------------------------------------------------------------------------------------------
Sub-group 2 (electronic only producers)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 123.0 150.5 27.5 22
Electronic Ballast, New Entrant................. 123.0 144.3 21.3 17
Magnetic Ballast, New Entrant................... 123.0 150.5 27.5 22
Existing Dynamics............................... 123.0 139.5 16.5 13
----------------------------------------------------------------------------------------------------------------
Electronic Ballast New Entrant
----------------------------------------------------------------------------------------------------------------
Electronic Ballast, New Entrant................. 0.0 6.0 6.0 -
----------------------------------------------------------------------------------------------------------------
Magnetic Ballast New Entrant
----------------------------------------------------------------------------------------------------------------
Magnetic Ballast, New Entrant................... 6.2 2.2 -4.0 -65
----------------------------------------------------------------------------------------------------------------
Industry
(Sub-group 1 + Sub-group 2)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 441.3 355.1 -86.2 -20
Electronic Ballast, New Entrant................. 441.3 355.1 -86.2 -20
Magnetic Ballast, New Entrant................... 350.1 314.4 -35.7 -10
Existing Dynamics............................... 441.3 364.2 -77.1 -17
----------------------------------------------------------------------------------------------------------------
Uncertainty Analysis of Cash Flows
The NPV values presented in the above tables incorporate
significant restructuring costs primarily associated with plant
closures in the U.S. and Mexico. The large majority of these costs are
directly associated with the closure of the remaining large U.S.-based
ballast plant. In consideration of the past trend towards consolidation
of magnetic ballast production to Mexico, a sensitivity analysis was
conducted on the cash flows assuming that the restructuring costs
associated with the plant closures would occur in the base case (in
absence of standards). It was found that these costs contribute
approximately $14 million to the negative impacts under all scenarios.
A sensitivity analysis was also conducted to analyze the impact of
certain business risks. Specifically, a scenario was developed whereby
changes in market demand would cause magnetic ballast shipments to
decline at twice the rate, i.e., 10 percent per year between 1999 and
2002, remain constant through 2005 and then continue declining at 5
percent per year
[[Page 14146]]
beginning 2006. It was further assumed that these abrupt changes in
shipments impact the magnetic ballast industry competitive dynamics by
reducing profit margins in the 2000 through 2005 time frame, to levels
observed in the electronic ballast market.
The cash flow impacts with the 2003 plant closure assumption and
the business risks as outlined above are presented in the Table V.7.
Table V.7.--Cash Flow Impacts of an Electronic Ballast Standard Under the 2015 (5% Decline) Shipment Scenario
With Plant Closures in the Base Case in 2003
----------------------------------------------------------------------------------------------------------------
Base case NPV Standard case Change in NPV Change in NPV
Scenarios ($mil) NPV ($mil) ($mil) (%)
----------------------------------------------------------------------------------------------------------------
Cash flow impacts on business represented by all regulated product classes--Magnetic and Electronic
Sub-group 1
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 288.9 198.9 -90.0 -31
Manufacturer Submittal with plant closure in 275.2 198.9 -76.3 -28
2003...........................................
Business risk: abrupt change in shipments....... 263.7 179.5 -84.2 -32
----------------------------------------------------------------------------------------------------------------
Sub-group 2
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 131.7 152.0 20.3 15
Manufacturer Submittal with plant closure in 131.7 152.0 20.3 15
2003...........................................
Business risk: abrupt change in shipments....... 131.7 152.0 20.3 15
----------------------------------------------------------------------------------------------------------------
Industry
(Sub-group 1 + Sub-group 2)
----------------------------------------------------------------------------------------------------------------
Manufacturer Submittal.......................... 420.6 350.9 -69.7 -17
Manufacturer Submittal with plant closure in 406.9 350.9 -56.0 -14
2003...........................................
Business risk: abrupt change in shipments....... 395.4 331.5 -63.9 -16
----------------------------------------------------------------------------------------------------------------
Impacts on Ballast Manufacturer Employment
Employment impacts are reported in two categories:
Direct employment impacts: These impacts consider jobs directly
involved with the production of ``affected'' magnetic or electronic
ballasts. In facilities producing ``affected'' and other types of
ballasts, only direct and overhead jobs related to ``affected''
ballasts are considered in this category. In situations where ballast
companies own component manufacturing operations, such as capacitor
plants or magnet wire operations, job impacts on these plants are
reported within this category. Impacts on other component suppliers are
presented in a separate section titled ``Impact on Suppliers to the
Fluorescent Lamp Ballast Industry.''
Associated employment impacts: These impacts consider jobs impacted
by business decisions driven by the ``direct'' employment impacts. For
example, if in a manufacturing plant with 100 employees, 50 are
producing ``affected'' magnetic ballasts and the remaining 50 are
producing ``unaffected'' magnetic ballasts, such as residential
ballasts, then an electronic ballast standard would result in the loss
of 50 direct jobs. Faced with this situation the company might decide
to close operations in its plant due to the dramatically reduced
capacity utilization. Such a decision would result in the loss of the
remaining 50 jobs. These 50 jobs would then be reported as
``associated'' employment impacts.
Manufacturers in Sub-group 1 anticipate that absent standards,
direct employment associated with manufacturing ``affected'' magnetic
ballasts will decrease approximately in the same proportion as
shipments. Faced with this decline, manufacturers in Sub-group 1 intend
to maintain high plant capacity utilization by replacing the loss in
direct jobs with new associated jobs. These new associated jobs may be
the result of new product introductions, plant consolidations or
decisions to make in-house, parts currently sourced from suppliers.
The uncertainty with regards to the timing of any plant closures in
the base case--after the year 2003--results from the difficulty in
anticipating how many associated jobs can be maintained in the long
run. Gains in associated jobs will not necessarily maintain plant
capacity utilization in the long run and a threshold may be reached
that requires the plant to be closed. For example, one manufacturer
suggested that for its supplier plant a drop of 30 percent in capacity
could lead to closure.
Table V.8 summarizes the employment impacts of an electronic
ballast standard under the two shipment scenarios. The table assumes a
standards effective date of 2003.
Table V.8.--Industry-Wide Employment Impacts of an Electronic Ballast Standard (Orderly decline in U.S.
manufacturing)
----------------------------------------------------------------------------------------------------------------
Direct jobs Associated Direct jobs 4
lost in jobs at risk 5 gained in
Country of manufacture magnetic in magnetic electronic Net direct
ballast ballast ballast jobs lost
manufacturing manufacturing manufacturing
----------------------------------------------------------------------------------------------------------------
2015 (5% decline) shipment scenario
----------------------------------------------------------------------------------------------------------------
USA............................................. 1666 2 406 500 166
Mexico.......................................... 1570 3 190 700 870
----------------------------------------------------------------------------------------------------------------
[[Page 14147]]
2027 (3% decline) shipment scenario
----------------------------------------------------------------------------------------------------------------
USA............................................. 717 2 363 557 160
Mexico.......................................... 1727 3 161 769 958
----------------------------------------------------------------------------------------------------------------
1 Includes both factory and non-factory jobs supporting magnetic ballast production.
2 These ``associated'' jobs are assumed relocated to Mexico.
3 These ``associated'' jobs will be relocated to other plants in Mexico or elsewhere.
4 Includes jobs from Sub-groups 1 and 2.
5 Does not include potential associated jobs added in these plants.
Uncertainty in Ballast Manufacturer Employment Impacts
As previously discussed, there exists some uncertainty relative to
the closure date of current magnetic ballast production facilities in
the base case. The employment impacts presented in Table V.8 assume a
base case with an orderly decline in the U.S. magnetic ballast
employment until 2015 or 2027. The large majority of these employment
impacts are directly associated with the closure of the remaining large
U.S.-based magnetic ballast plant.
In consideration of the past trend towards consolidation of
magnetic ballast production to Mexico, a sensitivity analysis was
conducted on the employment impacts assuming that the employment
impacts associated with the plant closures would occur in the base case
(in absence of standards). These impacts are detailed in the Table V.9.
The scenario assumes that the lost U.S. jobs would be picked up by
increased manufacturing activity in the Mexican plants, thereby
increasing the employment impact of a standard on Mexican jobs.
Table V.9.--Industry-Wide Employment Impacts of an Electronic Ballast Standard Under the Scenario Where (U.S.
Magnetic Ballast Plants Close in 2003 in the Base Case)
----------------------------------------------------------------------------------------------------------------
Direct jobs Associated Direct jobs 4
lost in jobs at risk 5 gained in
Country of manufacture magnetic in magnetic electronic Net direct jobs lost/
ballast ballast ballast gained
manufacturing manufacturing manufacturing
----------------------------------------------------------------------------------------------------------------
2015 (5% decline) shipment scenario
----------------------------------------------------------------------------------------------------------------
U.S.A................................ \1\ 0 \2\ 0 500 500 jobs gained
Mexico............................... 2236 \3\ 596 700 1536 jobs lost
----------------------------------------------------------------------------------------------------------------
2027 (3% decline) shipment scenario
----------------------------------------------------------------------------------------------------------------
U.S.A................................ 0 0 557 557 jobs gained
Mexico............................... 2444 \3\ 524 769 1675 jobs lost
----------------------------------------------------------------------------------------------------------------
\1\ Includes both factory and non-factory jobs supporting magnetic ballast production.
\2\ These ``associated'' jobs are assumed relocated to Mexico.
\3\ These ``associated'' jobs will be relocated to other plants in Mexico or elsewhere.
\4\ Includes jobs from Sub-groups 1 and 2.
\5\ Does not include potential associated jobs added in these plants.
Impacts on Ballast Manufacturing Capacity
It is likely that an electronic ballast standard would negatively
impact magnetic ballast production capacity in the U.S. and Mexico. As
mentioned previously, there is evidence to suggest that magnetic
ballast production facilities in the U.S. may be closed regardless of a
standard, and a sensitivity analysis was conducted to examine the
impacts of this scenario. While there is a degree of uncertainty over
what will happen to domestic magnetic ballast production facilities in
the absence of a standard, in all likelihood, the imposition of a new
electronic ballast standard will result in the closure of one magnetic
ballast production facility in the U.S., and in the partial closure of
another in Mexico. Additionally two manufacturer-owned (captive)
ballast supplier facilities would most likely be impacted: A capacitor
plant in Mexico could close and a magnet wire plant, located in the
U.S., could also close.
Although the scenario whereby magnetic ballast production
facilities are closed in 2003 in the base case was examined, all
manufacturers in Sub-group 1 suggested that in the absence of a
standard they would continue to manufacture ``affected'' magnetic
ballasts in their current manufacturing plants. They did not anticipate
any plant closures or shifting of production
[[Page 14148]]
of ``affected'' magnetic ballasts from one plant to another before the
year 2010.
Table V.10 summarizes the possible impact of a new electronic
ballast standard on existing manufacturing plants in the U.S. and
Mexico, assuming plants remain open in the base case as manufacturers
predict.
Table V.10.--Impacts on Manufacturing Capacity Due to an Electronic Ballast Standard
----------------------------------------------------------------------------------------------------------------
Plant Location Description Action
----------------------------------------------------------------------------------------------------------------
Plant 1.......................... U.S.A.................... Magnetic ballast........ Closure.
Plant 2.......................... U.S.A.................... Magnet Wire............. Possible Closure.
Plant 3.......................... Mexico................... Magnetic ballast........ Partial Closure.
Plant 4.......................... Mexico................... Capacitors.............. Closure.
Plant 5.......................... U.S.A.................... Electronic ballast...... Expansion.
Plant 6.......................... U.S.A.................... Electronic ballast...... Expansion.
Plant 7.......................... Mexico................... Electronic ballast...... Expansion.
Plant 8.......................... Mexico................... Electronic ballast...... Expansion.
----------------------------------------------------------------------------------------------------------------
An electronic ballast standard would lead to increased electronic
ballast manufacturing capacity in the U.S. and Mexico. In order to meet
increased sales resulting from a new electronic ballast standard, two
of the four manufacturers in Sub-group 1 plan to develop additional
electronic ballast manufacturing capacities in Mexico. The smaller
manufacturers in Sub-group 1 plan no major plant closures or expansions
and will accommodate the new product mix requirements within their
existing facilities. In Sub-group 2, two manufacturers stated that they
would add significant electronic ballast manufacturing capacity in the
U.S. to meet the new standard.
Impact on Small Ballast Manufacturers
Two relatively small manufacturers currently produce both
``affected'' magnetic and electronic ballasts. One of these
manufacturers would be a ``small business'' as defined in the
Regulatory Flexibility Act (See discussion in the Procedural Issues and
Regulatory Reviews section of this preamble). Both the small
manufacturers had their respective electronic and magnetic ballast
manufacturing operations in the same plants. It seems their smaller
size and less automated operations provides them with the flexibility
to adapt to a new electronic ballast standard without significant asset
write-offs or plant closures. However, the negative impacts on the
small manufacturers' cash flows from operations were similar in
proportion to those reported by the two large manufacturers in Sub-
group 1. As a result, in the 5% scenario, we estimate that small
manufacturers will experience a 16 percent loss in their NPV compared
to a 34 percent loss in NPV for the two large manufacturers.
As with other Sub-group 1 manufacturers, neither of these
manufacturers stated that an electronic ballast standard would force
them to leave the industry or go out of business.
Impact on Ballast Industry Suppliers
New energy-efficiency standards for fluorescent lamp ballasts will
also affect ballast industry suppliers. To estimate this impact, we
performed a detailed analysis of the impacts of an electronic ballast
standard on suppliers to the ballast industry. We invited 31 supplier
firms to participate in interviews. These firms were identified by
manufacturers to represent the key components contained in the bills of
materials for ``affected'' magnetic and electronic ballasts. Eleven of
these suppliers served magnetic ballast production, eleven electronic
ballast production, and nine supplier plants served both magnetic and
electronic production. Sixteen of the 20 organizations serving magnetic
ballast production participated in interviews and/or provided plant
tours. Eleven of the 20 organizations serving electronic ballast
production participated in interviews and/or provided plant tours.
Table V.11 shows an average (weighted by shipment levels)
distribution of materials and components cost for ``affected'' magnetic
ballasts. Interviews and literature sources provided information needed
to estimate financial and employment impacts of a new energy efficiency
standard for ballasts on suppliers responsible for approximately 91
percent of the cost of materials.
Table V.11.--Cost of Materials for ``Affected'' Magnetic Ballasts
------------------------------------------------------------------------
Contribution
to total
Material type cost of
materials
(%)
------------------------------------------------------------------------
Magnet and Lead Wire...................................... 40
Steel case and CRML....................................... 23
Capacitors................................................ 16
Thermal protectors, clamps, potting....................... 12
Other..................................................... 9
------------------------------------------------------------------------
The industries analyzed and represented are:
Cold rolled steel finished for ballast cases
Cold rolled motor laminate (CRML) steel for use primarily
in transformers
Magnet wire
Lead wire
Thermal protectors
Clamps to secure the stack of CRML stamped sections making
up the ballast transformer to the proper size
Potting and impregnation compounds
Capacitors
With the exception of a very small fraction of metallized film
capacitors produced outside the U.S. and materials produced in plants
owned and operated by the ballast manufacturers themselves, all of
these components are produced domestically in the United States. Except
for the clamps, all these industries (not necessarily the same plants)
also serve the production of electronic ballasts. The analyses for
financial and employment impacts considered materials supplied to
magnetic and electronic ballasts together for those industries which
serve both markets.
Table V.12 exhibits a similar distribution of materials and
components costs for an electronic ballast alternative to the
``affected'' magnetic ballast. The table shows a higher number of
components for electronic ballasts. The cost of materials for
electronic ballasts is approximately 30 percent higher than that for
``affected'' magnetic ballasts.
Table V.12.--Benchmark Costs for Electronic Ballasts
------------------------------------------------------------------------
Contribution
to total
Item cost of
materials
(%)
------------------------------------------------------------------------
Film Capacitors........................................... 17
PC Board, Thermal Protectors, Potting..................... 15
[[Page 14149]]
Steel case and CRML....................................... 12
Magnet and lead wire, connectors.......................... 12
Transistors............................................... 10
Ceramic and Electrolytic capacitors....................... 7
Bobbins................................................... 6
Diodes.................................................... 6
Ferrite Cores............................................. 5
Others.................................................... 10
------------------------------------------------------------------------
The analysis of supplier impacts focuses on domestic (production
facilities within the United States) suppliers. A substantial portion
of the components that go into producing electronic ballasts is
produced in foreign plants. We estimated the fraction of each component
produced domestically in 1997. To the extent that domestic suppliers
can maintain this market share, they could recover some of the
``affected'' magnetic ballast revenue and associated employment level
that they would lose if an electronic ballast energy efficiency
standard were to go into effect. The industries analyzed were producers
of printed circuit boards and bobbins. No first hand financial or
employment information was collected from industry representatives for
transistors, diodes, or ferrite cores. We combined these three
industries with a half dozen other smaller contributors to the cost of
materials and assumed pro-rated values for net income, depreciation,
and capital expenditure levels to estimate cash flow for this group.
This ``other'' group of suppliers represents approximately 27 percent
of supplier revenue, meaning about 73 percent of electronic ballast
supplier financial values is based on direct contact with industry
representatives. The comparable figure for the magnetic ballast
supplier side is 9 percent ``other'' and 91 percent based on interviews
with suppliers.
The analysis considers a reference case wherein domestic suppliers
maintain their 1997 market shares in the electronic ballast component
market. Through discussions with supplier industries it became apparent
that there existed some uncertainty as to the probability that ballast
manufacturers would continue to source their components domestically in
the event of an electronic standard. To bracket the uncertainty,
separate cash flows were performed for the extreme case where all
components for electronic ballasts were purchased from foreign sources.
The financial impacts associated with the reference and ``worst'' cases
are summarized in the following Tables.
Table V.13.--Estimated NPV in $Millions for Supplier Industries, Assuming Domestic Supplier Industries Maintain
Their 1997 Market Shares (Reference Case)
----------------------------------------------------------------------------------------------------------------
5% Scenario, 1998-2015 3% Scenario, 1998-2027
-----------------------------------------------------------------------------
Industry Standard Standard
Base case case Change $mil Base case case Change $mil
----------------------------------------------------------------------------------------------------------------
Capacitor......................... 1.28 1.59 0.31 1.34 1.74 0.41
Magnet, Lead Wire, Connectors..... 11.40 8.83 -2.57 12.39 9.27 -3.13
TP, Metal Clamps, Potting & 8.55 7.05 -1.51 10.24 7.59 -2.65
Impregnating.....................
Steel............................. 16.59 12.45 -4.14 18.74 14.21 -4.53
Other Mag/Electronic Suppliers.... 6.11 4.87 -1.23 6.81 5.18 -1.63
PC Board, Bobbins................. 1.87 2.81 0.94 1.45 2.69 1.24
Other Electronic Suppliers........ .79 1.44 0.65 1.04 1.88 0.84
-----------------------------------------------------------------------------
Total......................... 46.59 39.04 -7.55 52.01 42.56 -9.45
----------------------------------------------------------------------------------------------------------------
Table V.14.--Estimated NPV in $Millions for Supplier Industries, Assuming Foreign Suppliers Capture All the New
Electronic Ballast Market (worst case).
----------------------------------------------------------------------------------------------------------------
5% Scenario, 1998-2015 3% Scenario, 1998-2027
------------------------------------------------------------------------------
Industry Standard Standard
Base case case Change $mil Base case case Change $mil
----------------------------------------------------------------------------------------------------------------
Capacitor........................ 1.28 .89 -.39 1.34 .92 -0.41
Magnet, Lead Wire, Connectors.... 11.40 8.06 -3.34 12.39 8.37 -4.03
TP, Metal Clamps, Potting & 8.55 5.69 -2.86 10.24 5.92 -4.31
Impregnating....................
Steel............................ 16.59 11.05 -5.54 18.74 11.54 -7.20
Other............................ 6.11 4.13 -1.97 6.81 4.31 -2.50
PC Board, Bobbins................ 1.87 0.25 -1.62 1.45 0.15 -1.3
Other Electronic Suppliers....... 0.79 0.16 -0.64 1.04 0.09 -0.94
------------------------------------------------------------------------------
Total........................ 46.59 30.23 -16.36 52.01 31.3 -20.69
----------------------------------------------------------------------------------------------------------------
The financial impact ranges from a reference case $7.55 million
decline in NPV cash flow under the 5% scenario to a ``worst'' case
$20.69 million decline under the 3% scenario.
Impacts on Supplier Employment
The reference-case employment impacts under the 3% and 5% scenarios
are summarized in Table V.15 and indicate a range of 313-340 jobs lost
and potential for 129-144 to be gained back. If all the new electronic
ballast market were to go to foreign firms, no jobs would be gained
back, and thus in the worst case about 313-340 domestic jobs would be
lost.
[[Page 14150]]
Table V.15.--Estimated Employment Impacts for Supplier Industries Assuming Domestic Suppliers Maintain Their
1997 Market Shares.
----------------------------------------------------------------------------------------------------------------
5% Scenario, 1998-2015 3% Scenario, 1998-2027
-----------------------------------------------------------------------------
Industry Net jobs Net jobs
Jobs lost Potential lost Jobs lost Potential lost
jobs gained [gained] jobs gained [gained]
----------------------------------------------------------------------------------------------------------------
Capacitor......................... 27 34 [7] 29 37 [8]
Magnet & Lead..................... 69 10 59 76 11 65
TP, Metal Clamp,.................. 52 14 38 57 15 42
Steel............................. 58 13 45 63 14 49
Metallized Film................... 44 1 43 48 1 47
Other Magnetic/Electronic......... 40 8 32 44 9 35
PC Board, Bobbins................. 0 23 [23] 0 27 [27]
Other Electronic.................. 0 26 [26] 0 30 [30]
Associated Plant Closure.......... 23 ........... 23 23 ........... 23
-----------------------------------------------------------------------------
Total......................... 313 129 184 340 144 196
----------------------------------------------------------------------------------------------------------------
Impacts on Luminaire Manufacturers
The Department interviewed eight luminaire manufactures with a
combined market share approaching 85 percent of the market segments
affected by a new ballast standard. The Department specifically
investigated how a new energy efficiency standard for ballasts might
change luminaire manufacturer profitability and cash flow. Of the eight
manufacturers interviewed, two reported they will suffer no impacts and
two others believe their impacts would be minimal. The four other
manufacturers believe they will suffer varying levels of decreased
company value.
From the information obtained in the interviews, estimates of
reductions in NPV were prepared for each of the four manufacturers
reporting negative impacts. These projections incorporated the
financial figures and rationale provided by the manufacturers. Three
different rationales were presented in support of diminished
profitability and value.
One or more manufacturers are experiencing greater profitability
with electronic ballasts. The NPV reduction assumes that a standard
which eliminates magnetics as the commodity product would render
electronic ballasts the commodity product and competition would
eliminate the premium for electronic ballasts.
One or more manufacturers are experiencing greater profitability
with magnetic ballasts. The NPV reduction is a direct consequence of
replacing sales of higher margin products by lower margin sales.
The third view presented concerns the high price sensitivity of
low-end luminaires, particularly one and two lamp strip lights. It was
assumed for that analysis that not all incremental costs for electronic
ballasts could be passed on to consumers with a corresponding reduction
in profit margin.
For both shipment scenarios, the aggregated reduction in NPV for
the four firms totals approximately 13.5 million dollars assuming the
current difference in margins for luminaires incorporating magnetic or
electronic ballasts would continue absent standards. This appears to be
a very speculative assumption given the trend towards convergence of
magnetic and electronic luminaire margins reported by most luminaire
manufacturers. If in fact margins do converge by the implementation
date of a new standard, the impacts attributed to price margin
differences disappear and the total impacts are reduced to a value of
approximately 4.5 million dollars.
In addition to the previous financial impacts, manufacturers
reported significant other costs and business disruptions associated
with potential new ballast standards. There were concerns expressed
that a standard would divert resources from new product and technology
introduction and result in lost opportunities. Large efforts would also
be needed to revise product literature and perform photometric tests.
Further, many business processes and information systems relative to
materials management and other systems would need to be revised. The
costs associated with these issues, not including lost opportunities
were reported to be approximately one million dollars.
Impacts on Luminaire Manufacturer Employment
Of the eight luminaire manufacturers interviewed, six stated that
employment impacts from an electronic ballast standard would be be
minimal, if any, within their companies. Two manufacturers, however,
believe a new standard would probably reduce employment levels in their
U.S. facilities. This reduction is assumed to be caused by reductions
in export sales and a loss of flourescent luminaire sales in favor of
incandescent luminaires. Based on its analysis of these issues and in
agreement with the majority view of interview participants, the
Department believes the employment impacts of a ballast standard would
be minimal.
Two manufacturers expressed a concern that since their export
markets are primariliy magnetic, a drop in domestic ballast
manufacturing volumes would cause upward pressure on magnetic luminaire
prices and compel them to raise export prices for luminaires. Local
luminaire manufacturers, they believe, could find less costly sources
for magnetic ballasts resulting in decreased export sales for U.S.
companies. Furthermore, these manufactures fear that given the
importance of linear flourscent fixtures in most customer orders,
winning or losing a project can depend heavily on price levels of the
these luminaires. If flourecscent luminaire sales are lost to local
competitors then, they believe, U.S. companies could also lose sales of
HID luminaires, emergency lighting, exit signs and various other
products. The Department believes these employment impacts would be
very small for two reasons. First economic theory and real world
experience suggests that in competitive markets, overcapacity leads to
increased--not decreased--price competition. Second the export market
is concentrated in the Canadian and Mexican markets where U.S. ballast
manufacturers are major participants and could compete with local
ballasts manufacturers.
Another stated potential cause of reduced U.S. luminaire
manufacturing jobs is the possible movement away from flourescent
luminaires in favor of incandescent luminaires in the more
[[Page 14151]]
first cost sensitive commercial market segments. However, there was
considerable differences of opinion as to the significance of any such
movement in lighting systems. The general view was that there is
already a significant cost premium for fluorescent lighting and this
premium is not likely to greatly increase given ballast pricing trends.
Therefore the Department has not included any employment reductions for
luminaire manufacturers because of this potential effect.
Impacts on Lamp Manufacturers
Three major manufacturers, GE Lighting, OSI, and Philips Lighting
Company dominate the domestic market for linear fluorescent lamps.
Together these three manufacturers serve approximately 90 percent of
the U.S. market. As trade allies of the fluorescent ballast
manufacturing industry, they may experience an impact from a new
energy-efficiency standard applied to fluorescent lamp ballasts. Some
ballast and lamp industry sources and others have speculated that a new
energy-efficiency standard for ballasts would substantially accelerate
the transition from T12 lamps to T8, thus having an impact on lamp
manufacturers as well as ballast manufacturers.
As discussed previously, OSI commented that the lamp industry had
the capacity to handle the transition from T12 lamps to T8 lamps in the
OEM market resulting from an electronic ballast rule over a period of
three years. OSI believes, however, it doubtful the lamp industry could
handle, in addition, any significant transition to T8 lamps of the
installed base of T12 lamps in less than 8 years following an
electronic ballast rule. OSI commented that if magnetic ballasts were
no longer available, large resources would be diverted to the
development of energy saving T12 lamps compatible with electronic
ballasts or electronic ballasts compatible with energy saving T12
lamps.
The Department invited representatives from each of the three major
lamp manufacturers to estimate the impact that a new ballast standard
might have on them. One manufacturer chose not to participate in the
discussions, so the following results are based on talks with two major
manufacturers.
There was agreement that a new standard would accelerate the shift
in market share from T12 to T8 lamps. The manufacturers further agreed
the current transition to T8 lamps is being handled well and that any
acceleration in the transition must be served while retaining enough
T12 capacity to serve the replacement market. The replacement market
for T12 lamps is large, over 85 percent of the 1998 market of 340
million lamps were T12 lamps. The lamp manufacturing industry can gear
up to serve the increase in OEM demand for T8 lamps with a 3-4 year
lead-time. However, to serve any increased replacement market at the
same time would require an acceleration in capacity expansion for T8
production and early retirement of T12 capacity which would have
financial impacts.
The Department is uncertain as to how the replacement market might
respond to today's proposed standard. Consumers might make spot
replacements, as suggested by ACEEE earlier, or ballast manufacturers
may develop electronic T12 ballasts compatible with T12 energy saver
lamps or there could be an acceleration to T8 lamps in the replacement
market. Given this uncertainty, we did not attempt to quantify the
impact on lamp manufacturers of an electronic ballast standard applied
to the replacement ballast market before the 8 year implementation date
suggested by OSI.
2. Life-Cycle Cost
More efficient ballasts would affect commercial and industrial
consumers in two ways: operating expense would probably decrease and
purchase price would probably increase. We analyzed the net effect by
calculating the LCC. Inputs required for calculating LCC include end-
user prices for ballasts and lamps, electricity rates (cents/
kiloWatthour), energy savings, annual lighting operating hours, labor
rates, installation times, period of the analysis, ballast lifetimes,
lamp lifetimes, and discount rates. A detailed discussion of the
sources and methods used for arriving at an estimate of these
parameters is in the TSD. Briefly, we obtained end-user prices for
ballasts from a survey of ballast distributors from various parts of
the country; we estimated marginal electricity rates as described later
in this section; we based operating hours upon Xenergy building energy
audit data; we derived installation costs from journeyman wages listed
in the National Electrical Estimator 1995; the period of analysis is
the ratio of ballast life to the annual operating hours; lamp life is
the average of lamp life under spot and group replacement where spot
replacement lamp life is the lamp rated life from manufacturer's
catalog and group replacement is 75 percent of the rated life; and the
discount rate is 8 percent.
We estimated the marginal electricity rates by first calculating
the marginal rate faced by a sample of commercial customers in
buildings throughout the U.S. This was compared with the average
electricity rates for the same customers. The percent difference
between the average and marginal rates (Epsilon) was calculated for
each customer. We then used this Epsilon distribution to convert the
average electricity price from a specific United States utility into
marginal electricity price by using the formula:
Marginal Electricity Price = Average Electricity Price x (1 + Epsilon)
We performed a probability-based LCC analysis with a computer
program called Crystal Ball. For each of four inputs (ballast price,
electricity price, ballast lifetime, and annual lighting hours) to the
LCC model, we defined a probability-based distribution of the input to
account for the variability of the input. Instead of using a single
``average'' value to represent the input in its entirety, we used the
whole distribution to calculate the LCC. The output of the LCC model is
a mean LCC savings for each product class as well as a probability
distribution or likelihood of LCC reduction or increase.
We present a summary of the results in Table V.16. The column
titled ``Delta LCC'' gives the change in LCC when switching from the
baseline option of EEM ballast to the listed design option. ``%
Winners'' represents the probability of the design option resulting in
reduced LCC. Table 4.4 of the TSD also shows the life cycle cost
impacts when starting from an energy efficient magnetic T8 ballast.
Table V.16.--Summary of Delta LCC* Results
----------------------------------------------------------------------------------------------------------------
Delta LCC
----------------------
Product class % Market Design option Sector Mean
(1997$) %Winners**
----------------------------------------------------------------------------------------------------------------
1F40.............................. 5 T12 CC.............. Commercial.......... -4 7
[[Page 14152]]
T12 ERS............. Commercial.......... 4 68
2F40.............................. 36 T12 CC.............. Commercial.......... -2 31
T12 ERS............. Commercial.......... 6 80
3F40.............................. 1 T12 CC.............. Commercial.......... -2 33
Tandem-Wired...................... T12 ERS............. Commercial.......... 5 68
3F40 Not.......................... 10 T12 CC.............. Commercial.......... -4 23
Tandem-Wired...................... T12 ERS............. Commercial.......... 18 98
4F40.............................. 22 T12CC............... Commercial.......... -2 36
T12 ERS............. Commercial.......... 12 87
2F96.............................. 23 T12 EIS............. Commercial.......... 7 75
T12 EIS............. Industrial.......... -2 35
2F96HO............................ 2 T12 CC.............. Commercial.......... 11 90
T12 ERS............. Commercial.......... 28 98
T12 CC.............. Industrial.......... 1 50
T12 ERS............. Industrial.......... 15 94
----------------------------------------------------------------------------------------------------------------
*A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC
**% ballasts with reduced life cycle cost (winners), noted as ``certainty level'' by Crystal Ball.
3. Energy Savings, Net Present Value and Net National Employment
As indicated, we conclude that standards will result in significant
savings of electricity by ballasts for each standards scenario. These
energy savings have value to society, as measured by the net present
value analysis. The net present value analysis is a measure of the net
savings to society from standards and are summarized in the following
tables.
Table V.17a.--Net Present Value From Electronic Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electronic standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)*
---------------------------------------------------------------------------------------------------------------------------------------------------------
Scen 2B T12/
Scenario Scen 1A T12 Scen 1B T12 Scen 2A T12/ T8 Scen 3A Scen 3B Scen 4A Scen 4B
Decr2015 Decr2027 T8 Decr2015 Decr2027 Decr2015 Decr2027 Decr2015 Decr2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Benefit.................................. 1.97 3.13 3.22 5.13 2.68 4.46 2.98 4.85
Total Equipment Cost........................... 1.01 1.62 0.8 1.27 0.64 1.08 0.72 1.18
Net Present Value.............................. 0.96 1.51 2.43 3.86 2.03 3.38 2.26 3.68
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Total Benefit and Net Present Value do not include HVAC savings.
Table V.17b.--Net Present Value From Cathode Cutout Standards
----------------------------------------------------------------------------------------------------------------
Cathode cutout standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)
-----------------------------------------------------------------------------------------------------------------
Scen 5A 100% Scen 5B 100% Scen 6A 37% CC Scen 6B 37% CC
Scenario CC Decr2015 CC Decr2027 Decr2015 Decr2027
----------------------------------------------------------------------------------------------------------------
Total Benefit................................... 0.94 1.49 2.18 3.47
Total Equipment Cost............................ 0.78 1.26 0.58 0.93
Net Present Value............................... 0.16 0.23 1.60 2.54
----------------------------------------------------------------------------------------------------------------
Since the covered lamp ballasts are commercial products, these net
savings apply to American business and industry. NPV is the difference
between additional equipment costs and electricity cost savings. The
NPV for the electronic ballast standards scenarios ranges from about
0.96 billion to 3.86 billion dollars (1997 dollars). NPV increases
under the slower decreasing shipments forecast to 2027. NPVs for
scenario 2 with T8 electronic ballasts are about 2.5 times those for
scenario 1 with T12 electronic ballasts. For scenario 3, the five-year
phase-in period causes an NPV reduction of around 15 percent over
scenario 2. For scenario 4, the 2-year phase-in period results in an
NPV reduction of about 5 percent over Scenario 2.
For the cathode cutout standards scenarios, NPV ranges from 0.16 to
2.54 billion dollars. For scenario 6, the NPV is 10 to 11 times greater
than that of scenario 5. Note that we did not include HVAC energy cost
savings in any of the NPV calculations.
The net present value analysis from the standards in the Joint
Comments is summarized in Table V.18.
Table V.18.--Net Present Value Resulting From Joint Comment
------------------------------------------------------------------------
Joint comment standards for units sold from 2005 to 2030 discounted at
7% to 1997 (in billion 1997 $)
-------------------------------------------------------------------------
Scenario Dec2015 Dec2027
------------------------------------------------------------------------
Total Benefit..................................... 1.95 3.51
Total Equipment Cost.............................. 0.53 0.91
Net Present Value................................. 1.42 2.60
------------------------------------------------------------------------
The Department committed in its 1996 Process Improvement Rule to
develop estimates of the employment
[[Page 14153]]
impacts of proposed standards in the economy in general. 61 FR 36983.
As discussed above, energy efficiency standards for ballasts are
expected to reduce electricity bills for commercial and industrial
consumers, although these savings are likely to be partially offset by
increased costs for lighting equipment. The resulting net savings are
expected to be redirected to other forms of economic activity. These
shifts in spending and economic activity are expected to affect the
demand for labor, but there is no generally accepted method for
estimating these effects.
One method to assess the possible effects on the demand for labor
of such shifts in economic activity is to compare sectoral employment
statistics developed by the Labor Department's Bureau of Labor
Statistics (BLS). The BLS regularly publishes its estimates of the
number of jobs per million dollars of economic activity in different
sectors of the economy, as well as the jobs created elsewhere in the
economy by this same economic activity. BLS data indicate that
expenditures in the electric sector generally are associated with fewer
jobs (both directly and indirectly) than expenditures in other sectors
of the economy. There are many reasons for these differences, including
the capital-intensity of the utility sector and wage differences. Based
on the BLS data alone, we believe the increase in the demand for labor
resulting from shifts in economic activity would offset any reduced
demand in the domestic ballast industry as a result of a ballast
standard.
In developing this proposed rule, the Department attempted a more
precise analysis of the impacts on national labor demand using an
input/output model of the U.S. economy. The model characterizes the
interconnections among 35 economic sectors using the data from the
Bureau of Labor Statistics. Since the electric utility sector is more
capital-intensive and less labor-intensive than other sectors (see
Bureau of Economic Analysis, Regional Multipliers: A User Handbook for
the Regional Input-Output Modeling System (RIMS II), Washington, D.C.,
U.S. Department of Commerce, 1992), a shift in spending away from
energy bills into other sectors would be expected to increase overall
employment. The results of the Department's analysis are shown in
Appendix E of the TSD. This analysis also concluded that the shifts in
sectoral expenditures likely to result from the proposed ballast
standard would likely increase the net national demand for labor.
While both this input/output model and the direct use of BLS
employment data suggest the proposed ballast standards are likely to
increase the net demand for labor in the economy, the gains would most
likely be very small relative to total national employment. For several
reasons, however, even these modest benefits are in doubt:
Unemployment is now at the lowest rate in 30 years. If
unemployment remains very low during the period when the proposed
standards are put into effect, it is unlikely that the standards could
result in any net increase in national employment levels.
Neither the BLS data nor the input-output model used by
DOE include the quality or wage level of the jobs. One reason that the
demand for labor increases in the model may be that the jobs expected
to be created pay less than the jobs being lost. The benefits from any
potential employment gains would be reduced if job quality and pay are
reduced.
The net benefits from potential employment changes are a
result of the estimated net present value of benefits or losses likely
to result from the proposed standards, it may not be appropriate to
separately identify and consider any employment impacts beyond the
calculation of net present value.
Taking into consideration these legitimate concerns regarding the
interpretation and use of the employment impacts analysis, the
Department concludes only that the proposed ballast standards are
likely to produce employment benefits that are sufficient to offset
fully the expected adverse impacts on employment in the domestic
ballast industry.
Because this is the first time DOE has performed such an analysis
for an efficiency standards rulemakings, public comments are solicited
on the validity of the analytical methods used and the appropriate
interpretation and use of the results of this analysis.
4. Lessening of Utility or Performance of Products
An issue of utility that was considered was the possibility of
interference with certain equipment, such as medical monitoring
equipment, caused by the high frequency of electronic ballasts. To
prevent any interference that cannot be solved by electronic ballast
designers, the Department is not establishing a standard for T8
ballasts, thereby allowing magnetic T8 ballasts for such applications.
5. Impact of Lessening of Competition
The determination of this factor must be made by the Attorney
General.
6. Need of the Nation to Save Energy
Enhanced energy efficiency improves the Nation's energy security,
strengthens the economy and reduces the environmental impacts of energy
production. The energy savings from ballast standards result in reduced
emissions of carbon and NOX. Cumulative emissions savings
over the 18-year period modeled are shown in Table V.19.
Table V.19.--Cumulative Emissions Reductions (2003-2020)
----------------------------------------------------------------------------------------------------------------
Range for Range for
Electronic Cathode Cutout Range
Emission Standards Standards Resulting from
(standards 1- (standards 5 Joint Comments
4) and 6)
----------------------------------------------------------------------------------------------------------------
Carbon (Mt)..................................................... 12-30 6-20 11-19
NOX (kt)........................................................ 41-97 20-65 34-60
----------------------------------------------------------------------------------------------------------------
The annual carbon emission reductions range up to 2.3 Mt in 2020
and the NOX emissions reductions up to 5.7 kt in
2015.\8,\\9\ Total carbon and NOX emissions for each of the
12 studied standards are reported in Tables D-1a and D-1b, Appendix D,
of the TSD. In addition, equivalent results for the high and low
economic growth cases for standards level 2b are reported in Table D-2
of the TSD. The outcome of the analysis for each case is shown as both
[[Page 14154]]
emissions and deviations from the AEO99 Reference Case result.
Emissions for the Joint Comment are presented in Appendix E of the TSD.
---------------------------------------------------------------------------
\8\ million metric tons (Mt).
\9\ thousand metric tons (kt).
---------------------------------------------------------------------------
7. Other Factors
We present in Table V.20 a summary of the life-cycle cost results
for those subgroups of commercial and industrial consumers who, if
forced by standards to purchase electronic ballasts, would choose to
switch from T12 to T8 lighting systems. The column titled ``Delta LCC''
gives the change in LCC when switching from the baseline option of EEM
ballast to the listed design option. ``% Winners'' represents the
probability of the design option resulting in reduced LCC.
Table V.20.--Summary of Delta LCC* Results
----------------------------------------------------------------------------------------------------------------
Delta LCC
Product Class Design Option Sector -------------------------------
Mean (1997$) %Winners**
----------------------------------------------------------------------------------------------------------------
1F40.............................. T8 ERS............... Commercial........... 17 98
2F40.............................. T8 ERS............... Commercial........... 18 98
3F40 Tandem-Wired................. T8 ERS............... Commercial........... 27 98
3F40 Not Tandem-Wired............. T8 ERS............... Commercial........... 56 100
4F40 w/o Dual Switching........... T8 ERS............... Commercial........... 54 100
4F40 Dual Switching............... T8 ERS............... Commercial........... 44 99
----------------------------------------------------------------------------------------------------------------
*A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC
** % ballasts with reduced life cycle cost (winners), noted as ``certainty level'' by Crystal Ball.
For commercial and industrial consumers that choose four foot T8
lamps with their electronic ballasts, who in the current market
represent 95 percent of purchasers of electronic ballasts, 98 to 100
percent will have life cycle cost savings which average 17 to 54
dollars. We did not evaluate commercial and industrial consumers of
eight foot lamps, but we expect them to have similarly robust positive
results.
As stated, the Department analyzed the Joint Comment in terms of
national energy savings, net present value, national employment impacts
and emission reductions. These results are also shown in Appendix E of
the TSD. For the common scenario between the Department's analysis and
the Joint Comment proposal of a market transformation by 2027 and a
shift to T8 lamps, the above benefits are approximately 24 percent less
than the Department's analysis which started the standards in the year
2003. However, the burdens on the manufacturers are also reduced to
lower levels. The manufacturers have commented that their proposed
staggered implementation dates mitigate the adverse impacts.
e. Conclusion
Section 325(l) of the Act specifies that the Department must
consider, for amended standards, those standards that ``achieve the
maximum improvement in energy efficiency which the Secretary determines
is technologically feasible and economically justified'' and which will
``result in significant conservation of energy.'' Accordingly, the
Department first considered the benefits and burdens of the max tech
level of efficiency, i.e., electronic ballast standards. Furthermore,
in considering this standard level, the Department considered the
staggered implementation scheme recommended in the Joint Comments.
Significant Conservation of Energy
The Department concludes that an electronic ballast standard saves
a significant amount of energy. The energy savings reported for an
electronic ballast standard in the Department's analysis ranged between
1.20 to 2.32 Quads of energy, not including the HVAC effects. The
Department considers energy savings within this range to be
significant.
Technological Feasibility
The Department concludes that an electronic ballast standard is
technologically feasible as these products are currently available and
comprise roughly half of the market.
Summary of Economic Impacts
In determining economic justification, the Department considered
the burdens and benefits of an electronic ballast standard. The burdens
accrue to the manufacturers of magnetic ballasts, some of their
suppliers and employees, and to some commercial and industrial
consumers who, because of factors such as lower than average electric
costs or hours of operation, will experience increased life cycle
costs. On the other hand, most commercial and industrial consumers will
benefit from lower life cycle costs due to energy savings. These lower
costs to the nation's businesses and industries produce increased jobs
in the economy at large and the energy savings result in reduced
atmospheric emissions. The Department gave considerable weight to the
recommendations of the Joint Comment which attempts to balance these
burdens and benefits. The proposal reduces energy savings by
approximately 24 percent compared to the Department's analysis for the
common scenario of a market transformation by 2027 and a shift to T8
lamps. These reductions come mainly from delaying the effective dates
of the standards from the year 2003 to 2005 and later for replacement
ballasts. However, these same extensions also reduce the impacts of the
standards on manufacturers from what the Department estimated to levels
which the manufacturers state are mitigated. While the Department did
not revise the MIA, we believe the manufacturers' statement in the
Joint Comment that the impacts on them from the proposal are mitigated
is sufficient to conclude that, given the benefits, today's proposed
standards are economically justified.
Economic Impact on Manufacturers
Over the range of cash flow scenarios and shipment forecasts that
the Department studied for standards starting for all classes in 2003,
we estimated that manufacturers that produce both magnetic and
electronic ballasts would loose between 54.6 and 113.7 millions of
dollars of NPV as a result of electronic standards. Manufacturers that
currently produce electronic ballasts only were estimated to gain 9.3
to 27.5 millions of dollars of NPV. Domestic suppliers to the ballast
industry were expected to loose between 7.55 and 20.69 millions of
dollars of NPV. Luminaire manufacturers were expected to loose between
5.5 and 14.5 millions of dollars
[[Page 14155]]
of NPV. Cumulatively, the Department estimates that businesses involved
in the ballast industry would have net losses of between 47.4 and 121.4
millions of dollars of NPV as a result of electronic standards starting
in the year 2003. This loss of value comes mainly from the lower
profitability of the electronic ballast market compared to the magnetic
ballast market. Additionally, restructuring costs associated with plant
closures and expansions and changes in capacity utilization make up the
rest of the loss in value.
Manufacturers report that a domestic magnetic ballast manufacturing
plant, and possibly a domestic magnet wire plant, would close if an
electronic ballast standard became effective in 2003. It was also
reported that a capacitor plant and part of a magnetic ballast
manufacturing plant, both located in Mexico, would also close.
Additionally, it was reported that two domestic electronic ballast
manufacturing plants, and two located in Mexico, would expand. The
Department has included these assumptions in the above NPV values.
However, given the downward trend in magnetic ballast shipments,
statements by manufacturers that the market is transitioning away from
magnetic ballasts and the movement of domestic magnetic ballast
manufacturing facilities to Mexico in recent years, it certainly seems
possible that the plants associated with magnetic ballasts might be
closed, or moved to Mexico, even in the absence of standards.
Therefore, the Department also considered a scenario where the domestic
magnetic ballast manufacturing facilities close in the base case. Under
this assumption the losses to manufacturers that produce both magnetic
and electronic ballasts, and to the total industry, would be reduced by
13.7 million dollars from the previous figures to a range of 33.7 to
107.7 millions of dollars of NPV.
Employment Impacts
Given the manufacturer reported plant closure and expansion
assumptions, the Department estimated that between 666 and 717 direct
domestic magnetic ballast manufacturing jobs, along with 313 to 340
domestic supplier jobs, would be lost. The Department also estimated
that between 500 and 557 direct domestic electronic ballast
manufacturing jobs, along with zero to 144 supplier jobs would be
created. Thus, the Department estimated that the impact on direct
domestic employment in the ballast industry would be a net loss of
between 350 and 500 jobs.
However, given the movement of domestic magnetic ballast
manufacturing facilities to Mexico in recent years, it certainly seems
possible that many of these jobs would be moved to Mexico in the
absence of an electronic ballast standard. Therefore, the Department
also considered a scenario where the domestic magnetic ballast
manufacturing facility closes in the base case. Under this scenario, no
direct domestic magnetic ballast manufacturing jobs would be lost and
the impact on direct domestic employment in the ballast industry would
be a net gain of between 500 and 557 jobs.
In addition to the direct domestic jobs, the Department also
estimated that there are between 363 and 406 associated domestic jobs
in the ballast industry that, while not being eliminated, are at risk
of being moved to Mexico as a result of business decisions.
Additionally, the Department estimated that between 1,570 and 1,727
direct magnetic ballast manufacturing jobs in Mexico would be lost
while 700 to 769 direct electronic ballast manufacturing jobs would be
created in Mexico. Under the scenario where the domestic magnetic
ballast manufacturing facility closes in the base case, no associated
domestic jobs are at risk of being moved to Mexico as result of
standards, while the direct magnetic ballast manufacturing jobs lost in
Mexico grows to between 2,236 and 2,444 jobs.
Consumer Impacts
As a result of the Department's analysis, we believe most
commercial and industrial consumers will save money. In total, we
estimated the energy savings to have a net present value to American
business and industry of 1.42 to 2.60 billion dollars, depending on the
forecast of switching from magnetic ballasts to electronic ballasts in
the absence of standards, and the rate of switching from T12 to T8
lamps in the face of standards.
Commercial consumers will experience lower life cycle costs which
range from an average savings of 4 dollars for a 1F40T12 ballast to an
average savings of 18 dollars for a 3F40T12 not tandem-wired ballast.
Within these respective averages, 68 to 98 percent of the consumers
will have lower life cycle costs while 32 to 2 percent will have higher
life cycle costs. Those commercial consumers who also switch to T8
lamps will experience even lower life cycle costs which range from an
average savings of 17 dollars for a 1F40T8 ballast to an average
savings of 56 dollars for a 3F40T8 ballast. Within these respective
averages 98 to 100 percent of the consumers will have lower life cycle
costs. The Department believes almost every commercial consumer who
switches to an electronic ballast for T8 lamps will save money.
Industrial consumers using F96T12 lamps, who represent 26 percent
of F96T12 lamps, will experience higher life cycle costs with average
costs of 2 dollars per ballast. Within that average, 35 percent will
have lower life cycle costs while 65 percent will have higher life
cycle costs. The above industrial consumer impacts are for T12 lamps
and, while we did not evaluate industrial consumers of eight foot T8
lamps, we expect them to have a much larger proportion with lower life
cycle costs as was the case for all consumers of four foot lamps who
switch from T12 to T8 lamps.
National Impacts
As stated earlier, the energy savings reported for an electronic
ballast standard in the Department's analysis ranged from 1.20 to 2.32
Quads of energy. These energy savings would result in carbon emission
reductions of 11 to 19 million metric tons and NOX emission
reductions of 34 to 60 thousand metric tons.
Net Benefits of Proposed Standard
After carefully considering the analysis, comments and benefits
versus burdens, the Department proposes to amend the energy
conservation standards for fluorescent lamp ballasts as proposed by the
Joint Comment. The Department concludes this standard saves a
significant amount of energy and is technologically feasible and
economically justified. In determining economic justification, the
Department finds that the benefits of energy savings, consumer life
cycle cost savings, national net present value increase, job creation
and emission reductions resulting from the standard outweigh the
burdens of the loss of manufacturer net present value, possible plant
closings and job loss and consumer life cycle cost increases for some
users of fluorescent lamp ballasts covered by today's notice.
VI. Procedural Issues and Regulatory Review
a. Review Under the National Environmental Policy Act
In issuing the March 4, 1994 Proposed Rule for energy efficiency
standards for eight products, one of which was fluorescent lamp
ballasts, the Department prepared an Environmental
[[Page 14156]]
Assessment (EA) (DOE/EA-0819) that was published within the Technical
Support Document for that Proposed Rule. (DOE/EE-0009, November 1993.)
We found the environmental effects associated with various standard
levels for fluorescent lamp ballasts, as well as the other seven
products, to be not significant, and we published a Finding of No
Significant Impact (FONSI). 59 FR 15868 (April 5, 1994).
In conducting the analysis for today's Proposed Rule, the
Department evaluated design options as suggested in comments. As a
result, the energy savings estimates and resulting environmental
effects from revised energy efficiency standards for fluorescent lamp
ballasts in today's proposal differ somewhat from those that we
presented for fluorescent lamp ballasts in the 1994 Proposed Rule.
Nevertheless, the environmental effects expected from today's Proposed
Rule would fall within ranges of environmental impacts from the revised
energy efficiency standards for fluorescent lamp ballasts that DOE
found in the FONSI not to be significant.
b. Review Under Executive Order 12866, 'Regulatory Planning and Review'
Today's regulatory action has been determined to be an
``economically significant regulatory action'' under Executive Order
12866, ``Regulatory Planning and Review.'' (58 FR 51735, October 4,
1993). Accordingly, today's action was subject to review under the
Executive Order by the Office of Information and Regulatory Affairs
(OIRA).
The draft submitted to OIRA and other documents submitted to OIRA
for review have been made a part of the rulemaking record and are
available for public review in the Department's Freedom of Information
Reading Room, 1000 Independence Avenue, SW, Washington, DC 20585,
between the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday,
telephone (202) 586-3142.
The following summary of the Regulatory Analysis focuses on the
major alternatives considered in arriving at the proposed approach to
improving the energy efficiency of consumer products. The reader is
referred to the complete draft ``Regulatory Impact Analysis,'' which is
contained in the TSD, available as indicated at the beginning of this
NOPR. It consists of: (1) A statement of the problem addressed by this
regulation, and the mandate for government action; (2) a description
and analysis of the feasible policy alternatives to this regulation;
(3) a quantitative comparison of the impacts of the alternatives; and
(4) the national economic impacts of the proposed standard.
DOE identified the following eight major policy alternatives for
achieving consumer product energy efficiency. These alternatives
include:
No New Regulatory Action
Informational Action
--Product Labeling
--Consumer Education
Financial Incentives
--Tax Credits
--Rebates
Voluntary Energy Efficiency Targets
Mass Government Purchases
Lighting Research and Development
Building Codes
The Proposed Approach (Performance Standards)
Each alternative has been evaluated in terms of its ability to
achieve significant energy savings at reasonable costs, and has been
compared to the effectiveness of the proposed rule. These alternatives
were analyzed with the NES model, as explained in the RIA section and
Appendix B of the TSD. The results are reported for lighting energy
savings only (HVAC interactive impacts would increase the savings by
6.25 percent). Many alternatives assume a conversion rate, which means
the percentage of ballasts that would be magnetic for any year in the
base case that are T8 electronic in the alternative case; the base case
already assumes that some ballasts would be electronic without policy
action. The performance standards case has a 100 percent conversion
rate to electronic ballasts.
If no new regulatory action were taken, then no new standards would
be implemented for these products. This is essentially the ``base
case.'' For this analysis, we considered two base cases (the
``Decreasing shipments to 2015'' case and the ``Decreasing shipments to
2027'' case). In this section, we report two values for the base cases
and policy alternatives, corresponding to each base case respectively.
For the base cases, between the years 2003 and 2030, there would be
expected energy use of 83.3-90.6 Quads (87.9-96.6 EJ) of primary
energy, with no energy savings and a zero net present value (see
Appendix B of the TSD for the derivation of these estimates).
Several alternatives to the base cases can be grouped under the
heading of informational action. They include consumer product labeling
and DOE public education and information programs. Both of these
alternatives are already mandated by, and are being implemented under
the Act. In addition, there are other programs that promote currently-
efficient technologies. These include the National Electrical
Manufacturers Association's Energy Cost Savings Council, the
Environmental Protection Agency's Energy Star Buildings/Green Lights
Program, and the Energy Policy Act's Voluntary Luminaire Program. One
base case alternative would be to estimate the energy conservation
potential of enhancing these programs. To model this possibility, we
assumed that the market impacts of these programs resulted in a 3
percent annual conversion rate to electronic ballasts. This resulted in
energy savings equal to 0.05-0.09 Quad (0.05-0.09 EJ), with net present
value estimated to be $0.08-0.12 billion.
Another base case alternative would be to assume that enhanced
labeling and consumer education promote advanced technologies, such as
daylighting. To model this possibility, we assumed that some consumers
influenced by the policy would select electronic dimming ballasts,
while others would select regular electronic ballasts. For those using
dimming ballasts, we assumed that the fluorescent lamp ballast
kiloWatthour savings were 40 percent higher for F40 and F96 fluorescent
lamp ballasts, that there was no daylighting potential for industrial
sector F96HO, that incremental prices for dimming fluorescent lamp
ballasts were seven dollars higher than for regular electronic
ballasts, and that there was an annual 0.6 percent conversion rate to
dimming fluorescent lamp ballasts. The annual conversion rate for the
remaining consumers affected by the policy who selected regular
electronic ballasts was 2.4 percent. This possibility resulted in
energy savings of 0.05-0.10 Quad (0.06-0.10 EJ), with a net present
value of $0.08-0.13 billion.
Various financial incentive alternatives were tested. These
included tax credits and rebates to consumers, as well as tax credits
to manufacturers. Both the tax credits to consumers and the consumer
rebates were assumed to reduce the incremental ballast expense for
electronic ballasts by 50 percent. We assumed that the tax credits
caused a conversion rate to electronic ballasts of 7 percent. The tax
credits to consumers showed a change from the base case, saving 0.12-
0.21 Quad (0.12-0.22 EJ) with a net present value of $0.20-0.31
billion. Consumer rebates were assumed to result in a conversion rate
of 12 percent. Consumer rebates showed slightly higher energy savings;
they would save 0.20-0.36 Quad (0.21-0.38 EJ), with a net present value
of $0.34-0.53 billion.
[[Page 14157]]
Another financial incentive that was considered was a tax credit to
manufacturers for the additional costs of producing electronic
ballasts. In this scenario, we assumed a tax credit of 20 percent of
the increased costs to manufacturers for retooling in the years 2001-
2003 (when these costs would be incurred). \10\ These costs depreciated
over a ballast lifetime resulted in a $0.04 reduction in the
incremental purchase price. The tax credits to manufacturers had an
insignificant effect, with no energy savings and a zero net present
value.
---------------------------------------------------------------------------
\10\ Manufacturer Impact Analysis, conversion capital
expenditures (see the TSD, chapter 6).
---------------------------------------------------------------------------
Two scenarios of voluntary energy-efficiency targets were examined.
In the first one, the proposed energy conservation standards were
assumed to be voluntarily adopted by all the relevant manufacturers 5
years later than mandatory standards. In the second scenario, the
proposed standards were assumed to be adopted 10 years later. In these
scenarios, voluntary improvements having a 5-year delay, compared to
implementation of mandatory standards, would result in energy savings
of 0.84-1.91 Quads (0.88-2.02 EJ), and a net present value of $0.96-
2.04 billion; voluntary improvements having a 10-year delay would
result in 0.34-1.05 Quads (0.36-1.1 EJ) being saved, and a net present
value of $0.33-0.96 billion. These scenarios assume that there would be
universal voluntary adoption of the energy conservation standards by
fluorescent lamp ballast manufacturers, an assumption for which there
is no reasonable assurance.
Another policy option that we reviewed was that of massive
purchases of electronic ballasts by Federal, State, and local
governments. We modeled this policy by assuming that all ballasts
purchased by these government entities were electronic ballasts, which,
coupled with a modest impact on the remaining market, resulted in a 10
percent national conversion rate. This policy option resulted in energy
savings of 0.17-0.30 Quad (0.18-0.32 EJ) and a net present value of
$0.25-0.40 billion.
We also reviewed a policy of lighting research that could [there is
no cost reduction in this policy] add more efficient alternatives to
fluorescent electronic T-12 and T-8 ballasts. To analyze this option,
we assumed that the conversion rate to controls, such as dimming
fluorescent lamp ballasts, was 1.6 percent, that there was a time delay
of 5 years for new technology options to reach the market, that the
incremental kiloWatthour savings was 40 percent, and the increase in
the incremental electronic ballast cost was seven dollars. This
resulted in energy savings of 0.01-0.04 Quad (0.01-0.05 EJ), with a net
present value that we estimated to be $0.01-0.04 billion.
Still another policy option that we reviewed was one of aggressive
promotion of state adoption and enforcement of commercial building
codes, including those for major lighting system renovations. To
analyze this option, we assumed a one percent to three percent
electronic ballast conversion, for each base case, respectively. This
resulted in energy savings of 0.05-0.15 Quad (0.05-0.16 EJ), and a net
present value of $0.06-0.18 billion.
Lastly, all of these alternatives must be gauged against the
performance standards that are being proposed in this NOPR. Such
performance standards would result in energy savings of 1.20-4.90 Quads
(1.27-5.17 EJ) (without HVAC savings) and the net present value would
be an expected $1.42-5.41 billion. (These estimates represent the lower
and upper bounds of the results of all scenarios analyzed). As
indicated in the paragraphs above, none of the alternatives that were
examined for these products saved as much energy as the proposed rule.
Also, most of the alternatives would require that enabling legislation
be enacted, since authority to carry out those alternatives does not
presently exist.
c. Review under the Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an
assessment of the impact of regulations on small businesses. Small
businesses are defined as those firms within an industry that are
privately owned and less dominant in the market.
The Standard Industrial Classification (SIC) Code for fluorescent
lamp ballast manufacturers is 36124. To be categorized as a ``small''
fluorescent lamp ballast manufacturer, a firm must employ no more than
750 employees.
In the fluorescent lamp ballast industry, there is one ``small''
manufacturer who produces both ``affected'' magnetic and electronic
ballasts. The ``small'' manufacturer has its electronic and magnetic
ballast manufacturing operations in the same plant. Its smaller size
and less automated operations would seem to provide it with the
flexibility to adapt to a new electronic ballast standard without
significant asset write-offs or plant closures.
The negative impacts on the ``small'' manufacturer's cash flows
from operations, however, would likely be similar in proportion to
those of the larger manufacturers.
Since only one of the seven manufacturers of fluorescent lamp
ballasts is ``small,'' the Department concludes that its proposed
energy-efficiency standards rulemaking would not affect a
``substantial'' number of ``small'' manufacturers. In addition, the
firm's flexible manufacturing operations, along with the expected
proportional financial impacts, strongly suggests that the proposed
energy-efficiency standards would not produce ``significant'' economic
impacts on that one manufacturer.
In view of the foregoing, the Department has determined and hereby
certifies pursuant to section 605(b) of the Regulatory Flexibility Act
that, for this particular industry, the proposed standard levels in
today's Proposed Rule will not ``have a significant economic impact on
a substantial number of small entities,'' and it is not necessary to
prepare a regulatory flexibility analysis.
d. Review Under the Paperwork Reduction Act
No new information or record keeping requirements are imposed by
this rulemaking. Accordingly, no Office of Management and Budget
clearance is required under the Paperwork Reduction Act. 44 U.S.C. 3501
et seq.
e. Review Under Executive Order 12988, ``Civil Justice Reform''
With respect to the review of existing regulations and the
promulgation of new regulations, Section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines
[[Page 14158]]
issued by the Attorney General. Section 3(c) of Executive Order 12988
requires Executive agencies to review regulations in light of
applicable standards in section 3(a) and section 3(b) to determine
whether they are met or it is unreasonable to meet one or more of them.
DOE reviewed today's proposed rule under the standards of section 3 of
the Executive Order and determined that, to the extent permitted by
law, the final regulations meet the relevant standards.
f. ``Takings'' Assessment Review
It has been determined pursuant to Executive Order 12630,
``Governmental Actions and Interference with Constitutionally Protected
Property Rights,'' 52 FR 8859 (March 18, 1988), that this regulation
would not result in any takings that might require compensation under
the Fifth Amendment to the United States Constitution.
g. Review Under Executive Order 13132
Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined today's proposed rule and
has determined that it would not have a substantial direct effect on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. State regulations that may have existed
on the products that are the subject of today's proposed rule were
preempted by the Federal standards established in the NAECA Amendments
of 1988. States can petition the Department for exemption from such
preemption based on criteria set forth in EPCA.
h. Review Under the Unfunded Mandates Reform Act
With respect to a proposed regulatory action that may result in the
expenditure by the private sector of $100 million or more (adjusted
annually for inflation), section 202 of the Unfunded Mandates Reform
Act of 1995 (UMRA) requires a Federal agency to publish estimates of
the resulting costs, benefits and other effects on the national
economy. 2 U.S.C. 1532(a), (b). Section 202 of UMRA authorizes an
agency to respond to the content requirements of UMRA in any other
statement or analysis that accompanies the proposed rule. 2 U.S.C.
1532(c).
The content requirements of section 202(b) of UMRA relevant to a
private sector mandate substantially overlap the economic analysis
requirements that apply under section 325(o) of EPCA and Executive
Order 12866. The Supplementary Information section of the Notice of
Proposed Rulemaking and ``Regulatory Impact Analysis'' section of the
TSD for this Proposed Rule responds to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. DOE is required to select from those alternatives the most
cost-effective and least burdensome alternative that achieves the
objectives of the rule unless DOE publishes an explanation for doing
otherwise or the selection of such an alternative is inconsistent with
law. As required by section 325(o) of the Energy Policy and
Conservation Act (42 U.S.C. 6295(o)), this Proposed Rule would
establish energy conservation standards for fluorescent lamp ballasts
that are designed to achieve the maximum improvement in energy
efficiency that DOE has determined to be both technologically feasible
and economically justified. A full discussion of the alternatives
considered by DOE is presented in the ``Regulatory Impact Analysis''
section of the TSD for this Proposed Rule.
i. Review Under the Treasury and General Government Appropriations Act
of 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any proposed rule or policy that may affect
family well-being. Today's proposal would not have any impact on the
autonomy or integrity of the family as an institution. Accordingly, DOE
has concluded that it is not necessary to prepare a Family Policymaking
Assessment.
j. Review Under the Plain Language Directives
Section 1(b)(12) of Executive Order 12866 requires that each agency
shall draft its regulations to be simple and easy to understand, with
the goal of minimizing the potential for uncertainty and litigation
arising from such uncertainty. Similarly, the Presidential memorandum
of June 1, 1998 (63 FR 31883) directs the heads of executive
departments and agencies to use, by January 1, 1999, plain language in
all proposed and final rulemaking documents published in the Federal
Register, unless the rule was proposed before that date.
Today's proposed rule uses the following general techniques to
abide by Section 1(b)(12) of Executive Order 12866 and the Presidential
memorandum of June 1, 1998 (63 FR 31883):
Organization of the material to serve the needs of the
readers (stakeholders).
Use of common, everyday words in short sentences.
Shorter sentences and sections.
We invite your comments on how to make this proposed rule easier to
understand.
VII. Public Comment Procedures
a. Participation in Rulemaking
The Department encourages the maximum level of public participation
possible in this rulemaking. Individual commercial and industrial
consumers, representatives of consumer groups, manufacturers,
associations, States or other governmental entities, utilities,
retailers, distributors, manufacturers, and others are urged to submit
written statements on the proposal. The Department also encourages
interested persons to participate in the public hearing to be held in
Washington, DC, at the time and place indicated at the beginning of
this notice.
The DOE has established a comment period of 75 days following
publication of this notice for persons to comment on this proposal. We
will make available for review in the DOE Freedom of Information
Reading Room all public comments received and the transcript of the
public hearing.
b. Written Comment Procedures
Interested persons are invited to participate in this proceeding by
submitting written data, views or arguments with respect to the
subjects set forth in this notice. We provided instructions for
submitting written comments at the beginning of this notice and below.
You should label comments both on the envelope and on the
documents, ``Fluorescent Lamp Ballast Rulemaking (Docket No. EE-RM-97-
500),'' and submit them for DOE receipt by the date specified at the
beginning of this notice. Please submit one signed copy and a computer
diskette (WordPerfect 8) or ten (10) copies (no telefacsimiles) to:
[[Page 14159]]
U.S. Department of Energy, Attn: Brenda Edwards-Jones, Office of Energy
Efficiency and Renewable Energy, EE-41, 1000 Independence Avenue, SW,
Washington, DC 20585-0121, (202) 586-2945, e-mail: [email protected].
The Department will also accept electronically-mailed comments, but
you must supplement such comments with a signed hard copy.
All comments received by the date specified at the beginning of
this notice and other relevant information will be considered by DOE
before final action is taken on the proposed regulation.
All written comments received on the proposed rule will be
available for public inspection at the DOE Freedom of Information
Reading Room, as provided at the beginning of this notice.
If you submit information or data that you believe is confidential,
and should not be publicly disclosed, you should submit one complete
copy of your document and ten (10) copies or one electronic copy from
which the information believed to be confidential has been deleted. We
will make our own determination regarding the confidentiality of the
information or data according to our regulations at 10 CFR 1004.11.
Factors of interest to DOE, when evaluating requests to treat
information as confidential, include: (1) A description of the item;
(2) an indication as to whether and why such items of information have
been treated by the submitting party as confidential, and whether and
why such items are customarily treated as confidential within the
industry; (3) whether the information is generally known or available
from other sources; (4) whether the information has previously been
available to others without obligation concerning its confidentiality;
(5) an explanation of the competitive injury to the submitting person
that would result from public disclosure; (6) an indication as to when
such information might lose its confidential character due to the
passage of time; and (7) whether disclosure of the information would be
in the public interest.
c. Public Hearing
1. Procedure for Submitting Requests to Speak
The time and place of the public hearing are indicated at the
beginning of this notice. The Department invites any person who has an
interest in these proceedings, or who is a representative of a group or
class of persons having an interest, to make a written request for an
opportunity to make an oral presentation at the public hearing. Such
requests should be labeled both on the letter and the envelope,
``Fluorescent Lamp Ballast Rulemaking (Docket No. EE-RM-97-500),'' and
should be sent to the address, and must be received by the time
specified, at the beginning of this notice. Requests may be hand-
delivered or telephoned between the hours of 8:30 a.m. and 4:30 p.m.,
Monday through Friday, except Federal holidays.
The person making the request should briefly describe the interest
concerned and, if appropriate, state why he or she is a proper
representative of the group or class of persons that has such an
interest, and give a telephone number where he or she may be contacted.
Each person selected to be heard will be so notified by DOE as to the
approximate time they will be speaking.
Each person selected to be heard is requested to submit an advance
copy of his or her statement prior to the hearing as indicated at the
beginning of this notice. In the event any persons wishing to testify
cannot meet this requirement, that person may make alternative
arrangements in advance by so indicating in the letter requesting to
make an oral presentation.
2. Conduct of Hearing
The Department reserves the right to select the persons to be heard
at the hearing, to schedule the respective presentations, and to
establish the procedures governing the conduct of the hearing. The
length of each presentation is limited to 15 minutes.
A DOE official will be designated to preside at the hearing. The
hearing will not be a judicial or an evidentiary-type hearing, but will
be conducted in accordance with 5 U.S.C. 533 and section 336 of the
Act. At the conclusion of all initial oral statements at each day of
the hearing, each person who has made an oral statement will be given
the opportunity to make a rebuttal statement, subject to time
limitations. The rebuttal statement will be given in the order in which
the initial statements were made. The official conducting the hearing
will accept additional comments or questions from those attending, as
time permits. Any interested person may submit, to the presiding
official, written questions to be asked of any person making a
statement at the hearing. The presiding official will determine whether
the question is relevant, and whether time limitations permit it to be
presented for answer.
Further questioning of speakers will be permitted by DOE. The
presiding official will afford any interested person an opportunity to
question other interested persons who made oral presentations, and
employees of the United States who have made written or oral
presentations with respect to disputed issues of material fact relating
to the proposed rule. This opportunity will be afforded after any
rebuttal statements, to the extent that the presiding official
determines that such questioning is likely to result in a more timely
and effective resolution of such issues. If the time provided is
insufficient, DOE will consider affording an additional opportunity for
questioning at a mutually convenient time. Persons interested in making
use of this opportunity must submit their request to the presiding
official no later than shortly after the completion of any rebuttal
statements and be prepared to state specific justification, including
why the issue is one of disputed fact and how the proposed questions
would expedite their resolution.
Any further procedural rules regarding proper conduct of the
hearing will be announced by the presiding official.
A transcript of the hearing will be made, and the entire record of
this rulemaking, including the transcript, will be retained by DOE and
made available for inspection at the DOE Freedom of Information Reading
Room as provided at the beginning of this notice. Any person may
purchase a copy of the transcript from the transcribing reporter.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Energy conservation,
Household appliances.
Issued in Washington, D.C., on January 18, 2000.
Dan W. Reicher,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble Part 430 of Chapter II of
Title 10, Code of Federal Regulations, is proposed to be amended as set
forth below.
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
1. The authority citation for Part 430 continues to read as
follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
2. Section 430.32 of subpart C is amended by revising paragraph (m)
to read as follows:
[[Page 14160]]
Sec. 430.32 Energy conservation standards and effective dates.
* * * * *
(m) Fluorescent lamp ballasts.
(1) Except as provided in paragraphs (m)(2), (m)(3), and (m)(4) of
this section, each fluorescent lamp ballast--
(i) (A) Manufactured on or after January 1, 1990;
(B) Sold by the manufacturer on or after April 1, 1990; or
(C) Incorporated into a luminaire by a luminaire manufacturer on or
after April 1, 1991; and
(ii) Designed --
(A) To operate at nominal input voltages of 120 or 277 volts;
(B) To operate with an input current frequency of 60 Hertz; and
(C) For use in connection with an F40T12, F96T12, or F96T12HO lamps
shall have a power factor of 0.90 or greater and shall have a ballast
efficacy factor not less than the following:
----------------------------------------------------------------------------------------------------------------
Ballast
Application for operation of Ballast input Total nominal efficacy
voltage lamp watts factor
----------------------------------------------------------------------------------------------------------------
One F40 T12 lamp................................................ 120 40 1.805
277 40 1.805
Two F40 T12 lamps............................................... 120 80 1.060
277 80 1.050
Two F96T12 lamps................................................ 120 150 0.570
277 150 0.570
Two F96T12HO lamps.............................................. 120 220 0.390
277 220 0.390
----------------------------------------------------------------------------------------------------------------
(2) The standards described in paragraph (m)(1) of this section do
not apply to:
(i) a ballast that is designed for dimming or for use in ambient
temperatures of 0 deg. F or less, or
(ii) A ballast that has a power factor of less than 0.90 and is
designed for use only in residential building applications.
(3) Except as provided in paragraph (m)(4) of this section, each
fluorescent lamp ballast--
(i) (A) Manufactured on or after April 1, 2005;
(B) Sold by the manufacturer on or after July 1, 2005; or
(C) Incorporated into a luminaire by a luminaire manufacturer on or
after April 1, 2006; and
(ii) Designed--
(A) To operate at nominal input voltages of 120 or 277 volts;
(B) To operate with an input current frequency of 60 Hertz; and
(C) For use in connection with an F40T12, F96T12, or F96T12HO
lamps; shall have a power factor of 0.90 or greater and shall have a
ballast efficacy factor not less than the following:
----------------------------------------------------------------------------------------------------------------
Ballast
Application for operation of Ballast Input Total nominal efficacy
voltage lamp watts factor
----------------------------------------------------------------------------------------------------------------
One F40 T12 lamp................................................ 120 40 2.29
277 40 2.29
Two F40 T12 lamps............................................... 120 80 1.17
277 80 1.17
Two F96T12 lamps................................................ 120 150 0.63
277 150 0.63
Two F96T12HO lamps.............................................. 120 220 0.39
277 220 0.39
----------------------------------------------------------------------------------------------------------------
(4) (i) The standards described in paragraph (m)(3) of this section
do not apply to:
(A) A ballast that is designed for dimming to 50 percent or less of
its maximum output;
(B) A ballast that is designed for use with two F96T12HO lamps at
ambient temperatures of -20 deg. F or less and for use in an outdoor
sign;
(C) A ballast that has a power factor of less than 0.90 and is
designed and labeled for use only in residential building applications;
or
(D) A replacement ballast as defined in subparagraph (ii).
(ii) For purposes of this paragraph (m), a replacement ballast is
defined as a ballast that:
(A) Is manufactured on or before June 30, 2010;
(B) Is designed for use to replace an existing ballast in a
previously installed luminaire;
(C) Is marked ``FOR REPLACEMENT USE ONLY'';
(D) Is shipped by the manufacturer in packages containing not more
than 10 ballasts;
(E) Has output leads that when fully extended are a total length
that is less than the length of the lamp with which it is intended to
be operated; and
(F) Meets or exceeds the ballast efficacy factor in the following
table:
[[Page 14161]]
----------------------------------------------------------------------------------------------------------------
Ballast
Application for operation of Ballast input Total nominal efficacy
voltage lamp watts factor
----------------------------------------------------------------------------------------------------------------
One F40 T12 lamp................................................ 120 40 1.805
277 40 1.805
Two F40 T12 lamps............................................... 120 80 1.060
277 80 1.050
Two F96T12 lamps................................................ 120 150 0.570
277 150 0.570
Two F96T12HO lamps.............................................. 120 220 0.390
277 220 0.390
----------------------------------------------------------------------------------------------------------------
* * * * *
[FR Doc. 00-6106 Filed 3-14-00; 8:45 am]
BILLING CODE 6450-01-P