[Federal Register Volume 73, Number 202 (Friday, October 17, 2008)]
[Proposed Rules]
[Pages 62034-62134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23405]



[[Page 62033]]

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Part IV





Department of Energy





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10 CFR Parts 430 and 431



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

  Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / 
Proposed Rules  

[[Page 62034]]


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DEPARTMENT OF ENERGY

10 CFR Parts 430 and 431

[Docket Number EE-2006-STD-0127]
RIN: 1904-AB49


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

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

ACTION: Notice of proposed rulemaking and notice of public meeting.

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SUMMARY: The Energy Policy and Conservation Act (EPCA), as amended, 
prescribes energy conservation standards for various consumer products 
and commercial and industrial equipment, and requires the U.S. 
Department of Energy (DOE) to determine whether amended, more 
stringent, standards would be technologically feasible and economically 
justified, and would save a significant amount of energy. In this 
notice, DOE is proposing to amend the energy conservation standards for 
residential gas kitchen ranges and ovens and microwave ovens, as well 
as commercial clothes washers. DOE has tentatively determined that 
energy conservation standards for residential electric kitchen ranges 
and ovens are not technologically feasible or economically justified, 
and, therefore, is proposing a ``no-standard'' standard for these 
products. DOE had also initially considered amended energy conservation 
standards for residential dishwashers and dehumidifiers in this 
rulemaking; however, the Energy Independence and Security Act of 2007 
(EISA 2007) subsequently prescribed standards for these products. 
Therefore, DOE is not proposing standards for dishwashers and 
dehumidifiers in this notice, but will instead codify the statutory 
standards in a final rule. Finally, today's notice is announcing a 
public meeting on the proposed standards.

DATES: DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than December 16, 2008. See section VII, ``Public 
Participation,'' of this notice for details.
    DOE will hold a public meeting on Thursday, November 13, 2008, from 
9 a.m. to 4 p.m., in Washington, DC. DOE must receive requests to speak 
at the public meeting before 4 p.m., Thursday, October 30, 2008. DOE 
must receive a signed original and an electronic copy of statements to 
be given at the public meeting before 4 p.m., Thursday, November 6, 
2008.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue, SW., 
Washington, DC 20585. (Please note that foreign nationals visiting DOE 
Headquarters are subject to advance security screening procedures. If 
you are a foreign national and wish to participate in the workshop, 
please inform DOE of this fact as soon as possible by contacting Ms. 
Brenda Edwards at (202) 586-2945 so that the necessary procedures can 
be completed.)
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for Home Appliance Products, and provide the 
docket number EE-2006-STD-0127 and/or regulatory information number 
(RIN) 1904-AB49. Comments may be submitted using any of the following 
methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the instructions for submitting comments.
    2. E-mail: [email protected]. Include docket 
number EE-2006-STD-0127 and/or RIN number 1904-AB49 in the subject line 
of the message.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Program, Mailstop EE-2J, 1000 Independence 
Avenue, SW., Washington, DC, 20585-0121. Please submit one signed paper 
original.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. Please submit one 
signed paper original.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII of this document 
(Public Participation).
    Docket: For access to the docket to read background documents or 
comments received, visit the U.S. Department of Energy, Resource Room 
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 
600, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., 
Monday through Friday, except Federal holidays. Please call Ms. Brenda 
Edwards at the above telephone number for additional information 
regarding visiting the Resource Room.

FOR FURTHER INFORMATION CONTACT: Mr. Stephen Witkowski, Project 
Manager, Energy Conservation Standards for Home Appliance Products, 
U.S. Department of Energy, Office of Energy Efficiency and Renewable 
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, 
SW., Washington, DC 20585-0121. Telephone: (202) 586-7463. E-mail: 
[email protected].
    Ms. Francine Pinto, Mr. Eric Stas, or Mr. Michael Kido, U.S. 
Department of Energy, Office of the General Counsel, GC-72, 1000 
Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 
586-9507. E-mail: [email protected], [email protected], or 
[email protected].

Table of Contents

I. Summary of the Proposed Rule
II. Introduction
    A. Consumer Overview
    B. Authority
    C. Background
    1. Current Standards
    a. Dishwashers
    b. Dehumidifiers
    c. Cooking Products
    d. Commercial Clothes Washers
    2. History of Standards Rulemaking for Residential Dishwashers, 
Dehumidifiers, and Cooking Products; and Commercial Clothes Washers
III. General Discussion
    A. Standby Power for Cooking Products
    B. Test Procedures
    1. Dishwashers and Dehumidifiers
    2. Cooking Products
    3. Commercial Clothes Washers
    C. Technological Feasibility
    1. General
    a. Cooking Products
    b. Commercial Clothes Washers
    2. Maximum Technologically Feasible Levels
    a. Cooking Products
    b. Commercial Clothes Washers
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Life-Cycle Costs
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need of the Nation to Conserve Energy
    2. Rebuttable Presumption
IV. Methodology and Discussion of Public Comments
    A. Product Classes
    1. Cooking Products
    a. Standing Pilot Ignition Systems

[[Page 62035]]

    b. Commercial-Style Cooking Products and Induction Technology
    c. Microwave Ovens
    2. Commercial Clothes Washers
    B. Technology Assessment
    1. Cooking Products
    a. Sensors
    b. Display Technologies
    c. Power Supply and Control Board Options
    d. Power-Down Options
    2. Commercial Clothes Washers
    C. Engineering Analysis
    1. Efficiency Levels
    a. Cooking Products
    b. Commercial Clothes Washers
    2. Manufacturing Costs
    a. Cooking Products
    b. Commercial Clothes Washers
    D. Life-Cycle Cost and Payback Period Analyses
    1. Product Prices
    a. Cooking Products
    b. Commercial Clothes Washers
    2. Installation Costs
    a. Cooking Products
    b. Commercial Clothes Washers
    3. Annual Energy Consumption
    a. Cooking Products
    b. Commercial Clothes Washers
    4. Energy and Water Prices
    a. Energy Prices
    b. Water and Wastewater Prices
    5. Repair and Maintenance Costs
     a. Cooking Products
    b. Commercial Clothes Washers
    6. Product Lifetime
    7. Discount Rates
    a. Cooking Products
    b. Commercial Clothes Washers
    8. Effective Date of the Amended Standards
    9. Equipment Assignment for the Base Case
    a. Cooking Products
    b. Commercial Clothes Washers
    10. Commercial Clothes Washer Split Incentives
    11. Inputs to Payback Period Analysis
    12. Rebuttable-Presumption Payback Period
    E. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. General
    2. Shipments
    a. New Construction Shipments
    b. Replacements
    c. Purchase Price, Operating Cost, and Household Income Impacts
    d. Fuel Switching
    3. Other Inputs
    a. Base-Case Forecasted Efficiencies
    b. Standards-Case Forecasted Efficiencies
    c. Annual Energy Consumption
    d. Site-to-Source Conversion
    e. Embedded Energy in Water and Wastewater Treatment and 
Delivery
    f. Total Installed Costs and Operating Costs
    g. Effects of Standards on Energy Prices
    h. Discount Rates
    F. Consumer Subgroup Analysis
    G. Manufacturer Impact Analysis
    1. General Description
    a. Phase 1 (Industry Profile)
    b. Phase 2 (Industry Cash Flow Analysis)
    c. Phase 3 (Subgroup Impact Analysis)
    2. Government Regulatory Impact Model Analysis
    a. Government Regulatory Impact Model Scenarios and Key Inputs
    3. Manufacturer Interviews
    a. Conventional Cooking Products
    b. Microwave Ovens
    c. Commercial Clothes Washers
    H. Employment Impact Analysis
    I. Utility Impact Analysis
    J. Environmental Assessment
V. Analytical Results
    A. Trial Standard Levels
    1. Cooking Products
    2. Commercial Clothes Washers
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable-Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    i. Conventional Cooking Products
    ii. Microwave Ovens
    iii. Commercial Clothes Washers
    b. Impacts on Employment
    i. Conventional Cooking Products
    ii. Microwave Ovens
    iii. Commercial Clothes Washers
    c. Impacts on Manufacturing Capacity
    i. Conventional Cooking Products
    ii. Microwave Ovens
    iii. Commercial Clothes Washers
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value
    c. Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    C. Proposed Standards
    1. Overview
    2. Conclusion
    a. Conventional Cooking Products
    b. Microwave Ovens
    c. Commercial Clothes Washers
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    1. Conventional Cooking Products
    a. Reasons for the Proposed Rule
    b. Objectives of, and Legal Basis for, the Proposed Rule
    c. Description and Estimated Number of Small Entities Regulated
    d. Description and Estimate of Compliance Requirements
    e. Duplication, Overlap, and Conflict with Other Rules and 
Regulations
    f. Significant Alternatives to the Proposed Rule
    2. Microwave Ovens
    3. Commercial Clothes Washers
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at Public Meeting
    B. Procedure for Submitting Requests to Speak
    C. Conduct of Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    The Energy Policy and Conservation Act \1\ (EPCA or the Act), as 
amended, provides that any amended energy conservation standard DOE 
prescribes, including ones for cooking products \2\ and commercial 
clothes washers (collectively referred to in this notice of proposed 
rulemaking (NOPR) as ``the two appliance products''), shall be designed 
to ``achieve the maximum improvement in energy efficiency * * * which 
the Secretary determines is technologically feasible and economically 
justified.'' (42 U.S.C. 6295(o)(2)(A) and 6316(a).) Furthermore, any 
new or amended standard must ``result in significant conservation of 
energy.'' (42 U.S.C. 6295(o)(3)(B) and 6316(a).) In accordance with 
these and other statutory criteria discussed in this notice, DOE 
proposes to amend the energy conservation standards for the two 
appliance products and raise efficiency levels as shown in Table I.1. 
The standards would apply to all products listed in Table I.1 that are 
manufactured in, or imported into, the United States three years after 
the publication of the final rule in the Federal Register.
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    \1\ 42 U.S.C. 6291 et seq.
    \2\ The term ``cooking products,'' as used in this notice, 
refers to residential electric and gas kitchen ranges and ovens, 
including microwave ovens.

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 Table I.1--Proposed Energy Conservation Standards for Cooking Products
                     and Commercial Clothes Washers
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                                           Proposed energy conservation
             Product class                          standards
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Conventional Cooking Products:
    Gas cooktops/conventional burners..  No constant burning pilot
                                          lights.
    Electric cooktops/low or high        No standard.
     wattage open (coil) elements.
    Electric cooktops/smooth elements..  No standard.
    Gas ovens/standard oven............  No constant burning pilot
                                          lights.
    Gas ovens/self-clean oven..........  No change to existing standard.
    Electric ovens.....................  No standard.
Microwave ovens........................  Maximum standby power = 1.0
                                          watt.
Commercial clothes washers:
    Top-loading commercial clothes       1.76 Modified Energy Factor/8.3
     washers.                             Water Factor.
    Front-loading commercial clothes     2.00 Modified Energy Factor/5.5
     washers.                             Water Factor.
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    In addition, DOE is proposing prescriptive standards that require 
elimination of constant-burning pilots for gas cooktops and gas 
standard ovens and standby power limits for microwave ovens. 
Furthermore, DOE has tentatively concluded that standards for 
conventional electric cooking products (i.e., non-microwave oven 
products) and amended standards for gas self-cleaning ovens are not 
technologically feasible and economically justified. Therefore, DOE is 
proposing a ``no-standard'' standard for conventional electric cooking 
products. In addition, since standards already exist for gas self-
cleaning ovens (i.e., a ban on standing pilot lights), DOE is not 
proposing amendments to the existing standards.
    DOE notes that in the November 15, 2007, advance notice of proposed 
rulemaking (ANOPR; referred to as the ``November 2007 ANOPR''), DOE 
announced it was considering amended standards for residential 
dishwashers and dehumidifiers. 72 FR 64432. However, section 311 of the 
Energy Independence and Security Act of 2007 (EISA 2007; Pub. L. 110-
140) amended EPCA to establish revised energy conservation standards 
for residential dishwashers and dehumidifiers. (42 U.S.C. 6295(g)(9) 
and 6295(cc)) These EISA 2007 amendments set energy efficiency 
standards for these products; therefore, DOE will codify these 
statutory standards for residential dishwashers and dehumidifiers in a 
separate final rule.
    EISA 2007, through section 310, also amended EPCA to require that 
any final rule establishing or revising a standard for a covered 
product, which includes residential dishwashers, dehumidifiers, ranges 
and ovens, and microwave ovens, adopted after July 1, 2010, shall 
incorporate standby mode and off mode energy use into a single amended 
or new standard, if feasible. If not feasible, the Secretary shall 
prescribe within the final rule a separate standard for standby mode 
and off mode energy consumption, if justified. (42 U.S.C. 
6295(gg)(3)(A)-(B)) Although EISA 2007 will ultimately require test 
procedures for all covered residential products to measure standby mode 
and off mode energy consumption, it set specific deadlines for 
amendments to the test procedures for certain products, including the 
following products relevant to this rulemaking: residential 
dishwashers, ranges and ovens, microwave ovens, and dehumidifiers (all 
due by March 31, 2011). (42 U.S.C. 6295(gg)(2))
    DOE's preliminary analyses suggested that there could be a 
significant energy savings potential associated with microwave oven 
standby power, so DOE decided to accelerate its test procedure 
rulemaking for microwaves. DOE is publishing a test procedure NOPR for 
microwave ovens in the Federal Register. Having such a test procedure 
in place is a prerequisite for implementing an energy conservation 
standard that takes into account standby mode and off mode energy 
consumption. For the reasons stated in this notice, DOE does not 
currently have sufficient data at this time to allow it to consider a 
single standard incorporating standby mode and off mode for cooking 
products other than microwave ovens, so DOE is therefore proposing a 
separate standby power limit for microwave ovens only. Standby and off 
mode power for conventional cooking products, dishwashers, and 
dehumidifiers will be considered in separate rulemakings which will 
meet the March 31, 2011, EISA 2007 deadline.
    DOE is not proposing energy conservation standards at this time for 
standby and off mode power in dishwashers, dehumidifiers, and 
commercial clothes washers (CCWs) for the following reasons: (1) 
Standby mode power in dishwashers is already accounted for in the 
energy conservation standards, specified in terms of annual energy 
consumption, established by EISA 2007 (42 U.S.C. 6295(g)(10)(A)); (2) 
DOE has insufficient information on dehumidifier usage patterns to 
conduct an analysis of standby and off mode performance; and (3) EISA 
2007 does not include CCWs as a covered product for the purposes of 
prescribing standards for standby and off mode energy consumption. DOE 
notes that EPCA directs DOE to use the residential clothes washer (RCW) 
test procedure for CCWs. (42 U.S.C. 6314(a)(8)) In this test procedure, 
measurements for modified energy factor (MEF) and water factor (WF) are 
provided. This test procedure is also the subject of a rulemaking 
proposing amendments to incorporate standby and off mode power into 
energy consumption metrics, as required by EISA 2007 by June 30, 2009. 
However, since the proposed amendments would create a new metric (i.e., 
integrated modified energy factor (IMEF), incorporating standby mode 
and off mode power into MEF) but would retain MEF and not change its 
calculation under the test procedure, there will be no impact of these 
proposed amendments on CCWs.
    DOE estimates that the energy conservation standards proposed today 
would save a significant amount of energy-an estimated 0.75 quadrillion 
British thermal units (Btu), or quads, of cumulative energy over 30 
years (2012-2042). This amount is equivalent to 15.8 days of U.S. 
gasoline use. Breaking these figures down by product type, the national 
energy savings of the proposed standards for conventional gas cooking 
products is estimated to be 0.14 quads. For microwave ovens, it is 
estimated that the proposed standby power standard would result in 
national energy savings of 0.45 quads. For CCWs, the national energy 
savings resulting from the proposed standards is

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estimated to be 0.15 quads.\3\ In addition, the proposed standards for 
CCWs save over 190 billion gallons of cumulative water consumption over 
30 years (2012-2042).
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    \3\ The energy savings by product type may not sum to the total 
quads due to rounding of individual values.
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    The cumulative national net present value (NPV) of total consumer 
costs and savings of the proposed standards from 2012 to 2042, in 2006 
dollars (2006$), ranges from $2.2 billion (seven-percent discount rate) 
to $5.3 billion (three-percent discount rate). Again, breaking these 
figures down by product type, the NPV of the proposed standards for 
conventional gas cooking products ranges from $0.2 billion (seven-
percent discount rate) to $0.6 billion (three-percent discount rate). 
DOE estimates the industry net present value (INPV) of gas cooktops to 
be approximately $287 million and $466 million for gas ovens in 2006$. 
If DOE adopts the proposed standards, it estimates U.S. gas cooktop 
manufacturers will lose between 1.74 percent and 4.12 percent of the 
INPV, which is approximately $5 to $12 million. For gas ovens, DOE 
estimates U.S. manufacturers will lose between 1.57 percent and 2.10 
percent of the INPV, which is approximately $7 to $10 million.
    For microwave ovens, the NPV of the proposed standards ranges from 
$1.6 billion (seven-percent discount rate) to $3.5 billion (three-
percent discount rate). DOE estimates the INPV to be approximately 
$1.45 billion in 2006$. If DOE adopts the proposed standards, it 
estimates U.S. manufacturers will lose between 2.52 percent and 4.92 
percent of the INPV, which is approximately $37 to $71 million.
    For CCWs, the NPV of the proposed standards ranges from $0.5 
billion (seven-percent discount rate) to $1.2 billion (three-percent 
discount rate). This is the estimated total value of future operating-
cost savings minus the estimated increased equipment costs, discounted 
to 2007 in 2006 dollars (2006$). DOE estimates the INPV to be 
approximately $56 million in 2006$. If DOE adopts the proposed 
standards, it expects manufacturers will lose between 26.50 percent and 
31.09 percent of the INPV, which is approximately $15 million to $17 
million. However, the NPV for consumers (at the seven-percent discount 
rate) would exceed industry losses due to energy efficiency standards 
by at least 29.4 times.
    DOE believes the impacts of standards on consumers would be 
positive for each type of covered product addressed in this rulemaking, 
even though that standard may increase some initial costs. For example, 
DOE estimates that the proposed standards for conventional gas cooking 
products would increase the consumer retail price by $18 for gas 
cooktops and $22 for gas standard ovens. In addition, DOE believes that 
over 50 percent of consumers purchasing gas cooking products with 
constant burning or standing pilot lights would need to install an 
electrical outlet at a cost of $235 to accommodate a product that 
requires electricity to operate. But even with these additional costs, 
DOE estimates that the savings in reduced energy costs outweigh these 
costs; in other words, the average life-cycle cost (LCC) savings are 
positive. For microwave ovens, DOE estimates that limiting standby 
power consumption to 1.0 watt (W) would decrease energy costs but 
increase the consumer retail price by only $2, resulting in positive 
economic impacts to consumers. Although DOE estimates that the proposed 
MEF and WF standards for CCWs would increase the retail price by over 
$229 per unit for top-loading washers and $21 for front-loading 
washers, the operating cost savings outweigh these price increases, 
resulting in positive economic impacts to CCW consumers.
    DOE's analyses indicate that the energy savings resulting from the 
proposed standards would have benefits to utilities and to the 
environment. The energy saved is in the form of electricity and natural 
gas, and DOE expects the energy savings from the proposed standards to 
eliminate the need for approximately 404 megawatts (MW) of generating 
capacity by 2042. Breaking this figure down by product type: the 
proposed standards for conventional gas cooking products eliminate the 
need for approximately 56 MW of generating capacity; the proposed 
standards for microwave ovens eliminate the need for 320 MW of 
generating capacity, and the proposed standards for CCWs eliminate the 
need for 28 MW of generating capacity. These results reflect DOE's use 
of energy price projections from the U.S. Energy Information 
Administration (EIA)'s Annual Energy Outlook 2008 (AEO 2008).\4\
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    \4\ DOE intends to use the most recently available version of 
EIA's Annual Energy Outlook to generate the results for the final 
rule. Available online at http://www.eia.doe.gov/oiaf/aeo/.
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    In addition, the proposed standards would have environmental 
benefits, which would be estimated to result in cumulative 
(undiscounted) greenhouse gas emission reductions of 76 million tons 
(Mt) of carbon dioxide (CO2) from 2012 to 2042. 
Specifically, the proposed standards for conventional gas cooking 
products would reduce CO2 emissions by 14.6 Mt; the proposed 
standards for microwave ovens would reduce CO2 emissions by 
50.5 Mt; and the proposed standards for CCWs reduce CO2 
emissions by 11.5 Mt.
    The standards for gas cooking products and CCWs would also result 
in 10.1 kilotons (kt) of nitrogen oxides (NOX) emissions 
reductions, at the sites where appliances are used, from 2012 to 2042. 
In addition, gas cooking product and CCW standards would result in 
power plant NOX emissions reductions of 0.5 kt to 11.9 kt 
from 2012 to 2042. Moreover, the standards for microwave ovens would 
result in power plant emission reductions of 2.7 kt to 66.0 kt of 
NOX from 2012 to 2042, attributable to these appliances.
    The standards for gas cooking products, microwave ovens, and CCWs 
would also possibly result in power plant mercury (Hg) emissions 
reductions. For cooking products, Hg emissions could be reduced by up 
to 0.2 tons (t) from 2012 to 2042. For CCWs, up to 0.2 t of Hg 
emissions reductions could be realized over 2012 to 2042. For microwave 
ovens, Hg emissions could be reduced by up to 1.1 t from 2012 to 2042.
    In sum, the proposed standards represent the maximum improvement in 
energy and water efficiency that is technologically feasible and 
economically justified. DOE found that the benefits to the Nation of 
the proposed standards (energy and water savings, consumer average LCC 
savings, national NPV increase, and emission reductions) outweigh the 
costs (loss of INPV, and LCC increases for some consumers). DOE has 
concluded that the proposed standards are economically justified and 
technologically feasible, particularly since units achieving these 
standard levels already are commercially available. DOE notes that it 
considered higher efficiency levels as trial standard levels (TSLs), 
and is still considering them in this rulemaking; however, DOE 
tentatively believes that the burdens of the higher efficiency levels 
(loss of INPV and LCC increases for some consumers) outweigh the 
benefits (energy savings, LCC savings for some consumers, national NPV 
increase, and emission reductions). After reviewing public comments on 
this NOPR, DOE may ultimately decide to adopt one of its other TSLs or 
another value in between.
    Finally, although DOE has proposed a ``no-standard'' standard for 
several of the conventional cooking product classes, Federal energy 
conservation requirements, including a ``no-

[[Page 62038]]

standard'' standard, generally supersede State laws or regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6297(a)-(c)) DOE can, however, grant waivers of such preemption 
for particular State laws or regulations, in accordance with the 
procedures and other provisions of section 327(d) of EPCA, as amended. 
(42 U.S.C. 6297(d))

II. Introduction

A. Consumer Overview

    DOE is proposing energy conservation standard levels for 
residential cooking products and CCWs as shown in Table I.1. The 
proposed standards would apply to products manufactured or imported 
three years after the date the final rule is published in the Federal 
Register.\5\
---------------------------------------------------------------------------

    \5\ At this time, DOE anticipates that publishing a final rule 
in March 2009, pursuant to the requirements of a Federal court 
consent decree, which would make the amended standards effective in 
March 2012.
---------------------------------------------------------------------------

    Residential and commercial consumers will see benefits from the 
proposed standards. Although DOE expects the purchase price of the high 
efficiency cooking products and CCWs to be higher (ranging from 1 to 26 
percent for cooking products and 2 to 31 percent for CCWs) than the 
average price of this equipment today, the energy efficiency gains will 
result in lower energy costs, saving consumers $1 to $63 per year on 
their energy bills, again depending on the product. When these savings 
are summed over the lifetime of the product, consumers are expected to 
save an average of $6 to $252, depending on the product. DOE estimates 
that the payback period for the more-efficient, higher-priced product 
will range from 0.3 to 9 years, depending on the product. In contrast, 
residential consumers will see no impact in terms of the standard for 
electric kitchen ranges and ovens, because it was determined that 
amended standards were not justified under the existing statutory 
criteria.

B. Authority

    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) 
provides for the ``Energy Conservation Program for Consumer Products 
Other Than Automobiles.'' The program covers consumer products (all of 
which are referred to hereafter as ``covered products''), including 
residential dishwashers, dehumidifiers, and cooking products. (42 
U.S.C. 6292, 6295) Part A-1 of Title III (42 U.S.C. 6311-6317) 
establishes a similar program for ``Certain Industrial Equipment,'' 
which deals with a variety of commercial and industrial equipment 
(referred to hereafter as ``covered equipment'') including CCWs. (42 
U.S.C. 6312; 6313(e)) EPCA sets both energy and water efficiency 
standards for CCWs, and authorizes DOE to amend both. (42 U.S.C. 
6313(e))
    Specifically, for dishwashers, the National Appliance Energy 
Conservation Act of 1987 (NAECA), Public Law 100-12, amended EPCA to 
establish prescriptive standards, requiring that dishwashers be 
equipped with an option to dry without heat, and further requiring that 
DOE conduct two cycles of rulemakings to determine if more stringent 
standards are justified. (42 U.S.C. 6295(g)(1) and (4)) Section 
311(a)(2) of EISA 2007 subsequently established maximum energy and 
water use levels for residential dishwashers manufactured on or after 
January 1, 2010.\6\ (42 U.S.C. 6295(g)(10))
---------------------------------------------------------------------------

    \6\ Under the statute, a standard size dishwasher shall not 
exceed 355 kWh/year and 6.5 gallons per cycle, and a compact size 
dishwasher shall not exceed 260 kWh/year and 4.5 gallons per cycle.
---------------------------------------------------------------------------

    Section 135(c)(4) of the Energy Policy Act of 2005 (EPACT 2005; 
Pub. L. 109-58) added dehumidifiers as products covered under EPCA and 
established standards for them that became effective on October 1, 
2007. (42 U.S.C. 6295(cc)) These amendments to EPCA also require that 
DOE issue a final rule by October 1, 2009, to determine whether these 
standards should be amended. (42 U.S.C. 6295(cc)) If amended standards 
are justified, they must become effective by October 1, 2012. (Id.) In 
the event that DOE fails to publish such a final rule, EPACT 2005 
specifies a new set of amended standards with an effective date of 
October 1, 2012. (Id.) EISA 2007 subsequently amended section 325(cc) 
of EPCA by replacing the requirement for a rulemaking to amend the 
dehumidifier standards with prescriptive minimum efficiency levels for 
dehumidifiers manufactured on or after October 1, 2012.\7\ (EISA 2007, 
section 311(a)(1); 42 U.S.C. 6295(cc))
---------------------------------------------------------------------------

    \7\ Under the statute, such dehumidifiers shall have an Energy 
Factor (EF) that meets or exceeds the following values: (See above 
table.)

------------------------------------------------------------------------
                                                              Minimum EF
                Product capacity (pints/day)                   (liters/
                                                                 kWh)
------------------------------------------------------------------------
Up to 35.00................................................         1.35
35.01-45.00................................................         1.50
45.01-54.00................................................         1.60
54.01-75.00................................................         1.70
75.00 or more..............................................          2.5
------------------------------------------------------------------------

    As with dishwashers, NAECA amended EPCA to establish prescriptive 
standards for cooking products, requiring gas ranges and ovens with an 
electrical supply cord that are manufactured on or after January 1, 
1990 not to be equipped with a constant burning pilot, and requiring 
DOE to conduct two cycles of rulemakings for ranges and ovens to 
determine if the standards established should be amended. (42 U.S.C. 
6295 (h)(1)-(2))
    Similar to dehumidifiers, EPACT 2005 included amendments to EPCA 
that added CCWs as covered equipment, and it also established standards 
for such equipment that is manufactured on or after January 1, 2007.\8\ 
(EPACT 2005, section 136(a) and (e); 42 U.S.C. 6311(1) and 6313(e)) 
EPACT 2005 also requires that DOE issue a final rule by January 1, 
2010, to determine whether these standards should be amended. (EPACT 
2005, section 136(e); 42 U.S.C. 6313(e))
---------------------------------------------------------------------------

    \8\ Under the statute, a CCW must have a modified energy factor 
(MEF) of at least 1.26 and a water factor (WF) of not more than 9.5.
---------------------------------------------------------------------------

    It is pursuant to the authority set forth above that DOE is 
conducting the present rulemaking for cooking products and CCWs and 
will codify the statutory standards for dishwashers and dehumidifiers. 
The following discusses some of the key provisions of EPCA relevant to 
this standards-setting rulemaking.
    Under EPCA, the overall program consists of the following core 
elements: (1) Testing; (2) labeling; and (3) Federal energy 
conservation standards. The Federal Trade Commission (FTC) is 
responsible for labeling products covered by part A, and DOE implements 
the remainder of the program. Under 42 U.S.C. 6293 and 6314, EPCA 
authorizes DOE, subject to certain criteria and conditions, to develop 
test procedures to measure the energy efficiency, energy use, or 
estimated annual operating cost of covered products and equipment. The 
test procedures for the appliance products subject to today's notice 
appear at Title 10 of the Code of Federal Regulations (CFR) part 430, 
subpart B--dishwashers in appendix C, dehumidifiers in appendix X, 
cooking products in appendix I, and CCWs in appendix J1 (the latter 
pursuant to 10 CFR 431.154.)
    EPCA provides criteria for prescribing new or amended standards for 
covered products and equipment.\9\ As indicated

[[Page 62039]]

above, any new or amended standard for either of the two appliance 
products must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A)) Additionally, DOE may not prescribe a 
standard for some types of products if: (1) No test procedure has been 
established for that product; or (2) DOE determines by rule that the 
standard is not technologically feasible or economically justified. (42 
U.S.C. 6295(o)(3)(A)-(B)) The statute also provides that, in deciding 
whether a standard is economically justified, DOE must, after receiving 
comments on the proposed standard, determine whether the benefits of 
the standard exceed its burdens by considering, to the greatest extent 
practicable, the following seven factors:
---------------------------------------------------------------------------

    \9\ The EPCA provisions discussed in the remainder of this 
subsection directly apply to covered products, and also apply to 
certain covered equipment, such as commercial clothes washers, by 
virtue of 42 U.S.C. 6316(a). Note that the term ``product'' is used 
generally to refer to consumer appliances, while ``equipment'' is 
used generally to refer to commercial units.
---------------------------------------------------------------------------

    (1) The economic impact of the standard on manufacturers and 
consumers of the products or equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products or equipment in the type (or class) 
compared to any increase in the price, initial charges, or maintenance 
expenses for the covered products that are likely to result from the 
imposition of the standard;
    (3) The total projected amount of energy (or, as applicable, water) 
savings likely to result directly from the imposition of the standard;
    (4) Any lessening of the utility or the performance of the covered 
products or equipment likely to result from the imposition of the 
standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary considers relevant.
    (42 U.S.C. 6295(o)(2)(B)(i))
    Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1)) This provision 
prohibits the Secretary from prescribing any amended standard that 
either increases the maximum allowable energy use or decreases the 
minimum required energy efficiency of a covered product or equipment. 
Also, the Secretary may not prescribe an amended or a new standard if 
the Secretary finds that interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States of any product type (or class) 
with performance characteristics, features, sizes, capacities, and 
volume that are substantially the same as those generally available in 
the United States at the time of the Secretary's finding. (42 U.S.C. 
6295(o)(4))
    In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)), 
establishes a rebuttable presumption that a standard is economically 
justified if the Secretary finds that ``the additional cost to the 
consumer of purchasing a product complying with an energy conservation 
standard level will be less than three times the value of the energy 
(and as applicable, water) savings during the first year that the 
consumer will receive as a result of the standard,'' as calculated 
under the test procedure in place for that standard. This approach 
provides an alternative path in establishing economic justification 
under the EPCA factors. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE considered 
this test, but believes that the criterion it applies (i.e., a limited 
payback period) is not sufficient for determining economic 
justification. Instead, DOE has considered a full range of impacts, 
including those to the consumer, manufacturer, Nation, and environment.
    In promulgating a standard for a type or class of covered product 
that has two or more subcategories, DOE must specify a different 
standard level than that which applies generally to such type or class 
of products ``for any group of covered products which have the same 
function or intended use, if * * * products within such group--(A) 
consume a different kind of energy from that consumed by other covered 
products within such type (or class); or (B) have a capacity or other 
performance-related feature which other products within such type (or 
class) do not have and such feature justifies a higher or lower 
standard'' than applies or will apply to the other products. (42 U.S.C. 
6295(q)(1)) In determining whether a performance-related feature 
justifies such a different standard for a group of products, DOE must 
consider ``such factors as the utility to the consumer of such a 
feature'' and other factors DOE deems appropriate. Id. Any rule 
prescribing such a standard must include an explanation of the basis on 
which such higher or lower level was established. (42 U.S.C. 
6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions of EPCA found in 42 
U.S.C. 6297(d). Specifically, States that regulate an energy 
conservation standard for a type of covered product for which there is 
a Federal energy conservation standard may petition the Secretary for a 
DOE rule that allows the State regulation to become effective with 
respect to such covered product. (42 U.S.C. 6297(d)(1)(A)) DOE must 
prescribe a rule granting the petition if the Secretary finds that the 
State has established by a preponderance of the evidence that its 
regulation is needed to meet ``unusual and compelling State or local 
energy * * * interests.'' (42 U.S.C. 6297(d)(1)(B))

C. Background

1. Current Standards
a. Dishwashers
    DOE established the current energy conservation standards for 
dishwashers manufactured on or after May 14, 1994 in a final rule on 
May 14, 1991 (56 FR 22250), which consist of a requirement that the 
energy factor (EF) of a standard size dishwasher must not be less than 
0.46 cycles per kilowatt-hour (kWh) and that the EF of a compact size 
dishwasher must not be less than 0.62 cycles per kWh. (10 CFR 
430.32(f))
b. Dehumidifiers
    EPCA, as amended by EPACT 2005, prescribes the current energy 
conservation standard for dehumidifiers, as shown in Table II.1. (42 
U.S.C. 6295(cc)(1); 10 CFR 430.32(v))

     Table II.1--EPACT 2005 Standards for Residential Dehumidifiers
------------------------------------------------------------------------
                                                             Standards
                                                             effective
                  Dehumidifier capacity                     October 1,
                                                             2007  EF
                                                           (liters/kWh)
------------------------------------------------------------------------
25.00 pints/day or less.................................            1.00
25.01-35.00 pints/day...................................            1.20
35.01-54.00 pints/day...................................            1.30
54.01-74.99 pints/day...................................            1.50
75.00 pints/day or more.................................            2.25
------------------------------------------------------------------------

c. Cooking Products
    EPCA prescribes the current energy conservation standard for 
cooking products, which consists of a requirement that gas ranges and 
ovens with an electrical supply cord that are manufactured on or after 
January 1, 1990, not be equipped with a constant burning pilot. (42 
U.S.C. 6295(h)(1); 10 CFR 430.32(j))
d. Commercial Clothes Washers
    EPCA, as amended by EPACT 2005, also prescribes standards for CCWs

[[Page 62040]]

manufactured on or after January 1, 2007. (42 U.S.C. 6313(e)) These 
standards require that CCWs have an MEF of at least 1.26 and a WF of 
not more than 9.5. (Id.; 10 CFR 431.156)
2. History of Standards Rulemaking for Residential Dishwashers, 
Dehumidifiers, and Cooking Products; and Commercial Clothes Washers
    For dishwashers, NAECA amended EPCA to establish prescriptive 
standards, requiring that dishwashers be equipped with an option to dry 
without heat, and further requiring that DOE conduct two cycles of 
rulemakings to determine if more stringent standards are justified. (42 
U.S.C. 6295(g)(1) and (4)) On May 14, 1991, DOE published a final rule 
establishing the first set of performance standards for dishwashers (56 
FR 22250); these new standards discussed became effective on May 14, 
1994 (10 CFR 430.32(f)). DOE initiated a second standards rulemaking 
for dishwashers by publishing an ANOPR on November 14, 1994 (59 FR 
56423). However, as a result of the priority-setting process outlined 
in its Procedures, Interpretations and Policies for Consideration of 
New or Revised Energy Conservation Standards for Consumer Products (the 
``Process Rule'') (61 FR 36974 (July 15, 1996); 10 CFR part 430, 
subpart C, appendix A), DOE suspended the standards rulemaking for 
dishwashers.
    Section 135(c)(4) of EPACT 2005 added dehumidifiers as products 
covered under EPCA and established standards for them that became 
effective on October 1, 2007. (42 U.S.C. 6295(cc)) DOE has incorporated 
these standards into its regulations (70 FR 60407, 60414 (Oct. 18, 
2005); 10 CFR 430.32(v)).
    The November 2007 ANOPR addressed standards for residential 
dishwashers and dehumidifiers, in addition to cooking products and 
CCWs. On December 19, 2007, however, Congress enacted EISA 2007, which, 
among other things, established minimum efficiency levels for 
dehumidifiers manufactured on or after October 1, 2012. (EISA 2007, 
section 311(a)(1); 42 U.S.C. 6295(cc)) In addition, section 311(a)(2) 
of EISA 2007 established maximum energy and water use levels for 
residential dishwashers manufactured on or after January 1, 2010. (42 
U.S.C. 6295(g)(10)) Because EISA 2007 established standards for 
residential dishwashers and dehumidifiers, DOE will codify the 
statutory standards for these products in a separate final rule.\10\ 
DOE will not entertain comment on these standard levels set under EISA 
2007, because the Department does not have discretion to modify such 
statutory levels. As a result, DOE will limit its analysis in the 
balance of this NOPR to cooking products and commercial clothes 
washers.
---------------------------------------------------------------------------

    \10\ DOE intends to codify all prescriptive energy conservation 
standards established under EISA 2007 for various products and 
equipment into its regulations in a separate Federal Register 
notice.
---------------------------------------------------------------------------

    The existing prescriptive standard for cooking products, described 
above, was added to EPCA by amendments contained in the NAECA. As set 
forth in greater detail in the November 2007 ANOPR, these amendments 
required DOE to conduct two cycles of rulemakings to determine whether 
to revise the standard. DOE undertook the first cycle of these 
rulemakings and issued a final rule on September 8, 1998 (63 FR 48038), 
which found that no standards were justified for electric cooking 
products. Partially due to the difficulty of conclusively demonstrating 
that elimination of standing pilots was economically justified, DOE did 
not adopt a standard for gas cooking products. 72 FR 64432, 64438 (Nov. 
15, 2007). DOE is currently in the second cycle of rulemakings required 
by the NAECA amendments to EPCA. (42 U.S.C. 6295(h)(2))
    EPACT 2005 included amendments to EPCA that added CCWs as covered 
equipment and established the current standards for such equipment. 
(EPACT 2005, section 136(a) and (e); 42 U.S.C. 6311(1)(G) and 6313(e)) 
DOE has incorporated these standards into its regulations (70 FR 60407, 
60416 (Oct. 18, 2005); 10 CFR 431.156). The EPACT 2005 amendments also 
require that DOE conduct two cycles of rulemakings to determine whether 
these standards should be amended. (EPACT 2005, section 136(e); 42 
U.S.C. 6313(e)(2)) The first of these rules must be published by 
January 1, 2010, and any amended standard in the rule would apply to 
products manufactured three years after the rule is published. Id.
    To initiate the current rulemaking to consider energy conservation 
standards, on March 15, 2006, DOE published on its Web site a document 
titled, Rulemaking Framework for Commercial Clothes Washers and 
Residential Dishwashers, Dehumidifiers, and Cooking Products (Framework 
Document).\11\ 71 FR 15059 (March 27, 2006). The Framework Document 
described the procedural and analytical approaches that DOE anticipated 
using to evaluate energy conservation standards for these products, and 
identified various issues to be resolved in conducting the rulemaking. 
DOE held a public meeting on April 27, 2006, to present the Framework 
Document, to describe the analyses it planned to conduct during the 
rulemaking, to receive comments from stakeholders, and to inform and 
facilitate stakeholders' involvement in the rulemaking. DOE received 11 
written comments in response to the Framework Document after the public 
meeting.
---------------------------------------------------------------------------

    \11\ This document is available on the DOE Web site at: http://www.eere.energy.gov/buildings/appliance_standards/residential/dehumidifiers.html.
---------------------------------------------------------------------------

    On December 4, 2006, DOE posted two spreadsheet tools for this 
rulemaking on its Web site.\12\ The first tool calculates LCC and 
payback periods (PBPs) and included spreadsheets for: (1) Dishwashers; 
(2) dehumidifiers; (3) cooktops; (4) ovens; (5) microwave ovens; and 
(6) CCWs. The second tool--the national impact analysis (NIA) 
spreadsheet--calculates the impacts on shipments and the national 
energy savings (NES) and NPV at various candidate standard levels. The 
NIA spreadsheets include one each for: (1) Dishwashers; (2) 
dehumidifiers; (3) cooktops and ovens; (4) microwave ovens; and (5) 
CCWs.
---------------------------------------------------------------------------

    \12\ These spreadsheets are available on the DOE Web site at: 
http://www.eere.energy.gov/buildings/appliance_standards/residential_products.html.
---------------------------------------------------------------------------

    DOE published the ANOPR for this rulemaking on November 15, 2007, 
and held a public meeting on December 13, 2007, to present and seek 
comment on the November 2007 ANOPR analytical methodology and results. 
72 FR 64432. In the November 2007 ANOPR, DOE described and sought 
further comment on the analytical framework, models, and tools (e.g., 
LCC and NIA spreadsheets) it was using to analyze the impacts of energy 
conservation standards for these products. In conjunction with the 
November 2007 ANOPR, DOE also posted on its Web site the complete 
November 2007 ANOPR technical support document (TSD). The TSD included 
the results of a number of DOE's preliminary analyses, including: (1) 
The market and technology assessment; (2) screening analysis; (3) 
engineering analysis; (4) energy and water use determination; (5) 
markups analysis to determine equipment price; (6) LCC and PBP 
analyses; (7) shipments analysis; (8) NES and national impact analyses; 
and (9) manufacturer impact analysis (MIA). In the November 2007 ANOPR 
and at the public meeting, DOE invited comment in particular on the 
following issues concerning cooking products and CCWs: (1) Microwave 
oven standby power; (2) product classes; (3) CCW horizontal-axis 
designs; (4) microwave

[[Page 62041]]

oven design options; (5) technologies unable to be analyzed and 
exempted product classes, including potential limitations of existing 
test procedures; (6) CCW per-cycle energy consumption; (7) CCW consumer 
prices; (8) repair and maintenance costs; (9) efficiency distributions 
in the base case; (10) CCW shipments forecasts; (11) base-case and 
standards-case forecasted efficiencies; and (12) TSLs. 72 FR 64432, 
64512-14 (Nov. 15, 2007).
    The November 2007 ANOPR also included background information, in 
addition to that set forth above, on the history and conduct of this 
rulemaking and on DOE's use in this rulemaking of its Process Rule. 72 
FR 64432, 64438-39 (Nov. 15, 2007). DOE held a public meeting in 
Washington, DC, on December 13, 2007, to present the methodologies and 
results for the November 2007 ANOPR analyses, along with a summary of 
supplemental analysis DOE conducted for microwave ovens (referred to as 
the ``December 2007 public meeting''). At the December 2007 public 
meeting, stakeholders commented that they had come to an agreement 
regarding what they believed to be appropriate levels for energy 
conservation standards for dehumidifiers and dishwashers and would 
offer draft legislation that would reflect such agreement. (Association 
of Home Appliance Manufacturers (AHAM), Public Meeting Transcript, No. 
23.7 at pp. 20 and 24; \13\ Appliance Standards Awareness Project 
(ASAP), Public Meeting Transcript, No. 23.7 at p. 24) These 
stakeholders' suggested energy conservation standard levels were 
subsequently incorporated into the EISA 2007 amendments to EPCA, as 
discussed previously in this section.
---------------------------------------------------------------------------

    \13\ A notation in the form ``AHAM, Public Meeting Transcript, 
No. 23.7 at p. 20'' identifies an oral comment that DOE received 
during the December 13, 2007, ANOPR public meeting and which was 
recorded in the public meeting transcript in the docket for this 
rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource 
Room of the Building Technologies Program. This particular notation 
refers to a comment (1) made by the Association of Home Appliance 
Manufacturers (AHAM) during the public meeting, (2) recorded in 
document number 23.7, which is the public meeting transcript that is 
filed in the docket of this rulemaking, and (3) which appears on 
page 20 of document number 23.7. A notation in the form ``EEI, No. 
25 at pp. 2-3'' identifies a written comment (1) made by the Edison 
Electric Institute (EEI), (2) recorded in document number 25 that is 
filed in the docket of this rulemaking, and (3) which appears on 
pages 2-3 of document number 25.
---------------------------------------------------------------------------

    DOE expects to issue a final rule in this rulemaking in March 2009. 
Based on this schedule, the effective date of any new energy efficiency 
standards for these products would be March 2012, three years after the 
final rule is published in the Federal Register.

III. General Discussion

A. Standby Power for Cooking Products

    Section 310 of the EISA 2007 amends section 325 of the EPCA to 
require DOE to regulate standby mode and off mode energy consumption 
for all covered products, including residential ranges and ovens and 
microwave ovens, as part of energy conservation standards for which a 
final rule is adopted after July 10, 2010. In addition, EISA 2007 
amended section 325 of EPCA to specifically require that test 
procedures for ranges and ovens and microwave ovens be amended by March 
31, 2011 to include measurement of standby mode and off mode energy 
consumption, taking into consideration the most current versions of 
International Electrotechnical Commission's (IEC) Standard 62301 
Household electrical appliances--Measurement of standby power \14\ (IEC 
62301) and IEC Standard 62087 Methods of measurement for the power 
consumption of audio, video and related equipment (IEC 62087).\15\ (42 
U.S.C. 6295(gg)) Because the final rule for this rulemaking is 
scheduled to be published in the Federal Register by March 31, 2009, an 
energy conservation standard for cooking products set forth by this 
rulemaking is not required to incorporate standby mode and off mode 
energy consumption.
---------------------------------------------------------------------------

    \14\ IEC standards are available at: http://www.iec.ch.
    \15\ IEC 62087 does not cover any products for this rulemaking, 
and, therefore, was not considered.
---------------------------------------------------------------------------

    Although DOE is also not required to incorporate standby mode and 
off mode energy consumption for any cooking products at this time, in 
the November 2007 ANOPR, DOE stated that it is considering including 
standby power in the energy conservation standards and intends to 
initiate amendment of its test procedure to measure microwave oven 
standby power because: (1) Energy consumption in standby mode 
represents a significant proportion of microwave oven annual energy 
consumption, and (2) the range of standby power among microwave ovens 
currently on the market suggests that the likely impact of a standard 
would be significant in terms of energy consumption. 72 FR 64432, 
64440-42 (Nov. 15, 2007). Such a test procedure change is a 
prerequisite to incorporate a standby power requirement as part of the 
energy conservation standard for microwave ovens.\16\ DOE invited 
comments on this issue, and commenters generally supported the early 
initiation of test procedure amendments to measure standby power 
consumption in microwave ovens. The comments on this issue are 
discussed in section III.B.2 of this notice.
---------------------------------------------------------------------------

    \16\ As discussed in the November 2007 ANOPR, addressing standby 
mode and off mode energy consumption is not required for this 
standards rulemaking under EPCA, but DOE seeks to publish a final 
rule for the test procedure amendments prior to March 31, 2009, in 
order to allow the microwave oven energy conservation standards to 
account for standby mode and off mode power consumption.
---------------------------------------------------------------------------

    DOE also invited comment on the incorporation of standby power in 
an energy conservation standard for residential cooking products. 
Several organizations--ASAP, Natural Resources Defense Council (NRDC), 
Northwest Power and Conservation Council (NPCC), Northeast Energy 
Efficiency Partnerships (NEEP), and the American Council for an Energy-
Efficient Economy (ACEEE)--filed a single joint comment (hereafter 
Joint Comment) that supported a standby power standard for residential 
ovens, including microwave ovens, or, in the alternative, a 
prescriptive requirement if test methods cannot be amended in time to 
support this rulemaking. For the reasons just discussed, DOE is 
considering incorporating standby power into the energy conservation 
standard for microwave ovens. For conventional cooking products, as 
will be discussed in more detail in section III.B.2, DOE does not have 
data or information to analyze standby mode and off mode power 
consumption. DOE will instead consider test procedure amendments for 
conventional cooking products in a later rulemaking that meets the 
March 31, 2011, deadline set by EISA 2007. (42 U.S.C. 6295(gg)(2)(B))
    For microwave ovens, the Joint Comment stated that, while per-unit 
standby power savings amount to only several W per unit, they represent 
not only a large proportion of total microwave oven annual energy use 
but a large national impact as well when considering the stock and 
sales rate of microwave ovens. (Joint Comment, No. 29 at p. 7) DOE 
recognizes the Joint Comment's support for a standby power standard, 
but notes that even if the proposed standard were to be a prescriptive 
standby power level, a test procedure amendment prior to the final rule 
of this standards rulemaking would be required to incorporate such a 
measurement.
    In assessing the opportunity to reduce standby power, the Joint 
Comment compared maximum microwave oven standby power in measurements 
reported by DOE, AHAM, and the Australian National Appliance and 
Equipment Energy Efficiency Committee (ANAEEEC). These measurements 
ranged from almost 6 W to 8.4 W, with

[[Page 62042]]

a presumed standby demand of 3 W at most for minimal functionality, as 
inferred from microwaves listed in the Federal Energy Management 
Program (FEMP) procurement database which have both a clock display and 
a cooking sensor. The Joint Comment further stated that since there are 
no State or Federal standby performance or active mode performance 
standards, manufacturers have had little incentive to optimize the 
standby demand of microwave ovens. As an example of a product for which 
standby power was raised to the highest levels of design consideration 
by manufacturers, the Joint Comment stated that significant standby 
power reductions were achieved at minimal or no cost for external power 
supplies in response to market demands (e.g., portable electronics) and 
policy demands (e.g., standards or ENERGY STAR levels). (Joint Comment, 
No. 29 at pp. 5-8) AHAM, on the other hand, commented that DOE should 
not promulgate a standby power standard for cooking products in 
general, and in the case of microwave ovens, the contribution of 
standby power to total microwave oven energy use is relatively small 
and is associated with significant functionality for the consumer. 
(AHAM, No. 32 at p. 2)
    As part of its engineering analysis, DOE sampled 32 microwave 
ovens, and AHAM provided test data for an additional 21 units submitted 
by manufacturers. Each microwave oven was tested according to the 
existing DOE test procedure, which measures the amount of energy 
required to raise the temperature of one kilogram of water by 10 
degrees Celsius under controlled conditions. The ratio of usable output 
power over input power describes the EF, which is also a measure of the 
cooking efficiency. The data from the DOE and AHAM cooking tests show a 
cooking efficiency range from 55 percent to 62 percent. Reverse 
engineering conducted by DOE attempted to identify design options 
associated with this variation in cooking efficiency. Although design 
options among various microwave ovens were found to be highly 
standardized, DOE was unable to correlate specific design options or 
other features such as cavity size or output power with cooking 
efficiency. (See chapter 5 of the TSD accompanying this notice.)
    DOE also observed significant variability in the cooking efficiency 
measurements obtained using the DOE microwave oven test procedure for 
the 53 units tested by DOE and AHAM. The data show test-to-test 
variability of several EF percentage points for a given microwave oven 
(i.e., where a given combination of design options could be assigned to 
a number of TSLs, depending upon the test results). DOE was also unable 
to ascertain why similarly designed, equipped, and constructed 
microwave ovens showed varying EFs and, hence, annual energy 
consumption. DOE further notes that manufacturers stated during MIA 
interviews that the water used in the test procedure is not 
representative of an actual food load. One manufacturer stated, for 
example, that this could result in different microwave ovens being 
rated at the same energy efficiency even though true cooking 
performance is different.
    In a review of the DOE microwave oven test procedure (which does 
not currently incorporate a measure of standby mode and off mode energy 
use), DOE explored whether it would be technically feasible to combine 
the existing measure of energy efficiency during the cooking cycle 
(per-use) with standby mode and off mode energy use (over time) to form 
a single metric, as required by EISA 2007. (42 U.S.C. 6295(gg)(2)(A)) 
Specifically, the test procedure's existing metric for microwave oven 
overall energy efficiency measures the efficiency of heating a sample 
of water over a period of seconds. In contrast, standby mode and off 
mode energy consumption is a measure of the amount of energy used over 
a period of multiple hours while not performing the function of heating 
a load. DOE found that an overall energy efficiency that combines the 
two values is representative of neither the energy efficiency of the 
microwave oven for a very short period of use (as is the case with the 
EF) nor the efficiency of the microwave oven over an extended period of 
time.
    DOE notes that certain DOE test procedures for other products 
combine a measure of cycle efficiency and standby energy use to derive 
an overall ``energy efficiency measure,'' (e.g., gas kitchen ranges and 
ovens incorporate pilot gas consumption in EF, electric ovens include 
clock power in EF, and gas dryers include pilot gas consumption). 
However, DOE believes that in those cases where the difference in 
energy use between the primary function of those products and the 
standby power is so large that the standby power has little impact on 
the overall measure of energy efficiency or the combined efficiency is 
based on energy use of the primary energy function and standby power 
over the same period, (e.g., annual or seasonal), the combined measure 
of energy efficiency is a meaningful measure. In the case of microwave 
ovens, the energy consumption associated with standby mode is a 
significant fraction of the overall energy use. DOE notes, for example, 
that, depending on the cooking efficiency and standby power, the rank 
ordering of two microwave ovens based on EF alone could reverse if 
standby power were factored in, depending on the values of cooking 
energy use and standby power.\17\ Therefore, given the similar 
magnitudes of microwave oven annual energy consumption associated with 
these two disparate and largely incompatible metrics that are measured 
over very different time periods, DOE questioned whether it would be 
technically feasible to incorporate EF and standby power into a 
combined energy efficiency metric that produces a meaningful result.
---------------------------------------------------------------------------

    \17\ For example, two units among the microwave ovens tested by 
AHAM, each with 1000 W of input power, will be designated Unit A and 
Unit B for the purposes of this illustration. The EF of Unit A was 
measured by AHAM according to the current DOE test procedure as 55.7 
percent, while the EF of Unit B was measured as 57.3 percent. The 
standby power of Unit A, however, was measured as 1.7 W, compared to 
the 4.4 W of standby power for Unit B. If a combined EF (``CEF'') 
were to be calculated by adding the annual standby energy use to the 
annual cooking energy consumption, this CEF for Unit A would be 50.5 
percent, while the CEF for Unit B would be 45.0 percent, thereby 
reversing the rankings of the two microwave ovens according to their 
energy descriptor. The unit that was formerly considered the higher 
efficiency unit would thus be rated as lower in efficiency.
---------------------------------------------------------------------------

    To explore standby mode and off mode power for the purpose of 
potential microwave oven energy conservation standards, DOE tested 32 
sample units using the current IEC Standard 62301 standby test 
procedure and recorded a standby power range of about 1.2 W to 5.8 W 
(with less than 0.5 percent test-to-test deviation). DOE observed no 
off mode power consumption for the microwave ovens in its test sample, 
and DOE's research suggests that no other microwave ovens available in 
the United States consume energy in an off mode.\18\ Thus, DOE focused 
its investigations on standby mode. Data suggested correlations between 
specific features and standby power, thereby

[[Page 62043]]

providing the basis for a cost-efficiency curve. However, for the 
reasons stated above about combining a per-cycle efficiency with 
standby power over a long period of time, as well as due to the 
observed test variability in the cooking efficiency results, DOE is 
concerned that an overall measure of cooking efficiency that combines 
cooking and standby energy cannot produce test results that measure 
energy efficiency or energy use of microwave ovens in a reasonable and 
repeatable manner. An ``average'' microwave runs 8,689 hours in standby 
mode per year. Based on the standby power range measured by DOE and 
AHAM, standby power consumption represents a relatively large component 
of total annual energy consumption. At the efficiency baseline from the 
analysis conducted for the previous cooking products rulemaking, as 
discussed in the 1996 Technical Support Document for Residential 
Cooking Products (1996 TSD), (which was also observed in the test 
sample), the observed range of annual energy consumption due to cooking 
(14.2 kWh) is equivalent to approximately 2 W of standby power. (See 
chapter 3 of the TSD accompanying this notice.)
---------------------------------------------------------------------------

    \18\ A microwave oven is considered to be in ``off mode'' if it 
is plugged in to a main power source, is not being used for an 
active function such as cooking or defrosting, and is consuming 
power for features other than a display, cooking sensor, controls 
(including a remote control), or sensors required to reactivate it 
from a low power state. For example, a microwave oven with 
mechanical controls and no display or cooking sensor that consumed 
power for components such as a power supply when the unit was not 
activated would be considered to be in off mode. Note that DOE 
believes there are no longer any such microwave ovens with 
mechanical controls on the market, and, in fact, is not aware of any 
microwave ovens currently available that can operate in off mode.
---------------------------------------------------------------------------

    DOE also explored whether the existing test procedure's measure of 
annual energy consumption could be modified to be a combined energy 
efficiency descriptor for microwave ovens, despite the fact that EF is 
currently listed as the energy efficiency descriptor. For the reasons 
articulated here, DOE has tentatively concluded that neither approach 
meets the statutory standard for a combined metric.
    In light of the above, DOE believes that, although it may be 
mathematically possible to combine energy consumption into a single 
metric encompassing active (cooking), standby, and off modes, it is not 
technically feasible to do so at this time, because of the high 
variability in the current cooking efficiency measurement from which 
the active mode EF and annual energy consumption are derived (as 
discussed previously) and because of the significant contribution of 
standby power to overall microwave oven energy use. Given DOE's recent 
research, there is concern that cooking efficiency results for 
microwave ovens would not be meaningful, so incorporation of such 
results in a combined metric similarly would not be expected to be 
meaningful. Inherent in a determination of technical feasibility under 
EISA 2007 for a combined metric for active, standby, and off mode 
energy consumption is an expectation that the results would be 
meaningful. Accordingly, for the purposes of this notice, DOE is not 
proposing to incorporate standby and off modes with active mode into a 
combined metric, but is instead proposing a separate metric to measure 
standby power, as provided for by EISA 2007 in cases where it is 
technically infeasible to incorporate standby and off modes into a 
combined energy conservation metric.\19\ (42 U.S.C. 6295(gg)(3)(B))
---------------------------------------------------------------------------

    \19\ DOE notes that if a microwave oven standard is established 
based on standby power alone, measurable energy savings would 
certainly be achieved. If, however, standby power were to be 
combined with cooking efficiency, it is conceivable that many 
microwave ovens could already comply with the standard without 
reducing standby power, since the annual energy consumption due to 
standby power is on the same order as that associated with the 
variability in EF.
---------------------------------------------------------------------------

    Although it may not be technically feasible to develop a combined 
metric for microwave ovens today, it may be possible to do so in the 
future, provided that each is measured on a consistent basis (i.e., kWh 
per year apportioned to each mode) so that the results are meaningful 
and comparable. In this vein, DOE notes the need to develop a test 
procedure that addresses the high-variability concerns with its current 
cooking efficiency measure. DOE understands that IEC, AHAM, 
manufacturers, and others are exploring whether a test procedure can be 
developed that responds to the concerns DOE has raised. DOE expects to 
evaluate potential future test procedures to determine whether any 
address the concerns discussed above and meet the requirements of 
section 325(gg) of the Act, thereby making them suitable candidates for 
use in amending the DOE test procedure. If such test procedures are 
developed, DOE will consider a combined measure of microwave oven 
energy efficiency in a future rulemaking.

B. Test Procedures

1. Dishwashers and Dehumidifiers
    Because EISA 2007 provides prescriptive energy conservation 
standards for dishwashers and dehumidifiers based on existing DOE test 
procedures (42 U.S.C. 6295(g)(10) and (cc)(2), respectively), DOE is 
not proposing to make changes to the test procedures for these products 
at this time. DOE will consider test procedure amendments to address 
potential incorporation of standby mode and off mode power into the 
energy efficiency metrics in a later rulemaking or rulemakings that 
meet the March 31, 2011, deadline set by the EISA 2007 amendments to 
EPCA. (42 U.S.C. 6295(gg)(2)(B)(vi))
2. Cooking Products
    As noted in the November 2007 ANOPR, DOE indicated that it does not 
intend to modify test procedures for cooking products as part of this 
rulemaking, other than an amendment to consider the standby power 
consumption of microwave ovens. 72 FR 64432, 64442 (Nov. 15, 2007).
    The DOE test procedure for microwave ovens references IEC 705-1988 
Household Microwave Ovens--Methods for Measuring Performance, and 
Amendment 2-1993 (IEC 705) for methodology of measuring cooking 
performance. The Joint Comment on the ANOPR urged DOE to continue to 
use the existing DOE test method and the referenced IEC 705 for active 
power measurement for the EF calculation because it appears to provide 
greater precision of measurement than the current version of the IEC 
standard, redesignated as IEC 60705-1993 Edition 3.2-2006 (IEC 60705). 
(Joint Comment No. 29 at p. 9) DOE observed during its efficiency 
testing of a representative sample of microwave ovens that IEC 705-1988 
provides a more stable and repeatable cooking efficiency measurement 
than IEC 60705. Thus, DOE will not amend the microwave oven test 
procedure to reference IEC 60705 instead of IEC 705-1988. As discussed 
above, DOE is not aware of any other alternative test procedures that 
could be considered for incorporation by reference at this time.
    As part of the DOE microwave oven standby power tests, DOE reviewed 
IEC 62301 to determine whether the specified test conditions were 
suitable for microwave oven tests. At the December 2007 ANOPR public 
meeting, DOE contemplated incorporation by reference of IEC 62301 into 
the DOE test procedure, but suggested several clarifications that would 
be required to deal with instances where the IEC test conditions were 
non-specific: (1) the microwave oven clock display should be set to 12 
a.m. at the start of the test period; and (2) the standby power test 
should be run for a period of 12 hours to obtain a true average standby 
power, since clock power can vary as a function of displayed time, 
depending on the specific display technology. DOE sought comment on 
these potential modifications to the microwave oven test procedure, as 
well as any changes to the conventional cooking product test procedures 
to include standby power.
    The Joint Comment stated that DOE should modify the oven, cooktop, 
and microwave oven test procedures as necessary to measure the clock 
face standby energy use and any other

[[Page 62044]]

standby energy use, such as control electronics and power supply 
losses. In addition, the Joint Comment stated that DOE should use IEC 
62301 to test standby power, with the instruction to start the test 
with a clock setting of 12 a.m. and run the test for 12 hours or a 
lesser period of time demonstrated mathematically to be representative 
of a 12-hour period. (Joint Comment, No. 29 at pp. 6 and 9) ASAP 
commented that it supports a test procedure change to address microwave 
oven standby power, and that this test procedure change should not be a 
hurdle to implementing a standard that addresses standby power. (ASAP, 
Public Meeting Transcript, No. 23.7 at p. 72) GE Consumer and 
Industrial (GE), on the other hand, commented that it does not believe 
that there is justification for the development of ``necessarily 
complex'' new test procedures for cooking products. (GE, No. 30 at p. 
2)
    DOE believes separate test procedure rulemakings for standby mode 
and off mode power for microwave ovens and conventional cooking 
products are warranted. To support this rulemaking, the test procedure 
change to incorporate microwave oven standby mode and off mode power 
has been initiated in parallel with the current rulemaking, and a final 
rule for the test procedure will be published before the publication of 
a final rule on energy conservation standards. For conventional cooking 
products, DOE sought data and stakeholder feedback on the decision to 
retain the existing test procedures in the November 2007 ANOPR (72 FR 
66432, 64513 (Nov. 15, 2007)), and did not receive any inputs. DOE does 
not have any data on standby power consumption in conventional cooking 
products that indicate the potential for significant energy savings. 
Thus, DOE will consider test procedure amendments in a later rulemaking 
that meets the March 31, 2011, deadline set by the EISA 2007 amendments 
to EPCA. (42 U.S.C. 6295(gg)(2)(B))
3. Commercial Clothes Washers
    EPCA directs DOE to use the same test procedures for CCWs as those 
established by DOE for RCWs. (42 U.S.C. 6314(a)(8)) While DOE believes 
commercial laundry practices likely differ from residential 
practices,\20\ DOE believes that the existing clothes washer test 
procedure (at 10 CFR part 430, subpart B, appendix J) adequately 
accounts for the efficiency rating of CCWs, and that DOE's methods for 
characterizing energy and water use in the NOPR analyses adequately 
account for the consumer usage patterns specific to CCWs. 72 FR 64432, 
64442 (Nov. 15, 2007).
---------------------------------------------------------------------------

    \20\ Commercial clothes washers are typically used more 
frequently and filled with a larger load than residential clothes 
washers.
---------------------------------------------------------------------------

    Alliance Laundry Systems (Alliance) commented that, as a first-
order estimate, CCW usage patterns would be similar to those of the RCW 
market. Hence, Alliance supports the continued use of the existing test 
procedure as being generally representative of the multi-family and 
laundromat applications of the CCW segment of the market. (Alliance, 
No. 26 at p. 3)
    GE commented that the RCW test procedure gives credit for features, 
such as multiple water levels, which have no energy efficiency benefit 
in actual CCW use and which may confuse the end customer. Therefore, GE 
suggests that DOE develop a representative test procedure specifically 
for CCWs. (GE, No. 30 at p. 3) Similarly, during the MIA interviews, 
multiple manufacturers mentioned that the use of the RCW test procedure 
provides an incentive for CCW manufacturers to incorporate design 
options for which the RCW test procedure gives credit, but which are 
unlikely to save energy in actual CCW use or provide additional utility 
to consumers. For example, commenters stated that adaptive fill and 
load selector switches are unlikely to be used by consumers who 
generally pay a fixed fee per load and who are thus likely to run full-
sized loads and/or select the maximum fill setting. However, commenters 
did not provide data that demonstrate differences between CCW and RCW 
usage patterns or the energy implications thereof, nor did they address 
the statutory requirement to utilize the RCW test procedure for CCWs.
    DOE recognizes that in certain situations, the controls and/or 
operation of a CCW (e.g., fill level) can be set so that the CCW will 
not necessarily have the energy and water savings that might be 
expected to occur for RCWs. However, DOE does not have sufficient usage 
data to alter its preliminary conclusion that the existing RCW test 
procedure is adequate to measure the energy consumption of CCWs.

C. Technological Feasibility

1. General
    DOE considers a design option to be technologically feasible if it 
is in use by the respective industry or if research has progressed to 
the development of a working prototype. Therefore, in each standards 
rulemaking, DOE conducts a screening analysis, based on information it 
has gathered regarding existing technology options and prototype 
designs. In consultation with manufacturers, design engineers, and 
others, DOE develops a list of design options for consideration in the 
rulemaking. Once DOE has determined that a particular design option is 
technologically feasible, it further evaluates each design option in 
light of the following three additional criteria: (a) Practicability to 
manufacture, install, and service; (b) adverse impacts on product 
utility or availability; or (c) adverse impacts on health or safety. 10 
CFR part 430, subpart C, appendix A, section 4(a)(3) and (4). All 
design options that pass these screening criteria are candidates for 
further assessment in the engineering and subsequent analyses in the 
ANOPR stage. DOE may amend the list of retained design options in the 
NOPR analyses based on comments received on the ANOPR and on further 
research.
    All of the design options for cooking products and CCWs that DOE 
identified in the November 2007 ANOPR remain and were considered in 
today's proposed rule. (See the TSD accompanying this notice, chapter 
4.)
a. Cooking Products
    During MIA interviews, manufacturers commented that improved 
contact conductance for electric open (coil) element cooktops was more 
dependent on the flatness of the cookware used by the consumer rather 
than the design of the heating element itself. DOE is unaware of data 
substantiating these statements, and therefore chose to retain the 
design option for the purposes of this NOPR.
    In addition to the design options for microwave oven cooking 
efficiency presented in the November 2007 ANOPR, DOE also investigated 
technology options that reduce standby power. DOE identified lower-
power display technologies, improved power supplies and controllers, 
and alternative cooking sensor technologies as options to reduce 
standby power. DOE conducted this research when it became aware of the 
likelihood of EISA 2007 being signed, which DOE understood was to 
contain provisions pertaining to standby mode and off mode power 
consumption. Therefore, DOE presented details of each design option to 
stakeholders at the December 2007 public meeting even though the 
results were not available in time for publication in the November 2007 
ANOPR. DOE believes all of these options are technologically feasible, 
and in the ANOPR invited comment on technology options that reduce 
standby power in microwave ovens. 72 FR

[[Page 62045]]

64432, 64513 (Nov. 15, 2007). For more details of these technology 
options and stakeholder comments, see section IV.B of this notice.
b. Commercial Clothes Washers
    Alliance concurred with the CCW design options that DOE screened 
out and requested that DOE also screen out ``added insulation'' and 
``tighter tub tolerances'' from the CCW list of design options. 
Alliance stated that neither of these has been shown to impact energy 
consumption. (Alliance, No. 26 at p. 3) Since DOE received no data 
regarding the effectiveness of these two design options, today's NOPR 
retains them.
2. Maximum Technologically Feasible Levels
    EPCA requires as part of an energy conservation standards 
rulemaking that DOE must ``determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible'' for such product. (42 U.S.C. 6295(p)(1) and 6316(a)) Table 
III.1 lists the ``max-tech'' levels that DOE determined for this 
rulemaking.

Table III.1--Max-Tech Levels for Cooking Products and Commercial Clothes
                                 Washers
------------------------------------------------------------------------
                          Product                            Max-Tech EF
------------------------------------------------------------------------
Gas Cooktops...............................................         0.42
Electric Open (Coil) Cooktops..............................        0.769
Electric Smooth Cooktops...................................        0.753
Gas Standard Ovens.........................................       0.0583
Gas Self-Clean Ovens.......................................       0.0632
Electric Standard Ovens....................................       0.1209
Electric Self-Clean Ovens..................................       0.1123
Microwave Ovens............................................        0.602
------------------------------------------------------------------------
                                                               Max-Tech
                                                               Standby
                                                              Power (W)
------------------------------------------------------------------------
Microwave Ovens............................................       0.02 W
------------------------------------------------------------------------


 
                                                  Max-Tech   Max-Tech WF
                                                MEF  (ft\3\/     (gal/
                                                    kWh)        ft\3\)
------------------------------------------------------------------------
Top-Loading Commercial Clothes Washers........         1.76          8.3
Front-Loading Commercial Clothes Washers......         2.35          4.4
------------------------------------------------------------------------

a. Cooking Products
    For cooking products, DOE has retained the max-tech efficiency 
levels that the previous analysis outlined in the 1996 TSD defined, for 
the reasons that follow. DOE does not have efficiency data for 
conventional cooking products currently on the market, since 
manufacturers are not required to report EF. However, as reported in 
the November 2007 ANOPR, manufacturers have stated there have been no 
substantive changes in technology since the 1996 analysis that would 
affect max-tech efficiency levels. 72 FR 64432, 64436 and 64452 (Nov. 
15, 2007).
    For microwave ovens, both AHAM data and DOE supplemental testing, 
as presented at the December 2007 public meeting, confirmed that the 
max-tech EF level from the 1996 TSD remains the max-tech level in the 
context of the current rulemaking. The max-tech microwave oven standby 
power level corresponds to a unit equipped with a default automatic 
power-down function that shuts off certain power-consuming components 
after a specified period of user inactivity. The standby power at max-
tech was obtained from a microwave oven currently on the market in 
Korea which incorporates such a feature. (See the TSD accompanying this 
notice, chapter 5.)
b. Commercial Clothes Washers
    For CCWs, DOE recognizes that MEF and WF pairings may not 
simultaneously achieve max-tech levels. That is, a CCW with the highest 
possible MEF may not achieve the lowest possible WF. Similarly, a CCW 
with the lowest WF may not achieve the highest MEF. DOE considered 
several models currently available to determine max-tech values that 
best represent optimal performance for CCWs on the market today. DOE 
did not specify max-tech levels that represent a ``hybrid'' of the 
highest possible MEF and the lowest possible WF for each product class. 
For more details on this selection, see section IV.C.1 of this notice.

D. Energy Savings

1. Determination of Savings
    DOE used its NIA spreadsheet to estimate energy savings from 
amended standards for the appliance products that are the subject of 
this rulemaking. (Section IV.E of this notice and in chapter 11 of the 
TSD accompanying this notice describe the NIA spreadsheet model.) DOE 
forecasted energy savings over the period of analysis (beginning in 
2012, the year that amended standards would go into effect, and ending 
in 2042) for each TSL, relative to the base case, which represents the 
forecast of energy consumption in the absence of amended energy 
conservation standards. DOE quantified the energy savings attributable 
to amended energy conservation standards as the difference in energy 
consumption between the standards case and the base case.
    The base case considers market demand for more efficient products. 
For example, the market share of gas cooking appliances with standing 
pilot ignition systems has been declining for several years. (See 
section IV.E.3 of this notice and chapter 11 of the TSD accompanying 
this notice for more details.) As kitchens are remodeled or updated, 
consumers frequently take the opportunity to replace existing 
appliances with new ones, often replacing older ranges, ovens, and 
cooktops that incorporated standing pilots with models that are ignited 
electronically. The National Electrical Code (NEC) allows gas-fired 
appliances

[[Page 62046]]

to be attached to existing small appliance branch circuits, making such 
retrofits during kitchen remodels relatively easy. (2008 NEC section 
210.52(B)(2)) While outlets for gas-fired ovens, ranges, and cooktops 
are not required by the NEC, many local and State building codes 
require them in new construction and kitchen renovations, gradually 
reducing the number of kitchens in which there are no such outlets. 
Section IV.D.2.a describes in detail the additional installation costs 
that would be incurred by consumers in the event that standards are 
issued for gas cooking products that eliminate the use of standing 
pilot ignition systems. The added installation costs are accounted for 
in the evaluation of consumer economic impacts in the LCC and PBP 
analysis and the NIA.
    The NIA spreadsheet model calculates the electricity savings in 
``site energy'' expressed in kWh. Site energy is the energy directly 
consumed on location by an individual product. DOE reports national 
energy savings on an annual basis in terms of the aggregated source 
energy savings, which is the savings of energy that is used to generate 
and transmit the energy consumed at the site. To convert site energy to 
source energy, DOE derived conversion factors, which change with time, 
from AEO 2008. (See TSD chapter 11 accompanying this notice for further 
details.)
2. Significance of Savings
    EPCA, as amended, prohibits DOE from adopting a standard for a 
product if that standard would not result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B)) While the Act does not define the 
term ``significant,'' the U.S. Court of Appeals for the District of 
Columbia, in Natural Resources Defense Council v. Herrington, 768 F.2d 
1355, 1373 (D.C. Cir. 1985), indicated that Congress intended 
``significant'' energy savings in this context to be savings that were 
not ``genuinely trivial.'' The energy savings for energy conservation 
standards at each of the TSLs considered in this rulemaking are 
nontrivial, and, therefore, DOE considers them ``significant'' within 
the meaning of 42 U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria
    As noted earlier, EPCA provides seven factors to be evaluated in 
determining whether an energy conservation standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)) The following sections discuss how 
DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    To determine the quantitative impacts of a new or amended standard 
on manufacturers, the economic impact analysis is based on an annual-
cash-flow approach. This includes both a short-term assessment, based 
on the cost and capital requirements during the period between the 
announcement of a regulation and the time when the regulation becomes 
effective, and a long-term assessment. The impacts analyzed include 
INPV (which values the industry on the basis of expected future cash 
flows), cash flows by year, changes in revenue and income, and other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the impacts on different types of manufacturers, with particular 
attention to impacts on small manufacturers. Third, DOE considers the 
impact of standards on domestic manufacturer employment, manufacturing 
capacity, plant closures, and loss of capital investment. Finally, DOE 
takes into account cumulative impacts of different regulations (not 
limited to DOE) on manufacturers.
    For consumers, measures of economic impact include the changes in 
LCC and payback period for the product at each TSL. Under EPCA, the LCC 
is one of the seven factors to be considered in determining economic 
justification. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It is discussed in 
detail in the section below.
b. Life-Cycle Costs
    The LCC is the sum of the purchase price of equipment (including 
the installation) and the operating expense (including energy and 
maintenance expenditures), discounted over the lifetime of the 
appliance or equipment.
    In this rulemaking, DOE calculated both LCC and LCC savings for 
various efficiency levels. For cooking products, the LCC analysis 
estimated the LCC for representative equipment in housing units that 
represent the segment of the U.S. housing stock that uses these 
appliances. Through the use of a housing stock sample, DOE determined 
for each household in the sample the energy consumption and energy 
price of the cooking product. Thus, by using a representative sample of 
households, the analysis captured the wide variability in energy 
consumption and energy prices associated with cooking product use.
    For CCWs, although DOE was unable to develop a representative 
sample of the building stock that uses the appliance, it still 
established the variability and uncertainty in energy and water use by 
defining the uncertainty and variability in the use (cycles per day) of 
the equipment. The variability in energy and water pricing were 
characterized by regional differences in energy and water prices. To 
account for uncertainty and variability in other inputs, such as 
equipment lifetime and discount rate, DOE used a distribution of values 
with probabilities attached to each value.
    Therefore, for each housing unit with a cooking appliance and each 
consumer with a CCW, DOE sampled the values of these inputs from the 
probability distributions. As a result, the analysis produced a range 
of LCCs. This approach permits DOE to identify the percentage of 
consumers achieving LCC savings or attaining certain payback values due 
to an increased energy conservation standard, in addition to the 
average LCC savings or average payback for that standard. DOE presents 
the LCC savings as a distribution, with a mean value and a range, and 
for purposes of the analysis, DOE assumed that the consumer purchases 
the product in 2012.
c. Energy Savings
    While significant energy conservation is a separate statutory 
requirement for imposing an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE used 
the NIA spreadsheet results in its consideration of total projected 
savings.
d. Lessening of Utility or Performance of Products
    In establishing classes of products, DOE considered whether the 
evaluated design options would likely lessen the utility or performance 
of the products under consideration in this rulemaking. (42 U.S.C. 
6295(o)(2)(B)(i)(IV)) DOE determined that none of the considered TSLs 
would reduce the utility or performance of the products under 
consideration in the rulemaking.
     For gas cooking products, the potential elimination of 
standing pilot ignition systems and replacement with electronic 
ignition systems retains the basic consumer utility of igniting the gas 
to initiate a cooking process, while following safety requirements 
specified in American National Standards Institute (ANSI) Z21.1-2005 
and

[[Page 62047]]

Addenda 1-2007, Household Cooking Gas Appliances (ANSI Z21.1).\21\
---------------------------------------------------------------------------

    \21\ ANSI standards are available at http://www.ansi.org.
---------------------------------------------------------------------------

     For microwave ovens, all consumer utility features that 
affect standby power, such as a clock display and a cooking sensor, 
would be retained.
     For CCWs, the proposed standards maintain the consumer 
utility of washing clothes in a washer with either top or front access.
    Alliance, Whirlpool, and AHAM commented in support of multiple 
product classes for CCWs due in part to consumer utility issues, 
including capacity, reliability, and access of axis. (Alliance, No. 26 
at p. 1; Whirlpool, No. 28 at pp. 3-4; AHAM No. 32, at pp. 3-4) DOE 
believes that all of these consumer utilities will be maintained by the 
standards under consideration, as is discussed in the context of the 
CCW product class definition in section IV.A.2 of this notice.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from standards. It directs the Attorney General to 
determine the impact, if any, of any lessening of competition likely to 
result from a proposed standard and to transmit such determination to 
the Secretary, not later than 60 days after the publication of a 
proposed rule, together with an analysis of the nature and extent of 
such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE has 
transmitted a copy of today's proposed rule to the Attorney General and 
has requested that the Department of Justice (DOJ) provide its 
determination on this issue.
f. Need of the Nation To Conserve Energy
    The non-monetary benefits of the proposed standard are likely to be 
reflected in improvements to the security and reliability of the 
Nation's energy system-namely, reductions in the overall demand for 
energy will result in reduced costs for maintaining reliability of the 
Nation's electricity system. DOE conducts a utility impact analysis to 
estimate how standards may impact the Nation's needed power generation 
capacity. This analysis captures the effects of efficiency improvements 
on electricity consumption by the appliance products which are the 
subject of this rulemaking.
    The proposed standard also is likely to result in improvements to 
the environment. In quantifying these improvements, DOE has defined a 
range of primary energy conversion factors and associated emission 
reductions based on the estimated level of power generation displaced 
by energy conservation standards. DOE reports the environmental effects 
from each TSL for this equipment in the environmental assessment in the 
TSD. (42. U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a))
2. Rebuttable Presumption
    As set forth under 42 U.S.C. 6295(o)(2)(B)(iii), there is a 
rebuttable presumption that an energy conservation standard is 
economically justified if the increased installed cost for a product 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard (and water 
savings in the case of a water efficiency standard). However, although 
DOE examined the rebuttable-presumption criteria, it determined 
economic justification for the proposed standard levels through a 
detailed analysis of the economic impacts of increased efficiency as 
described above, pursuant to 42 U.S.C. 6295(o)(2)(B)(i). Section 
IV.D.12 of this notice addresses the rebuttable-presumption payback 
calculation.

IV. Methodology and Discussion of Public Comments

    DOE used spreadsheet models to estimate the impacts of the TSLs 
used in weighing the benefits and burdens of amended standards for the 
products that are the subject of this rulemaking. Specifically, it used 
the engineering spreadsheet to develop the relationship between cost 
and efficiency for these products and to calculate the simple payback 
period for the purposes of addressing the rebuttable presumption that a 
standard with a payback period of less than three years is economically 
justified. The LCC spreadsheet calculates the consumer benefits and 
payback periods for amended energy conservation standards. The NIA 
spreadsheet provides shipments forecasts and then calculates NES and 
NPV impacts of potential amended energy conservation standards. DOE 
also assessed manufacturer impacts, largely through use of the 
Government Regulatory Impact Model (GRIM).
    Additionally, DOE estimated the impacts of energy conservation 
standards for the appliance products on utilities and the environment. 
DOE used a version of EIA's National Energy Modeling System (NEMS) for 
the utility and environmental analyses. The NEMS model simulates the 
energy economy of the United States and has been developed over several 
years by the EIA primarily for the purpose of preparing the Annual 
Energy Outlook. The NEMS produces forecasts for the United States that 
are available in the public domain. The version of NEMS used for 
appliance standards analysis is called NEMS-BT and is primarily based 
on the AEO 2008 with minor modifications.\22\ The NEMS-BT offers a 
sophisticated picture of the effect of standards, since it accounts for 
the interactions between the various energy supply and demand sectors 
and the economy as a whole.
---------------------------------------------------------------------------

    \22\ The EIA approves the use of the name NEMS to describe only 
an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name NEMS-BT refers to the model 
as used here. (``BT'' stands for DOE's Building Technologies 
Program.) For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb. 1998) 
(available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf).
---------------------------------------------------------------------------

A. Product Classes

    In general, when evaluating and establishing energy conservation 
standards, DOE divides covered products into classes by the type of 
energy used, capacity, or other performance-related features that 
affect consumer utility and efficiency. (42 U.S.C. 6295(q); 6316(a)) 
Different energy conservation standards may apply to different product 
classes. Id.
1. Cooking Products
    For cooking products, DOE based its product classes on energy 
source (e.g., gas or electric) and cooking method (e.g., cooktops, 
ovens, and microwave ovens). DOE identified five categories of cooking 
products: gas cooktops, electric cooktops, gas ovens, electric ovens, 
and microwave ovens. In its regulations implementing EPCA, DOE defines 
a ``conventional range'' as ``a class of kitchen ranges and ovens which 
is a household cooking appliance consisting of a conventional cooking 
top and one or more conventional ovens.'' 10 CFR 430.2. The November 
2007 ANOPR presents DOE's reasons for not treating gas and electric 
ranges as a distinct product category and for not basing its product 
classes on that category. 72 FR 64432, 64443 (Nov. 15, 2007). For 
example, DOE defined a single product class for gas cooktops as gas 
cooktops with conventional burners.
    For electric cooktops, DOE determined in the 1996 TSD that the ease 
of cleaning smooth elements provides greater utility to the consumer 
than coil elements, and that smooth elements typically consume more 
energy than coil elements. Therefore, DOE has defined two separate 
product

[[Page 62048]]

classes for open (coil) element and smooth element electric cooktops.
    For electric ovens, DOE determined that the type of oven-cleaning 
system is a utility feature that affects performance. DOE found that 
standard ovens and ovens using a catalytic continuous-cleaning process 
use roughly the same amount of energy. On the other hand, self-cleaning 
ovens use a pyrolytic process that provides enhanced consumer utility 
with different overall energy consumption, as compared to either 
standard or catalytically lined ovens, due to the amount of energy used 
during the cleaning cycle and better insulation. Thus, DOE has defined 
two product classes for electric ovens: standard ovens with or without 
a catalytic line and self-cleaning ovens.
    DOE applied the same reasoning for gas ovens as it used for 
electric ovens, defining two product classes, one for standard ovens 
with or without a catalytic line and one for self-cleaning ovens.
    DOE determined that microwave ovens constitute a single product 
class for the purposes of this rulemaking. This product class can 
encompass microwave ovens with and without browning (thermal) elements, 
but does not include microwave ovens that incorporate convection 
systems. For a discussion of why DOE is not considering microwave ovens 
with convection capability in this rulemaking, see section IV.A.1.c of 
this notice.
    In sum, in this rulemaking DOE is using the following eight product 
classes in analyzing and setting standards for cooking products:
     Gas cooktop/conventional burners;
     Electric cooktop/open (coil) elements;
     Electric cooktop/smooth elements;
     Gas oven/standard oven;
     Gas oven/self-clean oven;
     Electric oven/standard oven;
     Electric oven/self-clean oven; and
     Microwave oven.
    For more information on the specification of product classes for 
cooking products, see chapter 3 of the TSD accompanying this notice.
a. Standing Pilot Ignition Systems
    DOE proposed in the November 2007 ANOPR that standing pilot 
ignition systems do not provide unique utility that would warrant a 
separate product class for gas cooking products incorporating them, and 
requested comment on such a determination for product classes. 72 FR 
66432, 64463 and 64513 (Nov. 15, 2007). The American Gas Association 
(AGA) and GE commented that standing pilot ignition systems do provide 
unique utility for several reasons, including: (1) The ability to 
operate the range during electrical power outages, (2) providing safe 
ignition where electrical supply is unavailable (such as lodges and 
hunting cabins) or not located reasonably close to the range, and (3) 
providing safe ignition where religious and cultural practices prohibit 
the use of electronic ignition. (AGA, Public Meeting Transcript, No. 
23.7 at p. 21; AGA, No. 27 at p. 2; GE, No. 30 at p. 2) AGA commented 
that religious and cultural prohibitions on the use of electricity in 
the United States were the reason for the original EPCA language 
requiring electronic ignition only on gas cooking products with other 
electrical features. (AGA, No. 27 at pp. 2, 14) AGA further stated that 
this consideration was the reason for DOE's exception allowing standing 
pilot lights on gravity gas-fired boilers in the EISA 2007. (AGA, No. 
27 at p. 2) On the other hand, the Joint Comment stated that non-
standing pilot ignition (i.e., electronic ignition) should be a design 
option and that an exemption for standing pilot ignition ranges is 
inappropriate. (Joint Comment, No. 29 at p. 6)
    In considering standing pilot ignition systems as either a separate 
product class or a design option, DOE notes that the purpose of such 
systems is to ignite the gas when burner operation is called for during 
a cooking process, and either standing pilot or electronic ignition 
provides this function. In addition, DOE has concluded from previous 
analysis that the average consumer does not experience frequent enough 
or long enough power outages to consider the ability to operate in the 
event of an electric power outage a significant utility.
    DOE also addressed a similar issue in the residential furnace and 
boiler rulemaking, where DOE made an exception to allow standing pilot 
ignition for gravity gas-fed boilers. Gravity gas-fed boilers, however, 
are a type of heating equipment that represent a unique utility in that 
they do not require an electric circulation motor to operate, a utility 
which happens to accommodate religious and cultural practices which 
prohibit electronic ignition as well. Thus, the exception is based on 
continuing to allow products with certain performance characteristics 
to be available to all consumers. But DOE is unable to create a similar 
exception for gas cooking products because there is no unique utility 
associated with standing pilot ignition.
    Through market research, DOE determined that battery-powered 
electronic ignition systems have been implemented in other products, 
such as instantaneous gas water heaters, barbeques, furnaces, and other 
appliances, and the use of such ignition systems appears acceptable 
under ANSI Z21.1. Therefore, subgroups with religious and cultural 
practices which prohibit the use of line electricity (i.e., electricity 
from the utility grid) can still use gas cooking products without 
standing pilots, assuming gas cooking products are made available with 
battery-powered ignition. Furthermore, there is not expected to be any 
appreciable difference in cooking performance between gas cooking 
products with or without a standing pilot. Thus, DOE concludes that 
standing pilot ignition systems do not provide a distinct utility and 
that a separate class for standing pilot ignition systems is not 
warranted under section 325(q)(1) of EPCA. (42 U.S.C. 6295(q)(1))
b. Commercial-Style Cooking Products and Induction Technology
    DOE stated in the November 2007 ANOPR that it lacks efficiency data 
to determine whether certain designs (e.g., commercial-style cooking 
products) and certain technologies (e.g., induction cooktops) should be 
excluded from the rulemaking. 72 FR 64432, 64444 and 64460 (Nov. 15, 
2007). AHAM, Whirlpool, and Sub-Zero Wolf Incorporated (Wolf) supported 
DOE's approach to exclude commercial-style cooking products, given the 
relatively small gains in energy savings for cooking products as a 
whole, the small relative size of the commercial-style products market, 
and required changes to the test procedure. (AHAM, No. 32 at p. 3, 9; 
Whirlpool, No. 28 at p. 6; Wolf, No. 24 at p. 2) AHAM and Wolf also 
stated that induction technology should not be considered for a variety 
of reasons, including (1) the lack of an applicable test procedure, (2) 
the relatively small gains in energy savings for cooking products as a 
whole, (3) the small relative size of the induction cooking market, and 
(4) the special cookware requirements. (Wolf, No. 24 at p. 2; AHAM, No. 
32 at p. 3) DOE did not receive any comments opposing this proposal.
    Therefore, absent any comment opposing the proposal and in light of 
the comments in support of the proposal, DOE is not considering 
commercial-style cooking products and induction technology in this 
rulemaking as proposed in the November 2007 ANOPR.
c. Microwave Ovens
    In the November 2007 ANOPR, DOE considered a single product class 
for

[[Page 62049]]

microwave ovens. The Joint Comment agreed that microwave ovens should 
be represented in a single product class without consideration of 
cavity size or output power rating, due to the lack of correlation 
between microwave oven size and efficiency demonstrated by both the 
AHAM and DOE studies. (Joint Comment, No. 29 at p. 9) AHAM opposed a 
single microwave oven product class, stating that the product class 
should be broken up into subcategories according to features that may 
be different than when the standard was first put into effect many 
years ago. (AHAM, Public Meeting Transcript, No. 23.7 at pp. 32-33)
    Based on the data already supplied to DOE by AHAM, and by DOE's own 
testing, no features or utilities were observed to be uniquely 
correlated with efficiency such that they would warrant defining 
multiple product classes for microwave ovens, according to the criteria 
put forth by EPCA. (42 U.S.C. 6295(q)) Thus, for the purposes of this 
rulemaking, DOE has retained a single product class for microwave 
ovens.
2. Commercial Clothes Washers
    In the November 2007 ANOPR, DOE stated that it planned to consider 
a single product class for CCWs in accordance with the prescriptive 
standards for such equipment set in EPACT 2005. 72 FR 64432, 64465 
(Nov. 15, 2007). Through EPACT 2005, Congress imposed a minimum energy 
efficiency threshold for all CCWs to meet.\23\ EPACT 2005 placed all 
CCWs into a single product class with a single energy efficiency and 
water efficiency standard for all covered equipment. Id. Accordingly, 
these standards encompass CCWs with wash baskets that rotate around 
either a vertical or horizontal axis.\24\
---------------------------------------------------------------------------

    \23\ 42 U.S.C. 6313(e); codified at 10 CFR 431.156.
    \24\ Typically, vertical-axis clothes washers are accessed from 
the top (also known as ``top-loaders''), while horizontal-axis 
clothes washers are accessed from the front (also known as ``front-
loaders''). However, a limited number of residential horizontal-axis 
clothes washers which are accessible from the top (using a hatch in 
the wash basket) are currently available, although DOE is unaware of 
any such CCWs on the market. For the purposes of this analysis, the 
terms ``vertical-axis'' and ``top-loading'' will be used 
interchangeably, as will the terms ``horizontal-axis'' and ``front-
loading.'' Additionally, clothes washers that have a wash basket 
whose axis of rotation is tilted from horizontal are considered to 
be horizontal-axis machines.
---------------------------------------------------------------------------

    At the same time, DOE noted in the ANOPR that it has the authority 
to establish additional product classes within the CCW product category 
if warranted, and requested data and information on the product class 
definitions in the November 2007 ANOPR. 72 FR 64432, 64513 (Nov. 15, 
2007). AHAM, Alliance, and Whirlpool supported two CCW product classes, 
suggesting that DOE should set a separate standard for top-loaders and 
front-loaders. (AHAM, Public Meeting Transcript, No. 23.7 at pp. 35-36 
and pp. 81-82; Alliance, Public Meeting Transcript, No. 23.7 at pp. 36-
37; and Whirlpool, No. 28 at pp. 3-4)
    In considering whether separate classes are warranted, DOE must 
consider the utility and performance characteristics to determine 
whether the relevant requirements have been met. (42 U.S.C. 6295(q); 
6313(a)) Among the criteria DOE considered when examining potential 
separate product classes for clothes washers was the wash basket axis 
of rotation, which DOE also used for RCWs. (See 10 CFR 430.32(g))
    Alliance stated that front-loading and top-loading CCWs show no 
overlap in operating efficiency, in terms of MEF and WF, and that they 
have unique characteristics. For example, such characteristics include 
the ability of top-loaders to allow a consumer to lift the lid mid-
cycle to add an item, whereas front-loaders must drain the water in the 
drum before the door can be opened. (Alliance, Public Meeting 
Transcript, No. 23.7 at pp. 36-37)
    DOE notes that a review of the current California Energy Commission 
(CEC), Consortium for Energy Efficiency (CEE), and ENERGY STAR clothes 
washer product databases shows some overlap in energy efficiency for 
top-loading and front-loading CCWs. However, this overlap is not nearly 
as broad as in the RCW market. DOE agrees that the efficiency levels 
that can be achieved by front-loading CCWs are generally higher than 
the levels that can be achieved by top-loading CCWs.
    Regarding product utility, Whirlpool cited the November 2007 
ANOPR's statement that ``[T]he residential clothes washer rulemaking 
history clearly demonstrated that size, axis of access, and certain 
technologies had consumer utility that affect performance and, 
therefore, warranted separate product classes for residential 
products.'' Whirlpool's point was that RCWs and CCWs are analogous 
products that should be treated in a consistent fashion. (Whirlpool, 
No. 28 at p. 4) ASAP, on the other hand, agreed with DOE's tentative 
approach of maintaining a single product class, noting that Congress 
and DOE have set standards over the last 20 years that have changed the 
mix of unit characteristics available on the market. ASAP argued that 
in an earlier RCW efficiency standards rulemaking, DOE had eliminated 
the warm rinse cycle, a feature many consumers liked. ASAP concluded 
that maintaining every characteristic on the market would restrict 
DOE's ability to set any efficiency standards. (ASAP, Public Meeting 
Transcript, No. 23.7 at pp. 38-40) ASAP also commented that the 
consumer utility of CCWs to wash clothes is independent of whether they 
are accessed from the top or the front. (ASAP, Public Meeting 
Transcript, No. 23.7 at pp. 83-84)
    Although DOE considered issuing a single CCW product class in the 
ANOPR that would encompass both top-loading and front-loading CCWs, 
further consideration of the relevant statutory provisions and the 
public comments on the November 2007 ANOPR have led DOE to conclude 
that EPCA does not permit adoption of a standard that would eliminate 
top-loading CCWs. Accordingly, for the reasons explained below, DOE has 
decided to establish two classes of CCWs based upon axis of access 
(i.e., top-loading or front-loading).
    When directing the Secretary to consider amendments to the energy 
efficiency standards for CCWs, Congress did not mandate use of a single 
class or alter other relevant provisions of the statute related to 
setting classes. First, under 42 U.S.C. 6311(21), the definition of 
``commercial clothes washer'' specifically includes both horizontal-
axis clothes washers (front-loading machines) and vertical-axis clothes 
washers (top-loading machines). Further, the prescriptive standards for 
CCWs (1.26 MEF/9.5 WF), as set forth in 42 U.S.C. 6313(e), are 
achievable by both top-loading and front-loading machines. Neither 
provision indicates an intention to eliminate either type of CCW 
currently available.
    Next, 42 U.S.C. 6295(o)(4) \25\ provides, ``The Secretary may not 
prescribe an amended or new standard * * * that is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States at the time of 
the Secretary's finding.'' This statutory provision demonstrates 
congressional intent to forego potential energy savings under certain 
enumerated circumstances. DOE has determined that this provision 
applies to the present CCW rulemaking.
---------------------------------------------------------------------------

    \25\ This provision is also applicable to CCWs, pursuant to 42 
U.S.C. 6316(a).
---------------------------------------------------------------------------

    In previous rulemakings, DOE has concluded that the method of 
``loading'' clothes in washers (axis of access) is a

[[Page 62050]]

``feature'' within the meaning of 42 U.S.C. 6295(o)(4) and, 
consequently, established separate product classes for top-loading and 
front-loading RCWs. (56 FR 22263 (May 14, 1991)) DOE reiterated this 
position in denying the California Energy Commission's (CEC) petition 
for waiver from Federal preemption of its RCW regulation.\26\ (71 FR 
78157 (Dec. 28, 2006)) DOE denied the CEC petition for three separate 
and independent reasons, one of which was that ``interested parties 
demonstrated by a preponderance of evidence that the State of 
California regulation would likely result in the unavailability of a 
class of residential clothes washers in California. * * * [T]he rule 
would violate EPCA in another way, i.e., it would mandate the 6.0 WF 
standard in 2010, which would likely result in the unavailability of 
top-loader residential clothes washers.'' Id. at 78157-58. Given the 
similarities in technologies and design and operating characteristics 
between RCWs and CCWs, in DOE's judgment, the axis of access must be 
accorded similar treatment in the context of the current CCW 
rulemaking.
---------------------------------------------------------------------------

    \26\ DOE's denial of the CEC petition is currently in litigation 
(California Energy Comm'n v. DOE, No. 07-71576 (9th Cir. filed April 
23, 2007)).
---------------------------------------------------------------------------

    If DOE were to propose an amended standard for CCWs under the 
statutory criteria set forth in EPCA based upon a single product class, 
the result would be a standard that would effectively eliminate top-
loading CCWs from the market, because it would set an MEF for all CCWs 
at a level significantly higher than the max-tech for top-loading 
machines. Because such a standard would violate the statute (42 U.S.C. 
6295(o)(4); 6313(a)), DOE has decided to propose separate product 
classes and accompanying standards for top-loading and front-loading 
CCWs in today's NOPR.

B. Technology Assessment

    In the market and technology assessment DOE conducted for the 
November 2007 ANOPR, DOE identified technology options available to 
improve the energy efficiency of each type of covered product. (See the 
TSD accompanying this notice, chapter 3.) A discussion of these options 
as they relate to the product categories at issue in this rulemaking 
follows.
1. Cooking Products
    At the December 2007 public meeting, DOE summarized its initial 
observations of technologies associated with standby power in microwave 
ovens and invited comment. DOE investigated technology options that 
appeared to be feasible means of decreasing standby power. Based on 
observations from tests, DOE suggested that microwave oven standby 
power largely depends on the display technology used, the associated 
power supplies and controllers, and the presence or lack of a cooking 
sensor that requires standby power.\27\ AHAM stated that functions such 
as sensors, clocks, and perhaps others consume standby power but also 
provide consumer utility. If a standby power standard is developed, 
AHAM believes it is critical to look at these functions and identify 
them properly in order to change the test procedure appropriately. AHAM 
stated it would work with DOE to identify the changes and some of the 
consumer utilities. (AHAM, Public Meeting Transcript, No. 23.7 at pp. 
70-71)
---------------------------------------------------------------------------

    \27\ Cooking sensors, which infer the cooking state of the food 
load, can reduce cook times and potentially produce real-world 
energy savings, although this benefit is not currently captured by 
the DOE test procedure and DOE is unaware of any data quantifying 
such an effect.
---------------------------------------------------------------------------

    According to Whirlpool, microwave ovens use standby power primarily 
for a clock and the instant-on capability. Whirlpool noted that 
consumers who purchase over-the-range microwave ovens with features 
such as sensing and auto-cook cycles expect a display that allows 
execution of these capabilities, matches their other premium appliances 
such as their ranges, and differentiates itself from the simple display 
on a basic-functionality countertop microwave oven. (Whirlpool, No. 28 
at pp. 1-2; Whirlpool, Public Meeting Transcript, No. 23.7 at p. 73)
    The Edison Electric Institute (EEI) commented that it does not 
consider cooking sensors in microwave ovens to be a part of 
``standby,'' since the sensors perform useful and helpful functions to 
consumers. EEI stated that DOE should test microwave ovens to see if 
cooking sensors reduce overall cooking times because reduced cooking 
times will likely create greater energy savings than the standby energy 
consumption of the sensor. (EEI, No. 25 at pp. 2-3)
    DOE will analyze any data and information provided by stakeholders 
to evaluate the utility provided by specific features that contribute 
to microwave oven standby power. In addition, DOE has conducted 
additional research on several microwave oven technologies that 
significantly affect standby power, including cooking sensors, display 
technologies, and control strategies and associated control boards.
a. Cooking Sensors
    Product teardowns performed by DOE during the November 2007 ANOPR 
analyses revealed that the most common identifiable cooking sensors are 
absolute humidity sensors. This sensor technology currently requires 
standby power in the range of 1 to 2 W to keep the sensing element 
heated, and also requires warm-up times in excess of two minutes if the 
sensor power is switched off. Japanese microwave oven manufacturers 
stated that they are unaware of any absolute humidity sensors that did 
not require standby power to stay warm. Standby testing by DOE and AHAM 
revealed no microwave ovens with cooking sensors that consume less than 
2 W in standby mode.
    EEI questioned whether cooking sensors that lack multi-minute warm-
up times exist, since microwave oven cooking times typically do not 
exceed two minutes. (EEI, Public Meeting Transcript, No. 23.7 at p. 
234) The Joint Comment stated that, in the unlikely event that there is 
not a straightforward technical solution (e.g., a faster-stabilizing 
gas-sensing medium) to existing sensor technology, DOE should look into 
alternative sensing approaches to cooking status. The Joint Comment 
stated that if DOE fails to find standard-type cook sensors with 
shorter stabilization times or alternative sensing and control 
strategies, at a minimum, DOE should evaluate other options including 
(1) an auto power-down mode for cooking sensing devices that is 
consumer programmable, and (2) requirements that microwave ovens be 
shipped with the cooking sensor disabled. (Joint Comment, No. 29 at p. 
8)
    Whirlpool commented that a potential standby power standard could 
eliminate cooking sensors in microwave ovens as current cooking sensors 
typically require two minutes to warm up before use. According to 
Whirlpool, imposing a two-minute waiting period before each microwave 
oven use would negate much of its consumer utility. (Whirlpool, No. 28 
at pp. 1-3)
    During teardown analyses, DOE observed that microwave ovens from 
one manufacturer use a piezoelectric steam sensor, which requires zero 
power in standby mode. In addition, DOE has identified infrared and 
weight sensors with little to no warm-up time that do not consume 
standby power and that have been applied successfully in microwave 
ovens currently available in the Japanese market. DOE has also 
identified relative humidity sensors as a type of zero-standby sensor 
that can be used in a microwave oven, but is unaware of any microwave 
ovens on the market that use this type of sensor. Lastly, DOE was made 
aware of an

[[Page 62051]]

absolute humidity sensor that requires no standby power, has zero 
incremental cost above that of a conventional absolute humidity sensor, 
and is in the process of being phased into production for a major 
microwave oven supplier to the U.S. market. Based on its research and 
manufacturer interviews, DOE believes that the number of different 
sensor technologies available on the market that do not require standby 
power suggests that the utility of a cooking sensor can be maintained 
with zero standby power. Further, DOE believes all manufacturers could 
transition to no-standby-power cooking sensors at a zero incremental 
cost for the sensor change by the effective date of a proposed standby 
power standard.
b. Display Technologies
    During reverse-engineering activities conducted as part of the 
November 2007 ANOPR analysis, DOE observed three different display 
types used in microwave ovens: Light-emitting diode (LED) displays, 
liquid crystal displays (LCD) with and without backlighting, and vacuum 
fluorescent displays (VFD). (See chapter 3 of the TSD accompanying this 
notice for further discussion of these technologies.) Within the 32-
unit sample that DOE examined, microwave ovens equipped with VFDs 
consumed the most power, on average, followed by units featuring 
backlit LCDs, LEDs, and non-backlit LCDs. DOE sought comment regarding 
the consumer utility of different display technologies.
    The Joint Comment stated that, unless a unique consumer utility can 
be shown for VFDs, the standard level analyzed should be based on LCD 
backlit or LED displays. According to the Joint Comment, LED and 
organic LED (OLED) products have dramatically increasing efficiency 
performance, and more color palettes are becoming available. In their 
opinion, a 1.0 to 1.5 W combined allowance for clock face display and 
illumination with power supply losses appears more than ample in view 
of rapidly improving power supply and lighting technologies. (Joint 
Comment, No. 29 at pp. 8-9)
    Interviews DOE conducted with display manufacturers revealed that 
VFDs can achieve higher brightness levels, wider viewing angles, and 
higher contrast than backlit LCDs. Display manufacturers also stated 
that LEDs have largely comparable performance to VFDs in terms of 
brightness and viewing angle. A VFD manufacturer mentioned that, while 
VFD technologies with efficiencies comparable to backlit LCDs do exist, 
such displays are substantially more expensive than the VFDs commonly 
found in microwave ovens today.
    Multiple manufacturers of cooking products interviewed as part of 
the MIA process mentioned the need to differentiate their cooking 
appliance lines from those of their competitors with (among other 
things) coordinated displays and user interfaces. Manufacturers noted 
that LCD displays (backlit or not) do not work well in appliances that 
get very hot, such as ovens, due to thermal limitations. Manufacturers 
also opposed switching entirely to LED-based displays since it could 
make it harder for them to differentiate their products, particularly 
in a market as commoditized as microwave ovens. Lastly, manufacturers 
noted that larger, more complex, and more colorful displays are usually 
associated with premium appliances, which will have a harder time 
achieving the same standby power consumption as units with smaller, 
dimmer, and simpler displays.
    The current rulemaking does not seek to regulate the standby power 
consumption of conventional cooking appliances, and microwave ovens do 
not feature high surface temperatures and can incorporate one of many 
display options, as noted in the DOE sample. In addition, not all high-
end appliance manufacturers use the same display technology across all 
cooking appliances that they manufacture. For example, at least one 
manufacturer uses a backlit LCD in its microwave oven, with the 
backlighting LEDs color-coordinated with the VFDs found in its ovens. 
DOE believes that the consumer utility of a microwave oven display is 
its brightness, viewing angle, and ability to display complex 
characters, and that this utility can be achieved by several display 
technologies. Therefore, in determining standby power levels, DOE will 
consider each of these display technologies and their respective power 
requirements.
c. Power Supply and Control Board Options
    Another potential area for standby power improvements is the power 
supplies on the control board. Multiple improvement paths with varying 
risk to manufacturers are available, including the selective upgrading 
of power supply components to boost efficiency, the reduction of peak 
power demand through the use of lower-power components, and the 
transition to switching power supplies.
    Power supply topology experts that DOE consulted noted that the 
quality of the transformer core material, types of diodes, capacitor 
quality, and voltage regulator selection could reduce no-load standby 
power for the power supply by half and boost conversion efficiency from 
55 to 70 percent. Switching power supplies offer the highest conversion 
efficiencies (up to 75 percent) and lowest no-load standby losses (0.2 
W or less) though at a higher cost, higher part count, and greater 
complexity. However, switching power supplies are as yet unproven in 
long-term microwave oven applications, and the greater complexity of 
these power supplies may also lower overall reliability. For more 
detail, see chapter 3 of the TSD accompanying this notice.
    There already are some premium microwave ovens on the U.S. market 
that incorporate switching power supplies. However, due to the 
incremental cost of such a power supply over a conventional power 
supply and the price competition in the microwave oven market, it is 
unlikely that switching power supplies will find wider application 
unless low standby power budgets force manufacturers to consider them.
d. Power-Down Options
    Manufacturers could also meet very low (less than 1 W) standby 
power levels according to the EISA 2007 and IEC 62301 definitions of 
``standby mode'' by incorporating an automatic function that turns off 
most power-consuming components once a period of inactivity has 
elapsed. Such a low-consumption state could be user-selectable on 
demand, or could be the default condition in which the microwave oven 
is shipped such that the consumer would be required to opt into 
maintaining the display, cooking sensor, or other utility feature 
during standby. DOE has determined that some microwave oven suppliers 
to the U.S. market have already taken such approaches to meet 
prescriptive standby power standards in other markets such as Japan. 
Therefore, DOE analyzed how the consumer utility of a microwave oven is 
influenced by this design option. A large number of microwave ovens in 
the Japanese market implement this feature, according to DOE 
discussions with the Japanese Electrical Manufacturers' Association.
    As outlined in the cooking sensor discussion (see section IV.B.1 of 
this notice), the Joint Comment stated that if DOE fails to find 
suitable cooking or other sensors, at a minimum, DOE should evaluate 
(1) an auto power-down mode for cooking sensing devices that is 
consumer programmable and (2) requirements that microwave ovens be 
shipped with the cooking sensor

[[Page 62052]]

disabled. (Joint Comment, No. 29 at p. 8)
    DOE determined that control strategies are available that allow 
manufacturers to make design tradeoffs between incorporating standby-
power-consuming features such as displays or cooking sensors and 
including a function to turn power off to these components during 
standby.
2. Commercial Clothes Washers
    DOE did not receive any comments on the technology assessment for 
CCWs other than those discussed previously in section III.C.1. 
Therefore, DOE retained all of the CCW design options listed in the 
November 2007 ANOPR for the engineering analysis. (For further 
information, see chapter 3 of the TSD accompanying this notice.)

C. Engineering Analysis

    The purpose of the engineering analysis is to characterize the 
relationship between the efficiency (or annual energy use) and cost of 
the products that are the subject of this rulemaking. DOE used this 
efficiency/cost relationship as input to the payback period, LCC, and 
national impact analyses. To generate manufacturing costs, DOE has 
identified three basic methodologies: (1) The design-option approach, 
which provides the incremental costs of adding to a baseline model's 
design options that will improve its efficiency; (2) the efficiency-
level approach, which provides the incremental costs of moving to 
higher energy efficiency levels, without regard to the particular 
design option(s) used to achieve such increases; and (3) the cost-
assessment (or reverse-engineering) approach, which provides ``bottom-
up'' manufacturing cost assessments for achieving various levels of 
increased efficiency, based on detailed data on costs for parts and 
material, labor, shipping/packaging, and investment for models that 
operate at particular efficiency levels.
    DOE conducted the engineering analysis for this rulemaking using 
different methods for each of the covered products. For cooking 
products, DOE selected the design-option approach, because efficiency 
ratings of products on the market are not reported; therefore, the 
engineering analysis for cooking products was based upon an update to 
the analysis contained in the 1996 TSD. For CCWs, published efficiency 
data allowed the use of an efficiency-level approach. DOE supplemented 
both approaches with data gained through reverse-engineering analysis 
and primary and secondary research, as appropriate. Details of the 
engineering analysis are in the TSD accompanying this notice (see 
chapter 5).
1. Efficiency Levels
a. Cooking Products
    For cooking products, DOE reviewed and updated the design options 
and efficiency levels published in the 1996 TSD analysis, as generally 
supported by stakeholders. DOE did not receive any comments regarding 
omitted cooking technologies and will retain all the cooking 
technologies and design options identified in the November 2007 ANOPR. 
(See chapter 3 of the TSD accompanying this notice.)
    Microwave Oven Cooking Efficiency. To identify microwave oven 
design options, DOE performed a reverse-engineering analysis on a 
representative sample of microwave ovens. DOE did not find any 
additional design options beyond those identified in the November 2007 
ANOPR. DOE also performed efficiency testing on the sample of microwave 
ovens, which validated data submitted by AHAM (reproduced in appendix 
5-A of the TSD accompanying this notice). Results from both AHAM and 
DOE efficiency testing showed no identifiable correlation between 
cooking efficiency and either cavity volume or rated output power. 
DOE's reverse-engineering analysis included an evaluation of microwave 
oven magnetrons, magnetron power supplies, and fan motors (identified 
as design options in the TSD). This evaluation determined that 
efficiencies for these design options have changed little since the 
1996 analysis. Therefore, DOE believes that this supplementary analysis 
validates the efficiency levels that were presented in the November 
2007 ANOPR. For more detail, see chapter 5 of the TSD accompanying this 
notice.
    Microwave Oven Standby Power. DOE is considering a maximum average 
standby power, in W, for microwave ovens. DOE's analysis estimates the 
incremental manufacturing cost for microwave ovens with standby power 
levels below the baseline standby power level of 4 W. For the purposes 
of this standby power analysis, a baseline microwave oven is considered 
to incorporate an absolute humidity cooking sensor.
    To analyze the cost-efficiency relationship for microwave oven 
standby, DOE defined standby power levels expressed as a maximum 
average standby power, in W. To analyze the impacts of standards, DOE 
defined the following four standby levels for analysis: The FEMP 
procurement efficiency recommendation; the IEA One-Watt level; a 
standby power level as a gap-fill between the FEMP Procurement 
Efficiency Recommendation and IEA One-Watt Program levels; and the 
current maximum microwave oven standby technology (i.e., lowest standby 
power) that DOE believes is or could be commercially available when the 
energy conservation standards become effective, based on a review of 
microwave ovens currently on the market worldwide. Table IV.1 provides 
the microwave oven standby levels and the reference source for each 
level that DOE has analyzed. For more details on the determination of 
standby power levels, see chapter 5 of the TSD accompanying this 
notice.

          Table IV.1--Standby Power Levels for Microwave Ovens
------------------------------------------------------------------------
                                                           Standby power
       Standby level             Standby level source           (W)
------------------------------------------------------------------------
Baseline...................  Baseline...................            4.0
1..........................  FEMP Procurement Efficiency            2.0
                              Recommendation.
2..........................  Gap Fill...................            1.5
3..........................  IEA 1-Watt Program.........            1.0
4..........................  Max-Tech...................            0.02
------------------------------------------------------------------------

    The Joint Comment stated that opportunities exist for reducing 
standby power without affecting consumer utility. The Joint Comment 
noted that, for the microwave ovens listed in the FEMP procurement 
database, 50 percent of the models with both a clock display and a 
cooking sensor have a standby demand of between 2.1 and 3.0 W,

[[Page 62053]]

implying that a baseline standby demand could be reduced to 3.0 W and 
probably less without threat of reduction of consumer utility. (Joint 
Comment, No. 29 at pp. 6-8)
b. Commercial Clothes Washers
    The efficiency levels for CCWs are defined by two factors 
normalized by wash basket volume--MEF and WF. These two variables are 
only directly related to each other via the average hot water usage by 
a clothes washer as measured by the DOE test procedure. Other measured 
parameters affect only one variable or the other. For example, cold 
water consumption only affects the WF, while remaining moisture content 
(RMC) only affects the MEF. (See chapter 5 of the TSD accompanying this 
notice for further explanation.) Based on comments and the 
determination at that time to consider a single product class for CCWs, 
DOE selected potential efficiency levels for the November 2007 ANOPR 
that were based on current Federal energy conservation standards, 
ENERGY STAR and CEE Commercial Clothes Washer Initiative criteria, and 
specifications for CCWs currently on the market. DOE sought comment on 
whether efficiency level 5 (2.0 MEF/5.5 WF, which corresponds to 
efficiency level 2 for front-loading CCWs in the current analysis) 
should be changed to allow for manufacturer cost differentiation above 
and below this level.
    Alliance stated that the only reason to adjust CCW energy and water 
consumption at the 2.0 MEF/5.5 WF level would be to allow inclusion of 
other manufacturers (since Alliance already produces units at this 
level) and to allow manufacturers to add water through additional 
rinses. The latter would address rinsing issues prevalent in front-
loading machines but would consume more energy in the motor. Alliance 
stated that it could support adjusting the 2.0 MEF/5.5 WF level to be 
less stringent and more flexible in meeting consumer demands for 
cleaning and rinsing performance, as well as to allow the inclusion of 
existing manufacturer designs that would obviate the need for incurring 
additional investment. (Alliance, No. 26 at p. 2) DOE notes that, based 
on the entries in the CEC, CEE, and ENERGY STAR databases, CCWs from 
several manufacturers can attain 2.0 MEF/5.5 WF for both institutional 
and non-institutional use. For example, two other manufacturers produce 
non-institutional front-loading CCWs that achieve energy and water 
efficiency levels of 2.13 MEF/5.03 WF and 1.99 MEF/6.8 WF, 
respectively. Alliance and one of its competitors could thus add water 
to their CCW cycle, whereas the third competitor would have to reduce 
water consumption to meet the 5.5 WF standard with its current model 
that nearly meets the 2.0 MEF efficiency level.
    Based upon the determination of two product classes for CCWs (see 
section IV.A.2), DOE subsequently revised the efficiency levels 
presented in the November 2007 ANOPR to characterize top-loading and 
front-loading CCWs separately. Accordingly, DOE considered the 
efficiency levels subsequently presented in Table IV.3, which were 
derived from current Federal energy conservation standards, ENERGY STAR 
and CEE Commercial Clothes Washer Initiative criteria and databases of 
currently available models, and entries in the CEC database. DOE seeks 
comment on these revised efficiency levels.
    DOE also sought comment on the max-tech efficiency level defined 
for the single product class in the November 2007 ANOPR. DOE noted that 
some CCWs on the market have MEFs or WFs that exceed the CCW max-tech 
efficiency level for one measure, but not both. For example, one CCW on 
the market at the time of the November 2007 ANOPR (2.45 MEF/9.5 WF) had 
a max-tech MEF performance but a baseline WF performance.\28\ DOE did 
not receive comment on which front-loading CCWs best represent max-
tech, and why. Stakeholder comments discussed in the November 2007 
ANOPR indicated that a high MEF and low WF are not necessarily 
correlated, and, thus, a max-tech level based on the highest MEF and 
lowest WF is not realistic. 72 FR 64432, 64465 (Nov. 15, 2008). As 
discussed in section III.C.2.b, DOE agreed with these comments, and 
selected top-loading and front-loading CCWs currently available on the 
market that exhibit a balance of high MEF and low WF to represent max-
tech for each product class.
---------------------------------------------------------------------------

    \28\ This information, available at http://www.energy.ca.gov/appliances/appliance/excel_based_files/Clothes_Washers/, was 
accessed on April 29, 2008.
---------------------------------------------------------------------------

    For top-loading CCWs, no max-tech level was defined in the November 
2007 ANOPR because the analysis was structured as a single product 
class, and, generally, top-loading machines cannot achieve as high an 
efficiency level as front-loading machines. Based on market surveys of 
currently available models, DOE proposes in this notice a max-tech 
level of (1.76 MEF/8.3 WF) for top-loading CCWs. For front-loading 
CCWs, DOE considered the max-tech level proposed in the November 2007 
ANOPR for the single product class, since all CCWs at such high 
efficiencies are front-loading. However, because new model 
introductions and discontinuations have occurred since the November 
2007 ANOPR, DOE has determined a new max-tech level for front-loading 
CCWs as well, which is higher in efficiency than the max-tech level 
proposed in the November 2007 ANOPR (2.2 MEF/5.1 WF). The new max-tech 
level for front-loading machines is (2.35 MEF/4.4 WF), based on a 
currently available CCW. These units were selected after an extensive 
market survey, and DOE's research suggests that their combination of 
high MEF and low WF represent the best-in-class balance between MEF and 
WF for the two product classes of CCWs. These max-tech levels were also 
the basis for all MIA incremental cost data developed in DOE's 
analysis. DOE seeks comment on the determination of the max-tech 
efficiency levels for top-loading and front-loading CCWs.
2. Manufacturing Costs
    DOE estimates a manufacturing cost for products at each efficiency 
level in this rulemaking. These manufacturing costs are the basis of 
inputs for a number of other analyses, including the LCC, national 
impact, and the GRIM analyses.
    The Joint Comment made the following three cross-cutting comments 
about manufacturing costs spanning the product families that this 
rulemaking could affect:
     Rather than rely primarily on manufacturer average cost 
data, DOE should give greatest weight in its analysis to cost data 
determined through its reverse-engineering analyses, which have a 
better track record of estimating actual costs.
     When using manufacturer data, DOE should use the minimum 
cost data submitted, rather than the average cost data. Minimum data 
are appropriate because the low-cost manufacturer will determine prices 
in a market at equilibrium. If one manufacturer has found a cheaper way 
to make a product, others will follow if they wish to compete in the 
price-sensitive portion of the marketplace.
     Once a new standard is promulgated, producers have a 
strong incentive to invest in new engineering solutions and production 
capacity that will enable them to comply at the lowest possible cost. 
(Joint Comment, No. 29 at p. 13)
    DOE agrees with the first point of the Joint Comment that reverse-
engineering provides valuable information in

[[Page 62054]]

determining manufacturing cost, and DOE notes that, in addition to 
considering the manufacturer-submitted cost data, it conducts reverse-
engineering analysis and teardowns to the extent practicable. DOE also 
considers sales census data combined with a markup data to reflect all 
the steps in the distribution chain, as well as previous TSD cost data, 
updated to reflect current manufacturing costs. DOE has used all the 
listed approaches as part of this rulemaking, although the precise 
approach varied by product.
    In response to the Joint Comment's second point, DOE does not 
believe that it has been demonstrated that the low-cost manufacturer 
will determine the prices in a market at equilibrium, nor that a low-
cost manufacturer will correspond to low-cost products on the market. 
There may be relatively complex, low-cost machines that are not 
necessarily produced by the low-cost manufacturer. There may also be 
features, including quality, that are indicative of higher-cost units 
that the marketplace demands. Therefore, DOE continues to use shipment-
weighted average cost data in its analyses because it believes that 
such costs are the most reflective of the manufacturing costs that 
industry incurs. DOE notes that many appliances with nominally similar 
functions sell at a range of price points. Such differentiation may be 
the result of features that may not be efficiency-related but may 
provide consumer utility. Through its shipments-weighted average 
costing process, DOE believes that the rulemaking will factor in 
continuing product differentiation, since it best reflects the actual 
state of the industry and the preferences by consumers. This shipment-
weighted approach is also consistent with the data submitted by 
stakeholders, allowing direct comparisons between DOE analyses such as 
the reverse engineering and the data submittals.
    In considering the Joint Comment's third point, DOE recognizes that 
it may well be true that a change in energy conservation standards is 
an opportunity for manufacturers to make investments beyond what would 
be required to meet the new standards in order to minimize the costs or 
to respond to other factors. For example, a product could be re-
engineered to take out cost (e.g., reduce the number of parts); capital 
investments could be made to remove labor costs (e.g., automate 
production); or production could be moved to lower-cost areas. However, 
these are individual company decisions, and it is impossible for DOE to 
forecast and analyze such investments. DOE does not know of any data 
that provide it with the capability of determining what precise course 
a manufacturer will take. Furthermore, while manufacturers have been 
able to take costs out of products to meet previous energy conservation 
standards, there are no data to suggest that there are any further 
costs to take out. Regarding capital investments, DOE assumes that the 
existing manufacturing processes remain the same. If capital 
investments are expected to be made, DOE requires data demonstrating 
this in order to include in the MIA and the employment impact analysis. 
Similarly, because the potential for moving production is unknown to 
DOE, data must be provided for analysis.
    Cooking Products. The Joint Comment suggested that DOE should 
collect energy and cost data for ovens for individual features such as 
low-power electronic controls, clock faces, and other standby load 
features. If industry cannot provide compelling cost data, the Joint 
Comment suggested that DOE should model it as a zero-cost design 
option. (Joint Comment, No. 29 at p. 6; ASAP, Public Meeting 
Transcript, No. 23.7 at p. 62) Regarding microwave oven costs, 
Whirlpool supported the approach of using the Producer Price Index 
(PPI) to update design options identified in the prior rulemaking, and 
stated that it is unaware of meaningful new design options to recommend 
to DOE. (Whirlpool, No. 28 at p. 5)
    DOE contacted original equipment manufacturer (OEM) suppliers and 
manufacturers to better understand the costs associated with various 
microwave oven components such as displays, power supplies, and 
magnetrons. Suppliers and manufacturers agreed that many lower-power, 
higher-efficiency components cost more to implement. For example, a 
switching power supply has more, and higher cost, components than a 
standard unregulated power supply. Similarly, increases in raw material 
prices have affected the cooking efficiency design options that DOE had 
identified in this and past analyses. Because no industry cost data 
were provided, DOE scaled the costs associated with each cooking 
efficiency design option from the 1996 TSD by the PPI. Because DOE 
proposes a microwave oven standby power standard, DOE developed 
manufacturing costs related to improved standby performance by 
estimating costs of published power supply designs and components, 
referencing subject-matter experts, and interviewing manufacturers that 
use such components.
    Commercial Clothes Washers. For CCWs, AHAM supplied industry-
aggregated manufacturing cost data for the November 2007 ANOPR analyses 
at two efficiency levels, which correspond to efficiency level 1 for 
top-loading CCWs and efficiency level 2 for front-loading CCWs. DOE 
updated these costs following the November 2007 ANOPR to include 
additional efficiency levels for each product class, based on 
manufacturer-supplied data and DOE analysis. DOE undertook a limited 
reverse-engineering approach to costing out the different efficiency 
points.\29\ In addition, DOE relied on interviews with manufacturers, 
knowledge of the clothes washer market through previous rulemakings, 
ENERGY STAR, and other activities. DOE believes that the updated cost-
efficiency curves reflect costs that clothes washer manufacturers are 
likely to experience.
---------------------------------------------------------------------------

    \29\ Late introductions of high-efficiency models did not allow 
for extensive reverse engineering due to the rulemaking schedule.
---------------------------------------------------------------------------

    The following discussion addresses specific issues raised in 
response to the November 2007 ANOPR.
a. Cooking Products
    Electronic Ignition Systems. In the November 2007 ANOPR, DOE 
identified electronic ignition systems as a design option that can be 
used instead of standing pilot lights to light gas-fired cooking 
appliances. DOE estimated incremental manufacturing costs of electronic 
ignition systems by scaling the manufacturing costs that were provided 
in the 1996 TSD by the PPI.
    DOE did not receive any comments that electronic ignition systems 
were an inappropriate design option to consider for this rulemaking. 
However, AGA commented that DOE underestimated the incremental 
manufacturing cost of electronic ignition for gas cooking products. 
According to AGA, the Harper-Wyman Co. provided an incremental retail 
price of $150 for a gas range with electronic ignition relative to a 
range with standing pilot ignition system in 1998 comments to DOE. This 
retail price increment stands in sharp contrast to the $37 incremental 
manufacturing cost estimated by DOE. (AGA, No. 27 at p. 13)
    In response to AGA's comments, DOE contacted component suppliers of 
gas cooking product ignition systems to validate DOE's manufacturing 
cost estimates in the November 2007 ANOPR. DOE believes that the 
information collected verifies that the costs in the November 2007 
ANOPR represent current costs and, therefore, will continue to 
characterize the incremental manufacturing costs for the non-standing 
pilot ignition systems with

[[Page 62055]]

the estimates developed for the November 2007 ANOPR.
    Microwave Oven Standby Power. For microwave ovens, DOE estimates a 
cost-efficiency relationship (or ``curve'') for microwave oven standby 
power in the form of the incremental manufacturing costs associated 
with incremental reductions in baseline standby power. As part of the 
November 2007 ANOPR analysis, DOE tested and tore down 32 microwave 
ovens and determined that microwave oven standby power depends on, 
among other factors, the display technology used, the associated power 
supplies and controllers, and the presence or lack of a cooking sensor. 
The results and discussion of standby testing along with standby power 
data submitted by AHAM can be found in chapter 5 of the TSD 
accompanying this notice. From this testing and reverse-engineering, 
DOE observed correlations between specific components and technologies, 
or combinations thereof, and measured standby power.
    DOE estimated costs for each of component and technology by using 
quotes obtained from suppliers, interviews with manufacturers, 
interviews with subject matter experts, research and literature review, 
and numerical modeling. DOE obtained preliminary incremental 
manufacturing costs associated with the standby levels by considering 
combinations of these components as well as other technology options 
identified to reduce standby power. DOE also conducted manufacturer 
interviews to obtain greater insight into the design strategies to 
improve efficiency and the associated costs.
    Table IV.2 shows microwave oven standby power preliminary cost-
efficiency results. Based upon DOE's research, interviews with subject 
matter experts, and discussions with manufacturers, DOE believes that 
all consumer utility (i.e., display, cooking sensor, etc.) can be 
maintained by standby levels down to standby level 3 (1.0 W). At the 
max-tech level, DOE would expect the implementation of an auto power-
down feature that would, among other things, shut off the display after 
a period of inactivity, potentially impacting consumer utility. For the 
detailed cost-efficiency analysis, including descriptions of design 
options and design changes to meet standby levels, see chapter 5 of the 
TSD accompanying this notice.

 Table IV.2--Incremental Manufacturing Costs for Microwave Oven Standby
                                  Power
------------------------------------------------------------------------
                                                            Incremental
                      Standby level                            cost
------------------------------------------------------------------------
 Baseline...............................................              NA
 1......................................................          $ 0.30
 2......................................................          $ 0.67
 3......................................................          $ 1.47
 4......................................................          $ 5.13
------------------------------------------------------------------------

    DOE observed several different cooking sensor technologies in its 
sample of 32 microwave ovens. Follow-on testing after the December 2007 
public meeting showed that some of these sensors are zero-standby 
(relative humidity) cooking sensors. One manufacturer also indicated 
during its MIA interview that its supplier of cooking sensors had 
developed zero-standby absolute humidity cooking sensors and that these 
sensors would have the same manufacturing cost as the higher-standby 
power devices they would replace. Based on the number of zero-standby 
cooking sensor approaches from which manufacturers can choose, DOE 
believes that all manufacturers can and likely will implement zero-
standby cooking sensors by the effective date of a standby power 
standard, and maintain the consumer utility of a cooking sensor without 
affecting unit cost.
    DOE believes that a standard at standby levels 1 or 2 would not 
affect consumer utility, because all display types could continue to be 
used. For these two levels, better power supplies should allow the 
continued use of any display that DOE found in its sample of 32 units. 
At standby level 3 for VFDs and standby level 4 for all display 
technologies, DOE analysis suggests the need for a separate controller 
(auto power-down) that automatically turns off all other power-
consuming components during standby mode. Such a feature would impact 
the consumer utility of having a clock display only if the consumer 
could not opt out of auto power-down. For the detailed cost-efficiency 
analysis, including descriptions of design options and design changes 
to meet standby levels, see chapter 5 of the TSD accompanying this 
notice.
b. Commercial Clothes Washers
    The CCW industry currently has only three major manufacturers 
(i.e., with more than one percent market share), and a limited number 
of CCWs models are available for purchase. As a result, only a few 
models are available for purchase at a given efficiency point, thereby 
restricting the amount of data that AHAM could submit.\30\ Accordingly, 
AHAM submitted two manufacturing cost estimates: (1) $74.63 at (1.42 
MEF/9.5 WF), and (2) $316.35 at (2.00 MEF/5.5 WF.) These are 
incremental costs over a baseline top-loading CCW. Without additional 
data, and based on preliminary manufacturer inputs, DOE, in the 
November 2007 ANOPR, adopted a cost-efficiency curve where all 
efficiency levels at or above (1.60 MEF/8.5 WF) incorporated the same 
manufacturing cost published for (2.00 MEF/5.5 WF.) DOE sought 
stakeholders' comment on how to refine the cost curve to better reflect 
shipment-weighted manufacturing costs by efficiency level. 72 FR 64432, 
64513 (Nov. 15, 2007).
---------------------------------------------------------------------------

    \30\ In order to avoid anti-competitive effects, AHAM is limited 
to publishing aggregated data by efficiency levels for which at 
least three AHAM members have submitted cost-efficiency data. AHAM 
weights the submission by unit shipments for each manufacturer to 
reflect current market conditions and to maintain confidentiality.
---------------------------------------------------------------------------

    In comments on the ANOPR, Whirlpool, Alliance, and AHAM stated that 
it was not reasonable to assume that all CCWs achieving (1.60MEF/8.5 
WF) through (2.20 MEF/5.1 WF) would have the same costs. (Whirlpool, 
No. 28 at pp. 4-5, Alliance, No. 26 at p. 2 and AHAM, No. 32 at p. 10) 
For example, Whirlpool stated that step functions generally exist in 
product cost as efficiency increases, and that the cost differences 
between these steps are significant, whereas the cost differences 
within the steps are less significant. (Whirlpool, No. 28 at pp. 4-5) 
In other words, certain efficiency levels can only be reached using 
certain technology options. In the case of CCWs, there is a point 
beyond which standard top-loading CCWs with agitators can no longer be 
used and a switch has to be made to higher-efficiency platforms. 
Whereas the run up to the switch may be gradual in terms of design 
changes, a switch to a higher-efficiency platform such as a front-
loading CCW usually entails a significant jump in product cost, which 
appears as a step function. Whirlpool noted that DOE has identified the 
steps for CCWs as traditional top-load and front-load units. According 
to Whirlpool, DOE's analysis does not include the possibility of a 
high-efficiency top-load CCW. Further, Whirlpool stated that, although 
such a machine is not in the market today, the company's experience in 
building residential high-efficiency top-load clothes washers could be 
translated into the development of a high-efficiency top-load CCW. Such 
a machine could likely perform at CCW efficiency levels (1.72 MEF/8.0 
WF), (1.80 MEF/7.5 WF),

[[Page 62056]]

and (2.00 MEF/5.5 WF). (Whirlpool, No. 28 at pp. 4-5)
    Although AHAM is unable to provide cost information at levels other 
than (1.42 MEF/9.5 WF) and (2.0 MEF/5.5 WF) while maintaining the 
confidentiality of its members, it recommended that DOE either approach 
CCW manufacturers directly or evaluate the cost differentials between 
residential front-loading units and verify with manufacturers that 
application of these costs and design options are realistic for CCWs. 
(AHAM, No. 32 at p. 10) In response, DOE contacted all CCW 
manufacturers and constructed its own estimate of the manufacturer cost 
curve by efficiency level.
    Alliance produces both top-loading and front-loading CCWs. Alliance 
stated that a low-cost alternative to front-loading CCWs for efficiency 
levels above 1.42 MEF would use existing, non-traditional technologies 
that are proprietary and have been shown not to be accepted in the 
residential market, and thus would never be accepted in the commercial 
market. According to Alliance, the reason for a constant incremental 
CCW manufacturing cost at MEF = 1.6 and above is that Alliance cannot 
afford to invest in any new technology in that range, because they 
already have a washer at the higher (2.00 MEF/5.5 WF) efficiency level. 
(Alliance, No. 26 at p. 2) DOE noted the new listing of a traditional 
top-loading CCW in December 2007 that achieves (1.76 MEF/8.3 WF), well 
beyond the limits that Alliance stated could be achieved. However, 
market acceptance of the new unit is unknown and similar washers 
incorporating spray rinse technology have been previously withdrawn 
from the CCW market due to consumer acceptance issues.
    DOE is sensitive to the unique position of the low volume 
manufacturer (LVM) in the marketplace, as its low manufacturing scale 
makes product development and capital expenditure investments that much 
harder to justify. Unlike its diversified competitors, the LVM services 
the comparatively small (i.e. 45x smaller) CCW market almost 
exclusively. Whereas its competitors can develop new technologies for 
use in the CCW market as well as the much larger RCW market, the LVM 
has to depreciate its investments over a much smaller production range. 
As a result of its concentration on commercial laundry and its low 
manufacturing scale, the LVM will be disproportionately affected by any 
CCW rulemaking compared to its competitors who derive less than two 
percent of their clothes washer revenues from CCW sales. DOE research 
to date suggests that a wholesale conversion of the LVM production 
facility to a lower-cost front-loading washer is not cost-justified. 
Thus, a consumer boycott of higher-efficiency but traditional top-
loading clothes washers due to wash performance issues could be just as 
effective at ending top-loading CCW production as a single product 
class designation requiring the use of front-loading washers. The LVM 
has stated that if it were required to convert its production facility 
to front-loading production that it would likely suffer material harm 
and exit the clothes washer business altogether.
    The Joint Comment argued that Alliance has a dominant CCW market 
share and can thus make the kinds of investments that are required to 
meet applicable efficiency standards. The Joint Comment also stated 
that Alliance's competitors would be forced to recover their 
efficiency-related investments over a smaller shipment base, and that 
their investments in CCWs could not be distributed over the cost-
competitive RCW market as well. (Joint Comment, No. 29 at p. 3)
    In response to these comments, DOE notes that most CCWs on the 
market in the United States are based largely on RCW platforms that are 
upgraded selectively. Some investments (such as the controllers) are 
CCW-specific but only make up part of the total unit cost. The majority 
of capital expenditures related to tooling, equipment, and other 
machinery in a plant can usually be applied to the residential as well 
as the commercial market. Thus, overall (RCW + CCW) manufacturing scale 
has a significant impact on the cost-effectiveness of potential 
upgrades. A manufacturer with a high-volume residential line can cost-
justify much more capital-intensive solutions if they are applicable in 
both markets, in contrast to a low-volume manufacturer that lacks the 
scale to make the investments worthwhile. Thus, a low-volume 
manufacturer may be required to purchase upgrade options from third-
party vendors to upgrade their units instead of developing less 
expensive, but capital-intensive, in-house solutions. In the clothes 
washer market, the most direct CCW competitor has over 60 times the 
overall shipment volumes of the LVM. This scale difference also relates 
to purchasing power. A large, diversified appliance manufacturer can 
use its production scale to achieve better prices for raw materials and 
commonly purchased components like controllers, motors, belts, 
switches, sensors, and wiring harnesses. Even if a large company 
purchases fewer items of a certain component, its overall revenue 
relationship with a supplier may still enable it to achieve better 
pricing than a smaller competitor can, even if that competitor buys 
certain components in higher quantities. Lastly, high-volume 
manufacturers benefit from being able to source their components 
through sophisticated supply chains on a worldwide basis. A low-volume 
manufacturer is unlikely to be able to compete solely on manufacturing 
cost.
    Based on the comments, DOE reviewed the November 2007 ANOPR CCW 
manufacturing cost information and interviewed CCW manufacturers 
representing nearly 100 percent of U.S. sales to discuss, among other 
things, the cost-efficiency curve. (See section IV.H.6.b of this notice 
and appendix 5-B of the TSD for further detail.) Based on this review 
and the information gathered, DOE modified the cost-efficiency curve 
based on detailed CCW manufacturer feedback, aggregating the responses 
by unit shipments to ensure confidentiality. Table IV.3 shows the 
updated cost-efficiency data.

                    Table IV.3 Incremental Manufacturing Costs for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                       Modified energy factor/water factor            Incremental cost
          Efficiency level           ---------------------------------------------------------------------------
                                         Top-loading       Front-loading       Top-loading       Front-loading
----------------------------------------------------------------------------------------------------------------
Baseline............................           1.26/9.5           1.72/8.0              $0.00              $0.00
1...................................           1.42/9.5            1.8/7.5             $74.63              $0.00
2...................................            1.6/8.5            2.0/5.5            $129.83             $13.67
3...................................           1.76/8.3            2.2/5.1            $144.43             $37.84
4...................................                N/A           2.35/4.4                N/A             $63.63
----------------------------------------------------------------------------------------------------------------


[[Page 62057]]

D. Life-Cycle Cost and Payback Period Analyses

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
of possible amended energy conservation standards for the two appliance 
products, on individual consumers for the cooking products and 
commercial consumers for CCWs. (See the TSD accompanying this notice, 
chapter 8.) The LCC is the total consumer expense over the life of the 
appliance, including purchase and installation expense and operating 
costs (energy expenditures and maintenance costs). To compute LCCs, DOE 
discounted future operating costs to the time of purchase and summed 
them over the lifetime of the appliance. The PBP is the change in 
purchase expense as a result of an increased efficiency standard, 
divided by the change in annual operating cost that results from the 
standard. Otherwise stated, the PBP is the number of years it would 
take for the consumer to recover the increased costs of a higher 
efficiency product through energy savings.
    DOE measures the change in LCC and the change in PBP associated 
with a given efficiency level relative to an estimate of base-case 
appliance efficiency. The base-case estimate reflects the market in the 
absence of amended mandatory energy conservation standards, including 
the demand for products that exceed the current energy conservation 
standards. Section IV.E.9 discusses the estimate of base-case 
efficiency in detail.
    For cooking products, DOE calculated the LCC and payback periods 
for a nationally representative set of housing units, which were 
selected from EIA's Residential Energy Consumption Survey (RECS). 
Similar to the November 2007 ANOPR, today's proposed rule for 
residential cooking products continues to use the 2001 RECS.\31\ EIA 
had not yet released the 2005 RECS when the analysis was performed. For 
each sampled household, DOE determined the energy consumption and 
energy price for the cooking product. Thus, by using a representative 
sample of households, the analysis captured the wide variability in 
energy consumption and energy prices associated with cooking product 
use. The Department determined the LCCs and payback periods for each 
sampled household using the cooking product's unique energy use and 
energy price, as well as other input variables. The Department 
calculated the LCC associated with the baseline cooking product in each 
household. To calculate the LCC savings and payback period associated 
with more efficient equipment (i.e., equipment meeting higher 
efficiency standards), DOE substituted the baseline unit with a more-
efficient design.
---------------------------------------------------------------------------

    \31\ U.S. Department of Energy-Energy Information 
Administration, Residential Energy Consumption Survey, 2001 Public 
Use Data Files (2001). Available at: http://www.eia.doe.gov/emeu/recs/recs2001/publicuse2001.html.
---------------------------------------------------------------------------

    For CCWs, DOE was unable to develop a consumer sample because 
neither RECS nor EIA's Commercial Building Energy Consumption Survey 
\32\ (CBECS) provide the necessary data to develop one. As a result, 
DOE was not able to use a consumer sample to establish the variability 
in energy and water use and energy and water pricing. Instead, DOE 
established the variability and uncertainty in energy and water use by 
defining the uncertainty and variability in the use (cycles per day) of 
the equipment. The variability in energy and water pricing were 
characterized by regional differences in energy and water prices.
---------------------------------------------------------------------------

    \32\ U.S. Department of Energy-Energy Information 
Administration, Commercial Buiilding Energy Consumption Survey, 2003 
Public Use Data Files (2003). Available at http://www.eia.doe.gov/emeu/cbecs/cbecs2003/public_use_2003/cbecs_pudata2003.html.
---------------------------------------------------------------------------

    Inputs for determining the total installed cost include equipment 
prices--which account for manufacturer costs, manufacturer markups, 
retailer or distributor markups, and sales taxes--and installation 
costs. Inputs for determining operating expenses include annual energy 
and water consumption, natural gas, electricity, and water prices, 
natural gas, electricity, and water price projections, repair and 
maintenance costs, equipment lifetime, discount rates, and the year 
that standards take effect. To account for uncertainty and variability 
in certain inputs, DOE created distributions of values with 
probabilities attached to each value. As described above, DOE 
characterized the variability in energy consumption and energy prices 
for residential cooking products by using household samples. For CCWs, 
DOE characterized the uncertainty and variability in equipment usage to 
capture the variability and uncertainly in energy and water 
consumption, whereas regional differences were used to capture the 
variability in energy and water pricing. For the installed cost inputs 
identified above, DOE characterized the sales taxes with probability 
distributions. For the other operating cost inputs, it characterized 
the discount rate and the equipment lifetime with distributions.
    The LCC and PBP model uses a Monte Carlo simulation to incorporate 
uncertainty and variability into the analysis when combined with 
Crystal Ball (a commercially available software program). The Monte 
Carlo simulations sampled input values randomly from the probability 
distributions (and the household samples for residential cooking 
products). The model calculated the LCC and PBP for each efficiency 
level for 10,000 housing units per simulation run.
    For both cooking products and CCWs, Table IV.4 summarizes the 
approach and data that DOE used to derive the inputs to the LCC and PBP 
calculations for the November 2007 ANOPR and the changes made for 
today's proposed rule. The following sections discuss the inputs and 
the changes.

[[Page 62058]]

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

    \33\ RS Means, Plumbing Cost Data (28th Annual Edition (2005). 
Available for purchase at: http://www.rsmeans.com/bookstore/.
    \34\ RS Means, Mechanical Cost Data (30th Annual Edition) 
(2008). Available for purchase at: http://www.rsmeans.com/bookstore/.
    \35\ Please see the following Web site for further information: 
http://www.energy.ca.gov/appliances/rass/.
    \36\ Please see the following Web site for further information: 
http://www.fsec.ucf.edu/en/.
    \37\ Please see the following Web site for further information: 
http://www.mla-online.com/.
    \38\ Please see the following Web site for further information: 
http://www.coinlaundry.org/.
    \39\ Please see the following Web site for further information: 
http://www.eia.doe.gov/.
    \40\ Please see the following Web site for further information: 
http://www.awwa.org/Bookstore/.
    \41\ Please see the following Web site for further information: 
http://www.bls.gov/.

  Table IV.4--Summary of Inputs and Key Assumptions in the LCC and PBP
                                Analyses
------------------------------------------------------------------------
                                   2007 ANOPR          Changes for the
           Inputs                  description          proposed rule
------------------------------------------------------------------------
                        Affecting Installed Costs
------------------------------------------------------------------------
Product Price...............  Derived by            No change.
                               multiplying
                               manufacturer cost
                               by manufacturer,
                               retailer (for
                               residential cooking
                               products) and
                               distributor (for
                               CCWs) markups and
                               sales tax, as
                               appropriate.
------------------------------------------------------------------------
Installation Cost...........  Cooking Products:     Cooking Products:
                               Baseline cost based   Baseline cost
                               on RS Means           updated with RS
                               Plumbing Cost Data,   Means Mechanical
                               2005.\33\ Estimated   Cost Data,
                               that 20 percent of    2008.\34\ Revised
                               households with gas   the percent of
                               cooktops and          households with gas
                               standard ovens that   cooking products
                               do not require        that would need to
                               electricity to        install an
                               operate would incur   electrical outlet.
                               added costs for the   Based on
                               installation of an    requirements in the
                               electrical outlet     NEC, estimated that
                               to accommodate        10 percent of
                               designs that          households with gas
                               require electricity   standard ovens and
                               (e.g., glo-bar or     4 percent of
                               electronic spark      households with gas
                               ignition).            cooktops would need
                               Electrical outlet     to install an
                               installation cost     electrical outlet
                               based on the type     to accommodate
                               of cable, tubing      designs that
                               and wire used,        require
                               resulting in an       electricity.
                               average cost of       Updated electrical
                               $76. All other        outlet installation
                               standard levels for   costs based on
                               all other product     requirements in the
                               classes incur no      NEC. Revised cost
                               additional            of $235 based on
                               installation costs.   the installation of
                                                     ground-fault
                                                     circuit-interrupter
                                                     (GFCI).
                             -------------------------------------------
                              CCWs: Baseline cost   CCWs: Baseline cost
                               based on RS Means     updated with RS
                               Plumbing Cost Data,   Means Mechanical
                               2005. No additional   Cost Data, 2008.
                               installation cost
                               for all standard
                               levels.
------------------------------------------------------------------------
                        Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy and Water Use.  Cooking Products:     Cooking Products: No
                               Based on recent       change with one
                               estimates from the    exception--microwav
                               2004 California       e oven standby
                               Residential           power included.
                               Appliance
                               Saturation Survey
                               \35\ (RASS) and the
                               Florida Solar
                               Energy Center \36\
                               (FSEC). Used 2001
                               RECS data to
                               establish the
                               variability of
                               annual cooking
                               energy consumption.
                             -------------------------------------------
                              CCWs: Per-cycle       CCWs: No change.
                               energy and water
                               use based on MEF
                               and WF levels.
                               Disaggregated into
                               per-cycle machine,
                               dryer, and water
                               heating energy
                               using data from
                               DOE's 2000 TSD for
                               residential clothes
                               washers. Annual
                               energy and water
                               use determined from
                               the annual usage
                               (number of use
                               cycles). Usage
                               based on several
                               studies including
                               research sponsored
                               by the Multi-
                               housing Laundry
                               Association \37\
                               (MLA) and the Coin
                               Laundry Association
                               \38\ (CLA).
                               Different use
                               cycles determined
                               for multi-family
                               and laundromat
                               product
                               applications.
                             -------------------------------------------
Energy and Water/Wastewater   Electricity: Based    Electricity: Updated
 Prices.                       on EIA's 2005 Form    using EIA's 2006
                               861 data. Natural     Form 861 data.
                               Gas: Based on EIA's   Natural Gas:
                               2005 Natural Gas      Updated using EIA's
                               Monthly.\39\ Water/   2006 Natural Gas
                               Wastewater: Based     Monthly. Water/
                               on Raftelis           Wastewater: Updated
                               Financial             using RFC/AWWA's
                               Consultants (RFC)     2006 Water and
                               and the American      Wastewater Survey.
                               Water Works           Variability: No
                               Association's         change.
                               (AWWA) 2004 Water
                               and Wastewater
                               Survey.\40\
                               Variability:
                               Regional energy
                               prices determined
                               for 13 regions;
                               regional water/
                               wastewater price
                               determined for four
                               regions.
------------------------------------------------------------------------
Energy and Water/Wastewater   Energy: Forecasted    Energy: Forecasts
 Price Trends.                 with EIA's AEO        updated with EIA's
                               2007. Water/          AEO 2008. Water/
                               Wastewater:           Wastewater:
                               Forecasted with       Forecasts updated
                               extrapolation from    with BLS index
                               Bureau of Labor       through 2007.
                               Statistics' (BLS)
                               national water
                               price index from
                               1970 through
                               2005.\41\
------------------------------------------------------------------------
Repair and Maintenance Costs  Cooking Products:     Cooking Products:
                               Estimated no change   For gas cooktops
                               in costs for          and standard ovens,
                               products more         accounted for
                               efficient than        increased costs
                               baseline products.    associated with glo-
                                                     bar or electronic
                                                     spark ignition
                                                     systems relative to
                                                     standing pilot
                                                     ignition systems.
                                                     For all standard
                                                     levels for all
                                                     other product
                                                     classes, maintained
                                                     no change in costs
                                                     between products
                                                     more efficient than
                                                     baseline products.
                             -------------------------------------------

[[Page 62059]]

 
                              CCWs: Estimated no    CCWs: Estimated
                               change in costs for   annualized repair
                               products more         costs for each
                               efficient than        efficiency level
                               baseline products.    based on half the
                                                     equipment lifetime
                                                     divided by the
                                                     equipment lifetime.
------------------------------------------------------------------------
        Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Product Lifetime............  Cooking Products:     Cooking Products: No
                               Based on data from    change with the
                               Appliance             exception that
                               Magazine,\42\ past    variability and
                               DOE TSDs, and the     uncertainty
                               California            characterized with
                               Measurement           Weibull probability
                               Advisory Committee    distributions.
                               (CALMAC).\43\
                               Variability and
                               uncertainty
                               characterized with
                               uniform probability
                               distributions.
                             -------------------------------------------
                              CCWs: Based on data   CCWs: No change with
                               from various          the exception that
                               sources including     variability and
                               the CLA. Different    uncertainty
                               lifetimes             characterized with
                               established for       Weibull probability
                               multi-family and      distributions.
                               laundromat product
                               applications.
                               Variability and
                               uncertainty
                               characterized with
                               uniform probability
                               distributions.
------------------------------------------------------------------------
Discount Rates..............  Cooking Products:     Cooking Products: No
                               Approach based on     change.
                               the finance cost of
                               raising funds to
                               purchase appliances
                               either through the
                               financial cost of
                               any debt incurred
                               to purchase
                               equipment, or the
                               opportunity cost of
                               any equity used to
                               purchase equipment.
                               Primary data source
                               is the Federal
                               Reserve Board's
                               Survey of Consumer
                               Finances (SCF) for
                               1989, 1992, 1995,
                               1998, 2001, and
                               2004. \44\
                             -------------------------------------------
                              CCWs: Approach based  CCWs: No change.
                               on cost of capital
                               of publicly traded
                               firms in the
                               sectors that
                               purchase CCWs.
                               Primary data source
                               is Damodaran
                               Online. \45\
------------------------------------------------------------------------
                 Affecting Installed and Operating Costs
------------------------------------------------------------------------
Effective Data of New         2012................  No change.
 Standard.
------------------------------------------------------------------------
Base-Case Efficiency          Gas cooktops: 7% at   Gas cooktops: No
 Distributions.                baseline; 93% with    change.
                               electronic spark
                               ignition.
                             -------------------------------------------
                              Gas standard ovens:   Gas standard ovens:
                               18% at baseline;      18% at baseline;
                               82% with glo-bar      74% with glo-bar
                               ignition.             ignition; 8% with
                                                     electronic spark
                                                     ignition.
                             -------------------------------------------
                              Microwave ovens:      Microwave ovens:
                               100% at baseline EF   100% at baseline EF
                               of 0.557. Standby     but accounted for
                               power was not         product market
                               considered in the     shares at different
                               analysis.             standby power
                                                     levels; 46% with
                                                     standby power
                                                     consumption of
                                                     greater than 2.0 W;
                                                     35% with standby
                                                     power consumption
                                                     of greater than 1.5
                                                     W and less than or
                                                     equal to 2.0 W; 19%
                                                     with standby power
                                                     consumption of
                                                     greater than 1.0 W
                                                     and less than or
                                                     equal to 1.5 W.
                             -------------------------------------------
                              All other cooking     All other cooking
                               products: 100% at     products: No
                               baseline.             change.
                             -------------------------------------------
                              CCWs: Analyzed as     CCWs: Analyzed as
                               single product        two product
                               class with 80% at     classes: top-
                               baseline (1.26 MEF/   loading and front-
                               9.5 WF); 20% at       loading.
                               2.00 MEF/5.50 WF.     Distributions for
                                                     both classes based
                                                     on the number of
                                                     available models at
                                                     the efficiency
                                                     levels. Top-
                                                     Loading: 63.6% at
                                                     1.26 MEF/9.5 WF;
                                                     33.3% at 1.42 MEF/
                                                     9.5 WF; 0% at 1.60
                                                     MEF/8.5 WF; 3.0% at
                                                     1.76 MEF/8.3 WF.
                                                     Front-Loading: 7.4%
                                                     at 1.72 MEF/8.0 WF;
                                                     4.4% at 1.80 MEF/
                                                     7.5 WF; 85.3% at
                                                     2.00 MEF/5.5 WF;
                                                     1.5% at 2.20 MEF/
                                                     5.1 WF; 1.5% at
                                                     2.35 MEF/4.4 WF.
------------------------------------------------------------------------

1. Product Price
    To calculate the consumer product prices, DOE multiplied the 
manufacturing costs developed from the engineering analysis by the 
supply-chain markups it developed (along with sales taxes). To 
calculate the final, installed prices for baseline products, as well as 
higher efficiency products, DOE added the consumer product prices to 
the installation costs.
---------------------------------------------------------------------------

    \42\ Please see the following Web site for further information: 
http://www.appliancemagazine.com/.
    \43\ Please see the following Web site for further information: 
http://www.calmac.org/.
    \44\ Please see the following Web site for further information: 
http://www.federalreserve.gov.
    \45\ Please see the following Web site for further information: 
http://pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------

a. Cooking Products
    For cooking products, DOE relied on data from AHAM's 2003 Fact Book 
\46\ showing that over 93 percent of residential appliances (including 
cooking products) are distributed from the manufacturer directly to a 
retailer. Therefore, DOE determined cooking product retail prices using 
markups based solely on the premise that these appliances are sold 
through a manufacturer-to-retailer distribution channel. Whirlpool 
commented that DOE should not focus solely on the retail distribution 
channel for its determination of retail prices. Whirlpool

[[Page 62060]]

stated that the analysis and assumptions made for the retail 
distribution channel are reasonably accurate but completely ignore the 
contractor distribution channel. Whirlpool claimed that the contractor 
distribution channel comprises approximately 20 percent of total 
industry volume (not the seven percent cited in the November 2007 ANOPR 
TSD), with a greater portion of cooking products flowing through this 
channel. Whirlpool said that larger new home builders and apartment 
management firms use the contractor channel, and that the margins and 
behavior of the parties in this channel differ from those in the retail 
channel. Whirlpool recommended that future rulemakings consider the 
contractor channel. (Whirlpool, No. 28 at p. 12) DOE understands that 
the contractor distribution channel may distribute a significant 
portion of cooking product sales. However, since DOE's analysis for 
rulemakings on other residential appliances indicates that overall 
markups in the contractor channel are on average similar to those in 
the retailer channel, DOE believes that it can reasonably assume that 
the retail prices determined from the manufacturer-to-retailer 
distribution channel for this standards rulemaking provide a good 
estimate for cooking product prices.
---------------------------------------------------------------------------

    \46\ Available online at: http://www.aham.org.
---------------------------------------------------------------------------

b. Commercial Clothes Washers
    For CCWs, DOE developed the distribution channels based on data 
developed by the CEE.\47\ The CEE data indicate that the relevant 
portions of the commercial, family-sized clothes washer market can be 
divided into three areas: (1) Laundromats; (2) private multi-family 
housing; and (3) large institutions (e.g., military barracks, 
universities, housing authorities, lodging establishments, and health 
care facilities). For purposes of developing the markups for CCWs, DOE 
based its calculations on the distribution channel that involves only 
distributors, because it believed that this channel would provide good 
estimates of consumer prices for the entire market. In the November 
2007 ANOPR, DOE specifically sought comment on whether determining CCW 
consumer prices based solely on the distribution channel that includes 
distributors will result in representative equipment prices for all CCW 
consumers. AHAM, Alliance, and Whirlpool generally agreed with DOE's 
approach of representing CCW equipment prices with data from the 
distributor channel only. (AHAM, No. 32 at p. 11; Alliance, Public 
Meeting Transcript, No. 2 at p. 132; Whirlpool, No. 28 at p. 8) DOE did 
not receive any negative comments on this approach. As a result, DOE 
did not change its approach for determining CCW markups for today's 
proposed rule.
---------------------------------------------------------------------------

    \47\ Consortium for Energy Efficiency, Commercial Family-Sized 
Washers: An Initiative Description of the Consortium for Energy 
Efficiency (1998). This document is available at: http://www.cee1.org/com/cwsh/cwsh-main.php3.
---------------------------------------------------------------------------

    According to the Joint Comment, for relatively small changes in a 
standard level, as associated with many product rulemakings to date, 
the available literature shows that products just meeting an amended 
standard have often had no price change or even price declines after 
the adoption of the more stringent standards. The Joint Comment cited 
reports from the European Union suggesting that actual price impacts 
are lower than predicted in their most recent round of standards for 
several products. Possible explanations include manufacturing economies 
found as a result of re-engineering of products after a standards 
amendment and retailer pricing strategies that prevent pass-through of 
small manufacturer cost increases to the retail customer. The Joint 
Comment claimed that this issue is especially relevant to microwave 
ovens, because the manufacturing cost to reduce standby power is likely 
to be very low, but the principle also will be relevant for any 
standard that entails a small impact on manufacturing costs. The Joint 
Comment stated that DOE should review actual pricing for standards 
effective in recent years to calibrate the accuracy of DOE's price 
predictions. In developing such a calibration, the Joint Comment stated 
that DOE must separate commodity price impacts (e.g., the cost of steel 
has increased sharply since 2001) from impacts associated with a new 
efficiency standard. (Joint Comment, No. 29 at pp. 9-10, 13-14) As 
described in section IV.C.2, Manufacturing Costs, DOE does not find 
merit to the Joint Comment's claims that the price change of meeting an 
amended standard declines after the standards' adoption. DOE recognizes 
that every change in minimum energy conservation standards is an 
opportunity for manufacturers to make investments beyond what would be 
required to meet the new standards in order to minimize the costs or to 
respond to other factors. DOE's manufacturing cost estimates, MIA 
interviews, and the GRIM analysis seek to gauge the most likely 
industry response to proposed energy conservation standards. DOE's 
analysis of responses must be based on currently available technology 
that will be non-proprietary when a rulemaking becomes effective, and 
thus cannot speculate on future product and market innovation. For more 
details on DOE's response, see section IV.C.2.
2. Installation Cost
    The installation cost is the consumer's total cost to install the 
equipment, excluding the marked-up consumer equipment price. More 
specifically, installation costs include labor, overhead, and any 
miscellaneous materials and parts. DOE determined baseline product 
installation costs for cooktops, ovens, and CCWs based on data from RS 
Means. For the November 2007 ANOPR, DOE used data from the RS Means 
Plumbing Cost Data, 2005 to estimate installation costs for cooking 
products and CCWs.\48\ RS Means provides estimates on the labor 
required to install each of above three products. For today's proposed 
rule, DOE updated its baseline installation costs using RS Means 
Mechanical Cost Data, 2008.\49\
---------------------------------------------------------------------------

    \48\ RS Means, Plumbing Cost Data (28th Edition)(2005) p. 97. 
Available for purchase at: http://www.rsmeans.com.
    \49\ RS Means, Mechanical Cost Data (31st Annual Edition) 
(2008). Available for purchase at: http://www.rsmeans.com.
---------------------------------------------------------------------------

a. Cooking Products
    For cooking products (except gas cooktops and standard ovens), DOE 
estimated that installation costs would not increase with product 
efficiency. For gas cooktops and standard ovens, DOE estimated the 
impact that eliminating standing pilot ignition systems would have on 
the installation cost. Specifically, DOE considered the percentage of 
households with gas ranges, cooktops, and ovens that would require the 
installation of an electrical outlet in the kitchen to accommodate a 
gas cooking product that would need electricity to operate, as well as 
the cost of installing an electrical outlet.
    DOE estimated for its November 2007 ANOPR that an upper bound of 20 
percent of households using gas cooktops and standard ovens with 
standing pilot ignition systems would require the installation of an 
electrical outlet in the kitchen for a product that requires 
electricity. AGA commented that the percentage of consumers that would 
need to install an electrical outlet is much greater than 20 percent, 
and suggested that the vast majority of pilot ignition products shipped 
are for installations where rewiring would be required for a range 
without pilot ignition. AGA questioned DOE's assumption that kitchens 
with existing electrical outlets would not require modification or 
installation of additional outlets, stating that State and

[[Page 62061]]

local building codes, most of which mandate adherence to National Fire 
Protection Agency (NFPA) 70, NEC, may not be ignored by consumers who 
would install a range with an electrical connection when replacing 
their pilot ignition ranges. AGA stated that many homes with standing 
pilot gas ranges are older and will not have outlets in close enough 
proximity to the range. AGA believes that current shipments of pilot 
ignition gas products are used in a segment of the replacement market 
where an electrical outlet is not within six feet of the appliance, and 
that these consumers will have to install an electrical outlet in the 
vicinity of their range. (AGA, Public Meeting Transcript, No. 23.7 at 
pp. 149-52; and AGA, No. 27 at pp. 2-3, 6-7, and 11-12)
    ASAP inquired as to whether DOE's estimate that 20 percent of 
households would require the installation of an electrical outlet would 
be updated using more recent data. (ASAP, Public Meeting Transcript, 
No. 23.7 at pp. 150-151) According to the Joint Comment, homes with no 
electricity in the kitchen may exist, but they would be such a small 
proportion of homes that the installation cost would be negligible in a 
national LCC analysis. (Joint Comment, No. 29 at p. 5)
    In response to these comments, DOE conducted an assessment of NEC 
requirements over time.\50\ DOE reviewed the gas oven and gas cooktop 
household samples to establish which houses may require an outlet 
installation. Because RECS specifies the home's vintage (year built), 
DOE was able to determine the composition of the household sample by 
particular vintage groupings. DOE also determined that every household 
in each sample had an electric refrigerator, so DOE concluded that 
every home had at least one electrical outlet in the kitchen. However, 
the NEC did not require spacing of electrical outlets every six feet 
prior to 1959. As a result, DOE could not conclusively determine that 
pre-1960 houses would have an outlet near the gas-fired appliance. 
Thus, it assumed that pre-1960 homes, representing 57 percent of the 
standard gas oven sample and 54 percent of the gas cooktop sample, may 
need an additional outlet installed in the kitchen to accommodate a gas 
cooking product without standing pilot ignition. Because DOE is not 
aware of any data on how the use of gas cooking products equipped with 
standing pilot lights is distributed across housing stock vintages, it 
assumed that all of the households in each vintage could purchase a 
product with standing pilot lights in the base case, but that homes 
built after 1960 would not need an outlet.
---------------------------------------------------------------------------

    \50\ D.A. Dini, Some History of Residential Wiring Practices, 
Underwriters Laboratories, Inc. (2006). This document is available 
at: http://www.nfpa.org/assets/files//PDF/Proceedings/Dini_paper_-_History_Residential_Wiring.pdf.
---------------------------------------------------------------------------

    For its November 2007 ANOPR, DOE estimated the installation cost of 
an electrical outlet based on data from RS Means. The resulting 
installation cost ranged from $42 to $125 and an average installation 
cost of $76 was used in the analysis. AGA commented that the 
installation costs used in the November 2007 ANOPR are much too low, 
adding that the NEC requires a lot of work to install an outlet near a 
range. AGA said that RS Means is an excellent source but has severe 
limitations, especially with respect to the variety of likely retrofit 
installations. Also, the RS Means data cover repair/remodeling projects 
in the $10,000 to $1 million range, which do not capture the true, 
consumer cost of rewiring for a gas range that requires electricity 
(i.e., costs for retrofit wiring in a finished kitchen would be 
significantly higher). AGA also stated that if the outlet is exposed 
and available for countertop services, a ground-fault circuit-
interrupter (GFCI) is required. If the consumer wants to avoid the 
installation of a GFCI, the outlet must be located behind the range and 
may require the installation of an additional circuit to service the 
additional load. In 1997, AGA's Building Energy and Code Committee 
indicated installation costs ranging from $110 to $350 in 1997 dollars 
for retrofits, depending on the region, with an average cost of $204. 
In AGA's opinion, such installation estimates are more representative 
than the cost used by DOE. AGA requested that DOE conduct a survey in 
major metropolitan areas and include varied housing types to obtain 
current installation costs. (AGA, Public Meeting Transcript, No. 23.7 
at p. 22, 150; AGA, No. 27 at p. 3, pp. 12-13, and pp. 6-7) Supporting 
this position, GE commented that adding a new outlet to an existing 
kitchen would easily cost hundreds of dollars, whereas providing 
electricity to a rural household could cost thousands. (GE, No. 30 at 
p. 2)
    DOE notes that the current NEC allows outlets for gas-fired 
appliances to be attached to existing small appliance circuits in 
kitchens. DOE revisited its installation cost estimates to address the 
requirements in the NEC for installing electrical outlets. As noted 
above, the NEC did not require that electrical outlets be spaced every 
six feet prior to 1959. In addition, the NEC had no requirement prior 
to 1962 that branch electrical circuits include a grounding conductor 
or ground path to which the grounding contacts of the receptacle could 
be connected. Therefore, because a GFCI outlet may need to be installed 
for older housing units built prior to the modern NEC, DOE revised its 
installation costs based solely on the installation of a GFCI outlet in 
a finished space. DOE derived its estimates based on the grounding of 
the outlet to a water pipe in the kitchen rather than back to a fuse 
box or circuit breaker panel. As in the November 2007 ANOPR, DOE relied 
on cost data from RS Means to estimate the installation cost. DOE 
recognizes that RS Means covers large projects totaling at least 
$10,000, so it added an electrician's trip charge to the installation 
cost. The resulting average installation cost determined by DOE is 
$235, much higher than the $76 cost it estimated for the November 2007 
ANOPR.
    Providing information on an alternative approach to installing an 
electrical outlet near the range, the Joint Comment urged DOE to 
consider the cost of adding an external, low-voltage power supply to 
the range to enable spark ignition. This power supply could then be 
plugged into more distant, existing outlets. The cost of such a power 
supply, even considering the need to include several transformer 
stages, would likely be a fraction of the cost of installing an outlet 
in the house. (Joint Comment, No. 29 at p. 6) DOE did not consider 
options to install a power supply in the appliance that would enable 
the use of low-voltage wiring to power the gas cooking product. This 
does not affect DOE's estimate that an outlet would need to be 
installed, because homes built before 1960 would still require an 
outlet installation to avoid the use of long extension cords to connect 
the appliance to an available outlet that could be up to 20 feet away 
from the cooking product.
b. Commercial Clothes Washers
    DOE did not receive comments about installation costs for CCWs. 
Therefore, today's proposed rule used roughly the same installation 
costs as in the November 2007 ANOPR. As noted previously, the only 
change implemented by DOE was to update its costs from the November 
2007 ANOPR, which were based on the RS Means Plumbing Cost Data, 2005, 
to those based on the RS Means Mechanical Cost Data, 2008. The 
resulting installation cost that DOE estimated equaled $186. DOE 
estimates that installation costs do not increase with product 
efficiency.

[[Page 62062]]

3. Annual Energy Consumption
a. Cooking Products
    For cooking products (except microwave ovens), DOE determined in 
its November 2007 ANOPR that cooking energy consumption has declined 
since the mid-1990s. DOE based its determination on results from the 
2004 California Residential Appliance Saturation Survey (RASS) \51\ and 
the Florida Solar Energy Center (FSEC).\52\ GE stated that its own 
internal information confirms DOE's conclusions--namely, that household 
cooking energy use is declining. (GE, No. 30 at p. 2) For today's 
proposed rule, DOE continues to base its annual energy consumption 
estimates for cooking products, other than microwave ovens, on the data 
from the 2004 RASS and FSEC. As for the November 2007 ANOPR, DOE 
continues to use the 2001 RECS data to establish the variability of 
annual cooking energy consumption for cooktops and ovens.
---------------------------------------------------------------------------

    \51\ California Energy Commission, California Statewide 
Residential Appliance Saturation Survey (Prepared for the CEC by 
KEMA-XNERGY, Itron, and RoperASW. Contract No. 400-04-009)(June 
2004). This document is available at: http://www.energy.ca.gov/appliances/rass/index.html.
    \52\ Parker, D. S., ``Research Highlights from a Large Scale 
Residential Monitoring Study in a Hot Climate,'' Proceedings of 
International Symposium on Highly Efficient Use of Energy and 
Reduction of its Environmental Impact (Japan Society for the 
Promotion of Science Research for the Future Program, JPS-
RFTF97P01002) (Jan. 2002) pp. 108-116. (Also published as FSEC-
PF369-02, Florida Solar Energy Center.) This document is available 
at: http://www.fsec.ucf.edu/en/publications/html/FSEC-PF-369-02/index.htm.
---------------------------------------------------------------------------

    For microwave ovens, DOE used the 2004 RASS for its November 2007 
ANOPR to estimate the product's annual energy consumption. DOE used the 
2001 RECS data to establish the variability of annual cooking energy 
consumption for microwave ovens. For today's proposed rule, DOE 
continues to use the above approaches. Whirlpool stated that DOE should 
consider that microwave ovens use only one-quarter to one-third the 
energy of conventional ovens because conventional ovens are preheated 
and need to heat larger oven cavities. (Whirlpool, No. 28 at p. 5) 
DOE's findings indicate that both standard and self-cleaning electric 
ovens use approximately 170 kWh per year, whereas microwave ovens use 
on average 131 kWh per year, or 77 percent of the annual energy 
consumed by conventional ovens.
    One change from the November 2007 ANOPR is inclusion of annual 
energy consumption associated with standby power. To estimate the 
annual energy use associated with standby power, DOE multiplied the 
baseline standby power by the number of hours in a year that the oven 
is in standby mode. The annual standby hours equals total hours in a 
year minus the number of hours that the microwave oven is in active 
operation. DOE determined the hours of active operation by dividing the 
average annual energy consumption by a representative input power for 
microwave ovens. Based on DOE's testing of microwave ovens reported at 
the December 2007 public meeting, the average microwave output power is 
1,026 W. Based on the baseline microwave EF of 0.557, the average input 
power is 1,842 W. Therefore, based on an annual cooking energy 
consumption of 131 kWh per year, there are 71 hours of active 
operation, resulting in 8,689 hours that the appliance is in standby 
mode. See chapter 6 of the TSD accompanying this notice for further 
details.
b. Commercial Clothes Washers
    For CCWs, DOE determined the annual energy and water consumption 
for its November 2007 ANOPR by multiplying the per-cycle energy and 
water use by the estimated number of cycles per year. CCW per-cycle 
energy consumption has three components: (1) Water-heating energy; (2) 
machine energy (the motor energy for turning an agitator or rotating a 
drum); and (3) drying energy. DOE determined the per-cycle clothes-
drying energy use by first establishing the RMC based on the 
relationship between RMC and the MEF, and then using the DOE test 
procedure equation that determines the per-cycle energy consumption for 
the removal of moisture. DOE took the per-cycle machine energy use from 
its 2000 TSD for RCWs.\53\ As noted in the discussion of the CCW test 
procedure (section III.B.3 of this notice,) DOE believes that the 
existing RCW test procedure adequately accounts for the characteristic 
energy and water use for CCWs in the NOPR analyses. As a result, DOE 
also believes that the per-cycle machine energy use for RCWs would be 
representative of CCW machine energy consumption. In the 2000 TSD, 
machine energy was calculated to be 0.133 kWh per cycle for MEFs up to 
1.40, and 0.114 kWh per cycle for MEFs greater than 1.40. With the per-
cycle clothes-drying and machine energy known, DOE determined the per-
cycle water-heating energy use by first determining the total per-cycle 
energy use (the clothes container volume divided by the MEF) and then 
subtracting from it the per-cycle clothes-drying and machine energy.
---------------------------------------------------------------------------

    \53\ U.S. Department of Energy, Final Rule Technical Support 
Document (TSD): Energy Efficiency Standards for Consumer Products: 
Clothes Washers (Dec. 2000) Chapter 4, Table 4.1. This document is 
available at: http://www.eere.energy.gov/buildings/appliance_standards/residential/clothes_washers.html.
---------------------------------------------------------------------------

    In the November 2007 ANOPR, DOE specifically requested comment on 
whether the RCW per-cycle energy consumption values for clothes-drying 
and machine use are representative of CCWs. 72 FR 64432, 64513 (Nov. 
15, 2007). AHAM and Whirlpool commented generally that residential 
clothes washer energy consumption is representative of the energy 
consumption of CCWs. (AHAM, No. 32 at p. 10 and Whirlpool, No. 28 at 
pp. 7-8) More specifically, AHAM stated that residential clothes washer 
per-cycle energy consumption is representative of CCW per-cycle energy 
consumption. (AHAM, No. 32 at p. 10) Whirlpool commented that the RMC 
values that DOE used appear to be reasonable. (Whirlpool, No. 28 at pp. 
7-8) Whirlpool added that because machine energy use is a relatively 
small component of overall energy consumption,\54\ mischaracterization 
of it probably would not distort the overall analysis. (Whirlpool, No. 
28 at p. 7) NPCC, on the other hand, referred to studies (specifically 
one commissioned by the City of Toronto) \55\ that have found that 
drying times in commercial laundry do not decrease with RMC. Because 
dryers do not have moisture sensors to terminate the cycle, NPCC claims 
they will continue to run based on the amount of money fed into the 
machine. (NPCC, Public Meeting Transcript, No. 23.7 at p. 126)
---------------------------------------------------------------------------

    \54\ The DOE clothes washer test procedure calculates total per-
cycle energy consumption as the sum of: (1) The energy required to 
heat the water; and (2) the electrical energy required for the 
basket motor and drive system, controls, display, etc. (i.e., 
machine energy use.) In addition, the MEF includes the energy 
required by a dryer to remove the RMC. Water heating energy and the 
energy required to remove the RMC are significantly higher than 
machine energy.
    \55\ City of Toronto Works and Emergency Services and Toronto 
Community Housing Corporation, Multi-Unit Residential Clothes Washer 
Replacement Pilot Project 1999 (May 2003).
---------------------------------------------------------------------------

    DOE recognizes that in some commercial settings, the drying cycle 
time may be fixed at a longer period than what the DOE dryer test 
procedure requires to achieve a ``bone dry'' state. As a result, the 
actual drying energy may not decrease as the RMC in clothing loads are 
lowered, which would imply that a CCW that produces a lower RMC in the 
wash load could be improperly receiving credit in the calculation of 
MEF. However, DOE notes that the cycle length for some

[[Page 62063]]

commercial dryers can be adjusted by the laundromat owner or route 
operator to match the average RMC of the CCWs at the same location, 
allowing for shorter drying cycles if the RMC is lowered. In addition, 
electronic payment systems, if equipped, provide the end-user the 
opportunity to select only the amount of time required to achieve the 
desired dryness of the load. Even if such adjustments are not made, 
customers of laundromats with fixed-cycle dryers can still benefit from 
lower RMCs by either putting more clothes into the dryer than they 
would have previously, or by interrupting the drying cycle when the 
clothes have dried to add a new set of clothes. Lastly, some 
laundromats operate ``free'' dryers (i.e., consumers just pay for the 
wash cycle), which incentivize the owners to use CCWs equipped with 
moisture sensors to minimize drying time and energy consumption. For 
these reasons, as well as the supporting comments received from AHAM 
and Whirlpool, DOE believes that the use of the existing residential 
clothes washer test procedure provides a representative basis for 
rating and estimating the per-cycle energy use of CCWs.
4. Energy and Water Prices
a. Energy Prices
    DOE derived average electricity and natural gas prices for 13 
geographic areas consisting of the nine U.S. Census divisions, with 
four large States (New York, Florida, Texas, and California) treated 
separately. For Census divisions containing one of these large States, 
DOE calculated the regional average values minus the data for the large 
State.
    DOE estimated residential and commercial electricity prices for 
each of the 13 geographic areas based on data from EIA Form 861, Annual 
Electric Power Industry Report.\56\ DOE calculated an average 
residential electricity price by first estimating an average 
residential price for each utility--by dividing the residential 
revenues by residential sales--and then calculating a regional average 
price by weighting each utility with customers in a region by the 
number of residential consumers served in that region. For the November 
2007 ANOPR, DOE used EIA data from 2004. The calculation methodology 
for today's proposed rule uses the most recent available data from 
2006. The calculation methodology of average commercial electricity 
prices is identical to that for residential prices, except that DOE 
used commercial sector data.
---------------------------------------------------------------------------

    \56\ Available at http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html.
---------------------------------------------------------------------------

    DOE estimated residential and commercial natural gas prices in each 
of the 13 geographic areas based on data from the EIA publication 
Natural Gas Monthly.\57\ For the November 2007 ANOPR, DOE used the 
complete annual data for 2005 to calculate an average summer and winter 
price for each area. For today's proposed rule, DOE used more recent 
2006 data from the same source. It calculated seasonal prices because, 
for some end uses, seasonal variation in energy consumption is 
significant. DOE defined summer as the months May through September, 
with all other months defined as winter. DOE calculated an average 
natural gas price by first calculating the summer and winter prices for 
each State, using a simple average over the appropriate months, and 
then calculating a regional price by weighting each State in a region 
by its population. This method differs from the method used to 
calculate electricity prices, because EIA does not provide consumer-
level or utility-level data on gas consumption and prices. The methods 
for calculating average commercial and residential natural gas prices 
are identical to each other except that the former relies on commercial 
sector data. Upon review of natural gas prices, AGA stated that, 
because DOE's analysis relied upon 2005 natural gas prices, the 
analysis overstates the cost of natural gas. AGA requested that DOE 
conduct a new natural gas cost survey to reflect current prices. (AGA, 
No. 27 at p. 4) As described above, DOE updated the prices to use the 
most recent data available from 2006. As described below, DOE uses 
price projections from EIA's AEO to forecast prices for future years. 
As is discussed in detail in section IV.E.3.g of this notice, for 
today's proposed rule, DOE did assess the impact of new energy 
conservation standards for cooking products and CCWs on forecasted 
energy prices.
---------------------------------------------------------------------------

    \57\ DOE-Energy Information Administration, Natural Gas Monthly. 
Available at: http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.htm.
---------------------------------------------------------------------------

    To estimate the trends in electricity and natural gas prices for 
the November 2007 ANOPR, DOE used the price forecasts in EIA's AEO 
2007. For today's proposed rule, DOE updated its energy price forecasts 
to those in the AEO 2008.\58\ For today's proposed rule, DOE based its 
results on the AEO 2008 reference case price forecasts. The spreadsheet 
tools which DOE used to conduct the LCC and PBP analysis allow users to 
select either the AEO's high-growth case or low-growth case price 
forecasts to estimate the sensitivity of the LCC and PBP to different 
energy price forecasts. To arrive at prices in future years, DOE 
multiplied the average prices described above by the forecast of annual 
average price changes in AEO 2008. Because AEO 2008 forecasts prices to 
2030, DOE followed past guidelines provided to the FEMP by EIA and used 
the average rate of change during 2020-2030 to estimate the price 
trends after 2030. For the analyses to be conducted for the final rule, 
DOE intends to update its energy price forecasts based on the latest 
available AEO.
---------------------------------------------------------------------------

    \58\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2008 with Projections to 2030 
(DOE/EIA-0383) (March 2008).
---------------------------------------------------------------------------

b. Water and Wastewater Prices
    DOE obtained residential and commercial water and wastewater price 
data from the Water and Wastewater Rate Survey conducted by Raftelis 
Financial Consultants (RFC) and the American Water Works Association 
(AWWA). For the November 2007 ANOPR, DOE used the version of the survey 
from 2004, but for today's proposed rule, DOE used the most recent 
version (i.e., the 2006 Water and Wastewater Rate Survey.) \59\ The 
survey covers approximately 300 water utilities and 200 wastewater 
utilities, with each industry analyzed separately. Because a sample of 
200-300 utilities is not large enough to calculate regional prices for 
all U.S. Census divisions and large States, DOE calculated regional 
values at the Census region level (Northeast, South, Midwest, and 
West).
---------------------------------------------------------------------------

    \59\ Raftelis Financial Consultants, Inc., ``2006 RFC/AWWA Water 
and Wastewater Rate Survey, 2006,'' (2006). This document is 
available at: http://www.raftelis.com/ratessurvey.html.
---------------------------------------------------------------------------

    To estimate the future trend for water and wastewater prices, DOE 
used data on the historic trend in the national water price index (U.S. 
city average) provided by the Bureau of Labor Statistics (BLS).\60\ For 
the November 2007 ANOPR, DOE used data covering the time period from 
1970 through 2005. For today's proposed rule, DOE used updated data to 
extend that time period through 2007. DOE extrapolated a future trend 
based on the linear growth from 1970 to 2007.
---------------------------------------------------------------------------

    \60\ Available at: http://www.bls.gov.
---------------------------------------------------------------------------

5. Repair and Maintenance Costs
    Repair costs are associated with repairing or replacing components 
that have failed in the appliance, whereas maintenance costs are 
associated with maintaining the operation of the equipment. For the 
November 2007 ANOPR, DOE assumed that small,

[[Page 62064]]

incremental changes in products related to efficiency result in either 
no or only small changes in repair and maintenance costs, compared with 
baseline products. However, DOE sought comment on its assumption that 
increases in product energy efficiency would not have a significant 
impact on the repair and maintenance costs.
a. Cooking Products
    AGA noted that DOE had not included higher maintenance costs in its 
LCC analysis for gas cooking products with a more complex ignition 
system (i.e., non-standing pilot ignition systems). According to AGA, 
this is a significant omission that DOE needs to address, especially 
since AGA stated that standing pilot ignition systems are likely to be 
relatively maintenance-free over the assumed product life of 19 years, 
whereas electronic ignition systems are not. AGA noted that in an 
analysis provided to DOE in 1998, Battelle estimated independent 
failure rates for each electronic ignition system as 0.9 failures over 
the life of the product. Battelle assumed that two such ignition system 
failures would occur on a free-standing range and that these failures 
would be non-concurrent. AGA commented that DOE needs to account for 
the increased repair costs for pilot ranges equipped with electronic 
controls and recommended that DOE's analysis include two electronic 
ignition service calls for these products, which AGA estimated 
currently costs between $125 and $300, including parts and labor, per 
service call. (AGA, Public Meeting Transcript, No. 23.7 at pp. 154-155; 
AGA, No. 27 at pp. 3-4 and p. 15)
    DOE contacted six contractors in different States to estimate 
whether repair and maintenance costs still differ between standing 
pilot and non-standing pilot ignition systems. Based on the 
contractors' input, DOE determined that standing pilots are less costly 
to repair and maintain than either electric glo-bar/hot surface 
ignition systems (used in most gas ovens) or electronic spark ignition 
systems (used in gas cooktops and a small percentage of gas ovens). 
Standing pilot ignition systems require repair and maintenance every 10 
years to clean valves. Electric glo-bar/hot surface ignition systems 
require glo-bar replacement approximately every 5 years. In the case of 
electronic ignition systems, control modules tend to last 10 years. The 
electrodes/igniters can fail because of hard contact from pots or pans, 
although failures are rare. Based on the above findings, DOE revised 
its analysis of repair and maintenance costs for gas cooking products. 
For standing pilot ignition systems, DOE estimated an average cost of 
$126 occurring in the tenth year of the product's life. For electric 
glo-bar/hot surface ignition systems, DOE estimated an average cost of 
$147 occurring every fifth year during the product's lifetime. For 
electronic spark ignition systems, DOE estimated an average cost of 
$178 occurring in the tenth year of the product's life. See chapter 8 
of the TSD accompanying this notice for further information regarding 
these estimates.
b. Commercial Clothes Washers
    AHAM, Alliance, and Whirlpool commented that front-loading units 
generally require more maintenance and repair than top-loading units. 
(AHAM, No. 32 at pp. 4, 9, 11, Alliance, No. 26 at p. 4 and Whirlpool, 
No. 28 at p. 8) Alliance stated that repair costs for front-loading 
washers are significantly higher than those for top-loading units 
because of their incorporation of electronic controls, variable speed 
motors, door locks, and multiple shock absorbers. Alliance claimed that 
more electronic circuitry and additional door lock circuitry increases 
diagnostic time and, thus, increases repair costs. (Alliance, No. 26 at 
p. 4) Whirlpool said that although the unit shipments of front-loading 
CCWs are less than half that of top-loading machines, the in-warranty 
repair costs are double that of top-loading machines, suggesting that 
the repair of front-loading machines is four times as costly as that of 
top-loading machines. (Whirlpool, No. 28 at p. 8) The Joint Comment, on 
the other hand, stated that their organizations are not aware of any 
data showing or suggesting that more-efficient products break down more 
often or require more maintenance than less efficient products. (Joint 
Comment, No. 29 at p. 10)
    Although AHAM, Alliance, and Whirlpool claim that repair and 
maintenance costs are greater for front-loading washers than top-
loading machines, no specific data were provided to identify the 
magnitude of such costs. Although in-warranty repair costs may be 
greater for front-loading washers as Whirlpool claims, the repair costs 
are not incurred by the consumer and thus do not contribute to the LCC 
of owning and operating the washer. However, DOE does recognize that a 
higher incidence of in-warranty repairs is likely to be an indication 
of the frequency of out-of-warranty repairs. Therefore, rather than 
continue to assume that higher-efficiency CCW designs do not incur 
higher repair costs, DOE included increased repair costs in today's 
proposed rule based on an algorithm developed by DOE for central air 
conditioners and heat pumps and which was also used for residential 
furnaces boilers.\61\ This algorithm calculates annualized repair costs 
by dividing half of the equipment retail price by the equipment 
lifetime.
---------------------------------------------------------------------------

    \61\ U.S. Department of Energy, Technical Support Document: 
Energy Efficiency Standards for Consumer Products: Residential 
Central Air Conditioners and Heat Pumps (May 2002) Chapter 5. This 
document is available at: http://www.eere.energy.gov/buildings/appliance_standards/residential/ac_central_1000_r.html.
---------------------------------------------------------------------------

6. Product Lifetime
    For the November 2007 ANOPR, DOE used a variety of sources to 
establish low, average, and high estimates for product lifetime. For 
residential cooking products, DOE established average product lifetimes 
of 19 years for conventional electric and gas cooking products and 9 
years for microwave ovens. For CCWs, the average lifetime was 11.3 
years for multi-family applications, and 7.1 years for laundromats. For 
the November 2007 ANOPR, DOE primarily used the full range of lifetime 
estimates to characterize the product lifetimes with uniform 
probability distributions ranging from a minimum to a maximum value. 
For microwave ovens, DOE used a triangular probability distribution to 
characterize product lifetime.
    Whirlpool commented on DOE's use of uniform probability 
distributions by stating that the vast majority of statistical texts 
apply a ``long-tailed'' distribution to product failure/lifetimes. 
According to Whirlpool, generally, the Weibull,\62\ or at least the 
Poisson distribution, is used for such purposes. Whirlpool strongly 
urged DOE to correct this oversimplification. (Whirlpool, No. 28 at p. 
12) Because Weibull distributions are commonly used in reliability 
analyses, DOE agrees with Whirlpool and revised its characterization of 
residential cooking product and CCW product lifetimes for today's 
proposed rule with Weibull probability distributions. See chapter 8 of 
the TSD accompanying this notice for further details on the sources 
used to develop product lifetimes, as well as the use of Weibull 
distributions to characterize product lifetime distributions.
---------------------------------------------------------------------------

    \62\ The Weibull distribution is one of the most widely used 
lifetime distributions in reliability engineering. It is a versatile 
distribution that can take on the characteristics of other types of 
distributions, based on the value of its shape parameter.

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

[[Page 62065]]

 7. Discount Rates
a. Cooking Products
    To establish discount rates for the cooking products in the 
November 2007 ANOPR, DOE derived estimates of the finance cost of 
purchasing these appliances. Because the purchase of equipment for new 
homes entails different finance costs for consumers than the purchase 
of replacement equipment, DOE used different discount rates for new 
construction and replacement installations.
    DOE estimated discount rates for new-housing purchases using the 
effective real (after-inflation) mortgage rate for homebuyers. This 
rate corresponds to the interest rate after deduction of mortgage 
interest for income tax purposes and after adjusting for inflation. DOE 
used the Federal Reserve Board's Survey of Consumer Finances (SCF) for 
1989, 1992, 1995, 1998, and 2001 for mortgage interest rates.\63\ After 
adjusting for inflation and interest tax deduction, effective real 
interest rates on mortgages across the six surveys averaged 3.2 
percent. For replacement purchases, DOE's approach for deriving 
discount rates involved identifying all possible debt or asset classes 
that might be used to purchase replacement equipment, including 
household assets that might be affected indirectly. DOE estimated the 
average shares of the various debt and equity classes in the average 
U.S. household equity and debt portfolios using data from the SCFs from 
1989 to 2004. DOE used the mean share of each class across the six 
sample years as a basis for estimating the effective financing rate for 
replacement equipment. DOE estimated interest or return rates 
associated with each type of equity and debt using SCF data and other 
sources. The mean real effective rate across the classes of household 
debt and equity, weighted by the shares of each class, is 5.6 percent. 
See chapter 8 of the TSD accompanying this notice for further details 
on the development of discount rates for cooking products.
---------------------------------------------------------------------------

    \63\ The Federal Reserve Board, 1989, 1992, 1995, 1998, 2001, 
2004 Survey of Consumer Finances (1989, 1992, 1995, 1998, 2001, 
2004). These documents are available at: http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html.
---------------------------------------------------------------------------

    The Joint Comment stated that if DOE continues to use a weighted-
average cost of capital approach, the agency should make sure its 
calculations are up to date and consider consumers who use credit cards 
as month-to-month free loans by paying their bills on time. (Joint 
Comment, No. 29 at p. 13) As noted above, in developing its discount 
rates for residential consumers, DOE used data from the SCF. Data from 
the 2007 SCF survey were not available for this rulemaking. However, 
because the rates for various forms of credit carried by households in 
these years were established over a range of time, DOE believes they 
are representative of rates that may be in effect in 2013. The SCF data 
do not allow consideration of the special situations cited by the 
stakeholders, and DOE is not aware of any other nationally 
representative data source that provides interest rates from a 
statistically valid sample. Therefore, DOE continued to use the above 
approach and results for today's proposed rule.
b. Commercial Clothes Washers
    For CCWs, DOE derived the discount rate for its November 2007 ANOPR 
from the cost of capital of publicly traded firms in the sectors that 
purchase CCWs. DOE estimated the cost of capital of these firms as the 
weighted average of the cost of equity financing and the cost of debt 
financing. DOE identified the following sectors purchasing CCWs: (1) 
Educational services; (2) hotels; (3) real estate investment trusts; 
and (4) personal services. DOE estimated the cost of equity using the 
capital asset pricing model (CAPM). The cost of debt financing is the 
interest rate paid on money borrowed by a company. DOE estimated the 
weighted-average cost of capital (WACC) using the respective shares of 
equity and debt financing for each sector that purchases CCWs. It 
calculated the real WACC by adjusting the cost of capital by the 
expected rate of inflation. To obtain an average discount rate value, 
DOE used additional data on the number of CCWs in use in various 
sectors. DOE estimated the average discount rate for companies that 
purchase CCWs at 5.7 percent. DOE received no comments on its 
development of discount rates for CCWs and continued to use the same 
approach for today's proposed rule.
8. Effective Date of the Amended Standards
    The effective date is the future date when parties subject to the 
requirements of a new standard must begin compliance. Consistent with 
DOE's semi-annual implementation report for energy conservation 
standards activities submitted to Congress pursuant to section 141 of 
EPACT 2005, a final rule for all of the appliance products considered 
for this rulemaking is scheduled to be completed by March 2009. Any new 
energy efficiency standards for these products become effective three 
years after the final rule is published in the Federal Register (i.e., 
March 2012). DOE calculated the LCC for the appliance consumers as if 
they would purchase a new piece of equipment in the year the standard 
takes effect.
9. Equipment Assignment for the Base Case
    For the LCC analysis for its November 2007 ANOPR, DOE analyzed 
candidate standard levels relative to a baseline efficiency level. 
However, some consumers already purchase products with efficiencies 
greater than the baseline product levels. Thus, to accurately estimate 
the percentage of consumers that would be affected by a particular 
standard level, DOE's analysis considered the full breadth of product 
efficiencies that consumers already purchase under the base case (i.e., 
the case without new energy efficiency standards). DOE refers to this 
distribution of product efficiencies as base-case efficiency 
distributions.
a. Cooking Products
    DOE's approach for conducting the LCC analysis for cooking products 
relied on developing samples of households that use each of the 
products. Using the current distribution of product efficiencies, DOE 
assigned a specific product efficiency to each sample household. 
Because DOE performed the LCC calculations on a household-by-household 
basis, it based the LCC for a particular standard level on the 
efficiency of the product in the given household. For example, if a 
household was assigned a product efficiency that is greater than or 
equal to the efficiency of the standard level under consideration, the 
LCC calculation would show that this household is not impacted by an 
increase in product efficiency that is equal to the standard level.
    DOE currently does not regulate cooking product efficiency with an 
energy efficiency descriptor, so little is known about the distribution 
of product efficiencies that consumers currently purchase. Thus, for 
all electric cooking products (other than microwave ovens) and gas 
self-cleaning ovens, DOE estimated that 100 percent of the market is at 
the baseline efficiency levels. For gas cooktops and gas standard 
ovens, data are available that allowed DOE to estimate the percentage 
of gas cooktops and gas standard ovens still sold with standing pilot 
lights.
    DOE sought stakeholder feedback on its methodology and data sources 
for estimating base-case efficiency distributions. Whirlpool commented 
that DOE's distributions for the November 2007 ANOPR for all cooking 
products (except for gas standard ovens)

[[Page 62066]]

were reasonably accurate. (Whirlpool, No. 28 at pp. 8-9) DOE continued 
to use these base-case efficiency distributions for today's proposed 
rule. For gas standard ovens, Whirlpool stated that the percentage of 
the market at the baseline level should be half of what DOE estimated. 
(Id.) DOE developed the market share of gas standard ovens with 
standing pilots on actual shipments data, the most recent being data 
from the Appliance Recycling Information Center (ARIC) for 1997, 2000, 
and 2004. Without actual shipments data from Whirlpool, DOE believes it 
has no basis to change its estimated market share of gas standard ovens 
with standing pilots.
    For the November 2007 ANOPR, DOE allocated the entire market share 
of products without standard pilots to standard level 1 (products with 
glo-bar ignition). Based on information collected during the course of 
DOE's contacts with contractors to establish the repair and maintenance 
costs of gas cooking product ignition systems, DOE now estimates that 
10 percent of products without standing pilots use spark ignition 
systems.
    Table IV.5 shows the market shares of the efficiency levels in the 
base case (i.e., in the absence of new energy conservation standards) 
for gas cooktops and gas standard ovens. In the table, candidate 
standard level 1 represents products without standing pilot light 
ignition systems.

                    Table IV.5--Gas Cooktops and Gas Standard Ovens: Base Case Market Shares
----------------------------------------------------------------------------------------------------------------
                        Gas cooktops                                          Gas standard ovens
----------------------------------------------------------------------------------------------------------------
                                                    Market
         Standard level                 EF          share      Standard level          EF          Market share
                                                  (percent)                                         (percent)
----------------------------------------------------------------------------------------------------------------
Baseline........................           0.156    6.8      Baseline..........          0.0298             17.6
1...............................           0.399   93.2      1*................          0.0536             74.2
2...............................           0.420      0      2.................          0.0566              0
                                                             3.................          0.0572              0
                                                             4.................          0.0593              0
                                                             5.................          0.0596              0
                                                             6.................          0.0600              0
                                                             1a*...............          0.0583              8.2 
----------------------------------------------------------------------------------------------------------------
* For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are used for the same
  purpose--to eliminate the need for a standing pilot--but the technologies for each design are different.
  Candidate standard level 1 is a hot surface ignition device, whereas candidate standard level 1a is a spark
  ignition device. Candidate standard level 1a is presented at the end of the table because candidate standard
  levels 2 through 6 are derived from candidate standard level 1.

    DOE's regulations do not currently contain standards for microwave 
ovens, so very little is known about the distribution of product 
efficiencies that consumers currently purchase. For its November 2007 
ANOPR, DOE estimated that 100 percent of the microwave oven market was 
at the baseline efficiency level. This baseline efficiency level was 
described only in terms of the EF, because DOE did not consider standby 
power consumption for microwave ovens in its November 2007 ANOPR. As 
discussed previously in section IV.D, DOE established four standby 
power levels for consideration in today's proposed rule. Because DOE 
tentatively determined that it is technically infeasible to combine EF 
and standby power into a single efficiency metric, it continues to 
address the four cooking efficiency levels considered in the November 
2007 ANOPR, independent of standby power consumption. (See section 
III.A. for a complete discussion on the technical infeasibility of 
combining EF and standby power into a single metric.) Table IV.6 shows 
the EF levels and their market shares in the base case. 72 FR 64432, 
64488 (Nov. 15, 2007).

       Table IV.6--Microwave Ovens: Base Case Market Shares for EF
------------------------------------------------------------------------
                                                           Market share
             Standard level                     EF           (percent)
------------------------------------------------------------------------
Baseline................................           0.557             100
1a......................................           0.586             0.0
2a......................................           0.588             0.0
3a......................................           0.597             0.0
4a......................................           0.602             0.0
------------------------------------------------------------------------

    With regard to standby power, during the course of DOE's 
investigation of microwave oven standby power consumption, DOE and AHAM 
tested a combined total of 52 units (see section III.A.). Based on 
these tests, DOE determined the percentage at each of the standby power 
levels identified in section IV.C.1. Because no other data were 
available, DOE used the test data from the combined sample to develop 
the market shares of standby power consumption in the base case. DOE 
seeks comment on whether the market share data in Table IV.7 are 
representative of the microwave oven market as a whole.

 Table IV.7--Microwave Ovens: Base Case Market Shares for Standby Power
------------------------------------------------------------------------
                                           Standby power   Market share
             Standard level                   (watts)        (percent)
------------------------------------------------------------------------
Baseline................................            4.0             46.2

[[Page 62067]]

 
1b......................................            2.0             34.6
2b......................................            1.5             19.2
3b......................................            1.0              0.0
4b......................................            0.02             0.0
------------------------------------------------------------------------

b. Commercial Clothes Washers
    For the November 2007 ANOPR, DOE derived its base-case market share 
data for CCWs based on shipment-weighted efficiency data provided by 
AHAM and assuming that CCWs were to be analyzed as a single product 
class. DOE sought stakeholder feedback on its methodology and data 
sources. Whirlpool commented that the distributions used by DOE for 
CCWs are reasonably accurate. (Whirlpool, No. 28 at p. 9)
    As discussed previously in section IV.A.2., DOE has now decided to 
analyze CCWs with two product classes for today's proposed rule--top-
loading washers and front-loading washers. DOE used the number of 
available models within each product class to establish the base-case 
effciency distributions. Table IV.8 presents the market shares of the 
efficiency levels in the base case for CCWs. See chapter 8 of the TSD 
accompanying this notice for further details on the development of CCW 
base-case market shares.

                                             Table IV.8--Commercial Clothes Washers: Base Case Market Shares
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Top-loading                                                                 Front-loading
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Market
              Standard level                    MEF           WF      Market share          Standard level             MEF           WF         share
                                                                        (percent)                                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................         1.26         9.50         63.6   Baseline.....................         1.72         8.00          7.4
1.........................................         1.42         9.50         33.3   1............................         1.80         7.50          4.4
2.........................................         1.60         8.50          0.0   2............................         2.00         5.50         85.3
3.........................................         1.76         8.30          3.0   3............................         2.20         5.10          1.5
                                                                                    4............................         2.34         4.40          1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Commercial Clothes Washer Split Incentive
    Under a split incentive situation, the party purchasing more 
efficient and presumably more expensive equipment may not realize the 
operating cost savings from that equipment, because another party 
(e.g., a landlord) may pay the utility bill. In the November 2007 
ANOPR, DOE did not explicitly consider the potential of split 
incentives in the CCW market, because it believed that the probability 
of such incentives was very low.
    Whirlpool disagreed with DOE's dismissal of the potential for split 
incentives in the CCW market. Whirlpool stated that those who own CCWs 
(usually route operators) do not incur the operating costs (as do, 
generally, laundromats and owners of multi-family dwellings). Route 
operators generally have contracts that run from 5 to 10 years, which 
limits their ability to pass on the higher costs of higher-efficiency 
units. (Whirlpool, No. 28 at pp. 12-13) Alliance noted that multi-
housing property owners typically lease CCWs, and the route operator 
owns the machine. (Alliance, Public Meeting Transcript, No. 23.7 at p. 
85)
    To evaluate the ability of CCW owners to pass on the costs of more 
expensive CCWs in the form of higher lease costs, DOE examined the SEC 
filings of two of the largest route operators, Coinmach Service 
Corporation (Coinmach) and Mac-Gray Corporation (Mac-Gray). DOE found 
that the lease agreements for those two operators allow for flexibility 
in their contracting. Coinmach stated the following in a June 2000 10-K 
Securities and Exchange Commission (SEC) filing: ``The Company's 
[Coinmach] leases typically include provisions that allow for 
unrestricted price increases, a right of first refusal (an opportunity 
to match competitive bids at the expiration of the lease term) and 
termination rights if the Company does not receive minimum net revenues 
from a lease. The Company has some flexibility in negotiating its 
leases and, subject to local and regional competitive factors, may vary 
the terms and conditions of a lease, including commission rates and 
advance location payments.'' \64\ The 2006 Mac-Gray 10-K SEC filing 
suggests that lease agreements are relatively short term, i.e., under 
five years rather than the 5 to 10 years identified by Whirlpool: ``As 
of December 31, 2006, approximately 90% of our [Mac-Gray] installed 
machine base was located in laundry facilities subject to long-term 
leases, which have a weighted average remaining term of approximately 
five years . . . Approximately 10% to 15% of such laundry room leases 
are up for renewal each year.'' \65\ This lease turnover rate suggests 
that route operators should be able to time equipment replacement and/
or upgrades with lease renewals. This in turn allows route operators to 
renegotiate lease terms to compensate them for the higher capital 
expenditures associated with more-efficient laundry equipment while 
splitting the economic benefits of such CCWs with the building owner(s) 
as part of the lease.
---------------------------------------------------------------------------

    \64\ This document is available at: http://sec.edgar-online.com/2000/06/29/16/0000902561-00-000328/Section2.asp.
    \65\ This document is available at: http://www.secinfo.com/d11MXs.ujBa.htm#1j71.
---------------------------------------------------------------------------

    Based on this information, DOE believes that few route operators 
would allow themselves to be held to a lease agreement that would 
prevent them from recovering the cost of more efficient CCW equipment. 
Therefore, DOE concludes that new CCW efficiency standards are unlikely 
to lead to split incentives in the CCW market.
11. Inputs to Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more

[[Page 62068]]

efficient equipment through energy (and water) cost savings, compared 
to baseline equipment. The simple payback period does not account for 
changes in operating expense over time or the time value of money. 
Payback periods are expressed in years. Payback periods greater than 
the life of the product mean that the increased total installed cost is 
not recovered in reduced operating expenses.
    The inputs to the PBP calculation are the total installed cost of 
the equipment to the customer for each efficiency level and the annual 
(first-year) operating expenditures for each efficiency level. The PBP 
calculation uses the same inputs as the LCC analysis, except that 
energy (and water) price trends and discount rates are not needed.
12. Rebuttable-Presumption Payback Period
    DOE performs a PBP analysis to determine whether the three-year 
rebuttable presumption of economic justification applies (in essence, 
whether the purchaser will recover the higher installed cost of more-
efficient equipment through lowered operating costs within three 
years). For each TSL, DOE determined the value of the first year's 
energy savings by calculating the quantity of those savings in 
accordance with DOE's test procedure, and multiplying that amount by 
the average energy price forecast for the year in which a new standard 
is expected to take effect--in this case, 2012. Section V.B.1.c. of 
this notice and chapter 8 of the TSD accompanying this notice present 
the rebuttable-presumption PBP results. DOE did not receive any 
comments on its analysis of the three-year rebuttable presumption of 
economic justification.

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

1. General
    DOE's NIA assesses the national energy savings, as well as the NPV 
of total customer costs and savings expected to result from new 
standards at specific efficiency levels.
    DOE used the NIA spreadsheet to perform calculations of energy 
savings and NPV, using the annual energy consumption and total 
installed cost data used in the LCC analysis. DOE forecasted the energy 
savings, energy cost savings, equipment costs, and NPV for each product 
class from 2012 through 2042. The forecasts provided annual and 
cumulative values for all four output parameters. In addition, DOE 
incorporated into its NIA spreadsheet the capability to analyze 
sensitivities to forecasted energy prices and product efficiency 
trends.
    Table IV.9 summarizes the approach and data DOE used to derive the 
inputs to the NES and NPV analyses for the November 2007 ANOPR and the 
changes made in the analyses of the proposed rule. A discussion of the 
inputs and the changes follows below. (See chapter 11 of the TSD 
accompanying this notice for further details.)

 Table IV.9--Approach and Data Used To Derive the Inputs to the National
              Energy Savings and Net Present Value Analyses
------------------------------------------------------------------------
                                   2007 ANOPR          Changes for the
           Inputs                  description          proposed rule
------------------------------------------------------------------------
Shipments...................  Annual shipments      See Table IV.10.
                               from Shipments
                               Model.
Effective Date of Standard..  2012................  No change.
Base-Case Forecasted          Shipment-weighted     No change.
 Efficiencies.                 efficiency (SWEF)
                               determined in the
                               year 2005. SWEF
                               held constant over
                               forecast period of
                               2005-2042.
Standards-Case Forecasted     Cooking Products:     Cooking Products: No
 Efficiencies.                 ``Roll-up''           change.
                               scenario used for
                               determining SWEF in
                               the year 2012 for
                               each standards
                               case. SWEF held
                               constant over
                               forecast period of
                               2012-2042.
                             -------------------------------------------
                              CCWs: Analyzed as a   CCWs: Analyzed as
                               single product        two product
                               class. Roll-up        classes. For each
                               scenario used for     product class, roll-
                               determining SWEF in   up scenario used
                               the year 2012 for     for determining
                               each standards        SWEF in the year
                               case. SWEF held       2012 for each
                               constant over         standards case.
                               forecast period of    SWEF held constant
                               2012-2042.            over forecast
                                                     period of 2012-
                                                     2042.
Annual Energy Consumption     Annual weighted-      No change.
 per Unit.                     average values as a
                               function of SWEF.
Total Installed Cost per      Annual weighted-      No change.
 Unit.                         average values as a
                               function of SWEF.
Energy and Water Cost per     Annual weighted-      No change.
 Unit.                         average values a
                               function of the
                               annual energy
                               consumption per
                               unit and energy
                               (and water) prices.
Repair Cost and Maintenance   Cooking Products: No  Cooking Products:
 Cost per Unit.                changes in repair     Incorporated
                               and maintenance       changes in repair
                               costs due to          costs for non-
                               standards.            standing pilot
                                                     ignition systems.
                             -------------------------------------------
                              CCWs: No changes in   CCWs: Incorporated
                               repair and            changes in repair
                               maintenance costs     costs as a function
                               due to standards.     of efficiency.
Escalation of Energy and      Energy Prices: AEO    Energy Prices:
 Water Prices.                 2007 forecasts (to    Updated to AEO 2008
                               2030) and             forecasts.
                               extrapolation to
                               2042.
                             -------------------------------------------
                              Water Prices: Linear  Water Prices:
                               extrapolation of      Updated to include
                               1970-2005             historical trend
                               historical trends     through 2007.
                               in national water
                               price index.
Energy Site-to-Source         Conversion varies     No change.
 Conversion.                   yearly and is
                               generated by DOE/
                               EIA's NEMS* program
                               (a time-series
                               conversion factor;
                               includes electric
                               generation,
                               transmission, and
                               distribution
                               losses).
Effect of Standards on        Not considered......  Determined but found
 Energy Prices.                                      not to be
                                                     significant.
Discount Rate...............  Three and seven       No change.
                               percent real.

[[Page 62069]]

 
Present Year................  Future expenses are   No change.
                               discounted to year
                               2007.
------------------------------------------------------------------------

2. Shipments
    An important element in the estimate of the future impact of a 
standard is product shipments. The shipments portion of the NIA 
Spreadsheet is a Shipments Model that uses historical data as a basis 
for projecting future shipments of the appliance products that are the 
subject of this rulemaking. In projecting shipments, DOE accounted for 
three market segments: (1) New construction; (2) existing buildings 
(i.e., replacing failed equipment); and (3) early replacements (for 
cooking products) and retired units not replaced (i.e., non-
replacements for CCWs). DOE used the early replacement and non-
replacement market segments to calibrate the Shipments Model to 
historical shipments data. For purposes of estimating the impacts of 
prospective standards on product shipments (i.e., forecasting 
standards-case shipments) DOE accounted for the combined effects of 
changes in purchase price, annual operating cost, and household income 
on the consumer purchase decision.
    Table IV.10 summarizes the approach and data DOE used to derive the 
inputs to the shipments analysis for the November 2007 ANOPR, and the 
changes it made for today's proposed rule. The most significant change 
pertains to CCWs. For the November 2007 ANOPR, DOE analyzed CCWs as a 
single product class. For reasons described in section IV.A.2, DOE has 
decided to analyze CCWs as two product classes--top-loading and front-
loading washers. The general approach for forecasting CCW shipments for 
today's proposed rule remains unchanged from the 2007 ANOPR. That is, 
all CCW shipments (i.e., shipments for both product classes) were 
estimated for the new construction, replacement and non-replacement 
markets. The difference for today's proposed rule is that after 
establishing forecasted product shipments for all CCWs, DOE allocated 
shipments to each of the two product classes based on the market share 
of each class. Based on data provided by AHAM for the 2007 ANOPR, DOE 
estimated that top-loading washers comprise 80 percent of the market 
while front-loading washers comprise 20 percent. DOE estimated that the 
product class market shares would remain unchanged over the time period 
2005-2042. A discussion of the inputs and the changes follows below.

     Table IV.10--Approach and Data Used To Derive the Inputs to the
                           Shipments Analysis
------------------------------------------------------------------------
                                   2007 ANOPR          Changes for the
           Inputs                  description          proposed rule
------------------------------------------------------------------------
Number of Product Classes...  Cooking Products:     Cooking Products: No
                               Seven classes for     change.
                               conventional (i.e.,
                               non-microwave oven
                               cooking products;
                               one class for
                               microwave ovens.
                             -------------------------------------------
                              CCWs: Single product  CCWs: Two product
                               class.                classes: top-
                                                     loading washers and
                                                     front-loading
                                                     washers. Shipments
                                                     forecasts
                                                     established for all
                                                     CCWs and then
                                                     disaggregated into
                                                     the two product
                                                     classes based on
                                                     the market share of
                                                     top- and front-
                                                     loading washers.
                                                     Market share data
                                                     provided by AHAM;
                                                     80% top-loading and
                                                     20% front-loading.
                                                     Product class
                                                     market shares held
                                                     constant over time
                                                     period of 2005-
                                                     2042.
New Construction Shipments..  Cooking Products:     Cooking Products: No
                               Determined by         change in approach.
                               multiplying housing   Housing forecasts
                               forecasts by          updated with EIA
                               forecasted            AEO 2008
                               saturation of         projections.
                               cooking products
                               for new housing.
                               Housing forecasts
                               based on AEO 2007
                               projections. New
                               housing product
                               saturations based
                               on EIA's RECS.
                               Forecasted
                               saturations
                               maintained at 2001
                               levels.
                             -------------------------------------------
                              CCWs: Determined by   CCWs: Multi-housing
                               multiplying multi-    forecasts updated
                               housing forecasts     with AEO 2008
                               by forecasted         projections.
                               saturation of CCWs    Verified frozen
                               for new multi-        saturations with
                               housing. Multi-       data from the U.S.
                               housing forecasts     Census Bureau's
                               based on AEO 2007     American Housing
                               projections. New      Survey (AHS) for
                               multi-housing         1997-2005.
                               product saturations
                               calibrated against
                               data from the
                               Consortium for
                               Energy Efficiency
                               (CEE). Forecasted
                               saturations
                               maintained (frozen)
                               at 1999 levels.
Replacements................  Cooking Products:     Cooking Products: No
                               Determined by         change in approach.
                               tracking total        Retirement
                               product stock by      functions revised
                               vintage and           to be based on
                               establishing the      Weibull lifetime
                               failure of the        distributions.
                               stock using
                               retirement
                               functions from the
                               LCC and PBP
                               analysis.
                               Retirement
                               functions were
                               based on uniform
                               lifetime
                               distributions.
                             -------------------------------------------
                              CCWs: Determined by   CCWs: No change in
                               tracking total        approach.
                               product stock by      Retirement
                               vintage and           functions revised
                               establishing the      to be based on
                               failure of the        Weibull lifetime
                               stock using           distributions.
                               retirement
                               functions from the
                               LCC and PBP
                               analysis.
                               Retirement
                               functions were
                               based on uniform
                               lifetime
                               distributions.

[[Page 62070]]

 
Early Replacements (cooking   Used to calibrate     No change.
 products only).               Shipments Model to
                               historical
                               shipments data. Two
                               percent of the
                               surviving stock per
                               year is retired
                               early.
Retired Units not Replaced    Used to calibrate     Froze the percentage
 (i.e., non-replacements)      Shipments Model to    of non-replacements
 (CCWs only).                  historical            at 15 percent for
                               shipments data.       the period 2006-
                               Starting in 1999      2042. Revision was
                               and extending to      made to account for
                               2005, estimated       the increased
                               that 3 to 35% of      saturation rate of
                               retired units were    in-unit washers in
                               not replaced.         the multi-family
                               Gradually reduced     stock between 1997
                               the percentage of     and 2005 timeframe
                               non-replacements to   shown by the AHS.
                               zero between 2006
                               and 2013.
Historical Shipments........  Cooking Products:     Cooking Products: No
                               Data sources          change.
                               include AHAM data
                               submittal, AHAM
                               Fact Book, and
                               Appliance Magazine.
                             -------------------------------------------
                              CCWs: Data sources    CCWs: No change.
                               include AHAM data
                               submittal,
                               Appliance Magazine,
                               and U.S. Bureau of
                               Economic Analysis'
                               quantity index data
                               for commercial
                               laundry.
Purchase Price, Operating     Developed the         No change.
 Cost, and Household Income    ``relative price''
 impacts due to efficiency     elasticity which
 standards.                    accounts for the
                               purchase price and
                               the present value
                               of operating cost
                               savings divided by
                               household income.
                               Used purchase price
                               and efficiency data
                               specific to
                               residential
                               refrigerators,
                               clothes washers,
                               and dishwashers
                               between 1980 and
                               2002 to determine a
                               ``relative price''
                               elasticity of
                               demand, of -0.34.
Fuel Switching..............  Cooking Products:     Cooking Products: No
                               Not considered.       change.
                             -------------------------------------------
                              CCWs: Not applicable  CCWs: Not
                                                     applicable.
------------------------------------------------------------------------

a. New Construction Shipments
    To determine new construction shipments, DOE used forecasts of 
housing starts coupled with the product market saturation data for new 
housing. For new housing completions and mobile home placements, DOE 
used actual data through 2005, and adopted the projections from EIA's 
AEO 2007 for 2006-2030 for the November 2007 ANOPR.\66\ DOE updated its 
housing projections for today's proposed rule using AEO 2008. DOE used 
the 2001 RECS to establish cooking product market saturations for new 
housing. For CCWs, DOE relied on new construction market saturation 
data from CEE.\67\
---------------------------------------------------------------------------

    \66\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2007 with Projections to 2030 
(Feb. 2007) (DOE/EIA-0383 (2007)). This document is available at: 
http://www.eia.doe.gov/oiaf/aeo/index.html.
    \67\ Consortium for Energy Efficiency, Commercial Family-Sized 
Washers: An Initiative Description of the Consortium for Energy 
Efficiency (1998). This document is available at: http://www.ceel.org/com/cwsh/cwsh-main.php3.
---------------------------------------------------------------------------

b. Replacements
    DOE estimated replacements using product retirement functions that 
it developed from product lifetimes. For the November 2007 ANOPR, DOE 
based the retirement function on a uniform probability distribution for 
the product lifetime. As discussed in section IV.E.6 of this notice, 
DOE updated its product lifetime distributions for the LCC analysis 
using Weibull distributions. As a result, DOE also updated its 
retirement functions for the Shipments Model based on Weibull 
distributions.
    Cooking Products. To calibrate each Shipments Model against 
historical shipments, DOE established the early replacement market 
segment for cooking products. DOE determined for its November 2007 
ANOPR that two percent of the surviving stock was replaced early. This 
finding was retained for today's proposed rule.
    Commercial Clothes Washers. For the November 2007 ANOPR, DOE 
determined that from 1988 to 1998, annual shipments of clothes washers 
stayed roughly in the range of 200,000 to 230,000 units per year. But 
data provided by AHAM show a drop in shipments to approximately 180,000 
units in 2005. To calibrate its Shipments Model for the November 2007 
ANOPR, DOE attributed this drop to non-replacements (i.e., a portion of 
CCWs that were retired from service from 1999 to 2005 were not 
replaced). Since DOE found no evidence that such non-replacement would 
continue over time, it projected that overall shipments would recover 
and gradually increase after the drop witnessed between 1999 and 2005 
as stocks of existing machines are retired. DOE specifically sought 
feedback in the November 2007 ANOPR on its assumptions regarding the 
shipments forecasts for CCWs.
    AHAM, Alliance, Whirlpool, Southern Company (SC) and Miele argued 
that CCW shipments are likely to decrease further in the future. (AHAM, 
No. 32 at pp. 4, 11-12; Alliance, No. 26 at p. 5; Whirlpool, No. 28 at 
pp. 9-10; SCG, Public Meeting Transcript, No. 23.7 at pp. 179-180; and 
Miele, Public Meeting Transcript, No. 23.7 at pp. 110-111) AHAM 
disagreed with DOE's forecast of CCW shipments, arguing that future 
shipments will remain unchanged from historical values, if not somewhat 
reduced. AHAM stated that both the number of replacement units and the 
number of new common-area laundry units are decreasing. AHAM cited a 
study \68\ by the National Multi-Housing Council indicating that growth 
in multi-family housing is being driven in large part by high-end 
apartment complexes, which often include in-apartment amenities such as 
clothes washers and dryers, and cited data from the U.S. Census 
Bureau's American Housing Survey (AHS) showing growth in in-unit 
clothes washers (for rental units). The switch to in-unit laundry 
appliances in rental units results in a reduction of shared laundry 
areas, implying a corresponding reduction in CCW shipments. (AHAM, No. 
32 at pp. 4, 11-12)
---------------------------------------------------------------------------

    \68\ J. Goodman, The Upscale Apartment Market: Trends and 
Prospects (National Multi-Housing Council) (2001).
---------------------------------------------------------------------------

    Alliance agreed that CCWs are increasingly competing with in-unit 
laundry products in multi-family housing. It cited information from the 
Multi-housing Laundry Association (MLA) stating that most recent multi-
family new construction in California and Nevada accommodates in-unit 
washers and many existing properties of 100 or more units are 
converting to in-

[[Page 62071]]

unit washers. Alliance supported AHAM's conclusions about CCW shipments 
and urged DOE to revise its shipments forecast to approximate the 
recent downward trend in CCW shipments, or, at the very least, keep CCW 
shipments constant. (ALS, No. 26 at p. 5) Whirlpool stated that CCW 
shipments are not increasing, and argued that an assumption of flat 
demand would be more realistic, adding that an alternative of declining 
demand should be explored to estimate the sensitivity of this 
assumption for overall energy savings. (Whirlpool, No. 28 at pp. 9-10) 
SC and Miele also stated that there is a trend toward multi-family 
residences using in-unit washers as opposed to common area laundry 
facilities. (SC, Public Meeting Transcript, No. 23.7 at pp. 179-180; 
Miele, Public Meeting Transcript, No. 23.7 at pp. 110-111)
    The Joint Comment disagreed with the claims by AHAM, Whirlpool, and 
Alliance. The Joint Comment argued that Alliance cited no decline in 
CCW shipments when reporting to the SEC on ``trends and 
characteristics'' in the North American market for its commercial 
laundry products. Rather, the Joint Comment stated that Alliance cited 
population growth as a ``steady driver'' for CCW shipments (i.e., 
suggesting that the DOE projection appears reasonable). (Joint Comment, 
No. 29 at p. 5)
    DOE appreciates the evidence that AHAM and Alliance have provided 
to illustrate the movement in multi-family buildings away from common-
area laundry facilities to in-unit washers and dryers. To reevaluate 
its November 2007 ANOPR shipments forecast, DOE verified AHAM's 
conclusion regarding the AHS data, namely, that the stock of in-unit 
washers in the multi-family stock has increased 16 percent between 1997 
and 2005. DOE also found that from 1997 to 2005, the AHS shows that the 
saturation of in-unit washers in new multi-family construction has 
stayed relatively constant, varying only slightly between 76 and 80 
percent. The implication is that CCW saturations in new multi-family 
construction also remained constant between 1997 and 2005. This 
suggests that the growth in in-unit washer saturations in the multi-
family stock over the last 10 years was likely caused by conversions of 
rental property to condominiums, resulting in the gradual phase-out or 
non-replacement of failed CCWs in common-area laundry facilities. Based 
on this apparent trend, DOE revised its November 2007 ANOPR estimate 
that CCW non-replacements would gradually phase-out by 2013. For 
today's proposed rule, DOE used the average percent of non-replacements 
over the period between 1999 and 2005 (18 percent) and maintained it 
over the entire forecast period of 2006 to 2042. The effect of 
maintaining non-replacements at 18 percent results in CCW shipments 
forecasts staying relatively flat between 2006 and 2042. This is in 
contrast to the annual growth rate of two percent determined for the 
November 2007 ANOPR.
c. Purchase Price, Operating Cost, and Household Income Impacts
    To estimate the combined effects on product shipments from 
increases in equipment purchase price and decreases in equipment 
operating costs due to new efficiency standards for the November 2007 
ANOPR, DOE conducted a literature review and a statistical analysis on 
a limited set of appliance price, efficiency, and shipments data. As 
the November 2007 ANOPR describes, DOE used purchase price and 
efficiency data specific to residential refrigerators, clothes washers, 
and dishwashers between 1980 and 2002 to conduct simple regression 
analyses. DOE's analysis suggests that the relative price elasticity of 
demand, averaged over the three appliances, is -0.34. Because DOE's 
forecast of shipments and national impacts due to standards spans over 
30 years, DOE considered how the relative price elasticity is affected 
once a new standard takes effect. After the purchase price change, 
price elasticity becomes more inelastic over the years until it reaches 
a terminal value--usually around the tenth year after the price change. 
DOE incorporated a relative price elasticity change that resulted in a 
terminal value of approximately one-third of the short-run elasticity 
(-0.34). In other words, DOE determined that consumer purchase 
decisions, in time, become less sensitive to the initial change in the 
product's relative price. DOE received no comments on its analysis to 
estimate the combined effects of increases in product purchase price 
and decreases in operating costs and, therefore, retained the analysis 
and the results for today's proposed rule.
    Because the combined market of electric and gas cooking products is 
completely saturated, DOE assumed in the November 2007 ANOPR that 
electric and gas cooking product standard levels would neither affect 
base-case shipments nor cause shifts in electric and gas cooking 
product market shares for cooking products other than microwave ovens. 
Thus, DOE's Shipments Model for electric and gas cooking products 
(i.e., conventional cooking products) does not incorporate use of a 
relative price elasticity.
d. Fuel Switching
    AGA commented that it is likely that consumers will switch from gas 
to electric cooking products in the event that standing pilot ignition 
systems are eliminated. According to AGA, consumers who face rewiring 
costs when replacing a gas cooking product are likely to consider 
purchasing and rewiring for an all-electric cooking product. Therefore, 
AGA commented that DOE needs to analyze the likelihood of such fuel 
switching, including assessing the full fuel-cycle energy consumption 
and emission implications, and evaluating the tradeoffs between the 
costs of the wiring jobs and the first costs of competing gas and 
electric products. (AGA, No. 27 at p. 3)
    As section IV.E.2 of this notice describes, DOE estimated a cost of 
$235 for installing an electrical outlet to accommodate a gas cooking 
product that needs electricity to operate. If a consumer were to switch 
from a gas cooking product to an electrical appliance due to the 
prospect of this installation cost, an outlet would still be needed to 
accommodate the electrical appliance. Based on the RS Means Mechanical 
Cost Data, 2008, the cost of installing only an outlet suitable for an 
electrical cooking appliance, which requires a 50-amp, 240-volt 
receptacle, is $305.\69\ Due to the amperage and voltage requirements 
of the receptacle as well as the age of the household in which the 
outlet would be installed (pre-1960), a separate branch circuit coming 
off the fuse box or circuit breaker panel would be necessary to 
accommodate the electrical cooking appliance. Also, because of the 
additional amperage required by the electrical cooking appliance, it is 
highly likely that the fuse box or circuit breaker panel would need to 
be upgraded. Based on material costs from the Craftsman 2008 Repair & 
Remodeling Estimator \70\ and labor costs for the RS Means, Mechanical 
Cost Data, 2008, DOE estimated an installation cost of $1247 for 
installing a branch circuit and upgrading a breaker panel from 50 amps 
to 100 amps. Combined with the $305 installation cost of the 
receptacle, the total installation cost to accommodate an electrical 
cooking appliance is

[[Page 62072]]

estimated to be $1562 or over six times the cost of installing a 
standard 120-volt outlet for a gas cooking product. Therefore, there is 
no financial incentive for a consumer to switch from gas cooking to 
electric cooking. Thus, DOE believes the probability of fuel switching 
is so low that DOE is not considering it in today's proposed rule. See 
chapter 11 of the TSD accompanying this notice for further details.
---------------------------------------------------------------------------

    \69\ RS Means, Mechanical Cost Data (30th Annual Edition) (2008) 
Op. cit.
    \70\ Craftsman Book Company, 2008 National Repair & Remodeling 
Estimator (2008). Available for purchase at: http://craftsman-book.com/products/index.php?main_page=cbc_product_book_info&products_id=400.
---------------------------------------------------------------------------

3. Other Inputs
    The following is a discussion of the other inputs to the NIA and 
any revisions DOE made to those inputs for today's proposed rule.
a. Base-Case Forecasted Efficiencies
    A key input to DOE's estimates of NES and NPV are the energy 
efficiencies that DOE forecasts over time for the base case (without 
new standards) and each of the standards cases. The forecasted 
efficiencies represent the annual shipment-weighted energy efficiency 
(SWEF) of the products under consideration over the forecast period 
(i.e., from the estimated effective date of a new standard to 30 years 
after the standard becomes effective). Because key inputs to the 
calculation of the NES and NPV depend on the estimated efficiencies, 
they are of great importance to the analysis. In the case of the NES, 
the per-unit annual energy (and water) consumption is a direct function 
of product efficiency. Regarding the NPV, two inputs (the per-unit 
total installed cost and the per-unit annual operating cost), depend on 
efficiency. The per-unit total installed cost is a direct function of 
efficiency. Because it is a direct function of the per-unit energy (and 
water) consumption, the per-unit annual operating cost depends 
indirectly on product efficiency.
    As section IV.D.9 of this notice discusses, DOE based its 
development of the product efficiencies in the base case on the 
assignment of equipment efficiencies in 2005. In other words, DOE 
determined the distribution of product efficiencies currently in the 
marketplace to develop a SWEF for 2005. Using the SWEF as a starting 
point, DOE developed base-case forecasted efficiencies based on 
estimates of future efficiency growth. From 2005 to 2012 (2012 being 
the estimated effective date of a new standard), DOE estimated for the 
November 2007 ANOPR that there would be no growth in SWEF (i.e., no 
change in the distribution of product efficiencies). Because there are 
no historical data to indicate how product efficiencies have changed 
over time, DOE estimated that forecasted efficiencies would remain 
frozen at the 2012 efficiency level until the end of the forecast 
period (i.e., 2042, or 30 years after the effective date). DOE did 
forecast the market share of gas standard ranges equipped with standing 
pilot lights to estimate the impact of eliminating standing pilot 
lights for gas cooktops and gas standard ovens. Although DOE recognizes 
the possibility that product efficiencies may change over time (e.g., 
due to voluntary efficiency programs such as ENERGY STAR), without 
historical information, DOE had no basis for speculating how these 
product efficiencies may change.
    AHAM commented that DOE's approach to estimating forecasted base-
case efficiencies was realistic. (AHAM, No. 32 at p. 12) For cooking 
products, Whirlpool also agreed with DOE's approach because these 
products are not incentivized by transformation programs such as ENERGY 
STAR. Whirlpool stated that because a new standard was established for 
CCWs in 2007, a change from that level is unlikely before 2012 due to 
product development cycles. Whirlpool would not speculate on changes in 
efficiency between 2012 and 2042; however, Whirlpool disagreed with 
DOE's assumption of no change. Whirlpool added that voluntary market 
transformation programs, such as ENERGY STAR, have a proven track 
record of saving energy without standards, and one could reasonably 
assume that such programs will have at least the same impact going 
forward as they have had historically. (Whirlpool, No. 28 at p. 10)
    For today's proposed rule, DOE maintained its approach of freezing 
forecasted efficiencies at the efficiency level estimated for 2012 for 
both residential cooking products and CCWs. For cooking products, the 
two stakeholders that did comment (AHAM and Whirlpool, as discussed 
above) agreed with DOE's approach. Due to Whirlpool's concerns 
regarding CCWs, DOE's Building Technologies Program contacted the 
ENERGY STAR program within DOE to determine what actions are being 
undertaken to promote the adoption of more-efficient CCWs. CCWs have 
been a product covered under the ENERGY STAR program since 2000. But 
the program has not been able to monitor sales on ENERGY STAR-qualified 
products because manufacturers are not required to submit relevant data 
to ENERGY STAR. Also, because CCWs are not sold through a distribution 
channel involving appliance retailers, DOE believes that any market 
share estimates developed would be dubious. Without reliable data from 
which to estimate the impact of ENERGY STAR on CCW market efficiency, 
DOE has decided to retain its frozen efficiency forecasts for today's 
proposed rule. This is a conservative estimate that will be taken into 
consideration when DOE weighs the benefits and burdens of TSLs.
b. Standards-Case Forecasted Efficiencies
    For its determination of standards-case forecasted efficiencies, 
DOE used a ``roll-up'' scenario in the November 2007 ANOPR to establish 
the SWEF for 2012, the year that standards would become effective. DOE 
stated its expectation that product efficiencies in the base case, 
which did not meet the standard level under consideration, would roll-
up to meet the new standard level. Also, DOE assumed that all product 
efficiencies in the base case that were above the standard level under 
consideration would not be affected (i.e., would not require or 
experience efficiency improvements as a result of a new energy 
efficiency standard). DOE made the same estimates regarding forecasted 
standards-case efficiencies as for the base case, namely, that 
forecasted efficiencies remained frozen at the 2012 efficiency level 
until the end of the forecast period, because DOE had no data to 
reasonably estimate how such efficiency levels might change over the 
next 30 years. By maintaining the same growth rate for forecasted 
efficiencies in the standards case as in the base case (i.e., zero or 
frozen growth), DOE retained a constant efficiency difference or gap 
between the two cases over the length of the forecast period. Although 
frozen trends may not reflect what happens to base-case and standards-
case product efficiencies in the future, DOE nevertheless believes that 
maintaining a frozen efficiency difference between the base case and 
standards case provides a reasonable estimate of the impact that 
standards have on product efficiency. In other words, because the 
determination of national energy savings and national economic impacts 
are more reliant on the impact that standards have on product 
efficiency, it is more important to accurately estimate the product 
efficiency gap between the standards case and base case, rather than to 
accurately estimate the actual product efficiencies in the standards-
case and base-case efficiency trends. To further explore this point, in 
the November 2007 ANOPR, DOE specifically sought feedback on its 
estimates of forecasted standards-case efficiencies and its view of how 
standards affect product

[[Page 62073]]

efficiency distributions in the year that standards take effect.
    The Joint Comment on the ANOPR stated that DOE's roll-up assumption 
is inadequate for estimating impacts, especially for lower and mid-
range candidate standard levels. According to the Joint Comment, new 
distributions of efficiency performance occur largely because ENERGY 
STAR has offered market distinction for higher efficiency products, 
while utilities and other efficiency program administrators have 
offered incentives for beyond-standards levels of performance. The 
Joint Comment argued that this process will become more important in 
the future, not less; this means consumers are buying an increasing 
number of products at levels significantly more efficient than Federal 
standards. For prior rulemakings, the Joint Comment argued that DOE has 
also evaluated a ``shift'' scenario, which models savings if the 
distribution of efficiencies were to remain the same as the current 
distribution, but simply shift above a given new standard level. The 
Joint Comment stated that modeling both roll-up and shift scenarios 
would enable DOE and stakeholders to better evaluate the impacts of a 
given standard level. (Joint Comment, No. 29 at pp. 4-5) Counter to the 
Joint Comment, both AHAM and Whirlpool concurred with DOE's use of a 
roll-up assumption for estimating the impact of standards on product 
efficiencies. (AHAM, No. 32 at p. 12; Whirlpool, No. 28 at p. 10)
    As noted in Whirlpool's comments, there are no market 
transformation programs such as ENERGY STAR for cooking products. 
Therefore, without the lure of a market transformation program like 
ENERGY STAR to promote the use of more-efficient cooking products 
beyond a particular standard level, DOE believes it is reasonable to 
estimate the impact of standards on the SWEF with only a roll-up 
scenario.
    As described above, CCWs are under the ENERGY STAR program, but 
there are no data on the impact that the program has had on market 
efficiency. In the case of top-loading washers, the base-case 
efficiency distribution specifies all but three percent of the top-
loading CCW market at either the baseline or 1.42 MEF/9.5 WF efficiency 
levels. Because the technological changes required to achieve higher 
efficiency levels are not currently being utilized in top-loading CCW 
designs, DOE estimates that standards would be unlikely to shift the 
top-loading CCW market to levels beyond minimum required efficiencies. 
In the case of front-loading washers, over 80 percent of the front-
loading CCW market is already at an efficiency level of 2.00 MEF/5.5 
WF, which is nearly at the max-tech level of 2.35 MEF/4.4 WF. 
Therefore, the effects from a shift scenario for front-loading washers 
would not be significantly different than the effects from a roll-up 
scenario. That is, the increased energy and water savings resulting 
from moving the market to the max-tech level would be offset by the 
increased equipment and repair costs from that level. Because of the 
reasons stated above, for today's proposed rule, DOE has analyzed only 
a roll-up scenario to establish the SWEF for top-loading and front-
loading washers after new CCW standards would become effective.
c. Annual Energy Consumption
    The inputs for determining NES are annual energy (and water) 
consumption per unit, shipments, equipment stock, national annual 
energy consumption, and site-to-source conversion factors. Because the 
annual energy (and water) consumption per unit depend directly on 
efficiency, DOE used the SWEFs associated with the base case and each 
standards case, in combination with the annual energy (and water use) 
data, to estimate the shipment-weighted average annual per-unit energy 
(and water) consumption under the base case and standards cases. The 
national energy consumption is the product of the annual energy 
consumption per unit and the number of units of each vintage. This 
calculation accounts for differences in unit energy consumption from 
year to year.
    The NIA uses forecasted shipments for the base case and all 
standards cases. As noted above in section IV.E.2.c, DOE used a 
relative price elasticity to estimate standards-case shipments for 
microwave ovens and CCWs, but not conventional cooking products. The 
increased total installed cost of more-efficient equipment causes some 
customers to forego equipment purchases. Consequently, shipments 
forecasted under the standards cases are lower than under the base 
case. To avoid the inclusion of savings from displaced shipments of 
microwave ovens, DOE used the standards-case shipments projection and 
the standards-case stock to calculate the annual energy consumption in 
the base case. However, for CCWs, DOE assumed any drop in shipments 
caused by standards would result in the purchase of used machines. As a 
result, the standards-case forecast explicitly accounted for the energy 
and water consumption of not only new standard-compliant CCWs but used 
equipment coming into the market due to the drop in new product 
shipments as well. Therefore, DOE maintained the use of the base-case 
shipments to determine the annual energy consumption in the base case.
    DOE's November 2007 ANOPR analysis estimated that 0.23 quads of 
national energy savings would be associated with the elimination of 
standing pilot ignition systems in gas cooking products and the 
anticipated substitution of electric spark ignition for gas standard 
ovens. AGA asserted that the maximum energy savings would be less (0.06 
quads over 30 years) and contended that the amount of energy saved from 
eliminating standing pilot ignition systems is not significant enough 
to warrant setting a standard that eliminates them. (AGA, No. 27 at pp. 
2 and pp. 13-14)
    EEI compared the energy savings of eliminating standing gas pilots 
to the potential energy savings from a microwave oven standby power 
standard. According to EEI, DOE's analysis shows that gas standby 
energy use in gas cooking products is a much more significant energy 
and cost issue than microwave oven standby energy use, and DOE should 
prioritize its methods and analysis to reduce standby gas energy usage. 
(EEI, No. 25 at pp. 2-3)
    DOE recognizes both AGA's and EEI's comments, but their input 
focused on how the agency should interpret the results of its energy 
savings analyses, rather than altering DOE's methodology for estimating 
the national energy savings due to the elimination of standing pilots. 
As the November 2007 ANOPR noted, DOE's method accounted for the market 
share of gas cooking products with standing pilots. Based on historical 
trends in the shipments data, DOE forecasted a continual decline in the 
market share of gas cooking products with standing pilots. As described 
in section IV.D.9.a, DOE estimated that 17.6 percent of standard gas 
oven shipments and 6.8 percent of gas cooktop shipments would be 
equipped with standing pilots in 2012. The above percentages are based 
on all gas standard oven and cooktop shipments (i.e., shipments from 
both stand-alone or built-in products as well as kitchen ranges). 
Because DOE estimated that kitchen ranges are the only gas products 
that still come equipped with standing pilots, only standard ovens and 
cooktops in kitchen ranges comprise the percent of all standard ovens 
and cooktops that are still equipped with standing pilots. DOE 
estimated that approximately 14 percent of gas ranges in 2012 were 
equipped with standing pilots. Overall, a smaller percentage of gas 
cooktops are equipped

[[Page 62074]]

with standing pilots (6.8 percent) than standard gas ovens (17.6 
percent) because there are far more stand-alone cooktop shipments than 
built-in standard oven shipments. DOE estimated a total market share of 
less than five percent by 2042 for gas cooking products with standing 
pilots. See chapter 11 of the TSD accompanying this notice for further 
details. By forecasting a declining market share of gas cooking 
products with standing pilots, DOE believes it accurately estimated the 
national energy savings due to energy efficiency standards that 
eliminate standing pilots. National energy savings results are 
presented below in section V.B.3.a.
d. Site-to-Source Conversion
    Since it is necessary to estimate the national energy savings 
expected from appliance standards, DOE uses a multiplicative factor to 
convert site energy consumption (at the home or commercial building) 
into primary or source energy consumption (the energy required to 
deliver the site energy). In the November 2007 ANOPR, DOE used annual 
site-to-source conversion factors based on the version of NEMS that 
corresponds to AEO 2006. For today's NOPR, DOE updated its conversion 
factors based on AEO 2008.\71\ These conversion factors account for 
natural gas losses from pipeline leakage and natural gas used for 
pumping energy and transportation fuel. For electricity, the conversion 
factors vary over time due to projected changes in generation sources 
(i.e., the power plant types projected to provide electricity to the 
country). Since the EIA's AEO does not provide energy forecasts that go 
beyond 2030, DOE used conversion factors that remain constant at the 
2030 values throughout the remainder of the forecast.
---------------------------------------------------------------------------

    \71\ For the standards rulemakings, DOE will generally use the 
same economic growth and development assumptions that underlie the 
most current AEO published by EIA. For its determination of site-to-
source conversion factors, DOE used the version of NEMS 
corresponding to AEO 2006 for the ANOPR due to the unavailability of 
the AEO 2007 version at the time DOE conducted the NIA. For its 
analyses for the NOPR and final rule, DOE is committed to using the 
latest available version of NEMS.
---------------------------------------------------------------------------

e. Embedded Energy in Water and Wastewater Treatment and Delivery
    In the November 2007 ANOPR, DOE did not include the energy required 
for water treatment and delivery for the reasons that follow. EPCA 
defines ``energy use'' to be ``the quantity of energy directly consumed 
by a consumer product at point of use, determined in accordance with 
test procedures under section 6293 of [42 U.S.C.].'' (42 U.S.C. 
6291(4)) (emphasis added) Based on the definition of ``energy use,'' 
DOE does not believe it has the authority to consider embedded energy 
(i.e., the energy required for water treatment and delivery) in the 
analysis. Furthermore, even if DOE had the authority, it does not 
believe adequate analytical tools exist to conduct such an 
evaluation.\72\
---------------------------------------------------------------------------

    \72\ An analytical tool equivalent to EIA's NEMS would be needed 
to properly account for embedded energy impacts on a national scale, 
including the embedded energy due to water and wastewater savings. 
This new version of NEMS would need to analyze spending and energy 
use in dozens, if not hundreds, of economic sectors. This version of 
NEMS also would need to account for shifts in spending in these 
various sectors to account for the marginal embedded energy 
differences among these sectors. 72 FR 64432, 64498-99 (Nov. 15, 
2007). DOE does not have access to such a tool or other means to 
accurately estimate the source energy savings impacts of decreased 
water or wastewater consumption and expenditures.
---------------------------------------------------------------------------

f. Total Installed Costs and Operating Costs
    The total annual installed cost increase is equal to the annual 
change in the per-unit total installed cost (i.e., the difference 
between base case and standards case) multiplied by the shipments 
forecasted in the standards case. DOE did not change its approach for 
calculating total annual installed cost increases for today's proposed 
rule.
    The annual operating cost savings per unit includes changes in 
energy, water, repair, and maintenance costs. DOE forecasted energy 
prices for the November 2007 ANOPR based on AEO 2007 and updated the 
energy prices for today's proposed rule using forecasts from AEO 2008.
    In the November 2007 ANOPR analysis, DOE believed there would be no 
increase in maintenance and repair costs due to standards. But as 
section IV.D.5 of this notice discusses, based upon public comments, 
DOE has accounted for the added repair and maintenance costs associated 
with non-standing pilot ignition systems for today's proposed rule. DOE 
has also included increases in repair and maintenance costs for more-
efficient CCWs.
 g. Effects of Standards on Energy Prices
    In the November 2007 ANOPR, DOE did not consider the potential 
impact of energy efficiency standards on energy prices. However, DOE 
did publish a final rule for residential furnaces and boilers rule in 
November 2007 that assessed the consumer benefits, in the form of 
reduced natural gas prices, from a 90-percent annual fuel utilization 
efficiency (AFUE) or higher standard for non-weatherized gas furnaces. 
72 FR 65136, 65152 (Nov. 19, 2007). The Joint Comment stated that 
because DOE conducted such an analysis for the furnace and boiler 
standards rulemaking, it must also evaluate gas and electricity price 
impacts in the context of the residential cooking product and CCW 
rulemaking. The Joint Comment further stated that DOE should consider 
the impact of standards on gas and electricity prices as a factor for 
economic justification, arguing that ``NAECA authorizes the Secretary 
to account for other, non-enumerated factors that he determines are 
relevant (42 U.S.C. 6297(o)).'' \73\ (Joint Comment, No. 29 at p. 12)
---------------------------------------------------------------------------

    \73\ DOE notes that the Joint Comment cites to a statutory 
section that does not exist (i.e., 42 U.S.C. 6297(o). Instead, the 
Joint Comment presumably intended to cite 42 U.S.C. 
6295(o)(2)(B)(i)(VII), which stands for the proposition presented.
---------------------------------------------------------------------------

    In response, DOE did conduct an analysis using a version of the 
2008 NEMS-BT, modified to account for energy savings associated with 
possible standards. The analysis estimated that gas and electric demand 
reductions resulting from max-tech standards for residential cooking 
products and CCWs had no detectable change on the U.S. average wellhead 
natural gas price or the average user price of electricity. Therefore, 
DOE concludes that residential cooking product and CCW standards will 
not provide additional consumer benefits over those determined in the 
NIA. See chapter 11 of the TSD accompanying this notice for more 
details.
h. Discount Rates
    DOE multiplies monetary values in future years by the discount 
factor to determine the present value. The Joint Comment stated that 
societal discount rates are the subject of extensive academic research 
and that the weight of academic opinion is that the appropriate 
societal discount rate is three percent or less. (Joint Comment, No. 29 
at p. 12) DOE estimated national impacts using both a three-percent and 
a seven-percent real discount rate as the average real rate of return 
on private investment in the U.S. economy. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis (OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs'').
    Chapters 10 and 11 of the TSD accompanying this notice provide 
additional detail on the shipments and national impacts analyses for 
the two

[[Page 62075]]

appliance products subject to further analyses as part of this 
rulemaking.

F. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
individual and commercial consumers, DOE evaluates the impact on 
identifiable subgroups of consumers that may be disproportionately 
affected by a national standard level.
    DOE used RECS data to analyze the potential effect of standards for 
residential cooking products on two consumer subgroups of interest: (1) 
Households with low income levels, and (2) households occupied by 
seniors. In addition, DOE received public comments that identified 
other specific consumer subgroups that could potentially be affected by 
the elimination of standing pilot ignition systems. According to AGA, 
Amish communities, which do not allow the use of electricity, have gas 
products that use either propane or natural gas. AGA stated that 
religious and cultural prohibitions regarding electricity use by 
certain groups in the U.S. are well understood and that this was the 
reason for the original EPCA language requiring electronic ignition 
only on gas cooking products with other electrical features. In 
addition, AGA claimed that this consideration was the reason for the 
exception to not ban standing pilot lights on gravity gas-fired boilers 
(which have no electrical supply) in EISA 2007. (AGA, No. 27 at p. 2) 
However, EEI argued that the Amish communities as a subgroup are 
extremely small, so it would be very difficult for DOE to analyze this 
subset. (EEI, Public Meeting Transcript, No. 23.7 at pp. 198-99) EEI 
estimated that 50,000 families (0.04 percent of U.S. households) do not 
use electricity in their homes and may use natural gas, propane, 
kerosene, or wood for cooking purposes. (EEI, No. 5 at pp. 3-4)
    DOE reviewed the U.S. Census Bureau's 2005 AHS and found that 
approximately 13,000 households, representing 0.01 percent of the total 
U.S. household population, use gas cooking products and are without 
electricity. Although it is unknown whether this subset of the U.S. 
household population includes Amish households, DOE does not doubt that 
Amish households would be affected by the elimination of standing 
pilots. DOE has contacted the Mennonite Information Center, the Young 
Center at Elizabethtown College, and businesses that sell gas 
appliances to the Amish community in Lancaster County, Pennsylvania and 
verified that Amish households do use gas-only cooking products. But, 
as section IV.A.1 discusses, DOE market research shows that battery-
powered electronic ignition systems have been implemented in other 
products, such as instantaneous gas water heaters, barbeques, furnaces, 
and other appliances, and the use of such products is not expressly 
prohibited by applicable safety standards such as ANSI Z21.1. 
Therefore, DOE believes that households that use gas for cooking and 
are without electricity will have technological options that would 
enable them to continue to use gas cooking if standing pilot ignition 
systems are eliminated. Because the subgroup consisting of households 
without electricity will still have technological options for 
continuing to use gas cooking products even if standing pilots are 
eliminated, DOE believes that this subgroup will not be adversely 
impacted by an efficiency standard requiring the elimination of 
standing pilots.
    Another consumer subgroup stakeholders identified is low-income 
households. GE stated that eliminating gas pilot ranges would cause 
hardship for most households using these products, since the majority 
of these products are used in Federally sponsored and municipally 
sponsored low-income and low-cost housing. GE argued that requiring 
these households to wire themselves to accommodate a gas range with 
electronic ignition would be cost prohibitive. (GE, No. 30 at pp. 2-4) 
EEI commented that DOE may want to identify the percentage of low-
income consumers that use equipment with standing pilots. (EEI, No. 5 
at p. 4) DOE was not able to verify GE's claim (submitted without data) 
that the majority of gas pilot ranges are used in Federally sponsored 
and municipally sponsored low-income housing, because, for example, the 
RECS data that DOE uses for its consumer subgroup analysis lack 
sufficient detail.
    DOE analyzed the potential effects of CCW standards on two 
subgroups: (1) Consumers not served by municipal water and sewer 
providers, and (2) small businesses. For consumers not served by water 
and sewer, DOE analyzed the potential impacts of standards by 
conducting the analysis with well and septic system prices, rather than 
water and wastewater prices based on RFC/AWWA data. For small CCW 
businesses, DOE analyzed the potential impacts of standards by 
conducting the analysis with different discount rates, because small 
businesses do not have the same access to capital as larger businesses. 
DOE estimated that for businesses purchasing CCWs, the average discount 
rate for small companies is 3.5 percent higher than the industry 
average. Due to the higher costs of conducting business, as evidenced 
by their higher discount rates, the benefits of CCW standards for small 
businesses will be less than the general population of CCW owners.
    More details on the subgroup analysis and the results can be found 
in chapter 12 of the TSD accompanying this notice.

G. Manufacturer Impact Analysis

1. General Description
    In determining whether a standard for either of the two appliance 
products subject to further analyses as part of this rulemaking is 
economically justified, the Secretary of Energy is required to consider 
``the economic impact of the standard on the manufacturers and on the 
consumers of the products subject to such standard.'' (42 U.S.C. 
6295(o)(2)(B)(i)(I) and 6316(a)) The statute also calls for an 
assessment of the impact of any lessening of competition as determined 
by the Attorney General. (42 U.S.C. 6295 (o)(2)(B)(i)(V) and 6316(a)) 
DOE conducted the MIA to estimate the financial impact of higher 
efficiency standards on manufacturers of the two appliance products, 
and to assess the impact of such standards on employment and 
manufacturing capacity.
    The MIA has both quantitative and qualitative aspects. The 
quantitative part of the MIA relies on the GRIM, an industry cash-flow 
model customized for this rulemaking. The GRIM inputs characterize the 
industry cost structure, shipments, and revenues. This includes 
information from many of the analyses described above, such as 
manufacturing costs and prices from the engineering analysis and 
shipments forecasts. The key GRIM output is the INPV, which estimates 
the value of the industry on the basis of cash flows, expenditures, and 
investment requirements as a function of TSLs. Different sets of 
assumptions (scenarios) will produce different results. The qualitative 
part of the MIA addresses factors such as product characteristics, 
characteristics of particular firms, and market and product trends, and 
includes an assessment of the impacts of standards on subgroups of 
manufacturers. The complete MIA is outlined in chapter 13 of the TSD 
accompanying this notice.
    In the Framework Document for this proceeding, notice of which was 
published in the Federal Register on March 27, 2006, DOE outlined the 
procedural and analytical approaches to be used in the MIA. (71 FR 
15059) In the

[[Page 62076]]

November 2007 ANOPR for this rulemaking, DOE reported some preliminary 
MIA information and data in section II.K. 72 FR 64432, 64505-07 (Nov. 
15, 2007). In response to these preliminary data, the November 2007 
ANOPR, and DOE statements at the December public meeting, DOE received 
specific comments on the MIA, which are addressed in this section. In 
previous energy conservation standards rulemakings, DOE did not report 
any MIA results during the ANOPR phase of the rulemaking. However, 
under a new MIA format announced through a report issued to Congress on 
January 31, 2006, ``Energy Conservation Standards Activities'' \74\ (as 
required by section 141 of EPACT 2005), DOE now reports preliminary MIA 
information at the ANOPR stage, as was done in the November 2007 ANOPR.
---------------------------------------------------------------------------

    \74\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/schedule_setting.html.
---------------------------------------------------------------------------

    DOE conducted the MIA for cooking products and CCWs in three 
phases. Phase 1 (Industry Profile) characterized the industry using 
data on market share, sales volumes and trends, pricing, employment, 
and financial structure. Phase 2 (Industry Cash Flow) focused on each 
industry as a whole. In this phase, DOE used the GRIM to prepare an 
industry cash-flow analysis. Using publicly available information 
developed in Phase 1, DOE adapted the GRIM's generic structure to 
perform an analysis of cooking product and CCW energy conservation 
standards. In Phase 3 (Subgroup Impact Analysis), DOE conducted 
interviews with manufacturers representing the majority of domestic 
cooking product and CCW sales. This group included large and small 
manufacturers, thereby providing a representative cross-section of the 
two industries.
    During these interviews, DOE discussed engineering, manufacturing, 
procurement, and financial topics specific to each company and obtained 
each manufacturer's view of the industry as a whole. The interviews 
provided valuable information that DOE used to evaluate the impacts of 
an amended energy conservation standard on manufacturers' cash flows, 
manufacturing capacities, and employment levels. DOE identified 
subgroups of manufacturers during interviews with manufacturers of 
cooking products and CCWs. The manufacturer subgroups are described in 
section IV.G.1.c. of this notice.
a. Phase 1 (Industry Profile)
    In Phase 1 of the MIA, DOE prepared a profile of the cooking 
products and CCW industries based on the market and technology 
assessment prepared for this rulemaking. Before initiating the detailed 
impact studies, DOE collected information on the present and past 
structure and market characteristics of the cooking products and CCW 
industries. The information DOE collected included market share, 
equipment shipments, markups, and cost structure for various 
manufacturers. The industry profile includes: (1) Further detail on 
product characteristics; (2) estimated manufacturer market shares; (3) 
the financial situation of manufacturers; and (4) trends in the number 
of firms, the market, and product characteristics of the cooking 
products and CCW industries.
    The industry profile included a top-down cost analysis of cooking 
products and CCW manufacturers that DOE used to derive cost and 
preliminary financial inputs for the GRIM (e.g., revenues; material, 
labor, overhead, and depreciation expenses; selling, general, and 
administrative expenses (SG&A); and research and development (R&D) 
expenses). DOE also used public sources of information to further 
calibrate its initial characterization of each industry, including SEC 
10-K reports, Standard & Poor's (S&P) stock reports,\75\ and corporate 
annual reports. DOE supplemented this public information with data 
released by privately held companies.
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    \75\ Available at: http://www2.standardandpoors.com/.
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b. Phase 2 (Industry Cash-Flow Analysis)
    Phase 2 of the MIA focused on the financial impacts of new energy 
conservation standards on the industry as a whole. Higher energy 
conservation standards can affect a manufacturer's cash flow in three 
distinct ways, resulting in: (1) A need for increased investment; (2) 
higher production costs per unit; and (3) altered revenue by virtue of 
higher per-unit prices and changes in sales volumes. To quantify these 
impacts in Phase 2 of the MIA, DOE performed three separate cash-flow 
analyses, using the GRIM: One for the conventional cooking products 
industry, one for microwave ovens, and one for CCWs. In performing 
these analyses, DOE used the financial values derived during Phase 1 
and the shipment scenarios used in the NIA.
c. Phase 3 (Subgroup Impact Analysis)
    Using average cost assumptions to develop an industry cash-flow 
estimate is not adequate for assessing differential impacts among 
subgroups of manufacturers. For example, small or niche manufacturers, 
or manufacturers whose cost structure differs significantly from the 
industry average, could be more negatively affected. DOE used the 
results of the industry characterization analysis from Phase 1 to group 
manufacturers that exhibit similar characteristics. In the Framework 
Document and November 2007 ANOPR, DOE invited stakeholders to comment 
on the manufacturing subgroups that it should analyze for the MIA.
    Cooking Products Subgroup: Small manufacturers of cooking products 
with standing pilot lights. DOE identified three manufacturers of gas-
fired ovens, ranges, and cooktops with standing pilot lights. Two of 
the three manufacturers are classified as small businesses by the Small 
Business Administration (SBA). DOE categorized the two small businesses 
into their own subgroup as a result of their size and their 
concentration in the residential cooking industry. Both manufacturers 
produce gas-fired appliances with standing pilot ignition systems and 
derive over 25 percent of their total revenue from gas-fired appliances 
with standing pilot ignition systems. Both small manufacturers produce 
only residential cooking appliances and have annual sales in the $50-60 
million range, whereas the third is a large, diversified appliance 
manufacturer. The two small cooking businesses are privately held, and 
each employs less than 300 employees.\76\ DOE contacted both small 
cooking product businesses it identified to discuss differential 
impacts due to the elimination of standing pilot lights. DOE also 
interviewed the large manufacturer of gas-fired ovens, ranges, and 
cooktops with standing pilot lights.
---------------------------------------------------------------------------

    \76\ The SBA classifies a residential cooking appliance 
manufacturer as a small business if it has less than 750 employees. 
Refer to: http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
---------------------------------------------------------------------------

    Commercial Clothes Washers Subgroup. DOE identified three 
manufacturers that represent nearly 100 percent of CCW shipments. For 
CCWs, DOE categorized one manufacturer as its own subgroup because of 
its focus on the commercial laundry business. Due to the low shipment 
volumes in the CCW market and the much lower revenues of this 
manufacturer compared to its competitors, DOE identified this 
manufacturer as a ``Low-Volume Manufacturer'' (LVM) for its MIA

[[Page 62077]]

subgroup analysis. In 2006, the LVM derived 87 percent of its clothes 
washer revenues from CCW sales, while CCW sales for each of its two 
main competitors represent less than one percent of their individual 
total clothes washer sales. Thus, the LVM fits the description of a 
niche manufacturer, even though in 2006 it had over $330 million in 
revenue and 1,500 employees. As discussed above, its two main 
competitors in the CCW market are diversified appliance manufacturers 
that each earns at least 50 times more revenue than the LVM on an 
annual basis. The LVM has successfully maintained its significant CCW 
market share despite its much smaller overall revenue base. DOE 
estimates that the LVM currently accounts for approximately 45 percent 
of CCW shipments. DOE described the differential cost impacts of new 
energy conservation standards on the LVM in the engineering analysis 
contained in the November 2007 ANOPR. (See Chapter 5 and Appendix 5-A 
of the TSD accompanying the November 2007 ANOPR.) The LVM does not 
qualify as a small business since it has over 1,000 employees.\77\
---------------------------------------------------------------------------

    \77\ The SBA classifies a commercial laundry equipment 
manufacturer as a small business if it has less than 500 employees. 
Refer to: http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
---------------------------------------------------------------------------

    Compared to their larger competitors, both small cooking products 
businesses are highly concentrated in residential cooking appliance 
manufacturing, and the CCW LVM is highly concentrated in commercial 
laundry. Unlike their larger competitors, they operate at a much 
smaller scale and do not manufacture products across a broad range of 
industries. Thus, the potential impacts of this rulemaking on the small 
cooking products businesses and the CCW LVM could be disproportionate 
compared to the impacts on their large, diversified competitors. As a 
result, DOE performed an in-depth analysis of the issues facing the 
small cooking products businesses and the CCW LVM. (See chapter 13 and 
appendix 13-A of the TSD accompanying this notice.) The following 
paragraphs describe in detail the steps DOE took in developing the 
information for the MIA.
2. Government Regulatory Impact Model Analysis
    As mentioned above, DOE uses the GRIM to quantify anticipated 
changes in cash flow that may result in a higher or lower industry 
value, which arise from potential energy conservation standards. The 
GRIM analysis uses a standard, annual cash-flow analysis that 
incorporates manufacturer prices, manufacturing costs, shipments, and 
industry financial information as inputs and models changes in costs, 
distribution of shipments, investments, and associated margins that 
would result from new regulatory conditions (in this case, standard 
levels). The GRIM spreadsheet uses a number of inputs to arrive at a 
series of annual cash flows, beginning with the base year of the 
analysis (2007) and continuing to 2042. DOE calculated INPVs by summing 
the stream of annual discounted cash flows during this period.
    DOE used the GRIM to calculate cash flows using standard accounting 
principles and to compare changes in INPV between a base case and 
different TSLs (the standards cases). Essentially, the difference in 
INPV between the base case and a standards case represents the 
financial impact of the new energy conservation standards on 
manufacturers. DOE collected this information from several sources, 
including publicly available data and interviews with a number of 
manufacturers. See chapter 13 of the TSD accompanying this notice for 
details.
a. Government Regulatory Impact Model Scenarios and Key Inputs
    Base-Case Shipments Forecast. The GRIM estimates manufacturer 
revenues based on total unit shipment forecasts and the distribution of 
these values by efficiency level. Changes in the efficiency mix at each 
standard level affect manufacturer finances. For this analysis, the 
GRIM used the NIA shipments forecasts from 2007 to 2042. In the 
shipments analysis, DOE also estimated the distribution of efficiencies 
in the base case for all product classes. In interviews, manufacturers 
of all product classes generally agreed with the NIA total shipment 
results.
    Standards-Case Shipments Forecast. For each standards case, DOE 
considers that shipments at efficiencies below the projected minimum 
standard levels would roll up to those efficiency levels in response to 
an increase in energy conservation standards. This scenario assumes 
that demand for high-efficiency equipment is a function of price, 
independent of the standard level. See chapter 13 of the TSD 
accompanying this notice for additional details.
    For CCWs, DOE uses a shipment scenario that considers the impacts 
of changes in relative prices on consumer demand for each product to 
bound the impacts of standards on manufacturers. As described in the 
discussion of purchase price, operating cost, and household income 
impacts found in the shipments model in chapter 10 of the TSD 
accompanying this notice, this shipment scenario estimates how the 
combined effects of increases in purchase price and decreases in 
operating costs due to new energy conservation standards affect 
shipments. In the ``price elasticity of demand'' shipment scenario, the 
effects from the increase in product purchase prices offset the effects 
from decreased operating costs, resulting in a net decrease in 
shipments.
    Base-Case and New Energy Conservation Standards Markup Scenarios. 
In the GRIM, markups are applied to the manufacturer production costs 
(MPCs) to calculate manufacturing selling price. After discussions with 
manufacturers, DOE analyzed two distinct markup scenarios: (1) A 
preservation of gross margin \78\ (percentage) scenario; and (2) a 
preservation of gross margin (in absolute dollars) scenario.
---------------------------------------------------------------------------

    \78\ ``Gross margin'' is defined as revenues minus cost of goods 
sold. On a unit basis, gross margin is selling price minus 
manufacturer production cost. In the GRIMs, markups determine the 
gross margin because various markups are applied to the manufacturer 
production costs to reach manufacturer selling price.
---------------------------------------------------------------------------

    DOE modeled the preservation of gross margin percentage scenario in 
all three GRIMs. Under this scenario, DOE applied a single uniform 
``gross margin percentage'' markup across all efficiency levels. As 
production cost increases with efficiency, this scenario implies that 
the absolute dollar markup will increase. DOE calculated that the non-
production cost markup (which consists of SG&A expenses, R&D expenses, 
interest, and profit) is 1.26. This markup is consistent with the one 
DOE used in the engineering analysis and GRIM analysis for the base 
case. In their interviews, all manufacturers believe it is optimistic 
to assume that, as their production costs increase in response to an 
energy conservation standard, they would be able to maintain the same 
gross margin percentage markup. Therefore, DOE believes that this 
scenario represents a high bound to industry profitability under an 
energy conservation standard.
    During interviews, multiple manufacturers of microwave ovens and 
conventional cooking products stated that they have not been able to 
fully recover the increased costs from increased raw material prices. 
Instead, manufacturers were only able to recover part of the total 
increase in production cost. Several manufacturers suggested that a 
similar situation would happen as a result of new energy conservation 
standards. In the ``preservation of gross

[[Page 62078]]

margin (absolute dollars)'' scenario, gross margin is defined as 
``revenues less cost of goods sold.'' The implicit assumption behind 
this markup scenario is that the industry will lower its markups in 
response to the standards to maintain only its gross margin (in 
absolute dollars). This means the percentage difference between MPC and 
selling price will decrease in the standards case compared to the base 
case and the gross margin percentage will be lower. The industry would 
do so by passing through its increased production costs to customers, 
while increased R&D and selling, general, and administrative expenses 
directly lower profit. DOE implemented this scenario in the microwave 
oven and conventional cooking products GRIMs by lowering the production 
cost markups for each TSL to yield approximately the same gross margin 
in dollars in the standards cases in the year standard are effective 
(2012) as is yielded in the base case. This scenario is less optimistic 
than the preservation of gross margin percentage scenario.
    Product and Capital Conversion Costs. Energy conservation standards 
typically cause manufacturers to incur one-time conversion costs to 
bring their production facilities and product designs into compliance 
with the new standards. For the purpose of the MIA, DOE classified 
these one-time conversion costs into two major groups: (1) Product 
conversion and (2) capital conversion costs. Product conversion 
expenses are one-time investments in research, development, testing, 
and marketing, focused on making product designs comply with the new 
energy conservation standard. Capital conversion expenditures are one-
time investments in property, plant, and equipment to adapt or change 
existing production facilities so that new product designs can be 
fabricated and assembled.
    DOE assessed the R&D expenditures manufacturers would be required 
to make at each TSL. For microwave ovens (EF standards) and 
conventional cooking products, DOE obtained financial information 
through manufacturer interviews and aggregated the data to prevent 
disclosure of proprietary or confidential information. For all product 
classes at each TSL, DOE considered these manufacturer responses. DOE 
estimated average industry product conversion expenditures by weighting 
these data by market share and, finally, extrapolated each 
manufacturer's R&D expenditures for each product. Where manufacturers 
did not comment, DOE used the conversion expenditures estimated in the 
1996 TSD, updated by current production volumes and the PPI.\79\ For 
CCW and standby power standards for microwave ovens, DOE used 
manufacturer interviews to determine the cost of upgrading a product 
platform. DOE used interviews and product catalogs to estimate the 
number of product platforms that needed to be upgraded at each TSL to 
obtain its estimates for the conversion costs of the entire industry.
---------------------------------------------------------------------------

    \79\ Available at: http://www.bls.gov/PPI/.
---------------------------------------------------------------------------

    DOE also evaluated the level of capital conversion costs 
manufacturers would incur in order to comply with amended energy 
conservation standards. For conventional cooking products, DOE 
initially revised the conversion capital expenditure figures in the 
1996 TSD with current manufacturing volume projections and 2007 PPI 
figures.\80\ During interviews, DOE asked manufacturers to comment on 
the figures, which DOE subsequently revised based on these responses. 
For microwave ovens and CCWs, DOE prepared preliminary estimates of the 
capital investments required at each TSL, which is affected in part by 
the ability to use existing plants, warehouses, tooling, and equipment. 
From the interviews and information in product catalogs, DOE was able 
to estimate what portion of existing manufacturing assets would need to 
be replaced and/or reconfigured, and what additional manufacturing 
assets would be required to manufacture the higher-efficiency products. 
In most cases, DOE projects that if standard levels were increased, the 
proportion of existing assets that manufacturers would have to replace 
would also increase. Additional information on the estimated product 
conversion and capital conversion costs is set forth in chapter 13 of 
the TSD accompanying this notice.
---------------------------------------------------------------------------

    \80\ Available at: http://www.bls.gov.
---------------------------------------------------------------------------

3. Manufacturer Interviews
    As noted above, as part of the MIA, DOE discussed potential impacts 
of standards with multiple manufacturers. As section IV.G.1 of this 
notice describes, DOE conducted MIA interviews on multiple occasions 
with the three manufacturers representing nearly 100 percent of 
domestic CCW sales. These interviews were in addition to those DOE 
conducted as part of the engineering analysis. After the December 2007 
public meeting, DOE also interviewed multiple cooking product 
manufacturers about microwave ovens, as well as conventional gas and 
electric cooking products. Data from the analysis indicated that the 
combined market share of these manufacturers represents 25 to 82 
percent of unit shipments, depending on the specific cooking product 
category. For certain issues relating to standby power, DOE also 
interviewed subject-matter experts. All interviews provided information 
that DOE used to evaluate the impacts of potential new energy 
conservation standards on manufacturers' cash flows, manufacturing 
capacities, and employment levels.
    Most of the information received from these meetings is protected 
by non-disclosure agreements and resides with DOE's contractors. Before 
each telephone interview or site visit, DOE provided company 
representatives with an interview guide that included the topics for 
which DOE sought input. As the November 2007 ANOPR describes, the MIA 
interview topics included key issues relevant to the rulemaking, 
including: (1) Product mix; (2) profitability; (3) conversion costs; 
(4) manufacturing capacity and employment levels; (5) market share and 
industry consolidation; (6) product utility and innovation; and (7) 
cumulative burden issues. Appendix 13-B of the TSD accompanying this 
notice provides copies of the discussion guides.
a. Conventional Cooking Products
    During the manufacturer interviews in the November 2007 ANOPR 
phase, conventional cooking product manufacturers raised three key 
issues: (1) Continuing intense price competition and an inability to 
pass on cost increases, (2) financial and consumer utility impacts of 
standby power standards, and (3) consumer utility and economic/industry 
impacts of eliminating standing pilot ignition systems for gas-fired 
appliances. DOE requested additional information on these key issues 
during manufacturer interviews during the NOPR phase. Additional topics 
raised by manufacturers of conventional cooking products during the 
NOPR-phase interviews included: (1) The validity, cost-effectiveness, 
and potential efficiency improvements of design options; (2) the 
disproportionate effect of energy efficiency standards on manufacturer 
and consumer subgroups; (3) factors that affect the INPV; and (4) the 
expected financial and consumer utility impacts of potential standby 
power standards.
    Multiple manufacturers cited price competition and the inability to 
pass on increased costs to consumers as their primary concern. DOE 
sought comment from appliance manufacturers on the potential consumer 
utility impacts as a

[[Page 62079]]

result of standby power standards for conventional cooking products. In 
addition, a low standby power standard could result in a lack of 
product differentiation, harming manufacturers' profitability.
    DOE sought comment regarding the potential elimination of standing 
pilot ignition systems from gas-fired cooking products, with 
replacement by electronic ignition systems using a spark or glo-bar 
igniter. (See chapter 5 of the TSD accompanying this notice for a 
further description.) Manufacturers of gas cooking products with 
standing pilot lights stated that there are several issues regarding 
the potential elimination of standing pilot lights, including: (1) The 
consumer utility of standing pilot ignition systems for customers 
without line power (for religious, economic, or other reasons); (2) 
likely retrofitting of standing pilot-equipped equipment with non-
certified ignition devices, which may be unsafe; (3) the retrofit costs 
are higher than DOE projects for consumers without an electrical outlet 
nearby; and (4) competitive impacts on the industry. Furthermore, 
interviews highlighted that two small businesses will be impacted 
disproportionately from elimination of pilot lights and could be harmed 
materially. Both small cooking appliance manufacturers stated that the 
elimination of the standing pilot option for their gas ranges would 
likely cause substantial harm, since standing pilot-equipped products 
represent more than 25 percent of their total revenues. DOE agrees that 
because the small businesses focus solely on the manufacture of 
residential cooking products, these two manufacturers could be affected 
to a greater extent than their larger competitors by a potential energy 
conservation standard that eliminates standing pilots.
    For conventional cooking products, DOE interviewed manufacturers 
about the design options that were presented in the November 2007 
ANOPR, which were based on those identified in the 1996 TSD. All 
manufacturers stated that their current cooking product designs are 
optimized for cost and performance, and thus any design options not 
already incorporated were deemed unlikely to save any significant 
energy. According to manufacturers, new design options would also 
result in significant upfront price increases and/or consumer utility 
issues because even purchased part substitutions result in substantial 
costs due to reliability, safety, and other necessary testing. During 
the MIA, DOE also sought to verify consumer subgroup(s) that could be 
disproportionately affected by this rulemaking. One manufacturer noted 
that some religious groups generally prohibit the use of line-powered 
appliances and that previous rulemakings (such as furnaces and boilers 
\81\) have included special provisions for such consumer sub-
categories. See section IV.F of this notice for further discussion of 
the consumer subgroup analysis conducted for the NOPR.
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    \81\ Refer to: http://www.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.html.
---------------------------------------------------------------------------

    DOE solicited comments from manufacturers about the likely impact 
on profitability, unit shipments, markups, and other factors that 
determine the INPV. Multiple manufacturers stated that energy 
conservation standards have the potential to significantly harm 
profitability because high-end cooking products typically have higher 
profit margins than entry-level appliances. Also, features that 
differentiate high-end appliances from lower-end appliances may be 
eliminated or become commonplace as a result of energy efficiency 
standards. Several manufacturers stated it is impossible to pass along 
cost increases to customers because of the competitive nature of the 
industry. Any cost increase due to standards set by DOE would thus 
automatically lower profit margins. One manufacturer expects greater 
foreign competition if standards force design options currently found 
only on high-end cooking products downward in the market, because the 
required redesign would eliminate the competitive advantage of domestic 
firms. DOE research suggests that the markups for low- and high-end 
cooking products differ (i.e., margins on high-end products tend to be 
higher than the margins on low-end products).
b. Microwave Ovens
    During interviews in the November 2007 ANOPR phase with microwave 
oven manufacturers, DOE identified two key issues: (1) Continuing 
intense price competition and an inability to pass on cost increases, 
and (2) financial and consumer utility impacts of standby power 
standards. Additional topics raised by microwave oven manufacturers 
during the NOPR-phase interviews included: (1) The validity and cost-
effectiveness of design options, (2) factors that determine the INPV; 
and (3) microwave oven test procedure issues.
    All manufacturers noted that most microwave oven manufacturing has 
moved overseas due to intense price competition and commoditization of 
this product category. Two manufacturers stated that they still wholly 
manufacture or assemble microwave ovens from components domestically, 
though the market share of these shipments is low compared to total 
industry shipments. All manufacturers stated the difficulty of passing 
any price increases (due to raw material costs, for example) on to 
consumers and they expect any energy conservation standard to further 
cut into manufacturer profits.
    DOE sought comment on the various pathways that manufacturers could 
elect to pursue to meet proposed standby power consumption limits. 
Multiple pathways exist, based on the selection of the (1) display 
technology, (2) power supply/control boards, (3) cooking sensors, and 
(4) the possible incorporation of algorithms to automatically reduce 
standby power after a period of inactivity (the max-tech option).
    All microwave oven manufacturers that DOE interviewed noted that 
the choice of display technology is an important differentiator in the 
marketplace. DOE research suggests that, if constantly active, VFD 
displays of the type commonly found in microwave ovens are unlikely to 
meet a standby power standard of 1.5 W or lower. Thus, in their opinion 
such a standby standard could lead to the loss of consumer utility.
    Noting manufacturer concerns about reduced utility resulting from 
standby power requirements, DOE researched this issue in detail. 
Microwave ovens with all other display types found in the DOE sample 
are projected to be able to meet a 1.0 W standby level as long as other 
standby power-consuming components are carefully specified. DOE 
consulted power supply design subject matter experts before conducting 
interviews with manufacturers. The subject matter experts noted that 
the no-load standby loads imposed by the power supplies in the DOE 
microwave oven test sample could be reduced with improved materials or 
by a topology change to a switching power supply (which has more parts, 
a higher cost, and potentially lower reliability). One manufacturer 
stated that it already makes microwave ovens that use switching power 
supplies for the U.S. market. The manufacturer noted that such a power 
supply change reduced the standby power of that manufacturer's product 
from approximately 3 W to 1-2 W. All manufacturers agreed that 
substantial investments in product development

[[Page 62080]]

would likely result from standby power standards.
    All microwave oven manufacturers believe that a cooking sensor 
provides significant product differentiation. One manufacturer noted 
that it will transition this year to an absolute humidity sensor with 
zero standby power and zero incremental cost above that of a 
conventional absolute humidity sensor. For further information 
regarding microwave ovens, sensors, and standby power requirements, see 
section IV.B.1.a of this notice and chapter 5 of the TSD accompanying 
this notice.
    In some countries, such as Japan, many microwave ovens power down 
automatically after a period of inactivity. Based on DOE criteria, such 
microwave ovens achieve max-tech standby power, since they consume 
minimally more power than microwave ovens with electromechanical timers 
while allowing the use of a cooking sensor. All manufacturers that DOE 
interviewed oppose the max-tech standby level (0.02 W), claiming that 
such a standard would effectively force manufacturers to switch off the 
displays on their microwave ovens after a period of inactivity. Not 
only would this require a completely revised control circuit (with 
additional cost, uncertain reliability, additional testing, and other 
implications), but it would also reduce the ability of manufacturers to 
differentiate their products in the marketplace. All manufacturers 
stated that consumers expect that a microwave oven equipped with a 
display should show clock time while in standby mode.
    DOE identified two domestic microwave oven manufacturing 
facilities. DOE solicited comments from all microwave oven 
manufacturers regarding current industry conditions and likely 
responses to potential energy conservation standards. One manufacturer 
stated that any incremental cost could lead to plant closures and a 
shift to production facilities where the labor costs are lower.
    All manufacturers oppose a standby level that would effectively 
limit their ability to differentiate high- versus low-end products in 
the market. During interviews, manufacturers were asked to comment on 
the minimum standby limit that would allow such differentiation. The 
minimum standby limit varied by manufacturer and ranged from 1.5 W to 4 
W.
c. Commercial Clothes Washers
    The key issues for CCW manufacturers remain unchanged from the 
November 2007 ANOPR analysis. During the NOPR MIA interviews, all CCW 
manufacturers stated they continue to support multiple CCW product 
classes and worry that high efficiency standards will significantly 
depress CCW unit shipments by encouraging the re-manufacture of old 
equipment and shifting the market further to in-unit laundry. Since its 
clothes washer revenue is so dependent on CCW sales, the LVM predicts 
that it will be impacted disproportionately by any CCW standard. The 
NOPR MIA interviews also focused on validating the November 2007 ANOPR 
CCW cost-efficiency curve. Based on conversations with all major CCW 
manufacturers and the determination of two CCW product classes, DOE is 
proposing two revised curves. For more details on the updated cost-
efficiency curve, see section IV.C.2.b of this notice.
    CCW manufacturers identified five key issues in the ANOPR 
interviews: (1) The risk of eliminating top-loading washers from the 
market; (2) reduced product shipments due to a shift from central 
laundry facilities to in-unit residential laundry and prolonging the 
life of existing equipment; (3) reduced cleaning performance of certain 
energy-saving design options; (4) the possible relocation of production 
facilities outside the country; and (5) the potential for industry 
consolidation and/or the elimination of the LVM. (See chapter 13 of the 
TSD accompanying this notice for more details.) DOE addressed each of 
these key issues again during manufacturer interviews in the NOPR 
phase. Additional topics DOE discussed with CCW manufacturers during 
the NOPR-phase interviews included: (1) Higher efficiency top-loading 
CCWs; (2) CCW performance metrics; (3) equipment reliability; and (4) 
test procedure issues.
    All manufacturers stated both publicly and privately that they 
support two CCW product classes, with separate efficiency standards for 
front-loading and top-loading CCWs. All CCW manufacturers stated that 
they expect a single efficiency standard to result in the elimination 
of top-loading CCWs with a traditional agitator. According to multiple 
manufacturers, the higher TSLs are technically feasible with non-
agitator top-loading platforms that are based on existing RCW designs. 
Whirlpool stated that it could develop such a washer, though the 
company did not disclose the cost. (Whirlpool, No. 28 at p. 5) However, 
multiple manufacturers consider these non-agitator top-loading CCWs 
unacceptable for the CCW market due to consumer utility issues. They 
believe that such CCWs cannot properly accommodate overloading and that 
consumer dissatisfaction could arise from poor wash quality.
    Manufacturers believe elimination of agitator top-loading washers 
could also harm laundromats and route operators who own and operate 
CCWs. Existing inventories of replacement parts for top-loading washers 
could become obsolete as top-loading machines are replaced by front-
loading models, potentially representing significant stranded capital.
    DOE sought comment from manufacturers regarding the possible 
impacts on CCW shipments due to proposed efficiency standards. All 
manufacturers agreed that the CCW market is at best flat, and possibly 
in decline. Manufacturers stated that: (1) Higher CCW costs could 
hasten the trend in multi-home housing from centralized CCW facilities 
to in-unit laundry; and (2) route operators and other CCW owners are 
expected to aggressively repair and remanufacture existing top-loading 
units rather than replace them with incompatible models. Manufacturers 
also expressed concern about the potential of energy efficiency 
standards to decrease shipments due to the higher initial costs of 
front-loading CCWs. Manufacturers stated that top-loading CCWs are 
currently significantly lower in price, are more reliable, and have 
lower spare parts costs than front-loading CCWs. Because multi-housing 
units typically face fixed capital budgets, those units could purchase 
fewer CCWs if standards increase purchase prices. Since total industry 
CCW annual shipments are approximately 200,000, all manufacturers 
contacted were skeptical that engineering resources and capital would 
be used to design new, lower-cost front-loading machines or expand 
existing production lines. During the ANOPR interviews, manufacturers 
stated that all top-loading CCW manufacturing facilities are domestic, 
whereas a significant number of front-loading shipments are sourced 
from abroad. Thus, any forced investments or decrease in top-loading 
shipments will disproportionately affect U.S. manufacturing sites.
    As noted above, three domestic manufacturers comprise nearly 100 
percent of the CCW market. Two of them are large, diversified appliance 
manufacturers, whereas the LVM focuses exclusively on laundry products 
(and has an approximately 45 percent market share.) Because the LVM 
derives 87 percent of its clothes washer revenue from CCW sales, the 
impact of any CCW efficiency standards will affect the LVM more than 
its competitors, which derive

[[Page 62081]]

about one percent of their clothes washer revenue from CCW sales. The 
LVM has also stated that any standard that eliminates its current top-
loading CCW platform, though not necessarily forcing the company out of 
business entirely, would materially harm the company and likely force 
it out of the clothes washer market altogether. For a detailed 
discussion of the LVM MIA issues, see the TSD accompanying this notice, 
chapter 13 and appendix 13-A.

H. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
direct and indirect impacts. Direct employment impacts are any changes 
in the number of employees for manufacturers of the appliance products 
that are the subject of this rulemaking, their suppliers, and related 
service firms. Indirect employment impacts are employment changes in 
the larger economy that occur due to the shift in expenditures and 
capital investment caused by the purchase and operation of more-
efficient appliances. The MIA addresses the portion of direct 
employment impacts that concern manufacturers of the two appliance 
products that are subject to further analysis in this rulemaking, as 
well as the direct impacts on the suppliers of these manufacturers and 
related service firms.
    Indirect employment impacts from standards consist of the net jobs 
created or eliminated in the national economy, other than in the 
manufacturing sector being regulated, due to: (1) Reduced spending by 
end users on energy (electricity, gas (including liquefied petroleum 
gas), and oil); (2) reduced spending on new energy supply by the 
utility industry; (3) increased spending on the purchase price of new 
products; and (4) the effects of those three factors throughout the 
economy. DOE expects the net monetary savings from standards to be 
redirected to other forms of economic activity. DOE also expects these 
shifts in spending and economic activity to affect the demand for labor 
in the short term, as explained below.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sectoral 
employment statistics developed by the 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. Data 
from BLS indicate that expenditures in the utility sector generally 
create fewer jobs (both directly and indirectly) than expenditures in 
other sectors of the economy. There are many reasons for these 
differences, including wage differences and the fact that the 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, DC, U.S. Department of Commerce (1992).) Efficiency 
standards have the effect of reducing consumer utility bills. Because 
reduced consumer expenditures for energy likely lead to increased 
expenditures in other sectors of the economy, the general effect of 
efficiency standards is to shift economic activity from a less labor-
intensive sector (i.e., the utility sector) to more labor-intensive 
sectors (e.g., the retail and manufacturing sectors). Thus, based on 
the BLS data alone, DOE believes net national employment will increase 
due to shifts in economic activity resulting from standards for cooking 
products and CCWs.
    In developing this proposed rule, DOE estimated indirect national 
employment impacts using an input/output model of the U.S. economy 
called Impact of Sector Energy Technologies (ImSET). ImSET is a 
spreadsheet model of the U.S. economy that focuses on 188 sectors most 
relevant to industrial, commercial, and residential building energy 
use.\82\ ImSET is a special-purpose version of the ``U.S. Benchmark 
National Input-Output'' (I-O) model, which has been designed to 
estimate the national employment and income effects of energy-saving 
technologies that are deployed by DOE's Office of Energy Efficiency and 
Renewable Energy. Compared with the previous versions of the model used 
in earlier rulemakings, this version allows for more complete and 
automated analysis of the essential features of energy efficiency 
investments in buildings, industry, transportation, and the electric 
power sectors. The ImSET software includes a computer-based I-O model 
with structural coefficients to characterize economic flows among the 
188 sectors. ImSET's national economic I-O structure is based on the 
1997 U.S. benchmark table (Lawson, et al. 2002),\83\ specially 
aggregated to 188 sectors. DOE estimated changes in expenditures using 
the NIA spreadsheet. Using ImSET, DOE then estimated the net national, 
indirect-employment impacts on employment by sector of potential new 
efficiency standards for cooking products and CCWs.
---------------------------------------------------------------------------

    \82\ Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact 
of Sector Energy Technologies, (PNNL-15273 Pacific Northwest 
National Laboratory) (2005). Available at: http://www.pnl.gov/main/publications/external/technical_reports/PNNL-15273.pdf.
    \83\ Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and 
Jiemin Guo, ``Benchmark Input-Output Accounts of the U.S. Economy, 
1997,'' Survey of Current Business (Dec. 2002) pp. 19-117.
---------------------------------------------------------------------------

    While both ImSET and the direct use of BLS employment data suggest 
the proposed standards could increase the net demand for labor in the 
economy, the gains would most likely be very small relative to total 
national employment. Therefore, DOE concludes only that the proposed 
standards are likely to produce employment benefits that are sufficient 
to fully offset any adverse impacts on employment in the manufacturing 
or energy industries related to cooking products and CCWs. (See the TSD 
accompanying this notice, chapter 15.)

I. Utility Impact Analysis

    The utility impact analysis estimates the change in the forecasted 
power generation capacity for the Nation, which would be expected to 
result from adoption of new standards. This analysis separately 
determines the changes to supply and demand as a result of natural gas, 
fuel oil, liquefied petroleum gas, or electricity residential 
consumption savings due to the standard. DOE calculated this change 
using the NEMS-BT computer model. NEMS-BT models certain policy 
scenarios such as the effect of reduced energy consumption per TSL by 
fuel type. The analysis output provides a forecast for the needed 
generation capacities at each TSL. The estimated net benefit of the 
standard is the difference between the forecasted generation capacities 
by NEMS-BT and the AEO 2008 Reference Case.
    DOE obtained the energy savings inputs associated with electricity 
and natural gas consumption savings from the NIA. These inputs reflect 
the effects of efficiency improvement on residential cooking product 
and CCW energy consumption, both fuel (natural gas) and electricity. 
Chapter 14 of the TSD accompanying this notice presents results of the 
utility impact analysis.
    EEI stated that DOE should show the change in natural gas 
production (i.e., infrastructure) as well as electric generation 
capacity as a result of standards. (EEI, No. 25 at p. 4) Historically, 
DOE's approach for the utility impact analysis has only evaluated the 
impact on natural gas consumption and utility sales. The evaluation of 
impacts on the natural gas infrastructure that may result from declines 
in the sales of natural gas is not

[[Page 62082]]

possible with the NEMS-BT analysis methodology. Therefore, DOE did not 
perform this type of evaluation in the utility impact analysis for the 
residential cooking product and CCW rulemaking. It is unlikely such 
impacts would be significant for the gas utility industry, however, 
given that the annual change in natural gas supply resulting from the 
standards is in the range of 1-18 trillion Btu (compared to an annual 
national gas supply of 19.04 quadrillion Btu.\84\)
---------------------------------------------------------------------------

    \84\ Department of Energy--Energy Information Administration, 
Annual Energy Outlook 2008 with Projections to 2030 (DOE/EIA-0383) 
(June 2008) Table A1. Available at: http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.
---------------------------------------------------------------------------

    In its November 2007 ANOPR, DOE stated that it did not plan to 
estimate impacts on water and wastewater utilities for its proposed 
rule, because the water and wastewater utility sector is more 
complicated than either the electric utility or gas utility sectors, 
with a high degree of geographic variability produced by a large 
diversity of water resource availability, institutional history, and 
regulatory context. 72 FR 64432, 64508 (Nov. 15, 2007). Further, DOE 
was not aware of any national data or nationally based tool that would 
allow it to calculate the impacts on water and wastewater utilities or 
water and wastewater infrastructure requirements. The Joint Comment and 
numerous water organizations stated that DOE should analyze the impacts 
on water and wastewater utilities. The Joint Comment added that because 
there are widespread problems in water and wastewater infrastructure 
financing, DOE should commit to conducting such an analysis. The 
commenters cite the Environmental Protection Agency's (EPA's) 2002 
report, The Clean Water and Drinking Water Infrastructure Gap Analysis 
(EPA-816-R-02-020), as evidence of the infrastructure problem. (Joint 
Comment, No. 29 at p. 4; AWE, AR, AMWA, CUWCC, and TBW, No. 34 at p. 1)
    In response to public comments, DOE nevertheless conducted a review 
of governmental and non-governmental analytical tools that might prove 
suitable for calculating the impacts of CCW standards on water and 
wastewater utilities or water and wastewater infrastructure 
requirements. Specifically, the EPA, the U.S. Geological Survey (USGS), 
and DOE are conducting or initiating national activities to study water 
and wastewater issues, including those pertaining to water and 
wastewater utilities. These tools are discussed below.
    The EPA's WaterSense program \85\ provides information to enhance 
the market for water-efficient products, programs, and practices. EPA 
developed the National Water Saving (NWS) spreadsheet tool to estimate 
water savings attributable to WaterSense activities. The model examines 
the effects of WaterSense by tracking the shipments of products that 
WaterSense designates as water-efficient. It estimates savings based on 
an accounting analysis of water-using equipment and building stock.\86\ 
Since this tool only permits calculation of water savings, however, it 
would not add any capabilities that DOE does not already have
---------------------------------------------------------------------------

    \85\ The WaterSense program provides the public with information 
regarding water efficient products, including available consumer 
products and general information related to water efficiency. Refer 
to: http://www.epa.gov/watersense/.
    \86\ McNeil, Michael, Camilla Dunham Whitehead, Virginie 
Letschert, and Mirka della Cava, WaterSense[supreg] Program: 
Methodology for National Water Savings Analysis Model Indoor 
Residential Water Use (LBNL) (Feb. 2008).
---------------------------------------------------------------------------

    With respect to non-governmental efforts, the California Urban 
Water Conservation Council (CUWCC) and the Pacific Institute have 
developed two tools for California water utilities. Avoided Cost Due to 
Water Efficiency and Conservation \87\ assists California water 
utilities in calculating avoided costs and developing methods to 
quantify the environmental benefits and costs associated with 
implementing water efficiency programs. The Water to Air Model \88\ 
helps California water managers quantify the energy and air quality 
dimensions of water management decisions. Neither of these models would 
allow estimation of impacts of water savings on water utility 
infrastructure requirements, however.
---------------------------------------------------------------------------

    \87\ This model is available at: http://www.cuwcc.com/technical/action.lasso?-database=cuwcc_catalog&-layout=CDML&-response=detailed_results.html&-recordID=34196&-search.
    \88\ This model is available at: http://www.pacinst.org/resources/water_to_air_models/index.htm.
---------------------------------------------------------------------------

    In sum, none of these activities has yet produced the necessary 
data or tools to permit DOE to conduct a water utility impact analysis 
of the type requested by commenters.
    Although DOE cannot yet determine water and wastewater utility 
impacts at the national level, both the LCC analysis and the NIA do 
include the economic savings from decreased water and wastewater 
charges. Such economic savings should include the economic value of any 
energy savings that may be included in the provision of consumer water 
and wastewater services.

J. Environmental Assessment

    DOE has prepared a draft Environmental Assessment (EA) pursuant to 
the National Environmental Policy Act and the requirements of 42 U.S.C. 
6295(o)(2)(B)(i)(VI) and 6316(a), to determine the environmental 
impacts of the proposed standards. Specifically, DOE estimated the 
reduction in power sector emissions of CO2 using the NEMS-BT 
computer model. DOE calculated a range of estimates for reduction in 
oxides of nitrogen (NOX) emissions and mercury (Hg) 
emissions using power sector emission rates. However, the Environmental 
Assessment (see chapter 16 of the TSD accompanying this notice) does 
not include the estimated reduction in power sector emissions of 
SO2, because DOE has determined that due to the presence of 
national caps on SO2 emissions as addressed below, any such 
reduction resulting from an energy conservation standard would not 
affect the overall level of SO2 emissions in the United 
States. Because the operation of gas cooking products and CCWs requires 
use of fossil fuels and results in emissions of CO2 and 
NOX, DOE also accounted for the reduction in CO2 
and NOX emissions from standards at the sites where these 
appliances are used.
    The NEMS-BT is run similarly to the AEO 2008 NEMS, except that 
cooking product and CCW energy use is reduced by the amount of energy 
saved (by fuel type) due to the TSLs. DOE obtained the inputs of 
national energy savings from the NIA spreadsheet model. For the 
environmental assessment, the output is the forecasted physical 
emissions. The net benefit of the standard is the difference between 
emissions estimated by NEMS-BT and the AEO 2008 Reference Case. The 
NEMS-BT tracks CO2 emissions using a detailed module that 
provides results with broad coverage of all sectors and inclusion of 
interactive effects. For the final rule, DOE intends to revise the 
emissions analysis using the AEO 2009 NEMS model using the process 
outlined above.
    The Clean Air Act Amendments of 1990 set an emissions cap on 
SO2 for all power generation. The attainment of this target, 
however, is flexible among generators and is enforced through the use 
of emissions allowances and tradable permits. Because SO2 
emissions allowances have value, they will almost certainly be used by 
generators, although not necessarily immediately or in the same year 
with and without a standard in place. In other words, with or without a 
standard, total cumulative SO2 emissions will always be at 
or near

[[Page 62083]]

the ceiling, while there may be some timing differences between year-
by-year forecast. Thus, it is unlikely that there will be an 
SO2 environmental benefit from electricity savings as long 
as there is enforcement of the emissions ceilings.
    Although there may not be an actual reduction in SO2 
emissions from electricity savings, there still may be an economic 
benefit from reduced demand for SO2 emission allowances. 
Electricity savings decrease the generation of SO2 emissions 
from power production, which can decrease the need to purchase or 
generate SO2 emissions allowance credits, and decrease the 
costs of complying with regulatory caps on emissions.
    Like SO2, future emissions of NOX and Hg 
would have been subject to emissions caps under the Clean Air 
Interstate Act (CAIR) and Clean Air Mercury Rule (CAMR). As discussed 
later in section V.B.6, these rules have been vacated by a Federal 
court. But the NEMS-BT model used for today's proposed rule assumed 
that both NOX and Hg emissions would be subject to CAIR and 
CAMR emission caps. In the case of NOX emissions, CAIR would 
have permanently capped emissions in 28 eastern States and the District 
of Columbia. Because the NEMS-BT modeling assumed NOX 
emissions would be subject to CAIR, DOE established a range of 
NOX reductions based on the use of a NOX low and 
high emission rates (in metric kilotons (kt) of NOX emitted 
per terawatt-hours (TWh) of electricity generated) derived from the AEO 
2008. To estimate the reduction in NOX emissions, DOE 
multiplied these emission rates by the reduction in electricity 
generation due to the standards considered. For mercury, because the 
emissions caps specified by CAMR would have applied to the entire 
country, DOE was unable to use the NEMS-BT model to estimate the 
physical quantity changes in mercury emissions due to energy 
conservation standards. To estimate mercury emission reductions due to 
standards, DOE used an Hg emission rate (in metric tons of Hg per 
energy produced) based on the AEO 2008. Because virtually all mercury 
emitted from electricity generation is from coal-fired power plants, 
DOE based the emission rate on the metric tons of mercury emitted per 
TWh of coal-generated electricity. To estimate the reduction in mercury 
emissions, DOE multiplied the emission rate by the reduction in coal-
generated electricity associated with standards considered.
    In comments on the ANOPR, Earth Justice (EJ) stated that DOE must 
evaluate the economic benefits of the standards' effects on allowance 
prices, that the exclusion of these benefits from DOE's analysis is 
arbitrary, and that this exclusion serves only to artificially depress 
the economic value of stronger efficiency standards. (EJ, No. 31 at pp. 
1-2) DOE believes that the impact of any one standard on the allowance 
credit price is likely small and highly uncertain. However, DOE has 
attempted to monetize the potential benefit from SO2 
emission reductions resulting from cooking product and CCW standards. 
The potential impact on SO2 allowance prices are discussed 
in section V.B.6. Because the CAIR and CAMR rules have been vacated by 
the courts, NOX and Hg allowances are no longer relevant, 
and therefore, DOE did not estimate the potential impact of standards 
on NOX and Hg allowance prices in today's proposed rule.
    DOE also received comments from stakeholders on the valuation of 
CO2 emissions savings that result from standards. The Joint 
Comment stated that by not placing an economic value on the benefits 
from reduced CO2 emissions, DOE makes it difficult to weigh 
these benefits in comparison to other benefits and costs resulting from 
a given standard level. Implicitly, the Joint Comment argued that DOE 
is arbitrarily valuing pollution reductions at $0, so the best way to 
avoid this mistake would be to estimate an economic value for pollutant 
reductions. According to the Joint Comment, voluminous work, both from 
academia and the business world, exists on the range of potential 
carbon prices under various regulatory scenarios. (Joint Comment, No. 
29 at pp. 10-11) EJ stated that failure to assign an economic value to 
CO2 emissions is tantamount to valuing those emissions at 
zero, an approach that the United States Court of Appeals for the Ninth 
Circuit recently held in Center for Biological Diversity v. NHTSA, 508 
F.3d 508, 535 (9th Cir. 2007), is arbitrary and capricious. Therefore, 
EJ reasoned that exclusion of CO2 emissions reduction 
benefits from DOE's analysis on the basis of uncertainty about their 
precise measure would be arbitrary and capricious, arguing that there 
is considerable agreement that the monetized value of avoided 
CO2 is significantly higher than zero. (EJ, No. 31 at p. 2) 
DOE has made several additions to its monetization of environmental 
emissions reductions in today's proposed rule, which are discussed in 
Section V.B.6, but has chosen to continue to report these benefits 
separately from the net benefits of energy savings. Nothing in EPCA, 
nor in the National Environmental Policy Act, requires that the 
economic value of emissions reduction be incorporated in the net 
present value analysis of the value of energy savings. Unlike energy 
savings, the economic value of emissions reduction is not priced in the 
marketplace.
    EEI stated that in its analysis of CO2, SO2, 
mercury, and NOX emissions from electric power generation, 
DOE should account for the rise in renewable portfolio standards and 
the possibility of an upcoming CO2 cap and trade program, 
both of which would reduce the amount of CO2 produced per 
kWh electricity generated. (EEI, No. 25 at p. 4) DOE's estimates of 
these emissions are based on output from the AEO 2008 version of NEMS. 
The emissions projections reflect EIA's best judgment about market 
factors and policies that affect utility choice of power plants for 
electricity generation. EIA generally includes only those policies that 
are already enacted. As the enactment of a CO2 cap and trade 
program is uncertain at this point, DOE believes it would be 
inappropriate to speculate on the nature and timing of such a policy 
for the purposes of this rulemaking.
    DOE also estimated the impacts on emissions at the sites where the 
appliance products are installed. In addition to electricity, the 
operation of gas cooking products and CCWs requires use of fossil fuels 
and results in emissions of CO2 and NOX at the 
sites where the appliances are used. NEMS-BT provides no means for 
estimating such emissions. Therefore, DOE calculated separate estimates 
of the effect of the proposed standards on site emissions of 
CO2 and NOX, based on emissions factors derived 
from the literature. Natural gas was the only fossil fuel accounted for 
by DOE in its analysis of standards for cooking products and CCWs. 
Because natural gas combustion does not yield SO2 emissions, 
DOE did not report the effect of the proposed standards on site 
emissions of SO2. DOE reports the estimates of 
CO2 and NOX site emission savings in its 
environmental assessment.
    EJ stated that DOE has presented no reasoned explanation--nor does 
one exist--of why environmental benefits that accrue in the future 
should be devalued. EJ stated that DOE's intention to discount 
emissions reductions only underscores that emissions reductions are 
susceptible to evaluation in economic as well as purely environmental 
terms. If DOE intends to apply strictly monetary concepts like discount 
rates to its valuation of emissions reductions, then it must 
incorporate those reductions into its cost/benefit analysis by 
calculating their

[[Page 62084]]

monetary value. (EJ, No. 31 at pp. 2-3) DOE believes that discounted 
environmental benefits represent a policy perspective wherein benefits 
farther in the future are less significant than energy savings closer 
to the present. DOE continues to provide discounted environmental 
benefits for today's proposed rule.
    In its November 2007 ANOPR, DOE stated it would conduct a separate 
analysis of wastewater discharge impacts as part of the environmental 
assessment for water-consuming appliances. For today's proposed rule, 
DOE conducted this analysis for CCWs based on estimates of CCW water 
use and the typical amount of water retention in a clothes load after a 
wash cycle. Based on the RMC of the clothes after a wash cycle, DOE 
estimated that approximately two percent of CCW water use is retained 
in the clothes load at the baseline efficiency level. The RMC decreases 
as a function of increasing CCW efficiency, thereby decreasing the 
amount of water retention in the clothes. But the amount of water use 
decreases with CCW efficiency as well. Because the rate of water use 
savings grows at approximately double the rate of water retention, the 
increased amount of water retained in the clothes as a percentage of 
the water use savings drops from approximately two percent to one 
percent over the range of CCW efficiencies considered. Therefore, 
assuming that water not retained in the clothes load is discharged into 
the wastewater stream, wastewater discharge savings range from 98 to 99 
percent of the water use savings at the baseline and max-tech levels, 
respectively. Section V.B.6 reports the estimated wastewater discharge 
savings.

V. Analytical Results

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of a number of TSLs for the 
appliance products that are the subject of today's proposed rule. Trial 
standard levels are based on efficiency levels explored in the ANOPR 
and were selected upon consideration of economic factors and current 
market conditions. The basis for the TSL selection is described for 
each of the appliance products below. Tables V.1, V.2, V.3, and V.4 
present the TSLs and the corresponding product class efficiencies for 
conventional cooking products, microwave ovens (two tables), and CCWs, 
respectively.
1. Cooking Products
    Table V.1 shows the TSLs for conventional cooking products. As 
discussed in section III.C.1, DOE conducts a screening analysis to 
determine the design options that are technologically feasible and can 
be considered as measures to improve product efficiency. However, as 
discussed in the November 2007 ANOPR as well as chapters 3 and 4 of the 
TSD accompanying this notice, there are few design options available 
for improving the efficiency of these cooking products due to physical 
limitations on energy transfer to the food load. This is particularly 
the case for all cooktop and self-cleaning oven product classes. For 
electric cooktops, DOE was able to identify only a single design change 
for analysis. For gas cooktops and electric self-cleaning ovens, DOE 
was able to identify two design options for analysis. And for gas self-
cleaning ovens, DOE was able to identify three design options for 
analysis. Although DOE considered several design options for standard 
ovens, with the exception of eliminating standing pilots for gas 
standard ovens, none significantly increased product efficiency. 
Specifically, eliminating standing pilots reduces overall gas 
consumption by over 50 percent while all other design options reduce 
gas consumption by approximately two percent. Therefore, DOE gave 
further consideration to only four TSLs for conventional cooking 
products.
    TSL 1 represents the elimination of standing pilot ignition systems 
from gas cooking products. All other product classes are unaffected by 
TSL 1, including gas self-cleaning ovens, which are not allowed to use 
standing pilot ignition systems because they already use electricity 
and come equipped with power cords to enable the self-cleaning cycle. 
Under TSL 1, DOE's current prescriptive standard of disallowing the use 
of standing pilot ignition systems in gas cooking pilots equipped with 
power cords would be extended to all gas cooking products, regardless 
of whether the appliance is equipped with a power cord. Also, under TSL 
1, there would be no need for DOE to regulate the EF of any of the 
conventional cooking product classes because only standing pilot 
ignition systems are being affected.
    TSL 2 for conventional cooking products consists of the candidate 
standard levels from each of the product classes that provide a 
majority of consumers (who are impacted by the standard) with an 
economic benefit. Based on this criterion, only electric coil cooktops 
and electric standard ovens have candidate standard levels that differ 
from those in TSL 1. In other words, for the remaining five product 
classes (electric smooth cooktops, electric self-cleaning ovens, and 
all gas cooking product classes), analytical results indicate there is 
no candidate standard level that provides an economic benefit to a 
majority of consumers.
    TSL 3 for conventional cooking products consists of the same 
candidate standard levels as TSL 2, with the exception of the gas self-
cleaning oven product class. For gas self-cleaning ovens, the design 
option that provides, on average, a small level of economic benefit to 
consumers is included.
    TSL 4 is the maximum technologically feasible level.

                       Table V.1--Trial Standard Levels for Conventional Cooking Products
----------------------------------------------------------------------------------------------------------------
                                                                     TSLs (EF)
         Product Classes          ------------------------------------------------------------------------------
                                          TSL 1                TSL 2                TSL 3              TSL 4
----------------------------------------------------------------------------------------------------------------
Electric Coil Cooktops...........  No Standard          0.769..............  0.769..............          0.769
                                    (Baseline).
Electric Smooth Cooktops.........  No Standard          No Standard          No Standard                  0.753
                                    (Baseline).          (Baseline).          (Baseline).
Gas Cooktops.....................  No Pilot...........  No Pilot...........  No Pilot...........          0.420
Electric Standard Ovens..........  No Standard          0.1163.............  0.1163.............          0.1209
                                    (Baseline).
Electric Self-Cleaning Ovens.....  No Standard          No Standard          No Standard                  0.1123
                                    (Baseline).          (Baseline).          (Baseline).
Gas Standard Ovens...............  No Pilot...........  No Pilot...........  No Pilot...........          0.0600
Gas Self-Cleaning Ovens..........  No Change to         No Change to         0.0625.............          0.0632
                                    Existing Standard    Existing Standard
                                    (Baseline).          (Baseline).
----------------------------------------------------------------------------------------------------------------


[[Page 62085]]

    As discussed previously in section III.A, DOE has concluded that it 
is currently technically infeasible to combine cooking efficiency (or 
EF) into a new efficiency metric with standby power consumption in 
microwave ovens. As a result, DOE considered two sets of TSLs-one set 
comprised solely of EF levels (TSLs 1a-4a) and a second set comprised 
solely of standby power levels (TSLs 1b-4b).
    Table V.2 shows the TSLs for the regulation of cooking efficiency 
or EF. TSLs 1a though 4a correspond to candidate standard levels 1a 
through 4a, respectively, and affect only the EF. For TSLs 1a through 
4a, no standard to limit standby power is specified. TSL 4a corresponds 
to the maximum feasible EF level. None of these first four TSLs have an 
LCC lower than the baseline level or an NPV that provides a net 
economic benefit to the Nation.

                        Table V.2--Trial Standard Levels for Microwave Oven Energy Factor
----------------------------------------------------------------------------------------------------------------
                                                                             TSLs
                                             -------------------------------------------------------------------
                                                   TSL 1a           TSL 2a           TSL 3a           TSL 4a
----------------------------------------------------------------------------------------------------------------
EF..........................................           0.586            0.588            0.597            0.602
----------------------------------------------------------------------------------------------------------------

    Table V.3 shows the TSLs for the regulation of standby power. TSLs 
1b through 4b correspond to candidate standard levels 1b through 4b, 
respectively, and affect only standby power. For TSLs 1b through 4b, no 
standard on EF is specified. All four of these TSLs yield LCC savings 
relative to the baseline level and provide a net economic benefit to 
the Nation. TSL 3b corresponds to the maximum feasible level for the 
regulation of standby power, which does not affect the appliance's 
capability to continually display the time. TSL 4b corresponds to the 
maximum technologically feasible level for the regulation of standby 
power, and it also represents the level with the minimum LCC as well as 
the maximum NPV. However, TSL 4b results in the inability of the 
appliance to continually display the time.

                       Table V.3-- Trial Standard Levels for Microwave Oven Standby Power
----------------------------------------------------------------------------------------------------------------
                                                                             TSLs
                                             -------------------------------------------------------------------
                                                   TSL 1b           TSL 2b           TSL 3b           TSL 4b
----------------------------------------------------------------------------------------------------------------
Standby Power (W)...........................             2.0              1.5              1.0             0.02
----------------------------------------------------------------------------------------------------------------

2. Commercial Clothes Washers
    Table V.4 shows the TSLs for CCWs. TSLs consist of a combination of 
MEF and WF for each product class. In all, DOE has considered five 
TSLs. TSL 1 corresponds to the first candidate standard level from each 
product class and represents the efficiency level for each class with 
the least significant design change. For TSL 2, the candidate standard 
levels for each class are simply incremented to the second candidate 
standard level and represent the next technological design change for 
each class. TSL 3 represents the third candidate standard level for 
top-loading washers (the maximum efficiency level for this class) while 
keeping front-loading washers at its second candidate standard level. 
For TSL 3, front-loading washers were held to the second candidate 
standard level in order to minimize the equipment price difference 
between the two product classes. For TSL 4, top-loading washers are 
retained at their maximum efficiency level while front-loading washers 
are incremented to their third candidate standard level. Finally, TSL 5 
corresponds to the maximum technologically feasible level for each 
product class. In progressing from TSL 1 to TSL 5, the LCC savings, 
NES, and NPV all increase. TSL 5 represents the level with the minimum 
LCC and maximum NES and NPV.

                         Table V.4--Trial Standard Levels for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Top-Loading:
    MEF.........................            1.42            1.60            1.76            1.76            1.76
    WF..........................            9.5             8.5             8.3             8.3             8.3
Front-Loading:
    MEF.........................            1.80            2.00            2.00            2.20            2.35
    WF..........................            7.5             5.5             5.5             5.1             4.4
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of standards on consumers, DOE 
conducted LCC and PBP analyses for each TSL. In general, higher-
efficiency products would affect consumers in two ways: (1) annual 
operating expense would decrease; and (2) purchase price would 
increase. Section IV.D of this notice discusses the inputs DOE used for 
calculating the LCC and PBP.
    The key outputs of the LCC analysis are a mean LCC savings relative 
to the baseline product design, as well as a probability distribution 
or likelihood of LCC reduction or increase, for each TSL and product 
class. The LCC analysis also estimates the fraction of product 
consumers for which the LCC will decrease (net benefit), increase (net 
cost), or exhibit no change (no impact) relative to the base-case 
equipment forecast. No impacts occur when the

[[Page 62086]]

equipment efficiencies of the base-case forecast already equal or 
exceed the considered TSL efficiency.
    Tables V.5 through V.17 show the mean LCC savings and the percent 
of households with a net cost, no impact, and a net benefit (i.e., 
positive savings) at each TSL for each product class. The average LCC 
and its components (the average installed price and the average 
operating cost) are also presented for each TSL. The tables also show 
the median and average payback period at each TSL.
    Cooking Products. Tables V.5, V.6, and V.7 show the LCC and PBP 
results for cooktops. For example, in the case of gas cooktops, TSL 1 
(pilotless ignition with an efficiency of 0.399 EF) shows an average 
LCC savings of $13 for the average household. Note that for TSL 1, 93.5 
percent of the housing units in 2012 already purchased a gas cooktop 
with pilotless ignition in the base case and, thus, have zero savings 
due to the standard. If one compares the LCC of the average household 
at the baseline level at 0.106 EF ($822) to TSL 1 at 0.399 EF ($559), 
then the difference in the LCCs of the average household is $263. 
However, since the base case includes a significant number of 
households that are not impacted by the standard, the average savings 
over all of the households is actually $13, not $263. DOE determined 
the median and average values of the PBPs shown below by excluding the 
percentage of households not impacted by the standard. For example, in 
the case of TSL 1 for gas cooktops, 93.5 percent of the households did 
not factor into the calculation of the median and average PBP.

                                      Table V.5--Electric Coil Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................       0.737        $272        $173        $445  ..........  ..........  ..........  ..........  ..........  ..........
                                                                                 -----------------------------------------------------------------------
1...............................       0.737         272         173         445                          No change from baseline
                                                                                 -----------------------------------------------------------------------
2, 3, 4.........................       0.769         276         166         441          $4        29.5         0.0        70.6         7.3        18.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                     Table V.6--Electric Smooth Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................       0.742        $309        $173        $482  ..........  ..........  ..........  ..........  ..........  ..........
                                                                                 -----------------------------------------------------------------------
1, 2, 3.........................       0.742         309         173         482                          No change from baseline
                                                                                 -----------------------------------------------------------------------
4...............................       0.753         550         170         720       -$238       100.0         0.0         0.0       1,512       3,745
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                           Table V.7--Gas Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................       0.106        $310        $512        $822  ..........  ..........  ..........  ..........  ..........  ..........
1, 2, 3.........................       0.399         332         227         559         $13         0.2        93.5         6.3         4.5         3.5
4...............................       0.420         361         222         583        -$11        93.9         0.0         6.1          77         271
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Similarly, Tables V.8 through V.11 show the LCC and PBP results for 
ovens (other than microwave ovens.) For example, in the case of gas 
standard ovens, TSL 1 (pilotless spark ignition with an efficiency of 
0.0583 EF) shows an average LCC savings of $6. If one compares the LCC 
of the base case at 0.0298 EF ($803) to the standards case at 0.0583 EF 
($714), then the difference in the LCCs is $89. However, the base case 
includes a significant number of households that are either at the 
baseline level or have ovens equipped with pilotless glo-bar ignition 
(82.3 percent of households). Because the base case includes a 
significant number of households that are not impacted by the standard, 
the average savings over all of the households is actually $6, not 
$289. DOE determined the median and average values of the PBPs shown 
below by excluding the percentage of households not impacted by the 
standard. For example, in the case of TSL 1 for gas standard ovens, 
82.3 percent of the households did not factor into the calculation of 
the median and average PBP. Also, the large difference in the average 
and median values for TSL 4 for all ovens is due to households with 
excessively long PBPs in the distribution of results. The Monte Carlo 
simulation for TSL 4 yielded a few results with PBPs in excess of 
thousands of years. A limited number of

[[Page 62087]]

excessively long PBPs produce an average PBP that is very long. 
Therefore, in these cases, the median PBP is a more representative 
value to gauge the length of the PBP.

                                     Table V.8--Electric Standard Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................      0.1066        $414        $218        $631  ..........  ..........  ..........  ..........  ..........  ..........
                                                                                 -----------------------------------------------------------------------
1...............................      0.1066         414         218         631                          No change from baseline
                                                                                 -----------------------------------------------------------------------
2, 3............................      0.1163         421         201         622          $9        43.9         0.0        56.1         8.0         310
4...............................      0.1209         489         194         683        -$52        95.2         0.0         4.8          61       2,337
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   Table V.9--Electric Self-Cleaning Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................      0.1099        $485        $230        $715  ..........  ..........  ..........  ..........  ..........  ..........
                                                                                 -----------------------------------------------------------------------
1, 2, 3.........................      0.1099         485         230         715                          No change from baseline
                                                                                 -----------------------------------------------------------------------
4...............................      0.1123         548         226         774       -$143        78.9         0.0        21.1         240        1263
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                       Table V.10--Gas Standard Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................      0.0298        $430        $373        $803  ..........  ..........  ..........  ..........  ..........  ..........
1, 2, 3.........................      0.0583         464         250         714          $6         6.5        82.3        11.2         9.4         7.3
4...............................      0.0600         507         469         975        -$86        95.0         0.0         5.0          27         473
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                     Table V.11--Gas Self-Cleaning Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................      0.0540        $550        $594      $1,144  ..........  ..........  ..........  ..........  ..........  ..........
                                                                                 -----------------------------------------------------------------------
1, 2............................      0.0540         550         594       1,144                          No change from baseline
                                                                                 -----------------------------------------------------------------------
3...............................      0.0625         566         577       1,143          $1        58.9         0.0        41.1          11         164
4...............................      0.0632         574         576       1,150         -$6        68.8         0.0        31.2          16         279
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Tables V.12 and V.13 show the LCC and PBP results for microwave 
ovens. Two sets of results are presented--one for the TSLs that pertain 
to EF and another for the TSLs that pertain to standby power. For the 
TSLs pertaining to standby power, TSL 2b (1.5 W standby power) shows an 
average LCC savings of $13. Note that for TSL 2b, 19.1 percent of the 
housing units in 2012 have already purchased a microwave oven at this 
level and, thus, have zero savings due to the standard. If one compares 
the LCC of the baseline at 0.557 EF and 4 W standby power ($348) to TSL 
2b ($333), then the difference in the LCCs is $15. However, since the 
base case includes a significant number of households that are not 
impacted by the standard, the average savings over all the households 
is actually $13, not $15. DOE determined the median and average values 
of the PBPs shown below by

[[Page 62088]]

excluding the percentage of households not impacted by the standard. 
For example, in the case of TSL 2b, 19.1 percent of the households did 
not factor into the calculation of the median and average PBP.

                                     Table V.12--Microwave Ovens: Life-Cycle Cost and Payback Period Results for EF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................       0.557        $220        $128        $348  ..........  ..........  ..........  ..........  ..........  ..........
1a..............................       0.586         232         123         356         -$3        42.0        53.7         4.3          29          69
2a..............................       0.588         246         123         369         -10        45.2        53.7         1.1          57         133
3a..............................       0.597         267         122         389         -19        45.9        53.7         0.4          81         190
4a..............................       0.602         294         121         415         -31        46.2        53.7         0.1         115         268
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                Table V.13--Microwave Ovens: Life-Cycle Cost and Payback Period Results for Standby Power
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings                 Payback period
                                             ------------------------------------------------------------------------------------         (years)
                                                                                                        Households with          -----------------------
               TSL                    EF        Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net
                                                 price       cost         LCC       savings    Net cost    No impact    benefit     Median      Average
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................         4.0        $220        $128        $348  ..........  ..........  ..........  ..........  ..........  ..........
1b..............................         2.0         220         115         335           6         0.0        53.7        46.3         0.3         0.3
2b..............................         1.5         221         112         333          13         0.0        19.1        80.9         0.6         0.8
3b..............................         1.0         222         102         331          18         0.0         0.0       100.0         1.5         1.6
4b..............................        0.02         228         102         330          19         0.0         0.0       100.0         3.1         3.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Commercial Clothes Washers. Tables V.14 and V.15 show the LCC and 
PBP results for both CCW product applications for the top-loading 
product class while Tables V.16 and V.17 show the LCC and PPB results 
for the front-loading product class. For example, in the case of the 
multi-family application for front-loading washers (Table V.16), TSL 2 
(2.00 MEF/5.50 WF) shows an average LCC savings of $52. Note that for 
TSL 2, 88.3 percent of consumers in 2012 are assumed to already be 
using a CCW in the base case at TSL 2 and, thus, have zero savings due 
to the standard. If one compares the LCC of the baseline at 1.72 MEF/
8.00 WF ($3980) to TSL 2 ($3489), then the difference in the LCCs is 
$491. However, since the base case includes a significant number of 
consumers that are not impacted by the standard, the average savings 
over all of the consumers is actually $52, not $491. DOE determined the 
median and average values of the PBPs shown below by excluding the 
percentage of households not impacted by the standard. For example, in 
the case of TSL 2 for front-loading washers in a multi-family 
application, 88.3 percent of the consumers did not factor into the 
calculation of the median and average PBP.

                Table V.14--Commercial Clothes Washers, Top-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.26/9.50        $734      $3,034      $3,768  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.42/9.50         852       2,934       3,786      -$11.6        45.0        35.7        19.3        10.7        15.6
2...............................   1.60/8.50         940       2,675       3,615       154.5        15.4         2.8        81.7         4.5         5.5
3, 4, 5.........................   1.76/8.30         963       2,560       3,524       243.7        10.0         2.8        87.2         3.8         4.6
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 Table V.15--Commercial Clothes Washers, Top-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.26/9.50        $734      $3,191      $3,925  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.42/9.50         852       3,103       3,955      -$19.6        53.4        35.7        10.9         7.4         8.5

[[Page 62089]]

 
2...............................   1.60/8.50         940       2,823       3,763       166.4         3.6         2.8        93.6         2.8         3.0
3, 4, 5.........................   1.76/8.30         963       2,712       3,675       252.3         1.1         2.8        96.1         2.4         2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------


               Table V.16--Commercial Clothes Washers, Front-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.72/8.00      $1,316      $2,664      $3,980  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.80/7.50       1,316       2,664       3,860        $8.7         0.0        92.7         7.3         0.0         0.0
2, 3............................   2.00/5.50       1,338       2,544       3,489        51.8         0.0        88.3        11.7         0.4         0.5
4...............................   2.20/5.10       1,376       2,151       3,404       134.4         2.3         2.8        94.9         2.8         3.1
5...............................   2.35/4.40       1,417       2,027       3,302       234.1         1.5         1.5        97.0         2.8         3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                Table V.17--Commercial Clothes Washers, Front-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.72/8.00      $1,316      $1,885      $4,135  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.80/7.50       1,316       2,818       4,005        $9.5         0.0        92.7         7.3         0.0         0.0
2, 3............................   2.00/5.50       1,338       2,688       3,587        58.0         0.0        88.3        11.7         0.3         0.3
4...............................   2.20/5.10       1,376       2,249       3,502       140.1         0.0         2.8        97.2         1.7         1.8
5...............................   2.35/4.40       1,417       2,126       3,390       250.4         0.0         1.5        98.5         1.6         1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Consumer Subgroup Analysis
    Using the LCC spreadsheet model, DOE determined the impact of the 
standards on the following consumer subgroups: (1) low-income 
households and senior-only households for conventional cooking products 
and microwave ovens, and (2) small business owners and consumers 
without municipal water and sewer for CCWs.
    Cooking Products. For conventional cooking products and microwave 
ovens, the results for low-income and senior-only households indicate 
that the LCC impacts on these subgroups and the payback periods are 
similar to the LCC impacts and payback periods on the full sample of 
residential consumers. Thus, the proposed standards would have an 
impact on low-income households and senior-only households that would 
be similar to their impact on the general population of residential 
consumers. (See the TSD accompanying this notice, chapter 12.)
    Commercial Clothes Washers. For CCWs, the results for consumers 
without municipal water and sewer indicate that the LCC impacts and 
payback periods for this subgroup are similar to the LCC impacts and 
payback periods on the full sample of CCW consumers. But for small 
business owners, the LCC impacts and payback periods are different than 
for the general population. For the top-loading product class, Tables 
V.18 and V.19 show the LCC impacts and payback periods for small multi-
family property owners and small laundromats, respectively, while 
Tables V.20 and V.21 show the same but for the front-loading product 
class. For all TSLs for both product classes (with exception of TSL 1 
for top-loading washers), both sets of small business owners, on 
average, realize LCC savings similar to the general population. The 
difference between the small business population and the general 
population occurs in the percentage of each population that realizes 
LCC savings from standards. With the exception of TSL 1 for top-loading 
washers, an overwhelming majority of the small business and general 
populations benefit from standards at each TSL. But for both product 
classes, a larger percentage of the general population benefits from 
standards than small business owners. This occurs because small 
businesses do not have the same access to capital as larger businesses. 
As a result, smaller businesses have a higher average discount rate 
than the industry average. Because of the higher discount rates, 
smaller businesses do not value future operating costs savings from 
more efficient CCWs as much as the general population. But to 
emphasize, in spite of the higher discount rates, a majority of small 
businesses still benefit from higher CCW standards at all TSLs, with 
the exception of TSL 1 for the top-loading product class.

[[Page 62090]]



   Table V.18--Commercial Clothes Washers, Top-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.26/9.50        $734      $2,463      $3,197  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.42/9.50         852       2,382       3,234      -$23.2        51.3        35.8        12.9        10.7        15.7
2...............................   1.60/8.50         940       2,172       3,112        95.0        23.1         3.1        73.8         4.5         5.5
3, 4, 5.........................   1.72/8.00         963       2,079       3,042       163.1        15.7         3.1        81.2         3.8         4.6
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Table V.19--Commercial Clothes Washers, Top-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.26/9.50        $734      $2,765      $3,499  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.42/9.50         852       2,689       3,541      -$26.9        59.4        35.8         4.8         7.4         8.5
2...............................   1.60/8.50         940       2,447       3,387       122.5         7.0         3.1        89.9         2.8         3.0
3, 4, 5.........................   1.72/8.00         963       2,350       3,313       194.0         2.9         3.1        94.0         2.4         2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------


  Table V.20--Commercial Clothes Washers, Front-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................   1.72/8.00      $1,316      $2,164      $3,480  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.80/7.50       1,316       2,164       3,383        $6.9         0.0        92.9         7.1         0.0         0.0
2, 3............................   2.00/5.50       1,338       2,067       3,086        41.5         0.0        88.3        11.7         0.4         0.5
4...............................   2.20/5.10       1,376       1,748       3,024       101.5         6.7         2.9        90.4         2.8         3.1
5...............................   2.35/4.40       1,417       1,648       2,950       174.7         5.6         1.4        93.1         2.8         3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table V.21--Commercial Clothes Washers, Front-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Life-cycle cost                       Life-cycle cost savings             Payback period (years)
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                        Households with
               TSL                  MEF/WF      Average     Average                          ------------------------------------
                                               installed   operating    Average     Average                               Net       Median      Average
                                                 price       cost         LCC       savings    Net cost    No impact    benefit
                                                                                               (percent)   (percent)   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline........................      1.72/0      $1,316      $1,533      $3,759  ..........  ..........  ..........  ..........  ..........  ..........
1...............................   1.80/7.50       1,316       2,443       3,646        $8.0         0.0        92.9         7.1         0.0         0.0
2, 3............................   2.00/5.50       1,338       2,330       3,287        50.0         0.0        88.3        11.7         0.3         0.3
4...............................   2.20/5.10       1,376       1,949       3,219       116.2         0.0         2.9        97.1         1.7         1.8
5...............................   2.35/4.40       1,417       1,843       3,128       206.2         0.0         1.4        98.6         1.6         1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Rebuttable-Presumption Payback
    As discussed above, EPCA establishes a rebuttable presumption that, 
in essence, an energy conservation standard is economically justified 
if the increased purchase cost for a product that meets the standard is 
less than three times the value of the first-year energy savings 
resulting from the standard. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE 
calculated a rebuttable-presumption payback period for each TSL to 
determine whether DOE could presume that a standard at that level is 
economically justified. Tables V.22 through V.25 show the rebuttable-
presumption payback periods for conventional cooking products, 
microwave ovens, and CCWs, respectively. Because only a single, average 
value is necessary for establishing the rebuttable-presumption payback 
period, rather than using distributions for input values, DOE used 
discrete values. As required by EPCA, DOE based the calculation on the 
assumptions in the DOE test procedures

[[Page 62091]]

for the appliance products. (42 U.S.C. 6295(o)(2)(B)(iii)) As a result, 
DOE calculated a single rebuttable-presumption payback value, and not a 
distribution of payback periods, for each TSL.

                                  Table V.22--Rebuttable-Presumption Payback Periods for Conventional Cooking Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Payback period (years)
                                      ------------------------------------------------------------------------------------------------------------------
                 TSL                                      Electric
                                        Electric coil      smooth        Gas cooktops       Electric     Electric self-    Gas standard   Gas self-clean
                                          cooktops        cooktops                      standard  ovens    clean ovens        ovens            ovens
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................              NA              NA              3.2             NA                NA              7.3              NA
2....................................             3.2              NA              3.2              2.6              NA              7.3              NA
3....................................             3.2              NA              3.2              2.6              NA              7.3             6.5
4....................................             3.2             664             14               20                95             23               9.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


  Table V.23--Rebuttable-Presumption Payback Periods for Microwave Oven
                              Energy Factor
------------------------------------------------------------------------
                                                        Payback period
                         TSL                                (years)
------------------------------------------------------------------------
1a..................................................                  16
2a..................................................                  32
3a..................................................                  45
4a..................................................                  64
------------------------------------------------------------------------


  Table V.24--Rebuttable-Presumption Payback Periods for Microwave Oven
                              Standby Power
------------------------------------------------------------------------
                                                        Payback period
                         TSL                                (years)
------------------------------------------------------------------------
1b..................................................                 0.2
2b..................................................                 0.4
3b..................................................                 0.8
4b..................................................                 2.1
------------------------------------------------------------------------


                Table V.25--Rebuttable-Presumption Payback Periods for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                                                     Payback period (years)
                                              ------------------------------------------------------------------
                                                         Top-Loading                      Front-loading
                     TSL                      ------------------------------------------------------------------
                                                 Multi-family     Laundromat      Multi-family      Laundromat
                                                 application      application     application      application
----------------------------------------------------------------------------------------------------------------
1............................................            303        \a\[infin]              0                0
2............................................             23.4             201              1.3              1.5
3............................................             17.4              62              1.3              1.5
4............................................             17.4              62              7.6             12.6
5............................................             17.4              62              8.9             15.0 
----------------------------------------------------------------------------------------------------------------
\a\ Infinity.

    With the exception of TSLs 2 and 3 for electric standard ovens and 
TSLs 1b to 4b for microwave ovens, and TSLs 1 to 3 for front-loading 
CCWs, the TSLs in the above tables do not have rebuttable-presumption 
payback periods of less than three years. DOE can use the rebuttable-
presumption payback period as an alternative path for establishing 
economic justification under the EPCA factors. But DOE believes that 
the rebuttable-presumption payback period criterion (i.e., a limited 
payback period) is not sufficient for determining economic 
justification. Instead, DOE has considered a full range of impacts, 
including those to consumers, manufacturers, the Nation, and the 
environment. Section V.C provides a complete discussion of how DOE 
considered the range of impacts to select its proposed standards.
2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new energy 
conservation standards on cooking product and CCW manufacturers. (See 
the TSD accompanying this notice, chapter 13.)
a. Industry Cash-Flow Analysis Results
    DOE used the INPV in the MIA to compare the financial impacts of 
different TSLs on cooking product and CCW manufacturers. The INPV is 
the sum of all net cash flows discounted at the industry's cost of 
capital (discount rate.) Because the INPV applies only to the 
industries, the INPV is different from the NPV that DOE used to assess 
the cumulative benefit or cost of standards to consumers on a national 
basis. The GRIM estimated cash flows between 2007 and 2042 and found 
them to be consistent with the cash flows predicted in the national 
impact analysis.
    DOE used the GRIM to compare the INPV of the base case (no new 
energy conservation standards) to that of each TSL. To evaluate the 
range of cash-flow impacts on the industries, DOE constructed different 
scenarios for each industry using different assumptions for

[[Page 62092]]

markups and shipments that correspond to the range of product-specific 
anticipated market responses. Each scenario results in a unique set of 
cash flows and corresponding industry value at each TSL. These steps 
allowed DOE to compare the potential impacts on industries as a 
function of TSLs in the GRIMs. The difference in INPV between the base 
case and the standards case is an estimate of the economic impacts that 
implementing that standard level would have on the entire industry.
i. Conventional Cooking Products
    Based on conversations with manufacturers, the primary sources of 
uncertainty relating to the post-standards industry value for 
conventional cooking products are the post-standards markups and their 
associated profit margins.
    To assess the lower end of the range of potential impacts for the 
conventional cooking products industry, DOE considered a scenario in 
which the industry gross margin percentage in the base case is 
preserved in the standards case (i.e., the markup is held constant for 
all products at all TSLs). Thus, a manufacturer is able to fully pass 
on any additional costs due to standards and maintain the percentage 
margin between COGS and manufacturing selling price. Thus, if unit 
sales remain constant, the gross margin in absolute dollars will 
increase after a standard comes into effect.
    To assess the higher end of the range of potential impacts for the 
conventional cooking products industry, DOE considered the scenario 
reflecting the preservation of industry gross margin in absolute 
dollars. Under this scenario, DOE assumed that the industry cannot pass 
on all additional costs due to efficiency-related changes (i.e., the 
markup decreases for all TSLs in the standards case.) Thus, the 
absolute gross margin is held constant. This means that the percentage 
difference between manufacturer production cost and selling price will 
decrease in the standards case compared to the base case and that the 
gross margin percentage will be lower. As a result, the industry will 
make the same gross margin in absolute dollars post-standard in a 
scenario with constant shipments but the industry will also have a 
lower INPV since the gross margin percentage is eroding. Table V.26 
through Table V.33 show the MIA results for each TSL using both markup 
scenarios described above for conventional cooking products, including 
electrical and gas cooktops and ovens.

            Table V.26--Manufacturer Impact Analysis for Electric Cooktops Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             357             357             355             355             434
Change in INPV............................  (2006 $ millions)...........  ..............               0             (2)             (2)              77
                                            (%).........................  ..............           0.00%          -0.56%          -0.56%          21.62%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             9.6             9.6            21.8
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.0             0.0            73.1
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............             0.0             9.6             9.6            94.9
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


         Table V.27--Manufacturer Impact Analysis for Electric Cooktops Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Preservation of gross margin absolute dollars markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             357             357             346             346            (26)
Change in INPV............................  (2006 $ millions)...........  ..............               0            (11)            (11)           (383)
                                            (%).........................  ..............           0.00%          -3.18%          -3.18%        -107.19%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             9.6             9.6            21.8
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.0             0.0            73.1
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............             0.0             9.6             9.6            94.9
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 62093]]


               Table V.28--Manufacturer Impact Analysis for Gas Cooktops Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             287             282             282             282             315
Change in INPV............................  (2006 $ millions)...........  ..............             (5)             (5)             (5)              28
                                            (%).........................  ..............          -1.74%          -1.74%          -1.74%           9.83%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             9.4             9.4             9.4            20.8
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             2.2             2.2             2.2             3.3
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            11.5            11.5            11.5            24.1
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


            Table V.29--Manufacturer Impact Analysis for Gas Cooktops Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Preservation of gross margin absolute dollars markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             287             275             275             275             146
Change in INPV............................  (2006 $ millions)...........  ..............            (12)            (12)            (12)           (141)
                                            (%).........................  ..............          -4.12%          -4.12%          -4.12%         -49.12%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             9.4             9.4             9.4            20.8
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             2.2             2.2             2.2             3.3
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            11.5            11.5            11.5            24.1
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


              Table V.30--Manufacturer Impact Analysis for Electric Ovens Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             793             793             785             785             782
Change in INPV............................  (2006 $ millions)...........  ..............               0             (8)             (8)            (10)
                                            (%).........................  ..............           0.00%          -0.99%          -0.99%          -1.27%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0            20.8            20.8            67.6
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.8             0.8           179.8
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............             0.0            21.6            21.6           247.5
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 62094]]


           Table V.31--Manufacturer Impact Analysis for Electric Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Preservation of gross margin absolute dollars markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             793             793             773             773             324
Change in INPV............................  (2006 $ millions)...........  ..............               0            (19)            (19)           (469)
                                            (%).........................  ..............           0.00%          -2.43%          -2.43%         -59.16%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0            20.8            20.8            67.6
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.8             0.8           179.8
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............             0.0            21.6            21.6           247.5
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 Table V.32 Manufacturer Impact Analysis for Gas Ovens Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             466             459             459             460             420
Change in INPV............................  (2006 $ millions)...........  ..............             (7)             (7)             (6)            (47)
                                            (%).........................  ..............          -1.57%          -1.57%          -1.38%         -10.04%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             9.4             9.4            18.7           100.3
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             1.8             1.8             7.6            72.0
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            11.1            11.1            26.4           172.3
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


             Table V.33--Manufacturer Impact Analysis for Gas Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Preservation of gross margin (absolute dollars) markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                 1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........             466             457             457             426             285
Change in INPV............................  (2006 $ millions)...........  ..............            (10)            (10)            (41)           (181)
                                            (%).........................  ..............          -2.10%          -2.10%          -8.68%         -38.80%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             9.4             9.4            18.7           100.3
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             1.8             1.8             7.6            72.0
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            11.1            11.1            26.4           172.3
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Electric Cooktops. At TSL 1, the impact on INPV and cash flow for 
electric cooktops is zero. At this level, DOE assumed both electric 
coil and smooth cooktops would have the same efficiency level as the 
baseline. Therefore, no impacts are reported at TSL 1.
    At TSL 2 and TSL 3, the impact on INPV and cash flow varies 
depending on manufacturers' ability to maintain gross margins as a 
percentage of revenues constant as the manufacturing product cost (MPC) 
increases as a result of standards. DOE estimated the impacts in INPV 
at TSL 2 and TSL 3 to range from -$2 million to -$11 million, or a 
change in INPV of -0.56 percent to -3.18 percent. At this level, the 
industry cash flow would decrease by

[[Page 62095]]

approximately 12 percent, to $18.3 million, compared to the base-case 
value of $20.8 million in the year leading up to the standards. DOE 
does not expect significant impacts at TSL 2 and TSL 3 because the 
investments needed to conform to the standards are relatively small 
compared to overall SG&A and R&D annual costs. In addition, product 
price increases would benefit manufacturers if they can fully pass 
along MPC increases to customers. However, overall INPV would decline 
in all scenarios at these standard levels because, according to 
manufacturers, the research and engineering costs needed to achieve 
these levels would exceed the relatively small capital expenditures and 
incremental costs at this standard level.
    At TSL 4, the impact on INPV and cash flow will vary significantly 
depending on the manufacturers' ability to maintain a constant gross 
margin percentage as MPCs increase due to standards. DOE estimated the 
impacts in INPV to range from approximately positive $77 million to -
$383 million, or a change in INPV of 21.62 percent to -107.19 percent. 
At this level, the industry cash flow decreases by approximately 168 
percent, to -$14.1 million, compared to the base-case value of $20.8 
million in the year leading up to the standards. At this TSL, if 
manufacturers are able to maintain their gross margin as a percentage 
of revenues, the impacts of higher manufacturing costs would be negated 
by the increases in total revenues. However, if manufacturers can only 
maintain their absolute dollar gross margin, then the impacts at TSL 4 
would completely erode manufacturers' profits. According to 
manufacturers, the energy savings at this level are not economically 
justified because both consumers and manufacturers will experience 
negative impacts. Consumers would experience significantly higher 
prices, while manufacturers will experience decreased profits, lower 
revenues, and much higher R&D costs.
    Gas Cooktops. At TSL 1, TSL 2, and TSL 3, the impact on INPV and 
cash flow varies depending on manufacturers' ability to fully maintain 
their gross margins as the MPCs increase as a result of the standards. 
These TSLs are equivalent to the elimination of standing pilot lights. 
DOE estimated the impacts in INPV at TSL 1, TSL 2, and TSL 3 to range 
from -$5 million up to -$12 million, or a change in INPV of -1.74 
percent up to -4.12 percent. At this level, the industry cash flow 
decreases by approximately 19 percent, to $14.3 million, compared to 
the base case value of $17.6 million in the year leading up to the 
standards. Since more than 90 percent of the equipment being sold is 
already at or above this level (i.e., most products do not have 
standing pilot lights), those manufacturers that do not fall below the 
efficiency levels specified by TSL 1, TSL 2, and TSL 3 will not have to 
make additional modifications to their product lines to conform to the 
amended energy conservation standards. DOE expects the lower end of the 
impacts to be reached, which indicates that industry revenues and costs 
will not be significantly negatively impacted as long as manufacturers 
can maintain their gross margin as a percentage of revenues. Analysis 
shows that although the elimination of standing pilot lights may not 
significantly impact large manufacturers, small manufacturers that rely 
on revenues from these products will be significantly impacted. In MIA 
interviews, all manufacturers of standing pilot-equipped gas appliances 
expressed concern about the potential elimination of standing pilots. 
Two small businesses, which both focus solely on cooking appliances, 
produce standing pilot-equipped products which comprise nearly half of 
their total annual gas product shipments and which they consider to be 
a differentiator from their larger, more-diversified competitors. While 
all manufacturers of gas cooking appliances affected by today's rule 
also make comparable cooking appliances with electronic ignition 
systems, these two small businesses are likely to be disproportionally 
impacted by a ban on standing pilot ignition systems. DOE contacted 
both manufacturers multiple times to better understand the potential 
business impact of a standing pilot ban and believes that, while 
standing pilot ignition systems are a differentiator, gas cooking 
products made by these manufacturers are primarily differentiated by 
non-standard unit widths and other features. Thus, while the potential 
elimination of standing pilot lights would lead to some decrease in 
differentiation, the main differentiators, notably non-standard unit 
sizes, will remain. DOE's discussion of the impacts on the small 
manufacturers is treated in the regulatory flexibility section of 
today's notice (see section VI. B.)
    At TSL 4, the analysis shows that the impact on INPV and cash flow 
continues to vary significantly depending on the manufacturers' ability 
to pass on increases in MPCs to the customer. DOE estimated the impacts 
in INPV at TSL 4 to range from approximately positive $28 million to -
$141 million, or a change in INPV of positive 9.83 percent to -49.12 
percent. At this level, the industry cash flow decreases by 
approximately 38 percent, to $10.9 million, compared to the base case 
value of $17.6 million in the year leading up to the standards. At this 
level, the component switch also carries substantial redesign costs. 
Sealed burners affect the design of the entire cooktop, thereby making 
product conversion and capital conversion costs much greater than a 
simpler component switch. At this TSL, if manufacturers can maintain 
their gross margin as a percentage of revenues, the impacts of higher 
manufacturing costs would be negated by the increases in total 
revenues. However, if manufacturers can only maintain their absolute 
dollar gross margin, then the impacts of TSL 4 would significantly 
erode manufacturers' profits.
    Electric Ovens. At TSL 1, the projected impact on INPV and cash 
flow for electric ovens is zero. At this level, DOE assumed both 
electric standard and self-cleaning ovens would have the same 
efficiency level as the baseline. Therefore, DOE reported no impacts at 
TSL 1.
    At TSL 2 and TSL 3, the impact on INPV and cash flow varies 
depending on manufacturers' ability to maintain gross margin as a 
percentage of revenues as the MPCs increase as a result of standards. 
DOE estimated the impacts in INPV at TSL 2 and TSL 3 to range from -$8 
million to -$19 million, or a change in INPV of approximately -.99 
percent to -2.43 percent. At these levels, the industry cash flow would 
decrease by approximately 12 percent, to $40.4 million, compared to the 
base-case value of $46.1 million in the year leading up to the 
standards. DOE does not expect significant impacts at TSL 2 and TSL 3 
because the investments needed to conform to the standards are 
relatively small in comparison to overall SG&A and R&D annual costs. In 
addition, product cost increases would benefit manufacturers if they 
can fully pass along MPC increases to customers.
    At TSL 4, the analysis shows that impacts on INPV and cash flow 
would vary significantly depending on the manufacturers' ability to 
maintain gross margin as MPCs increase due to standards. DOE estimated 
the impacts in INPV to range from approximately -$10 million to -$469 
million, or a change in INPV of -1.27 percent to -59.16 percent. At 
this level, the industry cash flow would decrease by approximately 194 
percent, to -$43.3 million, compared to the base-case value of $46.1 
million in the year leading up to the standards. At this

[[Page 62096]]

level, the increase in efficiency also carries substantial redesign 
costs. Forced convection and reducing conduction losses affect the 
design of the entire cavity, thereby making product conversion and 
capital conversion costs much greater than a simpler component switch. 
In addition, if manufacturers can maintain their gross margin as a 
percentage of revenues, the impacts of higher manufacturing costs would 
be relatively small. However, if manufacturers can only maintain their 
absolute dollar gross margin, then the impacts of TSL 4 would decrease 
the INPV of the industry by close to half.
    Gas Ovens. At TSL 1 and TSL 2, the impact on INPV and cash flow 
varies depending on manufacturers' ability to fully maintain their 
gross margins as the MPC increases as a result of standards. These TSLs 
are equivalent to the elimination of standing pilot lights from gas 
cooking products. DOE estimated the impacts in INPV at TSL 1 and TSL 2 
to range from a -$7 million up to -$10 million, or a change in INPV of 
-1.57 percent up to -2.10 percent. At this level, the industry cash 
flow decreases by approximately 11 percent, to $25.6 million, compared 
to the base case value of $28.8 million in the year leading up to the 
standards. Since more than 80 percent of the equipment being sold is 
already at or above this level (i.e., most products do not have 
standing pilot lights), those manufacturers that do not fall below the 
efficiency levels specified by TSL 1 and TSL 2 would not have to make 
additional modifications to their product lines to conform to the 
amended energy conservation standards. DOE expects the lower end of the 
impacts to be reached, which indicates that industry revenues and costs 
are not significantly negatively impacted as long as manufacturers can 
maintain their gross margin as a percentage of revenues. The analysis 
shows that although the elimination of standing pilot lights may not 
significantly impact large manufacturers, small manufacturers that rely 
on revenues from these products would be impacted significantly. DOE's 
discussion of the impacts on the small manufacturers is explained in 
further detail in the regulatory flexibility section of today's notice 
(see section VI. B.)
    At TSL 3, the impact on INPV and cash flow continues to vary 
depending on the manufacturers' ability to pass on increases in MPCs to 
the customer. DOE estimated the impacts in INPV at TSL 3 to range from 
approximately -$6 million to -$41 million, or a change in INPV of -1.38 
percent to -8.68 percent. At this level, the analysis shows that the 
industry cash flow decreases by approximately 27 percent, to $20.9 
million, compared to the base case value of $28.8 million in the year 
leading up to the standards.
    At TSL 4, the impact on INPV and cash flow varies significantly 
depending on the manufacturers' ability to pass on increases in MPCs to 
the customer. DOE estimated the impacts in INPV at TSL 4 to range from 
approximately -$47 million to -$181 million, or a change in INPV of -
10.04 percent to -38.80 percent. At this level, the analysis shows that 
the industry cash flow decreases by approximately 190 percent, to -
$26.0 million, compared to the base case value of $28.8 million in the 
year leading up to the standards. At this TSL, if manufacturers can 
maintain their gross margin as a percentage of revenues, the projected 
increase in total revenues negates the impacts of higher manufacturing 
costs. However, if manufacturers can only maintain their absolute 
dollar gross margin, then the impacts of TSL 4 would significantly 
erode manufacturers' profits.
ii. Microwave Ovens
    To assess the lower end of the range of potential impacts for the 
microwave oven industry, DOE considered the scenario reflecting the 
preservation of gross margin percentage. As production cost increases 
with efficiency, this scenario implies manufacturers will be able to 
maintain gross margins as a percentage of revenues. To assess the 
higher end of the range of potential impacts for the microwave oven 
industry, DOE considered the scenario reflecting preservation of gross 
margin in absolute dollars. Under this scenario, DOE assumed that the 
industry can maintain its gross margins in absolute dollars after the 
standard effective date. The industry would do so by passing through 
its increased costs to customers without increasing its gross margin in 
absolute dollars. Table V.34 and Table V.35 show MIA results related to 
the energy factor for each TSL using both markup scenarios described 
above for microwave oven manufacturers.

     Table V.34--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Percentage Markup Scenario (Energy Factor)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                1a              2a              3a              4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........           1,450           1,494           1,567           1,687           1,717
Change in INPV............................  (2006 $ millions)...........  ..............              44             117             237             267
                                            (%).........................  ..............           3.04%           8.09%          16.34%          18.44%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............            60.0            75.0            90.0           225.0
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.0             0.0            75.0
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            60.0            75.0            90.0           300.0
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 62097]]


  Table V.35--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario (Energy Factor)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                1a              2a              3a              4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........           1,450           1,250           1,064             775             284
Change in INPV............................  (2006 $ millions)...........  ..............           (199)           (386)           (675)         (1,165)
                                            (%).........................  ..............         -13.74%         -26.62%         -46.56%         -80.39%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............            60.0            75.0            90.0           225.0
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             0.0             0.0             0.0            75.0
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            60.0            75.0            90.0           300.0
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    TSL 1a represents an improvement in cooking efficiency from the 
baseline level of 0.557 EF to 0.586 EF. At TSL 1a, the impact on INPV 
and cash flow varies greatly depending on the manufacturers and their 
ability to pass on increases in MPCs to the customer. DOE estimated the 
impacts in INPV at TSL 1a to range from less than $44 million to -$199 
million, or a change in INPV of 3.04 percent to -13.74 percent. At this 
level, the industry cash flow decreases by approximately 18 percent, to 
$71.7 million, compared to the base-case value of $87.3 million in the 
year leading up to the standards.
    TSL 2a represents an improvement in cooking efficiency from the 
baseline level of 0.557 EF to 0.588 EF. At TSL 2a, the impact on INPV 
and cash flow would be similar to TSL 1a and depend on whether 
manufacturers can fully recover the increases in MPCs from the 
customer. DOE estimated the impacts in INPV at TSL 2a to range from 
$117 million to -$386 million, or a change in INPV of 8.09 percent to -
26.62 percent. At this level, the industry cash flow decreases by 
approximately 22 percent, to $67.9 million, compared to the base-case 
value of $87.3 million in the year leading up to the standards.
    TSL 3a represents an improvement in cooking efficiency from the 
baseline level of 0.557 EF to 0.597 EF. At TSL 3a, the impact on INPV 
and cash flow continues to vary depending on the manufacturers and 
their ability to pass on increases in MPCs to the customer. DOE 
estimated the impacts in INPV at TSL 3a to range from approximately 
$237 million to -$675 million, or a change in INPV of 16.34 percent to 
-46.56 percent. At this level, the industry cash flow decreases by 
approximately 27 percent, to $64.0 million, compared to the base-case 
value of $87.3 million in the year leading up to the standards.
    TSL 4a represents an improvement in cooking efficiency from the 
baseline level of 0.557 EF to 0.602 EF. At TSL 4a, DOE estimated the 
impacts in INPV to range from approximately $267 million to -$1,165 
million, or a change in INPV of 18.44 percent to -80.39 percent. At 
this level, the industry cash flow decreases by approximately 101 
percent, to -$1.0 million, compared to the base-case value of $87.3 
million in the year leading up to the standards. At higher TSLs, 
manufacturers have a harder time fully passing on larger increases in 
MPCs to the customer.
    Due to the similarities in design requirements to meet each TSL, 
the results for each TSL are dependent on the ability of manufacturers 
to pass along increases in manufacturer production costs and the 
additional conversion costs. The engineering analysis assumes that each 
TSL adds an additional component switch-out. For example, to reach TSL 
2, manufacturers must switch the fan in addition to switching the power 
supply required to meet TSL 1. The high conversion costs associated 
with these switches drive INPV negative if incremental costs are only 
partially passed along to consumers. If the incremental costs are fully 
passed along to consumers, which manufacturers stated was unlikely due 
to fierce competition in the industry, the higher purchase prices are 
enough to overcome the high conversion and capital conversion costs, 
thereby making INPV positive. The magnitude of the positive cash flow 
impact under the preservation of gross margin percentage scenario and 
the negative cash flow impact under the preservation of gross margin 
(absolute dollars) scenario depends on the incremental cost of 
standards-compliant products. The higher the relative cost, the larger 
the impact on operating revenue and cash flow in the years following 
the effective date of the standard. Since higher TSLs correspond to 
higher relative costs, the impacts of the markup scenarios are greater 
at higher TSLs.
    Table V.36 and Table V.37--show the standby power MIA results for 
each TSL using both markup scenarios described above for microwave 
ovens manufacturers.

                         Table V.36--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Percentage Markup Scenario (Standby Power)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    TSL
                                                                 Units                   Base case   ---------------------------------------------------------------
                                                                                                            1b              2b              3b              4b
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................................  (2006 $ millions).................           1,450           1,428           1,414           1,413           1,415

[[Page 62098]]

 
Change in INPV..................................  (2006 $ millions).................  ..............            (22)            (35)            (37)            (35)
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
                                                  (%)...............................  ..............          -1.50%          -2.44%          -2.52%          -2.40%
Amended Energy Conservation Standards Product     (2006 $ millions).................  ..............           -37.5            67.5            82.5           135.0
 Conversion Expenses.
Amended Energy Conservation Standards Capital     (2006 $ millions).................  ..............            -3.8             4.1             4.5             7.5
Investments.....................................
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
    Total Investment                              (2006 $ millions).................  ..............           -41.3            71.6            87.0           142.5
    Required....................................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


  Table V.37--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario (Standby Power)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        TSL
                                                        Units                Base case   ---------------------------------------------------------------
                                                                                                1b              2b              3b              4b
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  (2006 $ millions)...........           1,450           1,424           1,402           1,378           1,278
Change in INPV............................  (2006 $ millions)...........  ..............            (26)            (48)            (71)           (172)
                                           -------------------------------------------------------------------------------------------------------------
                                            (%).........................  ..............          -1.77%          -3.28%          -4.92%         -11.87%
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............            37.5            67.5            82.5           135.0
 Product Conversion Expenses.
Amended Energy Conservation Standards       (2006 $ millions)...........  ..............             3.8             4.1             4.5             7.5
 Capital
Investments...............................
                                           -------------------------------------------------------------------------------------------------------------
    Total Investment                        (2006 $ millions)...........  ..............            41.3            71.6            87.0           142.5
    Required..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    TSL 1b represents an improvement in standby power from the baseline 
level of 4.0 W to 2.0 W. At TSL 1b, the impact on INPV and cash flow 
varies depending on the manufacturers' ability to pass on increases in 
MPCs to the customer. DOE estimated the impacts in INPV at TSL 1b to 
range from less than -$22 million to -$26 million, or a change in INPV 
of -1.50 percent to -1.77 percent. At this level, the industry cash 
flow decreases by approximately 13 percent, to $76.1 million, compared 
to the base-case value of $87.3 million in the year leading up to the 
standards.
    TSL 2b represents an improvement in standby power from the baseline 
level of 4.0 W to 1.5 W. At TSL 2b, the impact on INPV and cash flow 
would be similar to TSL 1b and depend on whether manufacturers can 
fully recover the increases in MPCs from the customer. DOE estimated 
the impacts in INPV at TSL 2b to range from -$35 million to -$48 
million, or a change in INPV of -2.44 percent to -3.28 percent. At this 
level, the industry cash flow decreases by approximately 22 percent, to 
$68.2 million, compared to the base-case value of $87.3 million in the 
year leading up to the standards.
    TSL 3b represents an improvement in standby power from the baseline 
level of 4.0 W to 1.0 W. At TSL 3b, the impact on INPV and cash flow 
continues to vary depending on the manufacturers and their ability to 
pass on increases in MPCs to the customer. DOE estimated the impacts in 
INPV at TSL 3b to range from approximately -$37 million to -$71 
million, or a change in INPV of -2.52 percent to -4.92 percent. At this 
level, the industry cash flow decreases by approximately 27 percent, to 
$64.1 million, compared to the base-case value of $87.3 million in the 
year leading up to the standards.
    TSL 4b represents an improvement in standby power from the baseline 
level of 4.0 W to 0.02 W. At TSL 4b, DOE estimated the impacts in INPV 
to range from approximately -$35 million to -$172 million, or a change 
in INPV of -2.40 percent to -11.87 percent. At this level, the industry 
cash flow decreases by approximately 43 percent, to $49.3 million, 
compared to the base-case value of $87.3 million in the year leading up 
to the standards. At higher TSLs, manufacturers have a harder time 
fully passing on larger increases in MPCs to the customer. At TSL 4b, 
the conversion costs are higher than for TSL 1b, TSL 2b, and TSL 3b 
because the design of all microwave platforms must be more 
significantly altered.
    For standby power standards, conversion costs increase at higher 
TSLs as the complexity of further lowering standby power increases, 
substantially driving up engineering time and also increasing the 
testing and product development time. If the increased production costs 
are fully passed on to consumers (the preservation of gross margin 
percentage scenario), the operating revenue from higher prices is

[[Page 62099]]

not enough to overcome the negative impacts from the substantial 
conversion costs. The incremental costs are small for each TSL, meaning 
the positive impact on cash flows is small compared to the conversion 
costs. As a result of the small incremental costs and large conversion 
expenses, INPV is negative for all TSLs under the preservation of gross 
margin percentage scenario. If the incremental costs are not fully 
passed along to customers (the preservation of gross margin (absolute 
dollars) scenario), the negative impacts on INPV are amplified at each 
TSL.
iii. Commercial Clothes Washers
    For CCWs, the major source of uncertainty voiced by manufacturers 
during the interviews is the impact of higher standards on the number 
of CCWs sold. Pricing and profit margin issues were not emphasized as 
they were for cooking products. Future product sales are particularly 
important considering the high capital costs (particularly design 
costs) in comparison to the small number of products sold. In light of 
the concern over future shipments, DOE modeled two MIA scenarios, based 
on two shipment projections from the NIA.
    To assess the lower end of the range of potential impacts for the 
CCW industry, DOE considered a scenario wherein unit shipments will not 
be impacted regardless of new energy conservation standards--this 
scenario is called the base-case shipments scenario. To assess the 
higher end of the range of potential impacts for the CCW industry, DOE 
considered a scenario in which total industry shipments would decrease 
due to the combined effects of increases in purchase price and 
decreases in operating costs due to new energy conservation standards--
this scenario is called the price elastic of demand scenario. In both 
scenarios, it is assumed that manufacturers will be able to maintain 
the same gross margins (as a percentage of revenues) that is currently 
obtained in the base case.
    Table V.38 and Table V.39 show the MIA results for each TSL using 
both shipment scenarios described above for CCW manufacturers.

                            Table V.38--Manufacturer Impact Analysis for Commercial Clothes Washers With Base Case Shipments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Preservation of gross margin percentage markup with base case shipments
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                            Units            Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  (2006 $ millions)...              56              59              52              41              38              26
Change in INPV....................  (2006 $ millions)...  ..............               4             (4)            (15)            (18)            (30)
                                   ---------------------------------------------------------------------------------------------------------------------
                                    (%).................  ..............           6.51%          -6.37%         -26.50%         -32.02%         -53.13%
Amended Energy Conservation         (2006 $ millions)...  ..............            0.00           18.00           33.00           36.70           49.50
 Standards Product Conversion
 Expenses.
Amended Energy Conservation         (2006 $ millions)...  ..............            0.00            1.60            2.60            3.35            5.90
 Standards Capital Investments.
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Investment Required.....  (2006 $ millions)...  ..............             0.0            19.6            35.6            40.1            55.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


                    Table V.39--Manufacturer Impact Analysis for Commercial Clothes Washers With Price Elasticity of Demand Shipments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                Preservation of gross margin percentage markup with price elasticity of demand shipments
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                            Units            Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  (2006 $ millions)...              56              58              50              38              35              23
Change in INPV....................  (2006 $ millions)...  ..............               3             (6)            (17)            (20)            (32)
                                   ---------------------------------------------------------------------------------------------------------------------
                                    (%).................  ..............           4.91%         -10.27%         -31.09%         -36.83%         -58.19%
Amended Energy Conservation         (2006 $ millions)...  ..............            0.00           18.00           33.00           36.70           49.50
 Standards Product Conversion
 Expenses.
Amended Energy Conservation         (2006 $ millions)...  ..............            0.00            1.60            2.60            3.35            5.90
 Standards Capital Investments.
                                   ---------------------------------------------------------------------------------------------------------------------

[[Page 62100]]

 
    Total Investment Required.....  (2006 $ millions)...  ..............             0.0            19.6            35.6            40.1            55.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    At TSL 1, the impact on INPV and cash flow varies depending on the 
manufacturers' ability to maintain revenues as shipments decrease due 
to the price elasticity. DOE estimated the impacts in INPV at TSL 1 to 
range from positive $3.6 million to positive $2.7 million, or a change 
in INPV of 6.51 percent to 4.91 percent. At this level, the industry 
cash flow does not decrease from the base-case value of $3.8 million in 
the year leading up to the standards. Since all manufacturers have top-
loading and front-loading washers already above this level, DOE assumed 
that there would be no product conversion or conversion capital costs.
    At TSL 2, DOE estimated the impacts in INPV to range from -$3.5 
million to -$5.7 million, or a change in INPV of -6.37 percent to -
10.27 percent. At this level, the industry cash flow decreases by 
approximately 153 percent, to -$2.0 million, compared to the base-case 
value of $3.8 million in the year leading up to the standards. To 
conform to the standards at TSL 2, DOE estimated that at least one 
manufacturer will need to redesign and retool a line of top-loading 
washers that falls below this standard level. Since over 88 percent of 
front-loading washers exceed this level, DOE assumed that there would 
be relatively small product conversion and conversion capital costs for 
these washers.
    At TSL 3, DOE estimated the impacts in INPV to range from -$14.7 
million to -$17.3 million, or a change in INPV of -26.5 percent to -
31.09 percent. At this level, the industry cash flow decreases by 
approximately 320 percent, to -$8.3 million, compared to the base case 
value of $3.8 million in the year leading up to the standards. Since 
over 88 percent of front-loading washers exceed this level, DOE assumed 
that there would be relatively small product conversion and conversion 
capital costs for these washers. However, at TSL 3 manufacturers stated 
that significant product redesigns and line retooling would be required 
to conform to the top-loading standard. Beyond the concerns captured in 
the GRIM model, other issues were raised by manufacturers at TSL 3. For 
top-loading CCWs, multiple manufacturers stated that customers could 
see a reduction in wash quality or reject new designs based on a 
perceived reduction in wash quality. As a consequence they believe that 
a significant portion of the industry could potentially shift from top-
loading designs to front-loading designs. For manufacturers that do not 
produce large volumes of front-loading washers this would require 
significant capital to expand front-loading production lines and may 
force them to redesign their current models to reduce cost. The 
uncertainty in product class shifting adds to the perceived financial 
risks of adopting a TSL 3 for front-loading washers. The Department 
seeks comment on the possible magnitude of this shift.
    At TSL 4, DOE estimated the impacts in INPV at TSL 4 to range from 
-$17.8 million to -$20.5 million, or a change in INPV of -32.02 percent 
to -36.83 percent. At this level, the industry cash flow decreases by 
approximately 367 percent, to -$10.0 million, compared to the base-case 
value of $3.8 million in the year leading up to the standards. As with 
TSL 3, the top-loading standard remains at max-tech at TSL 4, and the 
impacts as previously stated for this product class. Currently, 97 
percent of front-loading washers shipped do not meet TSL 4, resulting 
in multiple manufacturers having to also redesign existing front-
loading products to conform to the standard. The $8.1 million in 
product conversion and capital conversion costs to redesign and retool 
for the front-loading standard, while not appearing that substantial on 
a nominal basis, are significant for manufacturers due to low volumes 
of front-loading washers. Adjusting for shipment volumes, investing 
$8.1 million in front-loading washers is equivalent to investing over 
$26 million in top-loading washers. These investment costs are also 
high compared to the industry value of $19 million for front-loading 
washers. Consequently, it could be difficult for manufactures to 
justify the investments necessary to reach TSL 4 for front-loading 
washers.
    At TSL 5, DOE estimated the impacts in INPV to range from -$29.5 
million to -$32.3 million, or a change in INPV of -53.13 percent to -
58.19 percent. At this level, the industry cash flow decreases by 
approximately 527 percent, to -$16.1 million, compared to the base-case 
value of $3.8 million in the year leading up to the standards. The top-
loading standard remains at max tech at TSL 5. Almost all front-loading 
washers currently sold do not meet TSL 5. Since most manufacturers do 
not have existing washers that are close to meeting TSL 5, the redesign 
and tooling costs drive INPV extremely negative. At TSL 5, manufactures 
would have to invest $23.4 million in front-loading washer in an 
industry valued at $19 million. It could be difficult for manufactures 
to justify the investments necessary to reach max tech for both top-
loading and front-loading washers.
b. Impacts on Employment
    To quantitatively assess the impacts of energy conservation 
standards on cooking products and CCW manufacturing employment, DOE 
used the GRIM to estimate the domestic labor expenditures and number of 
employees in the base case and at each TSL from 2007 through 2042 for 
the conventional cooking products, microwave oven, and CCW industries. 
DOE used statistical data from the U.S. Census Bureau's 2006 Annual 
Survey of Manufactures \89\ (2006 ASM) and 2006 Current Industry Report 
\90\ (2006 CIR), the results of the engineering analysis, and 
interviews with manufacturers to estimate the inputs necessary to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures are a function of the labor intensity of the 
equipment, the sales volume, and an implicit assumption that wages 
remain fixed in real terms over time. (DOE

[[Page 62101]]

notes that the MIA's analysis detailing impacts on employment focuses 
specifically on the production workers manufacturing the covered 
products in question, rather than a manufacturer's broader operations. 
Thus, the estimated number of impacted employees in the MIA is separate 
and distinct from the total number of employees used to determine 
whether a manufacturer is a small business for purposes of analysis 
under the Regulatory Flexibility Act.)
---------------------------------------------------------------------------

    \89\ The 2006 Annual Survey of Manufacturers is available at: 
http://www.census.gov/mcd/asmhome.html.
    \90\ The 2006 Current Industry Report is available at http://www.census.gov/cir/www/alpha.html.
---------------------------------------------------------------------------

    The estimates of production workers in this section only cover 
workers up to and including the line-supervisor level that are directly 
involved in fabricating and assembling a product within the original 
equipment manufacturer (OEM) facility. In addition, workers that 
perform services that are closely associated with production operations 
are included. Employees above the working-supervisor level are excluded 
from the count of production workers. Thus, the labor associated with 
non-production functions (e.g., factory supervision, advertisement, 
sales) is explicitly not covered.\91\ In addition, DOE's estimates only 
account for production workers that manufacture the specific products 
covered by this rulemaking. For example, a worker on a clothes dryer 
production line would not be included in the estimate of the number of 
CCW production workers. Finally, this analysis also does not factor in 
the dependence by some manufacturers on production volume to make their 
operations viable. For example, should a major line of business cease 
or move, a production facility may no longer have the manufacturing 
scale to obtain volume discounts on its purchases nor be able to 
justify maintaining major capital equipment. Thus, the impact on a 
manufacturing facility due to a line closure may affect more employees 
than just the production workers, but again this analysis focuses on 
the production workers directly impacted.
---------------------------------------------------------------------------

    \91\ The 2006 ASM provides the following definition: `The 
`production workers' number includes workers (up through the line-
supervisor level) engaged in fabricating, processing, assembling, 
inspecting, receiving, storing, handling, packing, warehousing, 
shipping (but not delivering), maintenance, repair, janitorial and 
guard services, product development, auxiliary production for 
plant's own use (e.g., power plant), recordkeeping, and other 
services closely associated with these production operations at the 
establishment covered by the report. Employees above the working-
supervisor level are excluded from this item.''
---------------------------------------------------------------------------

i. Conventional Cooking Products
    Using the GRIM, DOE estimates that there are 2,146 U.S. production 
workers in the conventional cooking products industry. Using the CIR 
data, DOE estimates that approximately 27 percent of conventional 
cooking products sold in the U.S. are manufactured domestically. 
Today's notice estimates the impacts on U.S. production workers in the 
conventional cooking products industry as a result of the trial energy 
conservation standards as show in Table V.40.

Table V.40--Change in Total Number of Domestic Production Employees in 2012 in the Conventional Cooking Products
                                                    Industry
----------------------------------------------------------------------------------------------------------------
                                     Baseline          TSL 1           TSL 2           TSL 3           TSL 4
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic                   2,146           2,153           2,163           2,181           2,731
 Production Workers in 2012.....
Change in Total Number of         ..............               7              17              35             585
 Domestic Production Workers in
 2012...........................
----------------------------------------------------------------------------------------------------------------

    DOE expects no significant direct employment impacts among 
conventional cooking products manufacturers for TSL 1 through TSL 3. 
Generally, DOE expects that there would be positive employment impacts 
among domestic conventional cooking products manufacturers for TSL 1 
through TSL 3. Because production employment expenditures are assumed 
to be a fixed percentage of COGS and the MPCs increase with more 
efficient products, labor tracks the increased prices in the GRIM. The 
GRIM predicts a gradual increase in domestic employment after 
standards. Because there are large price increases for TSL 4, the GRIM 
predicts an increase in employment. However, it is likely that the 
positive impacts in employment due to the incremental cost increase 
overstate the impacts that would result from increased shipments over 
time. This overstatement is caused by the assumption of constant labor 
content as a percentage of revenue. For TSL 4 in particular, the design 
options involve component substitution which substantially increase the 
cost of purchase parts but should not result in a proportionate 
increase in labor costs.
    DOE reached this conclusion independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 15 of 
the TSD accompanying this notice. The employment conclusions do not 
account for the possible relocation of domestic jobs to lower-labor-
cost countries because the potential relocation of U.S. jobs is 
uncertain and highly speculative. Because the labor impacts in the GRIM 
do not take relocation into account, the labor impacts would be 
different if manufacturers chose to relocate to lower-cost countries. 
The relatively small capital costs at TSL 1 through TSL 3 make 
relocation less likely. However, at all TSLs, manufacturers face 
significant product conversion costs that correspond to redesigning 
products and testing components on all platforms. These significant 
conversion costs put pressure on manufacturers at all TSLs to cut 
costs. At TSL 4, manufacturers face both significant capital and 
product conversion costs, which put even greater pressure on cost 
reduction that could ultimately lead to relocation.
ii. Microwave Ovens
    Using the GRIM, DOE estimates that there are 229 U.S. production 
workers in the microwave oven industry. Using the CIR data, DOE 
estimates that approximately four percent of microwave ovens sold in 
the U.S. are manufactured domestically. Today's notice estimates the 
impacts on U.S. production workers in the microwave oven industry as a 
result of the trial energy conservation and standby power standards as 
show in Table V.41 and Table V.42.

[[Page 62102]]



 Table V.41--Change in Total Number of Domestic Production Employees in 2012 in the Microwave Oven Industry For
                                             Energy Factor Standards
----------------------------------------------------------------------------------------------------------------
                                     Baseline          TSL 1           TSL 2           TSL 3           TSL 4
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic                     229             246             264             292             327
 Production Workers in 2012.....
Change in Total Number of         ..............              17              34              62              98
 Domestic Production Workers in
 2012...........................
----------------------------------------------------------------------------------------------------------------


 Table V.42--Change in Total Number of Domestic Production Employees in 2012 in the Microwave Oven Industry For
                                             Standby Power Standards
----------------------------------------------------------------------------------------------------------------
                                     Baseline          TSL 1           TSL 2           TSL 3           TSL 4
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic                     229             230             230             232             239
 Production Workers in 2012.....
Change in Total Number of         ..............               0               1               2               9
 Domestic Production Workers in
 2012...........................
----------------------------------------------------------------------------------------------------------------

    For all energy factor and standby power TSLs, the GRIM calculates 
an increase in domestic employment due to energy conservation standards 
because production labor expenditures are assumed to be a fixed 
percentage of COGS and MPCs increase with more-efficient products. For 
all TSLs, the GRIM employment results agree with the bottom-up analysis 
in the engineering analysis. The incremental costs for more efficient 
components at all TSLs are relatively small. In response to standards, 
domestic manufacturers would most likely not alter employment levels 
much because inserting a more efficient component does not necessarily 
require more labor.
    DOE reached this conclusion independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 15 of 
the TSD accompanying this notice. The employment conclusions do not 
account for the possible relocation of domestic jobs to lower-labor-
cost countries because the potential relocation of U.S. jobs is 
uncertain and highly speculative. Since more than 95 percent of 
microwave ovens are already imported and the employment impacts in the 
GRIM are small, the actual impacts on domestic employment would depend 
on whether any U.S. manufacturer decided to shift remaining U.S. 
production to lower-cost countries.
iii. Commercial Clothes Washers
    Using the GRIM, DOE calculates that there are 178 U.S. production 
workers in the commercial clothes washer industry. Using the CIR data, 
DOE estimates that approximately 81 percent of CCW sold in the U.S. are 
manufactured domestically. Today's notice estimates the impacts on U.S. 
production workers in the CCW industry impacted by energy conservation 
standards as show in Table V.43.

                             Table V.43--Change in Total Number of Domestic Production Employees in 2012 in the CCW Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Baseline          TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2012.....             178             196             216             222             224             227
Change in Total Number of Domestic Production Workers in  ..............              18              38              44              46              48
 2012...................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE expects that there would be positive employment impacts among 
domestic commercial clothes washer manufacturers for TSL 1 through TSL 
5. Because production employment expenditures are assumed to be a fixed 
percentage of COGS and the MPCs increase with more efficient products, 
labor tracks the increased prices in the GRIM. The GRIM predicts a 
steady level of domestic employment after standards at a level based on 
the increase in relative price.
    DOE reached this conclusion independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 15 of 
the TSD accompanying this notice. The employment conclusions do not 
account for the possible relocation of domestic jobs to lower-labor-
cost countries because the potential relocation of U.S. jobs is 
uncertain and highly speculative. The GRIM shows the employment levels 
rising at higher TSLs. If all standards-compliant CCWs are produced in 
the United States, the employment levels would be expected to be 
reasonably accurate. More-efficient washers are more complex and 
require more labor. However, approximately 80 percent of CCWs are 
currently produced domestically. The actual impacts on domestic 
employment after standards would be different if any U.S. manufacturer 
decided to shift remaining U.S. production to lower-cost countries. Due 
to the uncertainty in the business decisions of where to manufacture 
washers after standards, DOE presents a range of potential employment 
impacts if the potential for relocation is considered. The proposed 
standard could result in adding 44 production workers (if all 
manufacturers continue to produce washers in their existing U.S. 
facilities) to losing 178 production workers (if all U.S. manufacturers 
source standards-compliant washers or shift U.S. production abroad).
    Based on the commercial washer revenues reported in Appendix 13-A 
and using the employment assumptions in section IV.G, DOE estimates 
there are approximately 150 production workers at the LVM manufacturing 
products directly covered by this rulemaking. In addition, DOE 
estimates that there are 20 non-production employees attributable to 
CCWs at the facility. The domestic facility also manufactures 
residential top-loading washers, standard dryers, front-loading 
residential washers, washer-extractors, and tumbler dryers. If the LVM 
decided

[[Page 62103]]

to no longer produce any soft-mount washers or standard dryers at the 
facility because it could not sell dryers without selling washers, 
approximately 292 production and 40 non-production jobs would be lost. 
Including all production workers involved in covered and non-covered 
products, the closure of the LVM domestic manufacturing plant would 
equate to a loss of approximately 600 factory employees.
    A further discussion of the LVM and the potential impacts of 
relocation on employment for the CCW industry at other TSLs is 
presented in Chapter 13 of the TSD.
c. Impacts on Manufacturing Capacity
i. Conventional Cooking Products
    According to the manufacturers of gas cooking products, amended 
energy conservation standards should not significantly affect 
production capacity, except at the max-tech levels. For example, in 
interviews, all manufacturers of cooking products with standing pilot 
lights stated they also manufacture products that do not use this type 
of ignition. Since manufacturers of gas cooking appliances with 
standing pilot ignitions typically also sell otherwise-identical 
appliances with electronic ignition systems, manufacturers stated that 
they expected impacts on manufacturing capacity due to changes in the 
ignition systems to be minimal. Thus, DOE believes manufacturers will 
be able to maintain manufacturing capacity levels and continue to meet 
market demand under amended energy conservation standards. For most 
other products and efficiencies, manufacturers can modify existing 
equipment to accommodate redesigned products with more efficient 
components without significantly impacting production volumes.
    However, max-tech levels for standard electric ovens and standard 
gas ovens strand some existing manufacturing equipment and tooling, and 
would require substantial product development and retooling. DOE 
believes setting a standard at this level could lead to short term 
capacity problems for these products if manufacturers cannot make the 
tooling changes in time to meet the standard. For the other 
efficiencies, manufacturers will be able to retool without causing 
capacity constraints.
ii. Microwave Ovens
    According to the majority of microwave oven manufacturers, new 
energy conservation standards will not significantly affect production 
capacity. As with conventional cooking products, any necessary 
microwave oven redesigns involve component switches that will not 
change the fundamental assembly of the equipment. However, 
manufacturers anticipate significant changes to tooling for TSL 4 for 
energy factor standards and minor changes to tooling at all TSLs for 
standby power standards. For all efficiency levels for energy factor 
and standby power standards, the most significant conversion costs are 
the research and development (R&D), testing, and certification of 
products with more-efficient components, which does not affect 
production line capacity. Thus, DOE believes manufacturers will be able 
to maintain manufacturing capacity levels and continue to meet market 
demand under new energy conservation standards.
iii. Commercial Clothes Washers
    According to the majority of CCW manufacturers, new energy 
conservation standards could potentially impact manufacturers' 
production capacity depending on the efficiency level required. 
Necessary redesigns of front-loading and top-loading CCWs will not 
change the fundamental assembly of the product or cause a drastic 
increase in the volume requirements of one type of washer. Thus, DOE 
believes manufacturers will be able to maintain manufacturing capacity 
levels and continue to meet market demand under new energy conservation 
standards as long as manufacturers continue to offer top-loading and 
front-loading washers.
    However, a very high efficiency standard for top-loading clothes 
washers could cause a manufacturer to abandon further manufacture of 
top-loading clothes washers after the effective date (due to concerns 
about wash quality, for example). Instead of manufacturing top-loading 
clothes washers, the manufacturers could elect to switch its entire 
production over to front-loading clothes washers. Since top-loading and 
front-loading clothes washers share few, if any parts, are built on 
completely separate assembly lines, and are built at very different 
production volumes, a manufacturer may not be able to make a platform 
switch from top-loading to front-loading washers without significant 
impacts on product development and capital expenses, along with 
capacity constraints.
    For example, multiple manufacturers stated during interviews that 
front-loading CCWs represent a relatively small segment of their total 
production volumes. Thus, their front-loading production capacity may 
need to be substantially expanded to meet the demand that their top-
loading production lines used to meet. This expansion could possibly 
affect capacity until new production lines come on line to service 
demand. In addition, manufacturers stated that the higher prices of 
front-loading washers could lead to a decrease in shipments. This could 
lead to a permanently lower production capacity as machines are 
repaired and the product lifetime of existing washers is extended.
d. Impacts on Subgroups of Manufacturers
    As discussed above, using average cost assumptions to develop an 
industry cash flow estimate is not adequate for assessing differential 
impacts among subgroups of manufacturers. Small manufacturers, niche 
players, or manufacturers exhibiting a cost structure that differs 
significantly from the industry average could be affected differently. 
DOE used the results of the industry characterization to group 
manufacturers exhibiting similar characteristics.
    As outlined earlier, two small cooking appliance businesses and a 
low-volume manufacturer of CCWs will be affected disproportionately by 
any energy efficiency regulation in their respective industries. These 
businesses are focused on one specific market segment and are orders of 
magnitude smaller than their diversified competitors. Due to this 
combination of market concentration and size, all of them are at risk 
of material harm to their business, depending on the TSL chosen.
    For the small cooking appliance businesses, the primary issue is 
whether an amended standard would continue to allow gas-fired 
appliances with standing pilots to be sold. Two small businesses 
indicated that 25 percent or more of their entire production consists 
of such niche products, now that most manufacturers have switched to 
electronic ignition in their gas-fired cooking appliances. See section 
VI.B of this notice for detail discussion of possible impacts on small 
cooking appliance businesses.
    The CCW LVM indicated that it could not manufacture top-loading 
washers above an MEF of 1.42 (TSL 1). If DOE sets a standard above TSL 
1, the LVM would be forced to design a new top-loading washer, offer 
only front-loading washers, or choose to exit the CCW market 
altogether. Due to its small size, the investment required for the LVM 
to design a more efficient top-loading washer would put the company at 
a competitive disadvantage. If the LVM no longer offers top-loading 
washers and has to expand its front-loading production lines, it would 
likely cause

[[Page 62104]]

it to cease CCW production altogether, resulting in significant impacts 
to the industry. Currently, the LVM's top-loading washers account for 
more than half of the company's CCW revenues and three-quarters of its 
CCW shipments. To shift all top-loading CCWs to front-loading washers 
at current production volumes would require substantial investments 
that the company may not be able to justify. In addition, the LVM 
derives 87 percent of its clothes washer revenue from CCWs, so its 
sales in the RCW market would be too low to justify continuing any top-
loading clothes washer manufacturing. While the LVM currently 
manufactures a front-loading clothes washer, it does so at a cost 
disadvantage compared to its competitors. The potential investment and 
risk required to develop a cost-competitive clothes washer that 
deviates significantly from its traditional top-loader agitator design 
could be too great for the LVM's current owners. The LVM could decide 
to exit the market rather than take this risk which could cause 
employment impacts in the CCW industry. Further detail and separate 
analysis of impacts on the LVM are found in Chapter 13 of the TSD 
accompanying this notice.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden is the cumulative 
impact of multiple DOE standards and the regulatory actions of other 
Federal agencies and States that affect the manufacturers of a covered 
product or equipment. DOE believes that a standard level is not 
economically justified if it contributes to an unacceptable cumulative 
regulatory burden. While any one regulation may not impose a 
significant burden on manufacturers, the combined effects of several 
existing or impending regulations may have serious consequences for 
some manufacturers, groups of manufacturers, or an entire industry. 
Assessing the impact of a single regulation may overlook this 
cumulative regulatory burden.
    Companies that produce a wider range of regulated products may be 
faced with more capital and product development expenditures than their 
competitors. This can prompt those companies to exit the market or 
reduce their product offerings, potentially reducing competition. 
Smaller companies can be especially affected, since they have lower 
sales volumes over which to amortize the costs of compliance with new 
regulations.
    In addition to DOE's energy conservation regulations for cooking 
products and CCWs, several other existing Federal regulations and 
pending regulations apply to these products and other equipment 
produced by the same manufacturers. DOE recognizes that each regulation 
can significantly impact manufacturers' financial operations. Multiple 
regulations affecting the same manufacturer can quickly strain its 
profits and possibly cause it to exit from the market. The most 
significant of these additional regulations include the standby power 
requirements, several additional Federal and State energy conservation 
standards, the Restriction of Hazardous Substance Directive (RoHS), and 
international energy conservation standards and test procedures.
    Additional investments necessary to meet regulations in addition to 
the standards prescribed by this rulemaking could have significant 
impacts on manufacturers of cooking products and CCWs. For this NOPR, 
DOE also identified other regulations these manufacturers are facing 
for these and other products and equipment they manufacture within 
three years prior to and three years after the anticipated effective 
date of the amended energy conservation standards for cooking products 
and CCWs.
    Most manufacturers interviewed for this rulemaking are already 
compliant with the RoHS directive. The most significant cumulative 
regulatory burden for gas cooking appliance manufacturers is a State-
by-State restriction on mercury,\92\ which affects the gas valves used 
in their appliances. Most gas cooking appliance manufacturers have 
already eliminated mercury switches or already have plans in place to 
do so. However, all appliance manufacturers are concerned about 
potential restrictions of other hazardous substances in the future, 
such as fire protection materials, which could be costly to remove from 
existing products.
---------------------------------------------------------------------------

    \92\ For example, the Interstate Mercury Education & Reduction 
Clearinghouse (IMERC) is a coalition of northeast states 
coordinating the banning of products containing mercury (see http://www.newmoa.org/prevention/mercury/imerc.cfm).
---------------------------------------------------------------------------

    Most manufacturers interviewed also sell products to other 
countries with energy conservation and standby standards. Manufacturers 
may incur a substantial cost to the extent that there are overlapping 
testing and certification requirements in other markets besides the 
United States. However, since DOE only has the authority to set 
standards on products sold in the United States, DOE only accounts for 
domestic compliance costs in its calculation of product conversion 
expenses for products covered in this rulemaking. For more details, see 
chapter 13 of the TSD accompanying this notice.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings through 2042 that would be expected 
to result from amended energy conservation standards, DOE compared the 
energy consumption of the appliance products under the base case to 
energy consumption of these products under the TSLs. Tables V.44 
through V.47 show the forecasted national energy savings at each TSL 
for conventional cooking products, microwave ovens (two tables), and 
CCWs, respectively. For conventional cooking products, summing the 
energy savings for all products classes across each TSL considered in 
this rulemaking would result in significant energy savings, with the 
amount of savings increasing with higher efficiency standards. The same 
is true for microwave ovens and CCWs. For CCWs, summing the energy and 
water savings for both product classes across each TSL considered would 
result in significant energy and water savings. Chapter 11 of the TSD 
accompanying this notice provides additional details on the NES values 
reported below, as well as discounted NES results (and discounted 
national water savings results for CCWs) based on discount rates of 
three and seven percent. DOE reports both undiscounted and discounted 
values of energy savings. Discounted energy savings represent a policy 
perspective wherein energy savings farther in the future are less 
significant than energy savings closer to the present.\93\
---------------------------------------------------------------------------

    \93\ Consistent with Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), DOE follows the 
guidance of OMB regarding methodologies and procedures for 
regulatory impact analysis that affect more than one agency. In 
reporting energy and environmental benefits from energy conservation 
standards, DOE will report both discounted and undiscounted (i.e., 
zero discount-rate) values.

[[Page 62105]]



                               Table V.44--Summary of Cumulative National Energy Savings for Conventional Cooking Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             National energy savings (quads)
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Electric     Electric                  Electric     Electric       Gas
                       TSL                            coil        smooth        Gas        standard    self-clean    standard    Gas self-      Total
                                                    cooktops     cooktops     cooktops      ovens        ovens        ovens     clean ovens
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................         0.00         0.00         0.10         0.00         0.00         0.05         0.00         0.14
2...............................................         0.04         0.00         0.10         0.05         0.00         0.05         0.00         0.23
3...............................................         0.04         0.00         0.10         0.05         0.00         0.05         0.09         0.32
4...............................................         0.04         0.02         0.15         0.07         0.04         0.09         0.10         0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------


 Table V.45--Summary of Cumulative National Energy Savings for Microwave
                          Ovens (Energy Factor)
------------------------------------------------------------------------
                                                        National energy
                         TSL                            savings (quads)
------------------------------------------------------------------------
1a...................................................               0.08
2a...................................................               0.09
3a...................................................               0.11
4a...................................................               0.12
------------------------------------------------------------------------


 Table V.46--Summary of Cumulative National Energy Savings for Microwave
                          Ovens (Standby Power)
------------------------------------------------------------------------
                                                        National energy
                         TSL                            savings (quads)
------------------------------------------------------------------------
1b...................................................               0.23
2b...................................................               0.33
3b...................................................               0.45
4b...................................................               0.69
------------------------------------------------------------------------


       Table V.47--Summary of Cumulative National Energy and Water Savings for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                           Top-Loading              Front-Loading                 Total
                                   -----------------------------------------------------------------------------
                                                   National                  National                  National
                TSL                   National      water       National      water       National      water
                                       energy      savings       energy      savings       energy      savings
                                      savings     (trillion     savings     (trillion     savings     (trillion
                                      (quads)      gallons)     (quads)      gallons)     (quads)      gallons)
----------------------------------------------------------------------------------------------------------------
1.................................         0.05         0.00         0.00         0.00         0.05         0.00
2.................................         0.11         0.15         0.00         0.01         0.11         0.16
3.................................         0.15         0.18         0.00         0.01         0.15         0.19
4.................................         0.15         0.18         0.01         0.03         0.16         0.21
5.................................         0.15         0.18         0.02         0.06         0.17         0.24
----------------------------------------------------------------------------------------------------------------

b. Net Present Value
    The NPV analysis is a measure of the cumulative benefit or cost of 
energy conservation standards to the Nation. In accordance with the 
OMB's guidelines on regulatory analysis (OMB Circular A-4, section E, 
September 17, 2003), DOE calculated NPV using both a seven-percent and 
a three-percent real discount rate. The seven-percent rate is an 
estimate of the average before-tax rate of return on private capital in 
the U.S. economy, and reflects the returns on real estate and small 
business capital as well as corporate capital. DOE used this discount 
rate to approximate the opportunity cost of capital in the private 
sector, since recent OMB analysis has found the average rate of return 
to capital to be near this rate. DOE also used the three-percent rate 
to capture the potential effects of standards on private consumption 
(e.g., through higher prices for equipment and the purchase of reduced 
amounts of energy). This rate represents the rate at which society 
discounts future consumption flows to their present value. This rate 
can be approximated by the real rate of return on long-term government 
debt (i.e., yield on Treasury notes minus annual rate of change in the 
Consumer Price Index), which has averaged about three percent on a pre-
tax basis for the last 30 years.
    Tables V.48 through V.51 show the forecasted NPV at each TSL for 
conventional cooking products, microwave ovens, and CCWs.

[[Page 62106]]



                                Table V.48--Summary of Cumulative Net Present Value for Conventional Cooking Products (Impacts for Units Sold From 2012 to 2042)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               NPV (billion 2006$)
                                                ------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Electric     Electric smooth     Gas cooktops        Electric       Electric self-     Gas standard      Gas self-clean           Total
                                                     coil           cooktops     ------------------  standard  ovens     clean ovens          ovens              ovens       -------------------
                                                   cooktops   -------------------   Discount rate  --------------------------------------------------------------------------    Discount rate
                      TSL                       --------------   Discount rate   ------------------   Discount rate     Discount rate     Discount rate      Discount rate   -------------------
                                                   Discount   -------------------                  --------------------------------------------------------------------------
                                                     rate
                                                --------------    7%       3%        7%       3%       7%       3%       7%       3%       7%       3%       7%        3%        7%        3%
                                                   7%     3%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1..............................................   0.00   0.00     0.00      0.00     0.19     0.50     0.00     0.00     0.00     0.00     0.02     0.11      0.00      0.00      0.21      0.61
2..............................................   0.07   0.23     0.00      0.00     0.19     0.50     0.11     0.34     0.00     0.00     0.02     0.11      0.00      0.00      0.39      1.19
3..............................................   0.07   0.23     0.00      0.00     0.19     0.50     0.11     0.34     0.00     0.00     0.02     0.11     -0.01      0.19      0.38      1.37
4..............................................   0.07   0.23    -7.26    -13.89    -0.73    -1.11    -0.81    -1.37    -2.77    -5.21    -0.91    -1.76     -0.14     -0.04    -12.55    -23.14
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


 Table V.49--Summary of Cumulative Net Present Value for Microwave Oven
        Energy Factor (Impacts for Units Sold From 2012 to 2042)
------------------------------------------------------------------------
                                               NPV (billion 2006$)
                                       ---------------------------------
                  TSL                     7%  Discount     3%  Discount
                                              rate             rate
------------------------------------------------------------------------
1a....................................            -0.61            -1.07
2a....................................            -1.60            -2.96
3a....................................            -3.06            -5.72
4a....................................            -4.94            -9.28
------------------------------------------------------------------------


 Table V.50--Summary of Cumulative Net Present Value for Microwave Oven
        Standby Power (Impacts for Units Sold From 2012 to 2042)
------------------------------------------------------------------------
                                               NPV (billion 2006$)
                                       ---------------------------------
                  TSL                     7%  Discount     3%  Discount
                                              rate             rate
------------------------------------------------------------------------
1b....................................             0.91             2.03
2b....................................             1.25             2.79
3b....................................             1.56             3.52
4b....................................             1.61             3.90
------------------------------------------------------------------------


              Table V.51--Summary of Cumulative Net Present Value for Commercial Clothes Washers (Impacts for Units Sold From 2012 to 2042)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                NPV (billion 2006$)
                                                         -----------------------------------------------------------------------------------------------
                                                                    Top-Loading                    Front-Loading                       Total
                           TSL                           -----------------------------------------------------------------------------------------------
                                                            7% Discount     3% Discount     7% Discount     3% Discount     7% Discount     3% Discount
                                                               rate            rate            rate            rate            rate            rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................          -0.006            0.03           0.004            0.01          -0.001            0.04
2.......................................................            0.29            0.77            0.03            0.06            0.32            0.83
3.......................................................            0.43            1.10            0.03            0.06            0.46            1.16
4.......................................................            0.43            1.10            0.07            0.16            0.50            1.27
5.......................................................            0.43            1.10            0.12            0.29            0.55            1.39
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Impacts on Employment
    In addition to considering the direct employment impacts for the 
manufacturers of products covered by this rulemaking (discussed above), 
DOE also develops estimates of the indirect employment impacts of 
proposed standards in the economy in general. As noted previously, DOE 
expects energy conservation standards for the appliance products that 
are the subject of this rulemaking to reduce energy bills for 
consumers, with the resulting net savings being redirected to other 
forms of economic activity. DOE also realizes that these shifts in 
spending and economic activity could affect the demand for labor. To 
estimate these effects, DOE used an input/output model of the U.S. 
economy using BLS data (described in section IV.H). (See the TSD 
accompanying this notice, chapter 15.)
    This input/output model suggests the proposed standards are likely 
to slightly increase the net demand for labor in the economy. Neither 
the BLS data nor the input/output model DOE uses includes the quality 
or wage level of the jobs. As Table V.52 shows, DOE estimates that net 
indirect employment impacts from the proposed standards are likely to 
be

[[Page 62107]]

small. The net increase in jobs is so small that it would be 
imperceptible in national labor statistics and might be offset by 
other, unanticipated effects on employment.

                                          Table V.52--Net National Change in Indirect Employment, Jobs in 2042
                                                        [Net National Change in Jobs (thousands)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Conventional     Trial                      Trial                      Trial      Commercial
                   Trial standard level                        cooking      standard     Microwave     standard     Microwave     standard     clothes
                                                              products       level        oven EF       level     oven standby     level       washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.........................................................         0.25            1a         0.77            1b         2.19             1         0.07
2.........................................................         0.81            2a         0.78            2b         3.14             2         0.51
3.........................................................         0.90            3a         0.93            3b         4.30             3         0.63
4.........................................................         0.99            4a         0.96            4b         6.51             4         0.68
NA........................................................           NA            NA           NA            NA           NA             5         0.76
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Impact on Utility or Performance of Products
    For the reasons stated above in Section III.E.1.d., DOE believes 
that for purposes of 42 U.S.C. 6295(o)(2)(B)(i)(IV), none of the 
efficiency levels considered in this notice reduces the utility or 
performance of the appliance products under consideration in this 
rulemaking.
5. Impact of Any Lessening of Competition
    In weighing the promulgation of any proposed standards, DOE is 
required to consider any lessening of competition that is likely to 
result from the adoption of those standards. The determination of the 
likely competitive impacts stemming from a proposed standard is made by 
the Attorney General, who transmits this determination, along with an 
analysis of the nature and extent of the impact, to the Secretary of 
Energy. (See 42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii).)
    To assist the Attorney General in making such a determination, DOE 
has provided DOJ with copies of this notice and the TSD for review. DOE 
will consider DOJ's comments on the proposed rule in preparing the 
final rule.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of cooking products and 
CCWs addressed in this notice is likely to improve the security of the 
Nation's energy system by reducing overall demand for energy, and, 
thus, reducing the Nation's reliance on foreign sources of energy. 
Reduced demand also is likely to improve the reliability of the 
electricity system, particularly during peak-load periods. As a measure 
of this reduced demand, DOE expects the proposed standards covered 
under this rulemaking to eliminate the need for the construction of new 
power plants with approximately 404 MW electricity generation capacity 
in 2042.
    Enhanced energy efficiency also produces environmental benefits. 
The expected energy savings from higher standards for the products 
covered by this rulemaking will reduce the emissions of air pollutants 
and greenhouse gases associated with energy production and household 
and building use of fossil fuels. Table V.53 shows cumulative 
CO2, NOX, and Hg (mercury) emissions reductions 
for the products under consideration in this rulemaking over the 
analysis period. The expected energy savings from cooking product and 
CCW standards will reduce the emissions of greenhouse gases associated 
with energy production, and may reduce the cost of maintaining 
nationwide emissions standards and constraints.

     Table V.53--Summary of Emissions Reductions (Cumulative Reductions for Products Sold From 2012 to 2042)
----------------------------------------------------------------------------------------------------------------
                                                                        TSL
                                 -------------------------------------------------------------------------------
                                         1               2               3               4              NA
----------------------------------------------------------------------------------------------------------------
Emissions Reductions for
 Conventional Cooking Products:
    CO2 (Mt)....................           14.62           16.62           25.08           37.54              NA
    NOX (kt)....................      6.32-12.06      6.39-13.71     10.11-20.55     14.99-30.65              NA
    Hg (t)......................          0-0.20          0-0.26          0-0.37          0-0.56              NA
----------------------------------------------------------------------------------------------------------------
                                        1a              2a              3a              4a              NA
----------------------------------------------------------------------------------------------------------------
Emissions Reductions for
 Microwave Ovens Energy Factor:
    CO2 (Mt)....................           11.49           16.95           27.54           38.51              NA
    NOX (kt)....................      0.58-14.25      0.85-20.85      1.37-33.74      1.91-47.04              NA
    Hg (t)......................          0-0.25          0-0.37          0-0.60          0-0.84              NA
----------------------------------------------------------------------------------------------------------------
                                        1b              2b              3b              4b              NA
----------------------------------------------------------------------------------------------------------------
Emissions Reductions for
 Microwave Ovens Standby Power:
    CO2 (Mt)....................           23.15           35.19           50.48           82.12              NA
    NOX (kt)....................      1.23-30.30      1.87-46.02      2.67-65.96     4.35-107.23              NA
    Hg (t)......................          0-0.50          0-0.76          0-1.09          0-1.77              NA
----------------------------------------------------------------------------------------------------------------

[[Page 62108]]

 
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
Emissions Reductions for
 Commercial Clothes Washers:
    CO2 (Mt)....................            3.79            8.30           11.55           12.28           12.73
    NOX (kt)....................       1.43-3.25       3.04-7.13       4.25-9.93      4.51-10.56      4.67-10.95
    Hg (t)......................          0-0.05          0-0.12          0-0.17          0-0.18          0-0.19
----------------------------------------------------------------------------------------------------------------
Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.

    The estimated cumulative CO2, NOX, and Hg 
emissions reductions for the proposed standards range up to a maximum 
of 38 Mt for CO2, 15 kt to 31 kt for NOX, and 0 t 
to 0.6 t for Hg for conventional cooking products over the period from 
2012 to 2042. For microwave oven EF, cumulative emission reductions 
range up to a maximum of 39 Mt for CO2, 2 kt to 47 kt for 
NOX, and 0 t to 0.8 t for Hg, while for microwave oven 
standby, cumulative emission reductions range up to a maximum of 82 Mt 
for CO2, 4 kt to 107 kt for NOX, and 0 t to 1.8 t 
for Hg. For CCWs, cumulative emission reductions range up to a maximum 
of 13 Mt for CO2, 5 kt to 11 kt for NOX, and 0 t 
to 0.2 t for Hg. However, DOE's analyses show that TSL 4 for 
conventional cooking products, TSL 4a and TSL 4b for microwave ovens, 
and TSL 5 for CCWs provides the greatest reduction of emissions of all 
the TSLs considered. In the environmental assessment (chapter 16 of the 
TSD), DOE reports estimated annual changes in CO2, 
NOX, and Hg emissions attributable to each TSL. As discussed 
in section IV.J, DOE does not report SO2 emissions reduction 
from power plants because reductions from an energy conservation 
standard would not affect the overall level of SO2 emissions 
in the United States due to the emissions caps for SO2.
    The NEMS-BT modeling assumed that NOX would be subject 
to the Clean Air Interstate Rule (CAIR) issued by the U.S. 
Environmental Protection Agency on March 10, 2005.\94\ 70 FR 25162 (May 
12, 2005). On July 11, 2008, the U.S. Court of Appeals for the District 
of Columbia Circuit (D.C. Circuit) issued its decision in North 
Carolina v. Environmental Protection Agency,\95\ in which the court 
vacated the CAIR. If left in place, the CAIR would have permanently 
capped emissions of NOX in 28 eastern States and the 
District of Columbia. As with the SO2 emissions cap, a cap 
on NOX emissions would have meant that energy conservation 
standards are not likely to have a physical effect on NOX 
emissions in States covered by the CAIR caps. While the caps would have 
meant that physical emissions reductions in those States would not have 
resulted from the energy conservation standards that DOE is proposing 
today, the standards might have produced an environmental-related 
economic impact in the form of lower prices for emissions allowance 
credits, if large enough. DOE notes that the estimated total reduction 
in NOX emissions, including projected emissions or 
corresponding allowance credits in States covered by the CAIR cap was 
insignificant and too small to affect allowance prices for 
NOX under the CAIR.
---------------------------------------------------------------------------

    \94\ See http://www.epa.gov/cleanairinterstaterule/.
    \95\ Case No. 05-1244, 2008 WL 2698180 at *1 (D.C. Cir. July 11, 
2008).
---------------------------------------------------------------------------

    Even though the D.C. Circuit vacated the CAIR, DOE notes that the 
D.C. Circuit left intact EPA's 1998 NOX SIP Call rule, which 
capped seasonal (summer) NOX emissions from electric 
generating units and other sources in 23 jurisdictions and gave those 
jurisdictions the option to participate in a cap and trade program for 
those emissions. 63 FR 57356, 57359 (Oct. 27, 1998).\96\ DOE notes that 
the SIP Call rule may provide a similar, although smaller in extent, 
regional cap and may limit actual reduction in NOX emissions 
from revised standards occurring in States participating in the SIP 
Call rule. However, the possibility that the SIP Call rule may have the 
same effect as CAIR is highly uncertain. Therefore, DOE established a 
range of NOX reductions due to the standards being 
considered in today's proposed rule. DOE's low estimate was based on 
the emission rate of the cleanest new natural gas combined-cycle power 
plant available for electricity generation based on the assumption that 
efficiency standards would result in only the cleanest available 
fossil-fueled generation being displaced. DOE used the emission rate, 
specified in kt of NOX emitted per TWh of electricity 
generated, associated with an advanced natural gas combined-cycle power 
plant, as specified by NEMS-BT. The emission rate specified by NEMS-BT 
is 0.0341 thousand short tons per TWh. To estimate the reduction in 
NOX emissions, DOE multiplied this emission rate by the 
reduction in electricity generation due to the standards considered. 
DOE's high estimate was based on the use of a nationwide NOX 
emission rate for all electrical generation. Use of such an emission 
rate assumes that future efficiency standards would result in displaced 
electrical generation mix that is equivalent to today's mix of power 
plants (i.e., future power plants displaced are no cleaner than what 
are being used currently to generate electricity). In addition, under 
the high estimate assumption, standards would have little to no effect 
on the generation

[[Page 62109]]

mix. Based on the AEO 2008 for a recent year (2006) in which no 
regulatory or non-regulatory measures were in effect to limit 
NOX emissions, DOE derived a high-end NOX 
emission rate of 0.842 thousand short tons per TWh. To estimate the 
reduction in NOX emissions, DOE multiplied this emission 
rate by the reduction in electricity generation due to the standards 
considered. DOE is considering whether changes are needed to its plan 
for addressing the issue of NOX reduction. DOE invites 
public comment on how the agency should address this issue, including 
how it might value NOX emissions for States now that the 
CAIR has been vacated.\97\
---------------------------------------------------------------------------

    \96\ In the NOX SIP Call rule, EPA found that sources 
in the District of Columbia and 22 ``upwind'' States (States) were 
emitting NOX (an ozone precursor) at levels that 
significantly contributed to ``downwind'' States not attaining the 
ozone NAAQS or at levels that interfered with states in attainment 
maintaining the ozone NAAQS. In an effort to ensure that 
``downwind'' states attain or continue to attain the ozone NAAQS, 
EPA established a region-wide cap for NOX emissions from 
certain large combustion sources and set a NOX emissions 
budget for each State. Unlike the cap that CAIR would have 
established, the NOX SIP Call Rule's cap only constrains 
seasonal (summer time) emissions. In order to comply with the 
NOX SIP Call Rule, States could elect to participate in 
the NOX Budget Trading Program. Under the NOX 
Budget Trading Program, each emission source is required to have one 
allowance for each ton of NOX emitted during the ozone 
season. States have flexibility in how they allocate allowances 
through their State Implementation Plans but States must remain 
within the EPA-established budget. Emission sources are allowed to 
buy, sell and bank NOX allowances as appropriate. It 
should be noted that, on April 16, 2008, EPA determined that Georgia 
is no longer subject to the NOX SIP Call rule. 73 FR 
21528 (April 22, 2008).
    \97\ In anticipation of CAIR replacing the NOX SIP 
Call Rule, many States adopted sunset provisions for their plans 
implementing the NOX SIP Call Rule. The impact of the 
NOX SIP Call Rule on NOX emissions will 
depend, in part, on whether these implementation plans are 
reinstated.
---------------------------------------------------------------------------

    As noted above in section IV.J, with regard to mercury emissions, 
DOE is able to report an estimate of the physical quantity changes in 
mercury emissions associated with an energy conservation standard. As 
opposed to using the NEMS-BT model, DOE used a range of emission rates 
to estimate the mercury emissions that could be reduced from standards. 
DOE's low estimate was based on the assumption that future standards 
would displace electrical generation from natural gas-fired power 
plants resulting in an effective emission rate of zero. The low-end 
emission rate is zero because virtually all mercury emitted from 
electricity generation is from coal-fired power plants. Based on an 
emission rate of zero, no emissions would be reduced from standards. 
DOE's high estimate was based on the use of a nationwide mercury 
emission rate from the AEO 2008. Because power plant emission rates are 
a function of local regulation, scrubbers, and the mercury content of 
coal, it is extremely difficult to come up with a precise high-end 
emission rate. Therefore, DOE believes the most reasonable estimate is 
based on the assumption that all displaced coal generation would have 
been emitting at the average emission rate for coal generation as 
specified by the AEO 2008. As noted previously, because virtually all 
mercury emitted from electricity generation is from coal-fired power 
plants, DOE based the emission rate on the tons of mercury emitted per 
TWh of coal-generated electricity. Based on the emission rate for a 
recent year (2006), DOE derived a high-end emission rate of 0.0253 
short tons per TWh. To estimate the reduction in mercury emissions, DOE 
multiplied the emission rate by the reduction in coal-generated 
electricity due to the standards considered. These changes in Hg 
emissions, as shown in Table V.53, are extremely small with a range of 
between 0.04 and 0.11 percent for conventional cooking products, 0.05 
and 0.34 percent for microwave ovens, and 0.01 and 0.04 percent for 
CCWs of national base case emissions (as determined by the AEO 2008) 
depending on TSL.
    The NEMS-BT model used for today's proposed rule could not be used 
to estimate Hg emission reductions due to standards as it assumed that 
Hg emissions would be subject to EPA's Clean Air Mercury Rule \98\ 
(CAMR), which would have permanently capped emissions of mercury for 
new and existing coal-fired plants in all States by 2010. Similar to 
SO2 and NOX, DOE assumed that under such a 
system, energy conservation standards would result in no physical 
effect on these emissions, but might result in an environmental-related 
economic benefit in the form of a lower price for emissions allowance 
credits, if large enough. DOE estimated that the change in the Hg 
emissions from standards would not be large enough to influence 
allowance prices under CAMR.
---------------------------------------------------------------------------

    \98\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------

    On February 8, 2008, the D.C. Circuit issued its decision in New 
Jersey v. Environmental Protection Agency,\99\ in which the Court, 
among other actions, vacated the CAMR referenced above. Accordingly, 
DOE is considering whether changes are needed to its plan for 
addressing the issue of mercury emissions in light of the D.C. 
Circuit's decision. DOE invites public comment on addressing mercury 
emissions in this rulemaking.
---------------------------------------------------------------------------

    \99\ No. 05-1097, 2008 WL 341338, at *1 (D.C. Cir. Feb. 8, 
2008).
---------------------------------------------------------------------------

    In today's proposed rule, DOE is taking into account a monetary 
benefit of CO2 emission reductions associated with this 
rulemaking. To put the potential monetary benefits from reduced 
CO2 emissions into a form that is likely to be most useful 
to decisionmakers and stakeholders, DOE used the same methods used to 
calculate the net present value of consumer cost savings: the estimated 
year-by-year reductions in CO2 emissions were converted into 
monetary values and these resulting annual values were then discounted 
over the life of the affected appliances to the present using both 3 
percent and 7 percent discount rates.
    The estimates discussed below are based on an assumption of no 
benefit to an average benefit value reported by the IPCC.\100\ It is 
important to note that the IPCC estimate used as the upper bound value 
was derived from an estimate of the mean value of worldwide impacts 
from potential climate impacts caused by CO2 emissions, and 
not just the effects likely to occur within the United States. As DOE 
considers a monetary value for CO2 emission reductions, the 
value should be restricted to a representation of those costs/benefits 
likely to be experienced in the United States. As DOE expects that such 
values would be lower than comparable global values, however, there 
currently are no consensus estimates for the U.S. benefits likely to 
result from CO2 emission reductions. However, DOE believes 
it is appropriate to use U.S. benefit values, where available, and not 
world benefit values, in its analysis.\101\ Because U.S. specific 
estimates are not available, and DOE did not receive any additional 
information that would help serve to narrow the proposed range as a 
representative range for domestic U.S. benefits, DOE believes it is 
appropriate to propose the global mean value as an appropriate upper 
bound U.S. value for purposes of sensitivity analysis.
---------------------------------------------------------------------------

    \100\ During the preparation of its most recent review of the 
state of climate science, the Intergovernmental Panel on Climate 
Change (IPCC) identified various estimates of the present value of 
reducing carbon-dioxide emissions by one ton over the life that 
these emissions would remain in the atmosphere. The estimates 
reviewed by the IPCC spanned a range of values. In the absence of a 
consensus on any single estimate of the monetary value of 
CO2 emissions, DOE used the estimates identified by the 
study cited in Summary for Policymakers prepared by Working Group II 
of the IPCC's Fourth Assessment Report to estimate the potential 
monetary value of CO2 reductions likely to result from 
standards finalized in this rulemaking. According to IPCC, the mean 
social cost of carbon (SCC) reported in studies published in peer-
reviewed journals was $43 per ton of carbon. This translates into 
about $12 per ton of carbon dioxide. The literature review (Tol 
2005) from which this mean was derived did not report the year in 
which these dollars were denominated. However, we understand this 
estimate was denominated in 1995 dollars. Updating that estimate to 
2007 dollars yields a SCC of $15 per ton of carbon dioxide.
    \101\ In contrast, most of the estimates of costs and benefits 
of increasing the efficiency of residential cooking products and 
commercial clothes washers include only economic values of impacts 
that would be experienced in the U.S. For example, in determining 
impacts on manufacturers, DOE generally does not consider impacts 
that occur solely outside of the United States.
---------------------------------------------------------------------------

    As already discussed in section IV.J, DOE received comments on the 
ANOPR in the present rulemaking for estimating the value of 
CO2 emissions reductions. Both the Joint Comment and EJ 
argued for assigning an economic value to CO2 emissions. 
DOE's approach for assigning a range to the dollars per ton of 
CO2 emissions recognizes and addresses the concerns of the 
Joint Comment and EJ.

[[Page 62110]]

    Given the uncertainty surrounding estimates of the societal cost of 
carbon (SCC), relying on any single study may be inadvisable since its 
estimate of the SCC will depend on many assumptions made by its 
authors. The Working Group II's contribution to the Fourth Assessment 
Report of the IPCC notes that:

    The large ranges of SCC are due in the large part to differences 
in assumptions regarding climate sensitivity, response lags, the 
treatment of risk and equity, economic and non-economic impacts, the 
inclusion of potentially catastrophic losses, and discount 
rates.\102\
---------------------------------------------------------------------------

    \102\ Climate Change 2007--Impacts, Adaptation and Vulnerability 
Contribution of Working Group II to the Fourth Assessment Report of 
the IPCC, 17. Available at http://www.ipcc-wg2.org (last accessed 
Aug. 7, 2008).

    Because of this uncertainty, DOE is relying on Tol (2005), which 
was presented in the IPCC's Fourth Assessment Report, and was a 
comprehensive meta-analysis of estimates for the value of SCC. As a 
result, DOE is relying on the Tol study reported by the IPCC as the 
basis for its analysis.
    DOE continues to believe that the most appropriate monetary values 
for consideration in the development of efficiency standards are those 
drawn from studies that attempt to estimate the present value of the 
marginal economic benefits likely to result from reducing greenhouse 
gas emissions, rather than estimates that are based on the market value 
of emission allowances under existing cap and trade programs or 
estimates that are based on the cost of reducing emissions--both of 
which are largely determined by policy decisions that set the timing 
and extent of emission reductions and do not necessarily reflect the 
benefit of reductions. DOE also believes that the studies it relies 
upon generally should be studies that were the subject of a peer review 
process and were published in reputable journals.
    In today's NOPR, DOE is essentially proposing to rely on a range of 
values based on the values presented in Tol (2005). Additionally, DOE 
has applied an annual growth rate of 2.4% to the value of SCC, as 
suggested by the IPCC Working Group II (2007, p. 822), based on 
estimated increases in damages from future emissions reported in 
published studies. Because the values in Tol (2005) were presented in 
1995 dollars, DOE is assigning a range for the SCC of $0 to $20 ($2007) 
per ton of CO2 emissions.
    DOE is proposing to use the median estimated social cost of 
CO2 as an upper bound of the range. This value is based on 
Tol (2005), which reviewed 103 estimates of the SCC from 28 published 
studies, and concluded that when only peer-reviewed studies published 
in recognized journals are considered, ``that climate change impacts 
may be very uncertain but [it] is unlikely that the marginal damage 
costs of carbon dioxide emissions exceed $50 per ton carbon [comparable 
to a 2007 value of $20 per ton carbon dioxide when expressed in 2007 
U.S. dollars with a 2.4% growth rate].''
    In proposing a lower bound of $0 for the estimated range, DOE 
agrees with the IPCC Working Group II (2007) report that ``significant 
warming across the globe and the locations of significant observed 
changes in many systems consistent with warming is very unlikely to be 
due solely to natural variability of temperatures or natural 
variability of the systems'' (pp. 9), and, thus, tentatively concludes 
that a global value of zero for reducing emissions cannot be justified. 
However, DOE also believes that it is reasonable to allow for the 
possibility that the U.S. portion of the global cost of carbon dioxide 
emissions may be quite low. In fact, some of the studies looked at in 
Tol (2005) reported negative values for the SCC. DOE is using U.S. 
benefit values, and not world benefit values, in its analysis, and, 
further, DOE believes that U.S. domestic values will be lower than the 
global values. Additionally, the statutory criteria in EPCA do not 
require consideration of global effects. Therefore, DOE is proposing to 
use a lower bound of $0 per ton of CO2 emissions in 
estimating the potential benefits of today's proposed rule.
    The resulting estimates of the potential range of net present value 
benefits associated with the reduction of CO2 emissions are 
reflected in Table V.54.

 Table V.54--Estimates of Savings From CO2 Emissions Reductions Under Trial Standard Levels at 7% Discount Rate
                                              and 3% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                             Estimated        Value of estimated CO2     Value of estimated CO2
                                           cumulative CO2      emission  reductions       emission  reductions
    Conventional cooking product TSL       (Mt) emission      (million 2007$) at  7%     (million 2007$) at  3%
                                             reductions           discount rate              discount rate
----------------------------------------------------------------------------------------------------------------
1......................................              14.62  $0 to $114...............  $0 to $256.
2......................................              16.62  $0 to $129...............  $0 to $290.
3......................................              25.08  $0 to $192...............  $0 to $438.
4......................................              37.54  $0 to $286...............  $0 to $654.
----------------------------------------------------------------------------------------------------------------


 
                                             Estimated        Value of estimated CO2     Value of Estimated CO2
                                           cumulative CO2      emission  reductions       emission  reductions
    Microwave oven energy factor TSL       (Mt) emission      (million 2007$) at  7%     (million 2007$) at  3%
                                             reductions           discount rate              discount rate
----------------------------------------------------------------------------------------------------------------
1a.....................................              11.49  $0 to $90................  $0 to $201.
2a.....................................              16.95  $0 to $131...............  $0 to $296.
3a.....................................              27.54  $0 to $212...............  $0 to $481.
4a.....................................              38.51  $0 to $295...............  $0 to $672.
----------------------------------------------------------------------------------------------------------------


 
                                             Estimated        Value of estimated CO2     Value of estimated CO2
                                           cumulative CO2      emission  reductions       emission  reductions
    Microwave oven energy factor TSL       (Mt) emission      (million 2007$) at  7%     (million 2007$) at  3%
                                             reductions           discount rate              discount rate
----------------------------------------------------------------------------------------------------------------
1b.....................................              23.51  $0 to $186...............  $0 to $406.
2b.....................................              35.19  $0 to $281...............  $0 to $617.
3b.....................................              50.48  $0 to $403...............  $0 to $885.

[[Page 62111]]

 
4b.....................................              82.12  $0 to $654...............  $0 to $1,440.
----------------------------------------------------------------------------------------------------------------


 
                                             Estimated        Value of estimated CO2     Value of estimated CO2
                                           cumulative CO2      emission  reductions       emission  reductions
     Commercial clothes washer TSL         (Mt) emission      (million 2007$) at  7%     (million 2007$) at  3%
                                             reductions           discount rate              discount rate
----------------------------------------------------------------------------------------------------------------
1......................................               3.79  $0 to $29................  $0 to $64.
2......................................               8.30  $0 to $64................  $0 to $141.
3......................................              11.55  $0 to $89................  $0 to $196.
4......................................              12.28  $0 to $94................  $0 to $209.
5......................................              12.73  $0 to $98................  $0 to $217.
----------------------------------------------------------------------------------------------------------------

    DOE also investigated the potential monetary impact resulting from 
the impact of today's efficiency standards on SO2, 
NOX, and Hg emissions. As previously stated, DOE's initial 
analysis assumed the presence of nationwide emission caps on 
SO2 and Hg, and caps on NOX emissions in the 28 
States covered by the CAIR caps. In the presence of emission caps, DOE 
concluded that no physical reductions in power sector emissions would 
likely occur; however, the lower generation requirements associated 
with standards could potentially put downward pressure on the prices of 
emissions allowances in cap-and-trade markets. Estimating this effect 
is very difficult because of factors such as credit banking, which can 
change the trajectory of prices. DOE has further concluded that the 
effect from standards on SO2 allowance prices is likely to 
be negligible, based upon runs of the NEMS-BT model. See chapter 16 
(Environmental Assessment) of the TSD accompanying this notice for 
further details regarding SO2 allowance price impacts.
    As discussed earlier, with respect to NOX the CAIR rule 
has been vacated by the courts, so projected annual NOX 
allowances from NEMS-BT are no longer relevant. In DOE's subsequent 
analysis, NOX emissions are not controlled by a nationwide 
regulatory system. For the range of NOX reduction estimates 
and Hg reduction estimates, DOE estimated the national monetized 
benefits of emissions reductions from today's proposed rule based on 
environmental damage estimates from the literature. Available estimates 
suggest a very wide range of monetary values for NOX 
emissions, ranging from $370 per ton to $3,800 per ton of 
NOX from stationary sources, measured in 2001$ \103\ or a 
range of $421 per ton to $4,326 per ton in 2006$. As discussed above, 
with the D.C. Circuit vacating the CAIR, DOE is considering how it 
should address the issue of NOX reduction and corresponding 
monetary valuation. DOE invites public comment on how the agency should 
address this issue, including how to value NOX emissions for 
States in the absence of the CAIR.
---------------------------------------------------------------------------

    \103\ Office of Management and Budget Office of Information and 
Regulatory Affairs, ``2006 Report to Congress on the Costs and 
Benefits of Federal Regulations and Unfunded Mandates on State, 
Local, and Tribal Entities,'' (2006).
---------------------------------------------------------------------------

    DOE has already conducted research for today's proposed rule and 
determined that the basic science linking mercury emissions from power 
plants to impacts on humans is considered highly uncertain. However, 
DOE identified two estimates of the environmental damages of mercury 
based on two estimates of the adverse impact of childhood exposure to 
methyl mercury on IQ for American children, and subsequent loss of 
lifetime economic productivity resulting from these IQ losses. The 
high-end estimate is based on an estimate of the current aggregate cost 
of the loss of IQ in American children that results from exposure to 
mercury of U.S. power plant origin ($1.3 billion per year in 2000$), 
which translates to $31.7 million per ton emitted per year 
(2006$).\104\ The low-end estimate was $664,000 per ton emitted in 
2004$ or $709,000 per ton in 2006$, which DOE derived from a published 
evaluation of mercury control using different methods and assumptions 
from the first study, but also based on the present value of the 
lifetime earnings of children exposed.\105\ DOE invites public comment 
on how the agency should address this issue, including how to value 
mercury emissions in the absence of the CAMR. The resulting estimates 
of the potential range of the present value benefits associated with 
the national reduction of NOX and national reductions in Hg 
emissions are reflected in Table V.55 and Table V.56.
---------------------------------------------------------------------------

    \104\ Trasande, L., et al., Applying Cost Analyses to Drive 
Policy that Protects Children, 1076 ANN. N.Y. ACAD. SCI. 911 (2006).
    \105\ Ted Gayer and Robert Hahn, Designing Environmental Policy: 
Lessons from the Regulation of Mercury Emissions, Regulatory 
Analysis 05-01 (AEI-Brookings Joint Center For Regulatory Studies) 
p. 31 (2004). A version of this paper was published in the Journal 
of Regulatory Economics in 2006. The estimate was derived by back-
calculating the annual benefits per ton from the net present value 
of benefits reported in the study.

Table V.55--Preliminary Estimates of Monetary Savings From Reductions of Hg and NOX by Trial Standard Level at a
                                                7% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                       Estimated      Value of estimated       Estimated      Value of estimated
  Conventional cooking  product     cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
               TSL                   (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1...............................  6.32 to 12.06.....  0.7 to 13.9.......  0 to 0.20.........  0 to 1.8.
2...............................  6.39 to 13.71.....  0.7 to 15.7.......  0 to 0.26.........  0 to 2.2.
3...............................  10.11 to 20.55....  1.0 to 23.0.......  0 to 0.37.........  0 to 3.1.
4...............................  14.99 to 30.65....  1.5 to 33.7.......  0 to 0.56.........  0 to 4.6.
----------------------------------------------------------------------------------------------------------------


[[Page 62112]]


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
Microwave oven energy factor TSL     (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1a..............................  0.58 to 14.25.....  0.1 to 17.6.......  0 to 0.25.........  0 to 2.0.
2a..............................  0.85 to 20.85.....  0.1 to 25.3.......  0 to 0.37.........  0 to 2.9.
3a..............................  1.37 to 33.74.....  0.2 to 40.4.......  0 to 0.60.........  0 to 4.6.
4a..............................  1.91 to 47.04.....  0.2 to 55.9.......  0 to 0.84.........  0 to 6.4.
----------------------------------------------------------------------------------------------------------------


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
Microwave oven standby power TSL     (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1b..............................  1.23 to 30.30.....  0.2 to 38.9.......  0 to 0.50.........  0 to 4.0.
2b..............................  1.87 to 46.02.....  0.2 to 58.9.......  0 to 0.76.........  0 to 6.1.
3b..............................  2.67 to 65.96.....  0.3 to 84.2.......  0 to 1.09.........  0 to 8.7.
4b..............................  4.35 to 107.23....  0.5 to 136.4......  0 to 1.77.........  0 to 14.2.
----------------------------------------------------------------------------------------------------------------


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
 Commercial clothes  washer TSL      (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1...............................  1.43 to 3.25......  0.2 to 3.7........  0 to 0.06.........  0 to 0.4.
2...............................  3.04 to 7.13......  0.3 to 8.0........  0 to 0.13.........  0 to 0.9.
3...............................  4.25 to 9.93......  0.5 to 11.2.......  0 to 0.19.........  0 to 1.3.
4...............................  4.51 to 10.56.....  0.5 to 11.9.......  0 to 0.20.........  0 to 1.4.
5...............................  4.67 to 10.95.....  0.5 to 12.3.......  0 to 0.21.........  0 to 1.4.
----------------------------------------------------------------------------------------------------------------


Table V.56--Preliminary Estimates of Monetary Savings From Reductions of Hg and NOX by Trial Standard Level at a
                                                3% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                       Estimated      Value of estimated       Estimated      Value of estimated
  Conventional cooking  product     cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
               TSL                   (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1...............................  6.32 to 12.06.....  1.4 to 28.2.......  0 to 0.20.........  0 to 3.5.
2...............................  6.39 to 13.71.....  1.4 to 32.0.......  0 to 0.26.........  0 to 4.5.
3...............................  10.11 to 20.55....  2.2 to 47.4.......  0 to 0.37.........  0 to 6.4.
4...............................  14.99 to 30.65....  3.3 to 70.3.......  0 to 0.56.........  0 to 9.5.
----------------------------------------------------------------------------------------------------------------


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
Microwave oven energy factor TSL     (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1a..............................  0.58 to 14.25.....  0.1 to 34.3.......  0 to 0.25.........  0 to 4.2.
2a..............................  0.85 to 20.85.....  0.2 to 49.7.......  0 to 0.37.........  0 to 6.1.
3a..............................  1.37 to 33.74.....  0.3 to 80.1.......  0 to 0.60.........  0 to 9.9.
4a..............................  1.91 to 47.04.....  0.4 to 111.2......  0 to 0.84.........  0 to 13.8.
----------------------------------------------------------------------------------------------------------------


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
Microwave oven standby power TSL     (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1b..............................  1.23 to 30.30.....  0.3 to 74.1.......  0 to 0.50.........  0 to 8.4.
2b..............................  1.87 to 46.02.....  0.4 to 112.4......  0 to 0.76.........  0 to 12.8.
3b..............................  2.67 to 65.96.....  0.6 to 160.9......  0 to 1.09.........  0 to 18.3.
4b..............................  4.35 to 107.23....  1.0 to 261.2......  0 to 1.77.........  0 to 29.8.
----------------------------------------------------------------------------------------------------------------


 
                                       Estimated      Value of estimated       Estimated      Value of estimated
                                    cumulative NOX       NOX emission      cumulative Hg (t)      Hg emission
 Commercial clothes  washer TSL      (kt) emission        reductions           emission           reductions
                                      reductions        (million 2006$)       reductions        (million 2006$)
----------------------------------------------------------------------------------------------------------------
1...............................  1.43 to 3.25......  0.3 to 7.5........  0 to 0.06.........  0 to 0.9.
2...............................  3.04 to 7.13......  0.7 to 16.6.......  0 to 0.13.........  0 to 2.0.
3...............................  4.25 to 9.93......  1.0 to 23.0.......  0 to 0.19.........  0 to 2.8.
4...............................  4.51 to 10.56.....  1.0 to 24.5.......  0 to 0.20.........  0 to 3.0.
5...............................  4.67 to 10.95.....  1.0 to 25.4.......  0 to 0.21.........  0 to 3.1.
----------------------------------------------------------------------------------------------------------------

    Table V.57 presents the estimated wastewater discharge reductions 
due to the TSLs for CCWs. In chapter 16 of the TSD accompanying this 
notice, DOE reports annual changes in wastewater discharge attributable 
to each TSL.

[[Page 62113]]



  Table V.57--Summary of Wastewater Discharge Reductions (Cumulative Reductions for Products Sold From 2012 to
                                                      2042)
----------------------------------------------------------------------------------------------------------------
                                                                             TSL
----------------------------------------------------------------------------------------------------------------
                                                  1             2             3             4             5
----------------------------------------------------------------------------------------------------------------
Wastewater Discharge Reductions for
 Commercial Clothes Washers:
Wastewater (trillion gallons).............         0.00          0.16          0.19          0.20          0.23
----------------------------------------------------------------------------------------------------------------

C. Proposed Standards

1. Overview
    Under 42 U.S.C. 6295(o)(2)(A) and 6316(a), EPCA requires that any 
new or amended energy conservation standard for any type (or class) of 
covered product shall be designed to achieve the maximum improvement in 
energy efficiency that the Secretary determines is technologically 
feasible and economically justified. In determining whether a standard 
is economically justified, the Secretary must determine whether the 
benefits of the standard exceed its burdens to the greatest extent 
practicable, in light of the following seven factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products or equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products or equipment in the type (or class) 
compared to any increase in the price, initial charges, or maintenance 
expenses for the covered products that are likely to result from the 
imposition of the standard;
    (3) The total projected amount of energy (or, as applicable, water) 
savings likely to result directly from the imposition of the standard;
    (4) Any lessening of the utility or the performance of the covered 
products or equipment likely to result from the imposition of the 
standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a))
    The new or amended standard also must ``result in significant 
conservation of energy.'' (42 U.S.C. 6295(o)(3)(B) and 6316(a))
    In selecting the proposed energy conservation standards for cooking 
products and CCWs for consideration in today's NOPR, DOE started by 
examining the maximum technologically feasible levels, and determined 
whether those levels were economically justified. If DOE determined 
that the maximum technologically feasible level was not justified, DOE 
then analyzed the next lower TSL to determine whether that level was 
economically justified. DOE repeated this procedure until it identified 
an economically justified TSL.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, the following tables summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed above. These tables present the results--or, in some cases, a 
range of results--for each TSL. The range of values reported in these 
tables for industry impacts represents the results for the different 
markup scenarios that DOE used to estimate manufacturer impacts.
    In addition to the quantitative results, DOE also considers other 
burdens and benefits that affect economic justification. In the case of 
conventional cooking products, DOE considered the burden that would be 
imposed on the industry to comply with performance standards. 
Currently, conventional cooking products are not rated for efficiency 
because DOE has promulgated only prescriptive standards for gas cooking 
products. Therefore, any proposed performance standards would require 
the industry to test, rate, and label these cooking products, a 
significant burden that the industry currently does not bear. DOE has 
also considered harmonization of standby power standards for microwave 
ovens with international standby power programs such as Korea's e-
standby program,\106\ Australia's standby program,\107\ and Japan's Top 
Runner Program.\108\ These programs seek to establish standby power 
efficiency ratings through the International Energy Agency (IEA)'s One-
Watt program, which seeks to lower standby power below 1 W for 
microwave ovens.\109\ Both Korea and Australia will be publishing 
mandatory standby power standards of 1 W by 2010 and 2012, 
respectively. In accordance with Japan's Top Runner Program, Japanese 
appliance manufacturers made a voluntary declaration to reduce standby 
power of microwave ovens without a timer as close to zero as possible 
and that of microwave ovens with a timer to 1 W or lower.
---------------------------------------------------------------------------

    \106\ Refer to: http://www.kemco.or.kr/eng/.
    \107\ Refer to: http://www.energyrating.gov.au/standby.html.
    \108\ Refer to: http://www.eccj.or.jp/top_runner/index.html.
    \109\ IEA Energy Information Centre, Standby Power Use and the 
IEA ``1-Watt Plan''. Available at: http://www.iea.org/textbase/subjectqueries/standby.asp.
---------------------------------------------------------------------------

    In sum, the proposed standard levels for the products/equipment 
that are the subject of this rulemaking reflect DOE's careful balancing 
of the relevant statutory factors under EPCA. After considering public 
comments on this NOPR, DOE will publish a final rule that either adopt 
the proposed TSL, one of the higher or lower TSLs, or some value in 
between.
2. Conclusion
a. Conventional Cooking Products
    Table V.58 presents a summary of the quantitative results for each 
conventional cooking product TSL. These results indicate the energy 
savings and economic impacts due to increasing the efficiency of 
conventional cooking products.

                        Table V.58--Summary of Results for Conventional Cooking Products
----------------------------------------------------------------------------------------------------------------
                Category                        TSL 1             TSL 2             TSL 3             TSL 4
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads)............              0.14              0.23              0.32              0.50

[[Page 62114]]

 
7% Discount Rate........................              0.04              0.06              0.08              0.12
3% Discount Rate........................              0.08              0.12              0.17              0.26
Generation Capacity Reduction (GW) **...             0.056             0.074             0.109             0.167
NPV (2006$ billion):
    7% Discount Rate....................             0.215             0.393             0.381          (12.548)
    3% Discount Rate....................             0.609             1.186             1.374          (23.141)
Industry Impacts:
    Gas Cooktops
        Industry NPV (2006$ million)....          (5)-(12)          (5)-(12)          (5)-(12)          28-(141)
        Industry NPV (% Change).........           (2)-(4)           (2)-(4)           (2)-(4)           10-(49)
    Electric Cooktops
        Industry NPV (2006$ million)....                 0          (2)-(11)          (2)-(11)          77-(383)
        Industry NPV (% Change).........                 0           (1)-(3)           (1)-(3)          22-(107)
    Gas Ovens
        Industry NPV (2006$ million)....          (7)-(10)          (7)-(10)          (6)-(41)        (47)-(181)
        Industry NPV (% Change).........               (2)               (2)           (1)-(9)         (10)-(39)
    Electric Ovens
        Industry NPV (2006$ million)....                 0          (8)-(19)          (8)-(19)        (10)-(469)
        Industry NPV (% Change).........                 0           (1)-(2)           (1)-(2)          (1)-(59)
Cumulative Emissions Impacts [dagger]:
    CO2 (Mt)............................             14.62             16.62             25.08             37.54
    NOX (kt)............................        6.32-12.06        6.39-13.71       10.11-20.55       14.99-30.65
    Hg (t)..............................            0-0.20            0-0.26            0-0.37            0-0.56
Mean LCC Savings * (2006$):
    Gas Cooktop/Conventional Burners....                13                13                13              (11)
    Electric Cooktop/Low or High Wattage  ................                 4                 4                 4
     Open (Coil) Elements...............
    Electric Cooktop/Smooth Elements....  ................  ................  ................             (283)
    Gas Oven/Standard Oven with or                       6                 6                 6              (86)
     without a Catalytic Line...........
    Gas Oven/Self-Clean Oven............  ................  ................                 1               (6)
    Electric Oven/Standard Oven with or   ................                 9                 9              (52)
     without a Catalytic Line...........
    Electric Oven/Self-Clean Oven.......  ................  ................  ................             (143)
Median PBP (years):
    Gas Cooktop/Conventional Burners....               4.5               4.5               4.5              77.1
    Electric Cooktop/Low or High Wattage  ................               7.3               7.3               7.3
     Open (Coil) Elements...............
    Electric Cooktop/Smooth Elements....  ................  ................  ................              1512
    Gas Oven/Standard Oven with or                     9.4               9.4               9.4              26.9
     without a Catalytic Line...........
    Gas Oven/Self-Clean Oven............  ................  ................              11.4              16.4
    Electric Oven/Standard Oven with or   ................               8.0               8.0              60.6
     without a Catalytic Line...........
    Electric Oven/Self-Clean Oven.......  ................  ................  ................               240
LCC Results:
    Gas Cooktop/Conventional Burners
        Net Cost (%)....................               0.2               0.2               0.2              93.9
        No Impact (%)...................              93.5              93.5              93.5               0.0
        Net Benefit (%).................               6.3               6.3               6.3               6.1
    Electric Cooktop/Low or High Wattage
     Open (Coil) Elements
        Net Cost (%)....................  ................              29.4              29.4              29.4
        No Impact (%)...................  ................               0.0               0.0               0.0
        Net Benefit (%).................  ................              70.6              70.6              70.6
    Electric Cooktop/Smooth Elements
        Net Cost (%)                      ................  ................  ................             100.0
        No Impact (%)...................  ................  ................  ................               0.0
        Net Benefit (%).................  ................  ................  ................               0.0
    Gas Oven/Standard Oven with or
     without a Catalytic Line
        Net Cost (%)....................               6.5               6.5               6.5              95.0
        No Impact (%)...................              82.3              82.3              82.3               0.0
        Net Benefit (%).................              11.2              11.2              11.2               5.0
    Gas Oven/Self-Clean Oven
        Net Cost (%)....................  ................  ................              58.9              68.8
        No Impact (%)...................  ................  ................               0.0               0.0
        Net Benefit (%).................  ................  ................              41.1              31.2
    Electric Oven/Standard Oven with or
     without a Catalytic Line
        Net Cost (%)....................  ................              43.9              43.9              95.2
        No Impact (%)...................  ................               0.0               0.0               0.0
        Net Benefit (%).................  ................              56.1              56.1               4.8
    Electric Oven/Self-Clean Oven
        Net Cost (%)....................  ................  ................  ................              78.9
        No Impact (%)...................  ................  ................  ................               0.0
        Net Benefit (%).................  ................  ................  ................              21.1
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount
  indicated.
** Changes in installed generation capacity by 2042 based on AEO 2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants and at households. NOX emissions
  impacts include physical reductions at power plants as well as production of emissions allowance credits where
  NOX emissions are subject to emissions caps.


[[Page 62115]]

    First, DOE considered TSL 4, the max-tech level. TSL 4 would likely 
save 0.50 quads of energy through 2042, an amount DOE considers 
significant. Discounted at seven percent, the projected energy savings 
through 2042 would be 0.12 quads. For the Nation as a whole, DOE 
projects that TSL 4 would result in a net decrease of $12.5 billion in 
NPV, using a discount rate of seven percent. The emissions reductions 
at TSL 4 are 37.54 Mt of CO2, 14.99 kt to 30.65 kt of 
NOX, and 0 t to 0.56 t of Hg. Total generating capacity in 
2042 is estimated to decrease compared to the reference case by 0.167 
gigawatts (GW) under TSL 4.
    At TSL 4, DOE projects that the average conventional cooking 
product consumer will experience an increase in LCC, with the exception 
of consumers of electric coil cooktops. In the case of electric coil 
cooktops, the average consumer will save only $4 in LCC due to TSL 4. 
With the exception of electric coil cooktop consumers, DOE estimated 
LCC increases for at least 68 percent of consumers in the Nation that 
purchase conventional cooking products. The median payback period of 
each product class at TSL 4, with the exception of electric coil 
cooktops and gas self-cleaning ovens, is projected to be substantially 
longer than the mean lifetime of the equipment.
    Although TSL 4 for electric coil cooktops yields LCC savings and 
provides relatively short paybacks for average consumers, DOE estimates 
that the technology needed to attain the efficiency level (improved 
contact conductance) may not provide energy savings under field 
conditions, for the reasons below. (See section IV.B for more details.) 
Measured efficiency gains from improved contact conductance have been 
obtained under test procedure conditions using the aluminum test block. 
To ensure consistent and repeatable testing, an aluminum test block is 
used to establish cooktop efficiency by measuring the increased heat 
content of the block during a test measurement. Because the test block 
is much flatter than actual cooking vessels, thereby allowing for a 
higher degree of thermal contact between the block and coil element, 
DOE believes that the efficiency gains with an actual cooking vessel 
likely will not be as large or may not even be achievable. Therefore, 
DOE has significant doubt that electric cooktop consumers may actually 
realize economic savings with products at TSL 4.
    DOE estimated the projected change in INPV at TSL 4 for each of the 
following four general categories of conventional cooking products: gas 
cooktops, electric cooktops, gas ovens, and electric ovens. The 
projected change in INPV ranges from an increase of $28 million to a 
decrease of $141 million for gas cooktops, an increase of $77 million 
to a decrease of $383 million for electric cooktops, a decrease of $47 
million to a decrease of $181 million for gas ovens, and a decrease of 
$10 million to a decrease of $469 million for electric ovens. At TSL 4, 
DOE recognizes the risk of very large negative impacts if 
manufacturers' expectations about reduced profit margins are realized. 
In particular, if the high end of the range of impacts is reached as 
DOE expects, TSL 4 could result in a net loss of 49 percent in INPV to 
gas cooktop manufacturers, a net loss of 107 percent in INPV to 
electric cooktop manufacturers, a net loss of 39 percent to gas oven 
manufacturers, and a net loss of 59 percent to electric oven 
manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 4, the Secretary has reached the following initial 
conclusion: At TSL 4, the benefits of energy savings and emissions 
reductions would be outweighed by the potential multi-million dollar 
negative net economic cost to the Nation, the economic burden on 
consumers, and the large capital conversion costs that could result in 
a reduction in INPV for manufacturers.
    Next, DOE considered TSL 3, which yielded primary energy savings 
estimated at 0.32 quads of energy through 2042, an amount which DOE 
considers to be significant. Discounted at seven percent, the energy 
savings through 2042 would be 0.08 quads. For the Nation as a whole, 
DOE projects that TSL 3 would result in a net increase of $381 million 
in NPV, using a discount rate of seven percent. The emissions 
reductions are projected to be 25.08 Mt of CO2, 10.11 kt to 
20.55 kt of NOX, and 0 t to 0.37 t of Hg. Total generating 
capacity in 2042 under TSL 3 is estimated to decrease by 0.109 GW.
    At TSL 3, DOE projects that the impacts of amended energy 
conservation standards on average consumers of conventional cooking 
products will decrease their LCC. For electric smooth cooktops and 
electric self-cleaning ovens, TSL 3 does not increase the efficiency 
beyond baseline levels because none of the candidate standard levels 
for these products provide economic savings to consumers. At TSL 3, 
average gas and electric coil cooktop consumers will save $13 and $4 in 
LCC, respectively. Average consumers of gas standard ovens, gas self-
cleaning ovens, and electric standard ovens will realize LCC savings of 
$6, $1, and $9, respectively. The median payback period of each product 
class impacted by TSL 3 is projected to be at least 40 percent shorter 
than the mean lifetime of the products, 19 years. For example, at TSL 3 
the projected payback period is 4.5 years for average consumers of gas 
cooktops, whereas the projected payback period is 11.4 years for 
average consumers of gas self-cleaning ovens.
    Although TSL 3 provides LCC savings to the average consumer, DOE 
estimates a significant percentage of consumers of gas self-cleaning 
ovens and electric standard ovens will be burdened by the standard 
(i.e., experience increases in their LCC). DOE estimates that 59 
percent of consumers of gas self-cleaning ovens and 44 percent of 
consumers of electric standard ovens will be burdened by TSL 3. In the 
case of electric standard ovens, although a majority of consumers still 
benefit from the standard, almost 50 percent of consumers would be 
burdened. By comparison, a majority of non-impacted gas cooktop and 
non-impacted gas standard oven consumers would realize LCC savings due 
to TSL 3. Specifically, in the case of gas cooktops, 93.5 percent of 
consumers are not impacted by TSL 3 (i.e., 93.5 percent of consumers 
already purchase cooktops at TSL 3). Of the remaining 6.5 percent of 
gas cooktop consumers who are impacted by TSL 3, over 96 percent 
realize LCC savings. For gas standard ovens, 82.3 percent consumers are 
not impacted by TSL 3. Of the remaining 17.7 percent of gas standard 
oven consumers who are impacted by TSL 3, over 63 percent realize LCC 
savings. In the case of electric coil cooktops, although DOE estimates 
that over 70 percent of consumers would decrease their LCC, the 
efficiency gain achieved at TSL 3 would be achieved through the same 
technological change as TSL 4 (improved contact conductance). As noted 
for TSL 4, DOE has significant doubt that electric cooktop consumers 
will actually realize economic savings at TSL 3.
    At TSL 3, the projected change in INPV for each of the four general 
categories of conventional cooking products range from a decrease of $5 
million to a decrease of $12 million for gas cooktops, a decrease of $2 
million to a decrease of $11 million for electric cooktops, a decrease 
of $6 million to a decrease of $41 million for gas ovens, and a 
decrease of $8 million to a decrease of $19 million for electric ovens. 
At TSL 3, DOE recognizes the risk of negative impacts if manufacturers' 
expectations about

[[Page 62116]]

reduced profit margins are realized. In particular, if the high end of 
the range of impacts is reached as DOE expects, TSL 3 could result in 
maximum net losses of up to 4 percent in INPV for gas cooktop 
manufacturers, three percent for electric cooktop manufacturers, nine 
percent for gas oven manufacturers, and two percent for electric oven 
manufacturers.
    Although DOE recognizes the increased economic benefits to the 
Nation that could result from TSL 3, DOE has tentatively concluded that 
the benefits of a Federal standard at TSL 3 would still be outweighed 
by the economic burden on conventional cooking product consumers. For 
example, DOE believes the economic savings realized by average 
consumers are outweighed by the significant percentage of gas self-
cleaning oven and electric standard oven consumers who are burdened by 
the standard. Considering that TSL 3 also adversely impacts 
manufacturers' INPV, DOE believes the benefits of energy savings and 
emissions impacts are not significant enough to outweigh the burdens of 
the standard.
    DOE considered TSL 2 next. DOE projects that TSL 2 would save 0.23 
quads of energy through 2042, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2042 
would be 0.06 quads. For the Nation as a whole, DOE projects TSL 2 to 
result in net savings in NPV of $393 million. The estimated emissions 
reductions are 16.62 Mt of CO2, 6.39 kt to 13.71 kt of 
NOX, and 0 t to 0.26 t of Hg. Total generating capacity in 
2042 under TSL 2 would likely decrease by 0.074 GW.
    The candidate standard levels for each of the product classes that 
comprise TSL 2 are the same as TSL 3 except for gas self-cleaning 
ovens. DOE did not increase the efficiency for gas self-cleaning ovens 
beyond the baseline level for TSL 2 because, as described for TSL 3, 
efficiency levels greater than the baseline level do not yield LCC 
savings to a majority of gas self-cleaning consumers. For all other 
product classes, the impacts to consumers at TSL 3 are identical to TSL 
2.
    At TSL 2, the projected change in INPV for each of the four general 
categories of conventional cooking products range from a decrease of $5 
million to a decrease of $12 million for gas cooktops, a decrease of $2 
million to a decrease of $11 million for electric cooktops, a decrease 
of $7 million to a decrease of $10 million for gas ovens, and a 
decrease of $8 million to a decrease of $19 million for electric ovens. 
At TSL 2, DOE recognizes the risk of negative impacts if manufacturers' 
expectations about reduced profit margins are realized. In particular, 
if the high end of the range of impacts is reached as DOE expects, TSL 
2 could result in a net loss of 4 percent in INPV to gas cooktop 
manufacturers, a net loss of three percent in INPV to electric cooktop 
manufacturers, a net loss of two percent to gas oven manufacturers, and 
a net loss of two percent to electric oven manufacturers.
    Although DOE recognizes the increased economic benefits to the 
Nation that could result from TSL 2, DOE concludes that the benefits of 
a Federal standard at TSL 2 would still be outweighed by the economic 
burden that would be placed upon conventional cooking product 
consumers. Under TSL 2, DOE would no longer impose a standard for gas 
self-cleaning ovens, thereby reducing the economic burden to the 
Nation. The decreased economic burden under TSL 2 is evident from the 
change in NPV as net savings to the Nation increases to $393 million 
from the $381 million realized under TSL 3. Even so, DOE believes the 
economic savings realized by average consumers are outweighed by the 
significant percentage of electric standard oven consumers who are 
still burdened by the standard. A TSL 2 standard would also adversely 
impact manufacturer INPV. Consequently, DOE believes the benefits of 
energy savings and emissions impacts of TSL 2 are not significant 
enough to outweigh the burdens that would be created by the standard.
    DOE considered TSL 1 next. DOE projects that TSL 1 would save 0.14 
quads of energy through 2042, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2042 
would be 0.04 quads. For the Nation as a whole, DOE projects TSL 1 to 
result in net savings in NPV of $215 million. The estimated emissions 
reductions are 14.62 Mt of CO2, 6.32 kt to 12.06 kt of 
NOX, and 0 t to 0.20 t of Hg. Total generating capacity in 
2042 under TSL 1 would likely decrease by 0.056 GW.
    At TSL 1, only amended energy conservation standards consisting of 
prescriptive requirements to eliminate standing pilots for gas cooktops 
and gas standard ovens would be promulgated by DOE. DOE projects the 
impacts of amended energy conservation standards on average consumers 
of gas cooktops and gas standard ovens will decrease their LCC. At TSL 
1, average gas cooktop and gas standard oven consumers will save $13 
and $6 in LCC, respectively. DOE estimates that 93.5 percent of gas 
cooktops consumers and 82.3 percent of gas standard oven consumers 
already purchase products at TSL 1. Of the non-impacted consumers 
(i.e., consumers already purchasing products at TSL 1), DOE estimates 
that over 96 percent of gas cooktop consumers and over 63 percent of 
gas standard oven consumers realize LCC savings due to the elimination 
of standing pilots. The median payback period is projected to be 4.5 
years for the average gas cooktop consumer and 9.4 years for the 
average gas standard oven consumer.
    DOE recognizes that there are subgroups in the Nation that use gas 
cooking products but are without household electricity. Under TSL 1, 
these subgroups (approximately 0.01 percent of the total U.S. household 
population) are likely to be impacted because they would be required to 
use an electrical source for cooking products to operate the ignition 
system. However, DOE market research shows that battery-powered 
electronic ignition systems have been implemented in other products, 
such as instantaneous gas water heaters, barbeques, furnaces, and other 
appliances, and the use of such products is not expressly prohibited by 
applicable safety standards. Therefore, DOE believes that households 
that use gas for cooking and are without electricity will likely have 
technological options that would enable them to continue to use gas 
cooking if standing pilot ignition systems are eliminated.
    At TSL 1, the projected change in INPV ranges from a decrease of $5 
million to a decrease of $12 million for gas cooktops and a decrease of 
$7 million to a decrease of $10 million for gas ovens. At TSL 1, DOE 
recognizes the risk of negative impacts if manufacturers' expectations 
about reduced profit margins are realized. In particular, if the high 
end of the range of impacts is reached as DOE expects, TSL 1 could 
result in a net loss of 4 percent in INPV to gas cooktop manufacturers 
and a net loss of two percent to gas oven manufacturers. Although DOE 
estimates that TSL 1 will lead to some net loss in INPV to gas cooktop 
and gas oven manufacturers, because TSL 1 is comprised of prescriptive 
requirements, the industry would not be burdened with the additional 
costs associated with complying with performance requirements. 
Currently, only prescriptive standards for conventional cooking 
products are in effect requiring that gas cooking products with an 
electrical supply cord not be equipped with a constant burning pilot. 
As a result, conventional cooking product manufacturers are not 
burdened with

[[Page 62117]]

the costs of testing the rated performance of their products to label 
and comply with performance-based energy conservation standards. 
Because TSL 1 effectively extends the existing prescriptive requirement 
to all gas cooking products, regardless of whether the products have an 
electrical supply cord, DOE avoids burdening manufacturers with 
testing, labeling, and compliance costs that they currently do not 
bear.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that the benefits of a TSL 1 
standard outweigh the burdens. In particular, the Secretary has 
tentatively concluded that TSL 1 saves a significant amount of energy 
and is technologically feasible and economically justified. Therefore, 
DOE today proposes to adopt the energy conservation standards for 
conventional cooking products at TSL 1. Table V.59 demonstrates the 
proposed energy conservation standards for all product classes of 
conventional cooking products.

   Table V.59--Proposed Energy Conservation Standards for Conventional
                            Cooking Products
------------------------------------------------------------------------
                                                   Proposed energy
               Product class                    conservation standards
------------------------------------------------------------------------
Gas Cooktop/Conventional Burners...........  No Constant Burning Pilot
                                              Lights.
Electric Cooktop/Low or High Wattage Open    No Standard.
 (Coil) Elements.
Electric Cooktop/Smooth Elements...........  No Standard.
Gas Oven/Standard Oven with or without a     No Constant Burning Pilot
 Catalytic Line.                              Lights.
Gas Oven/Self-Clean Oven...................  No Change to Existing
                                              Standard.
Electric Oven/Standard Oven with or without  No Standard.
 a Catalytic Line.
Electric Oven/Self-Clean Oven..............  No Standard.
------------------------------------------------------------------------

b. Microwave Ovens
    Table V.60 presents a summary of the quantitative results for the 
four microwave oven TSLs pertaining to the EF.

                         Table V.60--Summary of Results for Microwave Oven Energy Factor
----------------------------------------------------------------------------------------------------------------
                Category                       TSL 1a            TSL 2a            TSL 3a            TSL 4a
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads)............              0.08              0.09              0.11              0.12
7% Discount Rate........................              0.02              0.02              0.03              0.03
3% Discount Rate........................              0.05              0.05              0.06              0.07
Generation Capacity Reduction (GW) **...             0.063             0.097             0.160             0.227
NPV (2006$ billion):
    7% Discount Rate....................            (0.61)            (1.60)            (3.06)            (4.94)
    3% Discount Rate....................            (1.07)            (2.96)            (5.72)            (9.28)
Industry Impacts:
    Industry NPV (2006$ million)........          44-(199)         117-(386)         237-(675)        267-(1165)
    Industry NPV (% Change).............            3-(14)            8-(27)           16-(47)           18-(80)
Cumulative Emissions Impacts [dagger]:
    CO2 (Mt)............................             11.49             16.95             27.54             38.51
    NOX (kt)............................        0.58-14.25        0.85-20.85        1.37-33.74        1.91-47.04
    Hg (t)..............................            0-0.25            0-0.37            0-0.60            0-0.84
Mean LCC Savings * (2006$)..............               (3)              (10)              (19)              (31)
Median PBP (years)......................              29.4              57.1              81.4             114.6
LCC Results:
    Net Cost (%)........................              42.0              45.2              45.9              46.2
    No Impact (%).......................              53.7              53.7              53.7              53.7
    Net Benefit (%).....................               4.3               1.1               0.4              0.1
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount
  indicated.
** Changes in installed generation capacity by 2042 based on AEO 2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include
  physical reductions at power plants as well as production of emissions allowance credits where NOX emissions
  are subject to emissions caps.

    First, DOE considered TSL 4a, the max-tech level for microwave oven 
cooking efficiency. TSL 4a would likely save 0.12 quads of energy 
through 2042, an amount DOE considers significant. Discounted at seven 
percent, the projected energy savings through 2042 would be 0.03 quads. 
For the Nation as a whole, DOE projects that TSL 4a would result in a 
net decrease of $4.94 billion in NPV, using a discount rate of seven 
percent. The emissions reductions at TSL 4a are 38.51 Mt of 
CO2, 1.91 kt to 47.04 kt of NOX, and 0 t to 0.84 
t of Hg. Total generating capacity in 2042 is estimated to decrease 
compared to the reference case by 0.227 gigawatts (GW) under TSL 4a.
    At TSL 4a, DOE projects that the average microwave oven consumer 
will experience an increase in LCC. Although DOE estimates that all 
microwave oven consumers purchase products with an EF at the baseline 
level, 54 percent of consumers are estimated to purchase microwave 
ovens with standby power consumption lower than the baseline standby 
consumption. As a result, the associated annual energy use for the 54 
percent of consumers with low microwave oven standby power is lower 
than the annual energy consumption of products meeting TSL 4a. 
Therefore, the 54 percent of consumers purchasing low standby power 
consuming microwave ovens are not impacted by TSL 4a. For the

[[Page 62118]]

microwave oven consumers in the Nation impacted by TSL 4a, DOE 
estimates that nearly all will be burdened with LCC increases. The 
median payback period of the average consumer is projected to be 
substantially longer than the mean lifetime of the equipment.
    DOE estimated the projected change in INPV ranges at TSL 4a from an 
increase of $267 million to a decrease of $1,165 million. At TSL 4a, 
DOE recognizes the risk of very large negative impacts if 
manufacturers' expectations about reduced profit margins are realized. 
In particular, if the high end of the range of impacts is reached as 
DOE expects, TSL 4a could result in a net loss of 80 percent in INPV to 
microwave oven manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 4a, the Secretary has reached the following initial 
conclusion: At TSL 4a, the benefits of energy savings and emissions 
reductions would be outweighed by the potential multi-billion dollar 
negative net economic cost to the Nation, the economic burden on 
consumers, and the large capital conversion costs that could result in 
a reduction in INPV for manufacturers.
    DOE considered TSL 3a next. Primary energy savings are estimated at 
0.11 quads of energy through 2042, which DOE considers significant. 
Discounted at seven percent, the energy savings through 2042 would be 
0.03 quads. For the Nation as a whole, DOE projects that TSL 3a would 
result in a net decrease of $3.06 billion in NPV, using a discount rate 
of seven percent. The emissions reductions are projected to be 27.54 Mt 
of CO2, 1.37 kt to 33.74 kt of NOX, and 0 t to 
0.60 t of Hg. Total generating capacity in 2042 under TSL 3a is 
estimated to decrease by 0.160 GW.
    At TSL 3a, DOE projects that the average microwave oven consumer 
will experience an increase in LCC. Although DOE estimates that all 
microwave oven consumers purchase products with an EF at the baseline 
level, 54 percent of consumers are estimated to purchase microwave 
ovens with standby power consumption lower than the baseline standby 
consumption. As a result, the associated annual energy use for the 54 
percent of consumers with low microwave oven standby power is lower 
than the annual energy consumption of products meeting TSL 3a. 
Therefore, the 54 percent of consumers purchasing low standby power 
consuming microwave ovens are not impacted by TSL 3a. For the microwave 
oven consumers in the Nation impacted by TSL 3a, DOE estimates that 
nearly all will be burdened with LCC increases. The median payback 
period of the average consumer is projected to be substantially longer 
than the mean lifetime of the equipment.
    DOE estimated the projected change in INPV ranges from an increase 
of $237 million to a decrease of $675 million. At TSL 3a, DOE 
recognizes the risk of very large negative impacts if manufacturers' 
expectations about reduced profit margins are realized. In particular, 
if the high end of the range of impacts is reached as DOE expects, TSL 
3a could result in a net loss of 47 percent in INPV to microwave oven 
manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 3a, the Secretary has reached the following initial 
conclusion: At TSL 3a, the benefits of energy savings and emissions 
reductions would be outweighed by the potential multi-billion dollar 
negative net economic cost to the Nation, the economic burden on 
consumers, and the large capital conversion costs that could result in 
a reduction in INPV for manufacturers.
    DOE considered TSL 2a next. DOE projects that TSL 2a would save 
0.09 quads of energy through 2042, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2042 
would be 0.02 quads. For the Nation as a whole, DOE projects TSL 2 to 
result in net cost in NPV of $1.60 billion. The estimated emissions 
reductions are 16.95 Mt of CO2, 0.85 kt to 20.85 kt of 
NOX, and 0 t to 0.37 t of Hg. Total generating capacity in 
2042 under TSL 2 would likely decrease by 0.097 GW.
    At TSL 2a, DOE projects that the average microwave oven consumer 
will experience an increase in LCC. Although DOE estimates that all 
microwave oven consumers purchase products with an EF at the baseline 
level, 54 percent of consumers are estimated to purchase microwave 
ovens with standby power consumption lower than the baseline standby 
consumption. As a result, the associated annual energy use for the 54 
percent of consumers with low microwave oven standby power is lower 
than the annual energy consumption of products meeting TSL 2a. 
Therefore, the 54 percent of consumers purchasing low standby power 
consuming microwave ovens are not impacted by TSL 2a. For the microwave 
oven consumers in the Nation impacted by TSL 2a, DOE estimates that 
almost 98 percent will be burdened with LCC increases. The median 
payback period of the average consumer is projected to be substantially 
longer than the mean lifetime of the equipment.
    At TSL 2a, the projected change in INPV range from an increase of 
$117 million to a decrease of $386 million. At TSL 2a, DOE recognizes 
the risk of negative impacts if manufacturers' expectations about 
reduced profit margins are realized. In particular, if the high end of 
the range of impacts is reached as DOE expects, TSL 2a could result in 
a net loss of 27 percent in INPV to microwave oven manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 2a, the Secretary has reached the following initial 
conclusion: At TSL 2a, the benefits of energy savings and emissions 
reductions would be outweighed by the potential negative net economic 
cost (over a billion dollars) to the Nation, the economic burden on 
consumers, and the large capital conversion costs that could result in 
a reduction in INPV for manufacturers.
    DOE considered TSL 1a next. DOE projects that TSL 1a would save 
0.08 quads of energy through 2042, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2042 
would be 0.02 quads. For the Nation as a whole, DOE projects TSL 1a to 
result in net cost in NPV of $610 million. The estimated emissions 
reductions are 11.49 Mt of CO2, 0.58 kt to 14.25 kt of 
NOX, and 0 t to 0.25 t of Hg. Total generating capacity in 
2042 under TSL 1a would likely decrease by 0.063 GW.
    At TSL 1a, DOE projects that the average microwave oven consumer 
will experience an increase in LCC. Although DOE estimates that all 
microwave oven consumers purchase products with an EF at the baseline 
level, 54 percent of consumers are estimated to purchase microwave 
ovens with standby power consumption lower than the baseline standby 
consumption. As a result, the associated annual energy use for the 54 
percent of consumers with low microwave oven standby power is lower 
than the annual energy consumption of products meeting TSL 1a. 
Therefore, the 54 percent of consumers purchasing low standby power 
consuming microwave ovens are not impacted by TSL 2a. For the microwave 
oven consumers in the Nation impacted by TSL 1a, DOE estimates that 
almost 91 percent will be burdened with LCC increases. The median 
payback period of the average consumer is projected to be substantially 
longer than the mean lifetime of the equipment.
    At TSL 1a, the projected change in INPV range from a decrease of 
$44 million to a decrease of $199 million. At TSL 1a, DOE recognizes 
the risk of

[[Page 62119]]

negative impacts if manufacturers' expectations about reduced profit 
margins are realized. In particular, if the high end of the range of 
impacts is reached as DOE expects, TSL 1a could result in a net loss of 
14 percent in INPV to microwave oven manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 1a, the Secretary has reached the following initial 
conclusion: At TSL 1a, the benefits of energy savings and emissions 
reductions would be outweighed by the potential multi-million dollar 
negative net economic cost to the Nation, the economic burden on 
consumers, and the large capital conversion costs that could result in 
a reduction in INPV for manufacturers.
    Based upon the available information, DOE has tentatively concluded 
that none of the TSLs for microwave oven cooking efficiency are 
economically justified. Therefore, DOE proposes no standards for 
microwave cooking efficiency or EF.
    Table V.61 presents a summary of the quantitative results for the 
four microwave oven TSLs pertaining to standby power.

                         Table V.61--Summary of Results for Microwave Oven Standby Power
----------------------------------------------------------------------------------------------------------------
            Category                    TSL 1b              TSL 2b              TSL 3b              TSL 4b
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads)....               0.23                0.33                0.45                0.69
7% Discount Rate................               0.06                0.09                0.12                0.19
3% Discount Rate................               0.13                0.18                0.25                0.38
Generation Capacity Reduction                 0.145               0.222               0.320               0.525
 (GW) **........................
NPV (2006$ billion):
    7% Discount Rate............               0.91                1.25                1.56                1.61
    3% Discount Rate............               2.03                2.79                3.52                3.90
Industry Impacts:
    Industry NPV (2006$ million)          (22)-(26)           (35)-(48)           (37)-(71)          (35)-(172)
    Industry NPV (% Change).....      (1.50)-(1.77)       (2.44)-(3.28)       (2.52)-(4.92)      (2.40)-(11.87)
Cumulative Emissions Impacts
 [dagger]
    CO2 (Mt)....................              23.15               35.19               50.48               82.12
    NOX (kt)....................         1.23-30.30          1.87-46.02          2.67-65.96         4.35-107.23
    Hg (t)......................             0-0.50              0-0.76              0-1.09              0-1.77
Mean LCC Savings * (2006$):.....                  6                  13                  18                  19
Median PBP (years):.............                0.3                 0.6                 1.5                 3.1
LCC Results:
    Net Cost (%)................                0.0                 0.0                 0.0                 0.0
    No Impact (%)...............               53.7                19.1                 0.0                 0.0
    Net Benefit (%).............               43.3                80.9               100.0              100.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount
  indicated.
** Changes in installed generation capacity by 2042 based on AEO 2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include
  physical reductions at power plants as well as production of emissions allowance credits where NOX emissions
  are subject to emissions caps.

    First, DOE considered TSL 4b, the max-tech level which affects only 
the standby power consumption of microwave ovens. TSL 4b would likely 
save 0.69 quads of energy through 2042, an amount DOE considers 
significant. Discounted at seven percent, the projected energy savings 
through 2042 would be 0.19 quads. For the Nation as a whole, DOE 
projects that TSL 4b would result in a net increase of $1.61 billion in 
NPV, using a discount rate of seven percent. The emissions reductions 
at TSL 4b are 82.12 Mt of CO2, 4.35 kt to 107.23 kt of 
NOX, and 0 t to 1.77 t of Hg. Total generating capacity in 
2042 is estimated to decrease compared to the reference case by 0.525 
gigawatts (GW) under TSL 4b.
    At TSL 4b, DOE projects that the average microwave oven consumer 
will experience a decrease in LCC of $19. DOE also estimates all 
consumers in the Nation that purchase microwave ovens will realize some 
level of LCC savings. The median payback period of the average consumer 
at TSL 4b is projected to be 3.1 years, substantially shorter than the 
lifetime of the product.
    Although DOE estimates that all microwave ovens consumers would 
benefit economically from TSL 4b, the reduction in standby power 
consumption at that level would result in the loss of certain functions 
which provide utility to consumers, specifically the continual display 
of the time of day. Because it is uncertain as to how greatly this 
function is valued by consumers, DOE is concerned that TSL 4b may 
result in significant loss of consumer utility.
    DOE estimated the projected change in INPV ranges from a decrease 
of $35 million to a decrease of $172 million. At TSL 4b, DOE recognizes 
the risk of very large negative impacts if manufacturers' expectations 
about reduced profit margins are realized. In particular, if the high 
end of the range of impacts is reached as DOE expects, TSL 4b could 
result in a net loss of 11.87 percent in INPV to microwave oven 
manufacturers.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 4b, the Secretary has reached the following initial 
conclusion: At TSL 4b, the benefits of energy savings, economic 
benefit, and emissions reductions would be outweighed by the potential 
economic burden on consumers from loss of product utility and the large 
capital conversion costs that could result in a reduction in INPV for 
manufacturers.
    DOE considered TSL 3b next. Primary energy savings are estimated at 
0.45 quads of energy through 2042, which DOE considers significant. 
Discounted at seven percent, the energy savings through 2042 would be 
0.12 quads. For the Nation as a whole, DOE projects that TSL 3b would 
result in a net increase of $1.56 billion in NPV, using a discount rate 
of seven percent. The emissions reductions are projected to be 50.48 Mt 
of CO2, 2.67 kt to 65.96 kt of NOX, and 0 t to 
1.09 t of Hg. Total generating capacity in 2042 under TSL 3b is 
estimated to decrease by 0.320 GW.
    At TSL 3b, DOE projects that the average microwave oven consumer 
will experience a decrease in LCC of $18. DOE also estimates all 
consumers in the Nation that purchase microwave ovens would realize 
some level of LCC savings. The median payback period of

[[Page 62120]]

the average consumer at TSL 3b is projected to be 1.5 years, 
substantially shorter than the lifetime of the product.
    TSL 3b not only economically benefits all consumers, but DOE 
estimates that the reduction in standby power consumption (down to a 
level of no great than 1.0 watt) would not impact consumer utility. For 
example, the continual display of time which would be lost under TSL 4b 
is retained at TSL 3b.
    DOE estimated the projected change in INPV ranges from a decrease 
of $37 million to a decrease of $71 million. At TSL 3b, DOE recognizes 
the risk of very large negative impacts if manufacturers' expectations 
about reduced profit margins are realized. In particular, if the high 
end of the range of impacts is reached as DOE expects, TSL 3b could 
result in a net loss of 4.92 percent in INPV to microwave oven 
manufacturers.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that the benefits of a TSL 3b 
standard outweigh the burdens. In particular, the Secretary has 
tentatively concluded that TSL 3b saves a significant amount of energy 
and is technologically feasible and economically justified. Therefore, 
DOE today proposes to adopt the energy conservation standards for 
microwave ovens at TSL 3b. Table V.62 demonstrates the proposed energy 
conservation standards for microwave ovens.

  Table V.62--Proposed Energy Conservation Standards for Microwave Oven
                        Standby Power Consumption
------------------------------------------------------------------------
                                            Proposed energy conservation
               Product class                          standards
------------------------------------------------------------------------
Microwave Oven with or without Thermal      Maximum Standby Power = 1.0
 Elements.                                   Watt.
------------------------------------------------------------------------

c. Commercial Clothes Washers
    Table V.63 presents a summary of the quantitative results for each 
CCW TSL.

                          Table V.63--Summary of Results for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads)....            0.05            0.11            0.15            0.16            0.17
7% Discount Rate................            0.01            0.03            0.04            0.04            0.04
3% Discount Rate................            0.03            0.06            0.08            0.09            0.09
Primary Water Saved (trillion               0.00            0.16            0.19            0.21            0.24
 gallons).......................
7% Discount Rate................            0.00            0.04            0.05            0.05            0.06
3% Discount Rate................            0.00            0.09            0.10            0.11            0.13
Generation Capacity Reduction              0.009           0.020           0.028           0.030           0.031
 (GW) **........................
NPV (2006$ billion):
    7% Discount Rate............         (0.001)            0.32            0.46            0.50            0.55
    3% Discount Rate............            0.04            0.83            1.16            1.27            1.39
Industry Impacts:
    Industry NPV (2006$ million)             4-3         (4)-(6)       (15)-(17)       (18)-(20)       (30)-(32)
    Industry NPV (% Change).....         6.5-4.9    (6.4)-(10.3)   (26.5)-(31.1)   (32.0)-(36.8)   (53.1)-(58.2)
Cumulative Emissions Impacts
 [dagger]
    CO2 (Mt)....................            3.79            8.30           11.55           12.28           12.73
    NOX (kt)....................       1.43-3.25       3.04-7.13       4.25-9.93      4.51-10.56      4.67-10.95
    Hg (t)......................          0-0.05          0-0.12          0-0.17          0-0.18          0-0.19
Wastewater Discharge Impacts                0.00            0.16            0.19            0.20            0.23
 (trillion gallons).............
Mean LCC Savings * (2006$):
    Top-Loading, Multi-Family...          (11.6)             154             244             244             244
    Top-Loading, Laundromat.....          (19.6)             166             252             252             252
    Front-Loading, Multi-Family.             8.7              52              52             134             234
    Front-Loading, Laundromat...             9.5              58              58             140             250
Median PBP (years):
    Top-Loading, Multi-Family...            10.7             4.5             3.8             3.8             3.8
    Top-Loading, Laundromat.....             7.4             2.8             2.4             2.4             2.4
    Front-Loading, Multi-Family.             0.0             0.4             0.4             2.8             2.8
    Front-Loading, Laundromat...             0.0             0.3             0.3             1.7             1.6
LCC Results:
     Top-Loading
         Multi-Family
            Net Cost (%)........            45.0            15.4            10.0            10.0            10.0
            No Impact (%).......            35.7             2.8             2.8             2.8             2.8
            Net Benefit (%).....            19.3            81.7            87.2            87.2            87.2
         Laundromat
            Net Cost (%)........            53.4             3.6             1.1             1.1             1.1
            No Impact (%).......            35.7             2.8             2.8             2.8             2.8
            Net Benefit (%).....            10.9            93.6            96.1            96.1            96.1
     Front-Loading
         Multi-Family
            Net Cost (%)........             0.0             0.0             0.0             2.3             1.5
            No Impact (%).......            92.7            88.3            88.3             2.8             1.5
            Net Benefit (%).....             7.3            11.7            11.7            94.9            97.0
         Laundromat
            Net Cost (%)........             0.0             0.0             0.0             0.0             0.0
            No Impact (%).......            92.7            88.3            88.3             2.8             1.5
            Net Benefit (%).....             7.3            11.7            11.7            97.2            98.5
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount
  indicated.
** Changes in installed generation capacity by 2042 based on AEO 2008 Reference Case.

[[Page 62121]]

 
[dagger] CO2 emissions impacts include physical reductions at power plants and at commercial buildings. NOX
  emissions impacts include physical reductions at power plants as well as production of emissions allowance
  credits where NOX emissions are subject to emissions caps.

    First, DOE considered TSL 5, the max-tech level. TSL 5 would likely 
save 0.17 quads of energy and 0.24 trillion gallons of water through 
2042, an amount DOE considers significant. Discounted at seven percent, 
the projected energy and water savings through 2042 would be 0.04 quads 
and 0.06 trillion gallons, respectively. For the Nation as a whole, DOE 
projects that TSL 5 would result in a net increase of $0.55 billion in 
NPV, using a discount rate of seven percent. The emissions reductions 
at TSL 5 are 12.73 Mt of CO2, 4.67 kt to 10.95 kt of 
NOX, and 0 t to 0.19 t of Hg. Total generating capacity in 
2042 is estimated to decrease compared to the reference case by 0.031 
gigawatts (GW) under TSL 5.
    At TSL, 5, DOE projects that the average top-loading CCW consumer 
would experience a decrease in LCC of $244 in multi-family applications 
and $252 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers in the Nation that purchase top-
loading CCWs--87 percent of consumers in multi-family applications and 
96 percent of consumers in laundromats. The median payback period of 
the average consumer at TSL 5 in multi-family applications and in 
laundromats is projected to be 3.8 years and 2.4 years, respectively.
    At TSL 5, DOE projects that the average front-loading CCW consumer 
would experience a decrease in LCC of $234 in multi-family applications 
and $250 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers in the Nation that purchase front-
loading CCWs--97 percent of consumers in multi-family applications and 
99 percent of consumers in laundromats. The median payback period of 
the average consumer at TSL 5 in multi-family applications and in 
laundromats is projected to be 2.8 years and 1.6 years, respectively.
    At TSL 5, DOE estimated the projected change in INPV ranges from a 
total decrease of $29.5 million for both product classes to a total 
decrease of $32.3 million. At TSL 5, DOE recognizes the risk of very 
large negative impacts if manufacturers' expectations about reduced 
profit margins are realized. In particular, if the high end of the 
range of impacts is reached as DOE expects, TSL 5 could result in a net 
loss of 58 percent in INPV to CCW manufacturers. Also, DOE is 
especially sensitive to the potentially severe impacts to the LVM of 
CCWs. Since the LVM's clothes washer revenue is so dependent on CCW 
sales, DOE is concerned that TSL 5 will disproportionately impact it.
    Although DOE recognizes the increased economic benefits to the 
Nation that could result from TSL 5, DOE has tentatively concluded that 
the benefits of a Federal standard at TSL 5 would be outweighed by the 
potential for disincentivizing consumers from purchasing more efficient 
front-loading washers. At TSL 5, front-loading washers are highly 
efficient but have a purchase price estimated to be $455 more expensive 
than top-loading washers. With such a large price differential between 
the two types of CCWs, and with less than two percent of the front-
loading market at TSL 5, DOE is concerned that significant numbers of 
potential consumers of front-loading washers would choose to purchase a 
less efficient top-loading washer.
    If potential front-loading washer consumers did decide to switch to 
less expensive top-loading washers, the NES and NPV realized from TSL 5 
would be diminished. DOE notes that in developing the energy savings 
and water savings estimates in Table V.63, the agency held constant the 
ratio of front-loading to top-loading CCW shipments across the various 
TSLs. Particularly at TSL 3 to TSL 5, the differences in these 
estimates are small, especially at a seven percent discount rate. DOE 
requests comment as to whether it should account for the price 
elasticity of demand when calculating the anticipated energy and water 
savings at the different TSLs. DOE also seeks relevant data or other 
information on this topic. The Department believes that the values 
currently in Table V.63 represent the high end of the potential energy 
and water savings for these TSLs. Taking into account price elasticity 
of demand could affect the anticipated energy and water savings of the 
various TSLs, and it could potentially result in a change in the TSL 
with the highest projected energy/water savings level.
    In addition, TSL 5 would adversely impact manufacturers' INPV to a 
significant extent. Not only does the industry face a potential loss in 
industry INPV, but manufacturers would also need to make significant 
capital investments for both types of CCWs in order to produce both 
top-loading and front-loading washers at the maximum technologically 
feasible levels. After carefully considering the analysis and weighing 
the benefits and burdens of TSL 5, the Secretary has reached the 
following initial conclusion: At TSL 5, the benefits of energy savings, 
economic benefit, and emissions reductions would be outweighed by the 
potential for disincentivizing consumers to purchase high-efficiency 
front-loading CCWs and the large capital conversion costs that could 
result in a substantial reduction in INPV for manufacturers.
    Next, DOE considered TSL 4. TSL 4 would likely save 0.16 quads of 
energy and 0.21 trillion gallons of water through 2042, an amount DOE 
considers significant. Discounted at seven percent, the projected 
energy and water savings through 2042 would be 0.04 quads and 0.05 
trillion gallons, respectively. For the Nation as a whole, DOE projects 
that TSL 4 would result in a net increase of $0.50 billion in NPV, 
using a discount rate of seven percent. The emissions reductions at TSL 
4 are 12.28 Mt of CO2, 4.51 kt to 10.56 kt of 
NOX, and 0 t to 0.18 t of Hg. Total generating capacity in 
2042 is estimated to decrease compared to the reference case by 0.030 
gigawatts (GW) under TSL 4.
    At TSL 4, top-loading CCWs have the same efficiency as TSL 5. 
Therefore, top-loading CCW consumers will experience the same LCC 
impacts and payback periods as TSL 5. At TSL 4 for front-loading CCWs, 
DOE projects that the average front-loading CCW consumer would 
experience a decrease in LCC of $134 in multi-family applications and 
$140 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers in the Nation that purchase front-
loading CCWs--95 percent of consumers in multi-family applications and 
97 percent of consumers in laundromats. The median payback period of 
the average consumer at TSL 5 in multi-family applications and in 
laundromats is projected to be 2.8 years and 1.7 years, respectively.
    DOE estimated the projected change in INPV ranges from a decrease 
of $18 million to a decrease of $20 million. At TSL 4, DOE recognizes 
the risk of very large negative impacts if manufacturers' expectations 
about reduced profit margins are realized. In particular, if the high 
end of the range of impacts is reached as DOE expects, TSL 4 could 
result in a net loss of 37 percent in INPV to CCW manufacturers. Also, 
DOE is especially sensitive to the potentially severe impacts to the 
LVM of CCWs. Since the LVM's clothes washer revenue is so dependent on 
CCW sales, DOE is

[[Page 62122]]

concerned that TSL 4 will disproportionately impact it.
    Although DOE recognizes the increased economic benefits to the 
Nation that could result from TSL 4, DOE has the same concerns 
regarding TSL 4 as for TSL 5. Namely, DOE has concerns as to the 
potential of TSL 4 to disincentivize consumers from purchasing more-
efficient front-loading washers. As a result, DOE has tentatively 
concluded that the benefits of a Federal standard at TSL 4 would be 
outweighed by this potential adverse impact. At TSL 4, front-loading 
CCWs are highly efficient but have a purchase price estimated to be 
$414 more expensive than top-loading washers. With such a price 
differential between the two types of CCWs, and with less than four 
percent of the front-loading market meeting TSL 4, DOE is concerned 
that significant numbers of potential consumers of front-loading CCWs 
would be more likely choose to purchase a less-efficient top-loading 
CCW. If potential front-loading washer consumers did decide to switch 
to less expensive top-loading washers, the NES and NPV realized from 
TSL 4 would be diminished. In addition, TSL 4 would adversely impact 
manufacturers' INPV to a significant extent. Not only does the industry 
face a potential loss in industry INPV, but manufacturers would also 
need to make significant capital investments for both types of CCWs in 
order to produce both top-loading washers at the maximum 
technologically feasible level and front-loading washers at a level 
which only three percent of the market currently meets. After carefully 
considering the analysis and weighing the benefits and burdens of TSL 
4, the Secretary has reached the following initial conclusion: At TSL 
4, the benefits of energy savings, economic benefit, and emissions 
reductions would be outweighed by the potential for disincentivizing 
consumers to purchase high-efficiency front-loading CCWs and the large 
capital conversion costs that could result in a substantial reduction 
in INPV for manufacturers.
    Next, DOE considered TSL 3. TSL 3 would likely save 0.15 quads of 
energy and 0.19 trillion gallons of water through 2042, an amount DOE 
considers significant. Discounted at seven percent, the projected 
energy and water savings through 2042 would be 0.04 quads and 0.05 
trillion gallons, respectively. For the Nation as a whole, DOE projects 
that TSL 3 would result in a net increase of $0.46 billion in NPV, 
using a discount rate of seven percent. The emissions reductions at TSL 
3 are 11.55 Mt of CO2, 4.25 kt to 9.93 kt of NOX, 
and 0 t to 0.17 t of Hg. Total generating capacity in 2042 is estimated 
to decrease compared to the reference case by 0.028 gigawatts (GW) 
under TSL 3.
    At TSL 3, top-loading CCWs have the same efficiency as TSL 5. 
Therefore, top-loading CCW consumers would experience the same LCC 
impacts and payback periods as TSL 5. At TSL 3 for front-loading CCWs, 
DOE projects that the average front-loading CCW consumer would 
experience a decrease in LCC of $52 in multi-family applications and 
$58 in laundromats. DOE also estimates an LCC decrease for all 
consumers that do not already purchase front-loading CCWs with an 
efficiency meeting TSL 3. The median payback period of the average 
consumer at TSL 3 in multi-family applications and in laundromats is 
projected to be 0.4 years and 0.3 years, respectively.
    DOE estimated the projected change in INPV ranges from a decrease 
of $15 million to a decrease of $17 million. At TSL 3, DOE recognizes 
the risk of very large negative impacts if manufacturers' expectations 
about reduced profit margins are realized. In particular, if the high 
end of the range of impacts is reached as DOE expects, TSL 3 could 
result in a net loss of 31 percent in INPV to CCW manufacturers. Also, 
DOE is especially sensitive to the potential adverse impacts to the LVM 
of CCWs. Since the LVM's clothes washer revenue is so dependent on CCW 
sales, DOE is concerned that TSL 3 will disproportionately impact it.
    DOE recognizes the increased economic benefits to the Nation that 
could result from TSL 3 but still has concerns of the potential for 
disincentivizing consumers from purchasing more-efficient front-loading 
washers. But at TSL 3, the price difference between front-loading and 
top-loading CCWs drops to $375. More importantly, over 88 percent of 
the front-loading market already meets TSL 3. With such a large front-
loading market share at TSL 3, it indicates the current cost-
effectiveness to consumers of this TSL. Therefore, DOE believes that 
the remaining 12 percent of front-loading CCW consumers not already 
purchasing washers at TSL 3 would likely to do so if standards are set 
at TSL 3. DOE notes that TSL 3 adversely impacts manufacturers' INPV. 
But because such a large percent of the front-loading market is at TSL 
3, manufacturers would likely not need to make significant capital 
investments for front-loading CCWs. Therefore, significant capital 
investments would only be required in order to produce top-loading 
washers at TSL 3.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that the benefits of a TSL 3 
standard outweigh the burdens. In particular, the Secretary has 
tentatively concluded that TSL 3 saves a significant amount of energy 
and is technologically feasible and economically justified. Therefore, 
DOE today proposes to adopt the energy conservation standards for CCWs 
at TSL 3. Table V.64 demonstrates the proposed energy conservation 
standards for CCWs. Even though DOE is proposing amended energy 
conservation standards for CCWs at TSL 3, DOE recognizes the potential 
adverse impacts to the LVM and the likelihood that adverse impacts may 
be significant for CCW market competition. Therefore, DOE will 
carefully consider the Department of Justice's review of the proposed 
standards for CCWs before issuing its final rule for this product.

    Table V.64--Proposed Energy Conservation Standards for Commercial
                             Clothes Washers
------------------------------------------------------------------------
                                            Proposed energy conservation
               Product class                          standards
------------------------------------------------------------------------
Top-Loading...............................  1.76 Modified Energy Factor/
                                             8.3 Water Factor.
Front-Loading.............................  2.00 Modified Energy Factor/
                                             5.5 Water Factor.
------------------------------------------------------------------------

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    DOE has determined today's regulatory action is a ``significant 
regulatory action'' under section 3(f)(1) of Executive Order 12866, 
``Regulatory Planning and Review.'' 58 FR 51735 (Oct. 4, 1993). 
Accordingly, this action was subject to review under the Executive 
Order by the Office of Information and Regulatory Affairs (OIRA) in the 
Office of Management and Budget.
    The Executive Order requires that each agency identify in writing 
the specific market failure or other specific problem and that it 
intends to address that warrants new agency action, as well as to 
assess the significance of the problem to determine whether any new 
regulation is warranted. Executive Order 12866, section 1(b)(1).
    With the exception of electric and some gas cooking products, DOE's 
preliminary analysis for some residential gas cooking products, 
microwave ovens, and CCWs explicitly quantifies and accounts for the 
percentage of consumers that already purchase more-efficient equipment 
and

[[Page 62123]]

takes these consumers into account when determining the national energy 
savings associated with various TSLs. The preliminary analysis suggests 
that accounting for the market value of energy savings alone (i.e., 
excluding any possible additional ``externality'' benefits such as 
those noted below) would produce enough benefits to yield net benefits 
across a wide array of products and circumstances. In its ANOPR, DOE 
requested additional data (including the percentage of consumers 
purchasing more-efficient cooking products and the extent to which 
consumers of all product types will continue to purchase more-efficient 
equipment), in order to test the existence and extent of these consumer 
actions. DOE received no such data from interested parties in response 
to the ANOPR but continues to request these data in today's proposed 
rule.
    DOE believes that there is a lack of consumer information and/or 
information processing capability about energy efficiency opportunities 
in the home appliance market. If this is the case, DOE would expect the 
energy efficiency for home appliances to be randomly distributed across 
key variables such as energy prices and usage levels. With the 
exception of some cooking products, DOE has already identified the 
percentage of consumers that already purchase more-efficient products. 
However, DOE does not correlate the consumer's usage pattern and energy 
price with the efficiency of the purchased product. In its ANOPR, DOE 
sought data on the efficiency levels of existing home appliances by how 
often they are used (e.g., how many times or hours the product is used) 
and their associated energy prices (and/or geographic regions of the 
country). DOE received no such data from interested parties in response 
to the ANOPR but continues to request these data in today's proposed 
rule. If DOE does receive data, it plans to use these data to test the 
extent to which purchasers of this equipment behave as if they are 
unaware of the costs associated with their energy consumption. Also, 
DOE seeks comment on consumer knowledge of the Federal ENERGY STAR 
program, and on the program's potential as a resource for increasing 
knowledge of the availability and benefits of energy-efficient 
appliances in the home appliance consumer market.
    A related issue is asymmetric information (one party to a 
transaction has more and better information than the other) and/or high 
transactions costs (costs of gathering information and effecting 
exchanges of goods and services). In many instances, the party 
responsible for an appliance purchase may not be the one who pays the 
cost to operate it. For example, home builders in large-scale 
developments often make decisions about appliances without input from 
home buyers and do not offer options to upgrade those appliances. Also, 
apartment owners normally make decisions about appliances, but renters 
often pay the utility bills. If there were no transactions costs, it 
would be in the home builders' and apartment owners' interest to 
install appliances that buyers and renters would choose. For example, 
one would expect that a renter who knowingly faces higher utility bills 
from low-efficiency appliances would be willing to pay less in rent, 
and the apartment owner would indirectly bear the higher utility cost. 
However, this information is not readily available, and it may not be 
in the renter's interest to take the time to develop it, or, in the 
case of the landlord who installs a high-efficiency appliance, to 
convey that information to the renter.
    To the extent that asymmetric information and/or high transactions 
costs are problems, one would expect to find certain outcomes for 
appliance energy efficiency. For example, all things being equal, one 
would not expect to see higher rents for apartments with high-
efficiency appliances. Conversely, if there were symmetric information, 
one would expect appliances with higher energy efficiency in rental 
units where the rent includes utilities compared to those where the 
renter pays the utility bills separately. Similarly, for single-family 
homes, one would expect higher energy efficiency levels for replacement 
units than appliances installed in new construction. Within the new 
construction market, one would expect to see appliances with higher 
energy efficiency levels in custom-built homes (where the buyer has 
more say in appliance choices) than in comparable homes built in large-
scale developments.
    In addition, this rulemaking is likely to yield certain external 
benefits resulting from improved energy efficiency of cooking products 
and CCWs that are not captured by the users of such equipment. These 
benefits include externalities related to environmental protection and 
energy security that are not reflected in energy prices, such as 
reduced emissions of greenhouse gases. The emissions reductions in 
today's proposed rule are projected to be 76.6 Mt of CO2 and 
16.1 kt of NOX. DOE invites comments on the weight that DOE 
should place on these factors in its determination of the maximum 
energy efficiency level at which the total benefits are likely to 
exceed the total burdens resulting from an amended standard.
    As previously stated, DOE continues to seek data that might enable 
it to test for market failures or other specific problems for the 
products under consideration in this rulemaking. Given adequate data, 
there are ways to test for the extent of market failure for CCWs, for 
example. One would expect the owners of CCWs who also pay for their 
energy and water consumption to purchase machines that use less energy 
and water compared to machines whose owners do not pay for energy and 
water, other things being equal. To test for this form of market 
failure, DOE needs data on energy efficiency and water consumption of 
such units and whether the owner of the equipment is also the operator. 
DOE is also interested in other potential tests of market failure and 
data that would enable such tests.
    As noted above, DOE conducted a regulatory impact analysis and, 
under the Executive Order, was subject to review by the Office of 
Information and Regulatory Affairs (OIRA) in the OMB. DOE presented to 
OIRA the draft proposed rule and other documents prepared for this 
rulemaking, including the RIA, and has included these documents in the 
rulemaking record. They are available for public review in the Resource 
Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th 
Floor, Washington, DC 20024, (202) 586-9127, between 9 a.m. and 4 p.m., 
Monday through Friday, except Federal holidays.
    The RIA is contained as chapter 17 in the TSD prepared for the 
rulemaking. The RIA 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.
    The RIA calculates the effects of feasible policy alternatives to 
energy conservation standards for residential cooking products and 
CCWs, and provides a quantitative comparison of the impacts of the 
alternatives. DOE evaluated each alternative in terms of its ability to 
achieve significant energy savings at reasonable costs, and compared it 
to the effectiveness of the proposed rule. DOE analyzed these 
alternatives using a series of regulatory scenarios as input to the NIA 
Spreadsheets for the two appliance products, which it modified to allow

[[Page 62124]]

inputs for voluntary measures. For more details on how DOE modified the 
NIA spreadsheets to determine the impacts due to the various non-
regulatory alternatives to standards, refer to chapter 17 of the TSD 
accompanying this notice.
    As shown in Table VI.1 below, DOE identified the following major 
policy alternatives for achieving increased energy efficiency in 
residential cooking products and CCWs:
     No new regulatory action;
     Financial incentives;
     Consumer rebates;
     Consumer tax credits;
     Manufacturer tax credits;
     Voluntary energy efficiency targets;
     Bulk government purchases;
     Early replacement; and
     The proposed approach (national performance and 
prescriptive standards).

                              Table VI.1--Non-Regulatory Alternatives to Standards
----------------------------------------------------------------------------------------------------------------
                                                                                Net present value ** (billion $)
                                       Energy Savings  Water savings (trillion ---------------------------------
         Policy alternatives             * (quads)             gallons)           7% discount      3% discount
                                                                                      rate             rate
----------------------------------------------------------------------------------------------------------------
Conventional Cooking Products ***
     No New Regulatory Action.......               0    NA....................               0                0
     Consumer Rebates...............            0.12    NA....................            0.17             0.52
     Consumer Tax Credits...........            0.05    NA....................            0.07             0.23
     Manufacturer Tax Credits.......            0.01    NA....................            0.02             0.06
     Early Replacement..............            0.01    NA....................            0.07             0.12
     Today's Standards at TSL 1.....            0.14    NA....................            0.21             0.61
 Microwave Ovens:
     No New Regulatory Action.......               0    NA....................               0                0
     Consumer Rebates...............            0.07    NA....................            0.27             0.60
     Consumer Tax Credits...........            0.02    NA....................            0.07             0.16
     Manufacturer Tax Credits.......            0.01    NA....................            0.04             0.09
     Voluntary Energy Efficiency                0.35    NA....................            1.22             2.82
     Targets.
     Early Replacement..............            0.02    NA....................            0.10             0.15
     Bulk Government Purchases......            0.01    NA....................            0.02             0.05
     Today's Standards at TSL 3b....            0.45    NA....................            1.56             3.52
Commercial Clothes Washers:
     No New Regulatory Action.......               0    0.....................               0                0
     Consumer Rebates...............            0.08    0.08..................            0.20             0.53
     Consumer Tax Credits...........            0.01    0.02..................            0.04             0.09
     Manufacturer Tax Credits.......            0.01    0.01..................            0.03             0.07
     Voluntary Energy Efficiency                0.03    0.03..................            0.08             0.21
     Targets [dagger].
     Early Replacement..............            0.01    0.01..................            0.14             0.22
     Bulk Government Purchases                  0.01    0.01..................            0.03             0.08
     [dagger].
     Today's Standards at TSL 3.....            0.15    0.19..................            0.46             1.16
----------------------------------------------------------------------------------------------------------------
* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net
  present value from 2012 to 2042 in billions of 2006 dollars.
*** Voluntary energy efficiency target and bulk government purchase alternatives are not considered because the
  percentage of the market at TSL 1 (today's proposed standard) is well over the market adoption target level
  that each alternative strives to attain.
[dagger] Voluntary energy efficiency target and bulk government purchase alternatives are not considered for
  front-loading washers because the percentage of the market at TSL 3 (today's proposed standard) is well over
  the market adoption target level that each alternative strives to attain.

    The net present value amounts shown in Table VI.1 refer to the NPV 
for consumers. The costs to the government of each policy (such as 
rebates or tax credits) are not included in the costs for the NPV 
since, on balance, consumers would be both paying for (through taxes) 
and receiving the benefits of the payments. The following paragraphs 
discuss each of the policy alternatives listed in Table VI.1. (See the 
TSD accompanying this notice, chapter 17.)
    No New Regulatory Action. The case in which no regulatory action is 
taken with regard to cooking products and CCWs constitutes the ``base 
case'' (or ``No Action'') scenario. In this case, between 2012 and 
2042, conventional cooking products are expected to use 10.3 quads of 
primary energy, microwave ovens 5.2 quads, and CCWs 0.97 quads along 
with 2.2 trillion gallons of water. Since this is the base case, energy 
savings and NPV are zero by definition.
    Consumer Rebates. Consumer rebates cover a portion of the 
incremental installed cost difference between products meeting baseline 
efficiency levels and those meeting higher efficiency levels, which 
generally result in a higher percentage of consumers purchasing more-
efficient models. DOE utilized market penetration curves from a study 
that analyzed the potential of energy efficiency in California.\110\ 
The penetration curves are a function of benefit-cost ratio (i.e., 
lifetime operating costs savings divided by increased total installed 
costs) to estimate the increased market share of more-efficient 
products given incentives by a rebate program. Using specific rebate 
amounts, DOE calculated, for each of the considered products, the 
benefit-cost ratio of the more-efficient appliance with and without the 
rebate to project the increased market penetration of the product due 
to a rebate program.
---------------------------------------------------------------------------

    \110\ Rufo, M. and F. Coito, California's Secret Energy Surplus: 
The Potential for Energy Efficiency (prepared for The Energy 
Foundation and The Hewlett Foundation by Xenergy, Inc.) (2002).
---------------------------------------------------------------------------

    For conventional cooking products meeting the efficiency levels in 
TSL 1 (i.e., gas cooking products without constant burning pilot 
lights), DOE estimated that the annual increase in consumer purchases 
of these products due to consumer rebates would be 7.8 percent. DOE 
selected the portion of the incremental costs covered by the rebate 
(i.e., 100 percent) using data from rebate programs conducted by 88 gas 
utilities, electric utilities, and other State

[[Page 62125]]

government agencies.\111\ DOE estimated that the impact of this policy 
would be to permanently transform the market so that the increased 
market share seen in the first year of the program would be maintained 
throughout the forecast period. At the estimated participation rates, 
consumer rebates would be expected to provide 0.12 quads of national 
energy savings and an NPV of $0.17 billion (at a seven-percent discount 
rate).
---------------------------------------------------------------------------

    \111\ Because DOE was not able to identify consumer rebate 
programs specific to conventional cooking products, rebate amounts 
for another kitchen appliance, dishwashers, were used to estimate 
the impact from a rebate program providing incentives for more-
efficient cooking products.
---------------------------------------------------------------------------

    For microwave ovens meeting the efficiency levels at TSL 3b (i.e., 
maximum standby power consumption of 1.0 watt), DOE estimated that the 
percentage of consumers purchasing more-efficient products due to 
consumer rebates would increase annually by 9.9 percent. DOE assumed 
that the rebate would cover the entire incremental cost for this 
product since that cost is so small. DOE estimated that the impact of 
this policy would be to permanently transform the market so that the 
increased market share seen in the first year of the program would be 
maintained throughout the forecast period. At the estimated 
participation rates, consumer rebates would be expected to provide 0.07 
quads of national energy savings and an NPV of $0.27 billion (at a 
seven-percent discount rate).
    For CCWs meeting TSL 3, DOE estimated that the percentage of 
consumers purchasing the more-efficient products due to consumer 
rebates would increase annually by 40.2 percent for top-loading washers 
and 4.0 percent for front-loading washers. DOE selected the rebate 
amount using data from rebate programs for CCWs conducted by 24 gas, 
electric, and water utilities and other agencies. DOE estimated that 
the impact of this policy would be to permanently transform the market 
so that the increased market share seen in the first year of the 
program would be maintained throughout the forecast period. At the 
estimated participation rates, consumer rebates would be expected to 
provide 0.08 quads of national energy savings, 85 billion gallons of 
national water savings, and an NPV of $0.20 billion (at a seven-percent 
discount rate).
    Although DOE estimated that consumer rebates would provide national 
benefits for conventional cooking products, microwave ovens, and CCWs, 
these benefits would be smaller than the benefits resulting from 
national performance standards at the proposed levels. Thus, DOE 
rejected consumer rebates as a policy alternative to national 
performance standards.
    Consumer Tax Credits. Consumer tax credits cover a percentage of 
the incremental installed cost difference between products meeting 
baseline efficiency levels and those with higher efficiencies. Consumer 
tax credits are considered a viable non-regulatory market 
transformation program as evidenced by the inclusion of Federal 
consumer tax credits in EPACT 2005 for various residential appliances. 
(section 1333 of EPACT 2005; codified at 26 U.S.C. 25C) DOE reviewed 
the market impact of tax credits offered by the Oregon Department of 
Energy (ODOE) (ODOE, No. 35 at p. 1) and Montana Department of Revenue 
(MDR) (MDR, No. 36 at p. 1) to estimate the effect of a national tax 
credit program. To help estimate the impacts from such a program, DOE 
also reviewed analyses prepared for the California Public Utilities 
Commission,\112\ the Northwest Energy Efficiency Alliance,\113\ and the 
Energy Foundation/Hewlett Foundation.\114\ For each of the appliance 
products considered for this rulemaking, DOE estimated that the market 
effect of a tax credit program would gradually increase over a time 
period until it reached its maximum impact. Once the tax credit program 
attained its maximum effect, DOE assumed the impact of the policy would 
be to permanently transform the market at this level.
---------------------------------------------------------------------------

    \112\ Itron and KEMA, 2004/2005 Statewide Residential Retrofit 
Single-Family Energy Efficiency Rebate Evaluation (prepared for the 
California Public Utilities Commission, Pacific Gas And Electric 
Company, San Diego Gas And Electric Company, Southern California 
Edison, Southern California Gas Company, CPUC-ID: 1115-04) 
(2007).
    \113\ KEMA, Consumer Product Market Progress Evaluation Report 3 
(prepared for Northwest Energy Efficiency Alliance, Report 
07-174) (2007).
    \114\ Rufo, M. and F. Coito, op. cit.
---------------------------------------------------------------------------

    For conventional cooking products, DOE estimated that the market 
share of efficient products meeting TSL 1 would increase by 0.7 percent 
in 2012 and increase over a six-year period to an annual maximum of 2.8 
percent in 2020. At these estimated participation rates, consumer tax 
credits would be expected to provide 0.05 quads of national energy 
savings and an NPV of $0.07 billion (at a seven-percent discount rate). 
For microwave ovens, DOE estimated that the market share of efficient 
products meeting TSL 3b would increase by 0.7 percent in 2012, and 
increase over a nine-year period to an annual maximum of 2.8 percent in 
2020.\115\ At these estimated participation rates, consumer tax credits 
would be expected to provide 0.02 quads of national energy savings and 
an NPV of $0.07 billion (at a seven-percent discount rate).
---------------------------------------------------------------------------

    \115\ Because DOE was not able to identify consumer tax credit 
programs specific to conventional cooking products and microwave 
ovens, increased market penetrations for another kitchen appliance, 
dishwashers, were used to estimate the impact from a tax credit 
program providing incentives for more-efficient conventional cooking 
products and microwave ovens.
---------------------------------------------------------------------------

    For CCWs, DOE estimated that consumer tax credits would induce an 
increase of 1.3 percent in 2012 in the purchase of products meeting TSL 
3 and eventually increase to a maximum of 5.8 percent in 2020 for both 
top-loading and front-loading washers.\116\ At the estimated 
participation rates, consumer tax credits would be expected to provide 
0.01 quads of national energy savings, 16 billion gallons of national 
water savings, and an NPV of $0.04 billion (at a seven-percent discount 
rate).
---------------------------------------------------------------------------

    \116\ Because DOE was not able to identify consumer tax credit 
programs specific to commercial clothes washers, increased market 
penetrations for residential clothes washers were used to estimate 
the impact from a tax credit program providing incentives for more-
efficient commercial clothes washers.
---------------------------------------------------------------------------

    DOE estimated that while consumer tax credits would yield national 
benefits for conventional cooking products, microwave ovens, and CCWs, 
these benefits would be much smaller than the benefits from the 
proposed national performance standards. Thus, DOE rejected consumer 
tax credits as a policy alternative to national performance standards.
    Manufacturer Tax Credits. Manufacturer tax credits are considered a 
viable non-regulatory market transformation program as evidenced by the 
inclusion of Federal tax credits in EPACT 2005 for manufacturers of 
residential appliances. (Section 1334 of EPACT 2005; codified at 26 
U.S.C. 45M) Similar to consumer tax credits, manufacturer tax credits 
would effectively result in lower product prices to consumers by an 
amount that covered part of the incremental price difference between 
products meeting baseline efficiency levels and those meeting higher 
efficiency levels. Because these tax credits would go to manufacturers 
instead of consumers, research indicates that fewer consumers would be 
affected by a manufacturer tax credit program than by consumer tax 
credits.117 118 Although consumers

[[Page 62126]]

would benefit from price reductions passed through to them by the 
manufacturers, research demonstrates that approximately half the 
consumers who would benefit from a consumer tax credit program would be 
aware of the economic benefits of more efficient technologies included 
in an appliance manufacturer tax credit program. In other words, 
research estimates that half of the effect from a consumer tax credit 
program is due to publicly available information or promotions 
announcing the benefits of the program. This effect, referred to as the 
``announcement effect,'' is not part of a manufacturer tax credit 
program. Therefore, DOE estimated that the effect of a manufacturer tax 
credit program would be only half of the maximum impact of a consumer 
tax credit program.
---------------------------------------------------------------------------

    \117\ K. Train, Customer Decision Study: Analysis of Residential 
Customer Equipment Purchase Decisions (prepared for Southern 
California Edison by Cambridge Systematics, Pacific Consulting 
Services, The Technology Applications Group, and California Survey 
Research Services) (1994).
    \118\ Lawrence Berkeley National Laboratory, End-Use Forecasting 
Group. Analysis of Tax Credits for Efficient Equipment (1997). 
Available at: http://enduse.lbl.gov/Projects/TaxCredits.html. (Last 
accessed April 24, 2008.)
---------------------------------------------------------------------------

    For conventional cooking products, the percentage of consumers 
purchasing products meeting TSL 1 would be expected to increase by 0.6 
percent due to a manufacturer tax credit program.\119\ For microwave 
ovens, DOE estimated the percentage of consumers purchasing products at 
TSL 3b would be expected to increase by 1.4 percent. For CCWs, DOE 
estimated the percentage of consumers purchasing products at TSL 3 
would be expected to increase by 2.9 percent for both top-loading and 
front-loading washers. For all of the considered products, DOE assumed 
that the impact of the manufacturer tax credit policy would be to 
permanently transform the market so that the increased market share 
seen in the first year of the program would be maintained throughout 
the forecast period.
---------------------------------------------------------------------------

    \119\ DOE assumed that the manufacturer tax credit program would 
affect only consumers of gas cooking products, who did not need 
electric outlets installed; therefore the increased percentage 
impact includes only those consumers.
---------------------------------------------------------------------------

    At the above estimated participation rates, manufacturer tax 
credits would provide 0.01 quads of national energy savings and an NPV 
of $0.02 billion (at a seven-percent discount rate) for conventional 
cooking products, 0.01 quads of national energy savings and an NPV of 
$0.04 billion (at a seven-percent discount rate) for microwave ovens, 
and 0.01 quads of national energy savings, 12 billion gallons of 
national water savings, and an NPV of $0.03 billion (at a seven-percent 
discount rate) for CCWs.
    DOE estimated that while manufacturer tax credits would yield 
national benefits for conventional cooking products, microwave ovens, 
and CCWs, these benefits would be much smaller than the benefits from 
national performance standards. Thus, DOE rejected manufacturer tax 
credits as a policy alternative to the proposed national performance 
standards.
    Voluntary Energy Efficiency Targets. DOE estimated the impact of 
voluntary energy efficiency targets by reviewing the historical and 
projected market transformation performance of past and current ENERGY 
STAR programs.
    To estimate the impacts from a voluntary energy efficiency program 
targeting the adoption of microwave ovens meeting TSL 3b, DOE evaluated 
the ENERGY STAR program's experience with cathode ray tube (CRT) 
televisions,\120\ as well as other consumer electronics products.\121\ 
Over a 10-year period spanning 1998-2007, the ENERGY STAR program 
estimated the annual market share increases of CRT televisions and 
other consumer electronics meeting qualifying efficiency levels due to 
the ENERGY STAR program which increased to a maximum of 58 percent. DOE 
applied this same pattern of market share increase to microwave ovens 
beginning in 2012. Because CRT televisions and microwave ovens have 
similar characteristics (i.e., electronic or electric appliance with an 
overwhelming majority of households owning the product), DOE believes 
it is reasonable to estimate the impacts of the ENERGY STAR program for 
microwave ovens with the impacts that have been realized for CRT 
televisions. After attaining this maximum market share after 10 years, 
DOE's analysis maintained that market share throughout the remainder of 
the forecast period. DOE estimated that voluntary energy efficiency 
targets would be expected to provide 0.35 quads of national energy 
savings and an NPV of $1.22 billion (at a seven-percent discount rate). 
Although this program would provide national benefits, DOE's analysis 
indicates that they would be smaller than the benefits resulting from 
the proposed national performance standards. Thus, DOE rejected the use 
of voluntary energy efficiency targets as a policy alternative to 
national performance standards.
---------------------------------------------------------------------------

    \120\ The efficiency gains of CRT televisions, like those of 
microwaves, come from reducing standby losses.
    \121\ Sanchez, M.C., C.A. Webber, R. Brown, and G.K. Homan, 2007 
Status Report--Savings Estimates for the ENERGY STAR[supreg] 
Voluntary Labeling Program (Lawrence Berkeley National Laboratory, 
LBNL-56380) (2007).
---------------------------------------------------------------------------

    To estimate the impacts from a voluntary energy efficiency program 
targeting the adoption of top-loading CCWs meeting TSL 3, DOE evaluated 
the potential impacts of expanding the Federal government's existing 
ENERGY STAR program for CCWs. DOE modeled the voluntary efficiency 
program based on the ENERGY STAR program's experience with 
RCWs.122 123 Over the period spanning 2007-2025, ENERGY STAR 
projected that the market share of RCWs meeting target efficiency 
levels due to ENERGY STAR will increase to a maximum of 28 percent. DOE 
estimated that an expanded voluntary program would increase their 
market share by half of these projected annual amounts for the existing 
ENERGY STAR program, reaching a maximum of 14 percent increased market 
share. For CCWs, DOE assumed that the impacts of the existing ENERGY 
STAR program were already incorporated in the base case, and applied 
the same pattern of market share increase from an expanded voluntary 
program to CCWs beginning in 2012. After attaining its maximum market 
share of 14 percent in the year 2030, DOE's analysis maintained that 
market share throughout the remainder of the forecast period. DOE 
estimated that an expanded program of voluntary energy efficiency 
targets would be expected to provide 0.03 quads of national energy 
savings, 33 billion gallons of national water savings, and an NPV of 
$0.08 billion (at a seven-percent discount rate). Although this program 
would provide national benefits, they were estimated to be smaller than 
the benefits resulting from the proposed national performance 
standards. Thus, DOE rejected the use of voluntary energy efficiency 
targets as a policy alternative to national performance standards.
---------------------------------------------------------------------------

    \122\ Data were not available on the market impacts of the CCW 
program.
    \123\ Sanchez et al., op. cit.
---------------------------------------------------------------------------

    DOE did not analyze the potential impacts of voluntary energy 
efficiency targets for front-loading CCWs or conventional cooking 
products because a vast majority of products already meet the proposed 
standards. In the case of front-loading CCWs, over 88 percent of the 
market meets TSL 3, while in the case of conventional cooking products, 
over 85 percent of the gas range market already meets TSL 1. The ENERGY 
STAR program typically targets products where a maximum of 
approximately 25 percent of the existing market meets the target 
efficiency

[[Page 62127]]

level.\124\ Since the markets for front-loading CCWs and gas ranges are 
well above the 25 percent threshold, DOE did not consider this approach 
for conventional cooking products.
---------------------------------------------------------------------------

    \124\ Sanchez, M. and A. Fanara, ``New Product Development: The 
Pipeline for Future ENERGY STAR Growth,'' Proceedings of the 2000 
ACEEE Summer Study on Energy Efficiency in Buildings (2000) Vol 6, 
pp. 343-354.
---------------------------------------------------------------------------

    Early Replacement. The early replacement policy alternative 
envisions a program to replace old, inefficient units with models 
meeting efficiency levels higher than baseline equipment. Under an 
early replacement program, State governments or electric and gas 
utilities would provide financial incentives to consumers to retire the 
appliance early in order to hasten the adoption of more-efficient 
products. For all of the considered products, DOE modeled this policy 
by applying a four percent increase in the replacement rate above the 
natural rate of replacement for failed equipment. DOE based this 
percentage increase on program experience with the early replacement of 
appliances in the State of Connecticut.\125\ DOE assumed the program 
would continue for as long as it would take to ensure that the eligible 
existing stock in the year that the program began (2012) was completely 
replaced.
---------------------------------------------------------------------------

    \125\ Nexus and RLW Analytics, Impact, Process, and Market Study 
of the Connecticut Appliance Retirement Program: Overall Report, 
Final. (submitted to Northeast Utilities--Connecticut Light and 
Power and the United Illuminating Company by Nexus Market Research, 
Inc. and RLW Analytics, Inc.) (2005).
---------------------------------------------------------------------------

    For conventional cooking products, this policy alternative would 
replace old, inefficient units with models meeting the efficiency 
levels in TSL 1. DOE estimated that such an early replacement program 
would be expected to provide 0.04 quads of national energy savings and 
an NPV of $0.07 billion (at a seven-percent discount rate). For 
microwave ovens, this policy alternative would replace old, inefficient 
units with models meeting the efficiency levels in TSL 3b. DOE 
estimated that such an early replacement program would be expected to 
provide 0.02 quads of national energy savings and an NPV of $0.10 
billion (at a seven-percent discount rate). For CCWs, this policy 
alternative would replace old, inefficient top-loading and front-
loading units with models meeting the efficiency levels in TSL 3. DOE 
estimated that such an early replacement program would be expected to 
provide 0.01 quads of national energy savings, 14 billion gallons of 
national water savings, and an NPV of $0.14 billion (at a seven-percent 
discount rate).
    Although DOE estimated that the above early replacement programs 
for each of the considered products would provide national benefits, 
they would be much smaller than the benefits resulting from national 
performance standards. Thus, DOE rejected early replacement incentives 
as a policy alternative to national performance standards.
    Bulk Government Purchases. Under this policy alternative, the 
government sector would be encouraged to shift their purchases to 
products that meet the target efficiency levels above baseline levels. 
Aggregating public sector demand could provide a market signal to 
manufacturers and vendors that some of their largest customers sought 
suppliers with products that met an efficiency target at favorable 
prices. This program also could induce ``market pull'' impacts through 
manufacturers and vendors achieving economies of scale for high-
efficiency products. DOE assumed that Federal, State, and local 
government agencies could administer such a program. At the Federal 
level, such a program would add microwave ovens to the products for 
which FEMP has energy efficient procurement specifications and would 
modify the existing FEMP specifications for CCWs. DOE modeled this 
program by assuming an increase in the installation of equipment 
meeting higher efficiency levels for those households where government 
agencies purchase or influence the purchase of appliances.
    For microwave ovens, this program would encourage the government 
sector to shift their purchases to units that meet the efficiency 
levels in TSL 3b. Based on data from the 2005 AHS, there are 
approximately two million housing units that are publicly owned, 
representing about 1.6 percent of all U.S. households.\126\ Per RECS 
2001, 76 percent of Federally owned housing units have microwave 
ovens.\127\ Therefore, DOE estimated that 1.2 million publicly owned 
housing units have microwave ovens. Based on research of the 
effectiveness of bulk government purchasing programs, DOE estimated 
that the market share of more-efficient microwave ovens in publicly 
owned housing would increase at a rate of eight percent per year over a 
10-year period (2012-2021) and remain at the 2021 level for the 
remainder of the forecast period.\128\ DOE estimated that bulk 
government purchases of microwave ovens would be expected to provide 
0.01 quads of national energy savings and an NPV of $0.02 billion (at a 
seven-percent discount rate), benefits which would be much smaller than 
those estimated for the proposed national performance standards. Thus, 
DOE rejected bulk government purchases as a policy alternative to 
national performance standards.
---------------------------------------------------------------------------

    \126\ U.S. Department of Housing and Urban Development--Office 
of Policy Development and Research, A Picture of Subsidized 
Households--2000 (2000). Available at: http://www.huduser.org/picture2000/. (Last accessed April 24, 2008.)
    \127\ U.S. Department of Energy--Energy Information 
Administration, Residential Energy Consumption Survey: Household 
Energy Consumption and Expenditures 2001 (2001). Available at: 
http://www.eia.doe.gov/emeu/recs/public.html.
    \128\ Harris, J. and F. Johnson, ``Potential Energy, Cost, and 
CO2 Savings from Energy-Efficient Government Purchase,'' 
Proceedings of the ACEEE 2000 Summer Study on Energy Efficiency in 
Buildings (2000) Vol 4, pp. 147-166.
---------------------------------------------------------------------------

    For CCWs, this program would encourage the government sector to 
shift its purchases to top-loading units that meet the efficiency 
levels in TSL 3. DOE estimated that this policy would apply to 
multifamily buildings that are government-owned. Based on a technology 
review prepared for FEMP by Pacific Northwest National Laboratory 
(PNNL), approximately 7000 CCWs (representing a 3.2 percent market 
share) were purchased in the year 2000 for Federal buildings.\129\ 
Based on research of the effectiveness of bulk government purchasing 
programs, DOE estimated that the market share of more-efficient CCWs in 
Federally owned multifamily buildings would increase at a rate of eight 
percent per year over a 10-year period (2012-2021) and remain at the 
2021 level for the remainder of the forecast period. DOE estimated that 
bulk government purchases would be expected to provide 0.01 quads of 
national energy savings, 13 billion gallons of national water savings, 
and an NPV of $0.03 billion (at a seven-percent discount rate), 
benefits which would be much smaller than those estimated for the 
proposed national performance standards. Thus, DOE rejected bulk 
government purchases as a policy alternative to national performance 
standards.
---------------------------------------------------------------------------

    \129\ Pacific Northwest National Laboratory, Assessment of High-
Performance, Family-Sized Commercial Clothes Washers (DOE/EE-0218) 
(2000).
---------------------------------------------------------------------------

    DOE did not analyze the potential impacts of bulk government 
purchases for front-loading CCWs or conventional cooking products 
because a vast majority of products already meet the proposed 
standards. In the case of front-loading CCWs, over 88 percent of the 
market meets TSL 3, while in the case of conventional cooking products, 
over 85 percent of the gas range market already meets TSL 1. FEMP

[[Page 62128]]

procurement specifications typically promote products in the top 25 
percent of the existing product offerings in terms of efficiency. Since 
most of the front-loading CCWs and gas ranges sold in the base case 
already comply with such specifications, DOE was not able to consider 
this program as a source of data for top-loading CCWs and conventional 
cooking products.
    National Performance Standards (TSL 1 for conventional cooking 
products, TSL 3b for microwave ovens, and TSL 3 for CCWs). As indicated 
in the paragraphs above, none of the alternatives DOE examined would 
save as much energy as the proposed standards. Therefore, DOE proposes 
to adopt the efficiency levels listed in section V.C.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, Proper Consideration of Small Entities in 
Agency Rulemaking, 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    DOE reviewed today's proposed rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. 68 FR 7990. A regulatory flexibility analysis 
examines the impact of the rule on small entities and considers 
alternative ways of reducing negative impacts. DOE identified producers 
of all products covered by this rulemaking which have manufacturing 
facilities located within the United States. DOE then looked at 
publicly available data and contacted manufacturers, where needed, to 
determine if they meet the SBA's definition of a small manufacturing 
facility.
    For the manufacturers of products covered by this rulemaking, the 
SBA has set three size thresholds, which define which entities are 
``small businesses'' for the purposes of the statute. Since all CCW 
manufacturers also produce RCWs, limits for both categories are 
presented in Table VI.2, along with the size limits of household 
cooking appliance manufacturers. DOE used the small business size 
standards published on March 11, 2008, as amended, by the SBA to 
determine whether any small entities would be required to comply with 
the rule. 61 FR 3286 (codified at 13 CFR part 121.) The size standards 
are listed by North American Industry Classification System (NAICS) 
code and industry description.

            VI.2--SBA and NAICS Classification of Small Businesses Potentially Affected by This Rule
----------------------------------------------------------------------------------------------------------------
                                                                                          Employee
               Industry description                            Revenue limit               limit        NAICS
----------------------------------------------------------------------------------------------------------------
Residential Laundry Equipment Manufacturing.......  N/A...............................        1,000       335224
Commercial Laundry Equipment Manufacturing........  N/A...............................          500       333312
Household Cooking Appliance Manufacturing.........  N/A...............................          750       335221
----------------------------------------------------------------------------------------------------------------

1. Cooking Products
    The conventional cooking appliance industry is characterized by 
both domestic and international manufacturers. Most conventional 
cooking appliances are currently manufactured in the United States. 
Consolidation within the cooking products industry has reduced the 
number of parent companies that manufacture similar equipment under 
different affiliates and labels.
    DOE conducted a market survey and created a list of every 
manufacturer that makes conventional cooking appliances for sale in the 
United States. DOE also asked stakeholders and industry representatives 
if they were aware of any other small manufacturers. DOE then reviewed 
publicly available data and contacted manufacturers, as necessary, to 
determine whether they meet the SBA's definition of a ``small 
business'' in the cooking appliance industry. Based on this analysis, 
DOE estimates that there are two small domestic manufacturers of 
conventional cooking appliances. One of these appliance manufacturers 
has production limited to ranges, while the other produces cooktops, 
ranges, hoods, wall ovens, and cooking ventilation equipment. Before 
issuing this notice of proposed rulemaking, DOE contacted both small 
businesses, and one of them agreed to be interviewed. Dun and 
Bradstreet reports that both companies are privately owned, have less 
than 300 employees, and have annual revenues of less than $60 
million.\130\ DOE also obtained information about small business 
impacts while interviewing manufacturers that exceed the small business 
size threshold of 750 employees in this industry.
---------------------------------------------------------------------------

    \130\ Refer to: http://www.dnb.com/us/.
---------------------------------------------------------------------------

    DOE found that, as it pertains to the elimination of standing 
pilots, small manufacturers have the same concerns as the remaining 
high-volume manufacturer of gas cooking appliances with standing pilot 
ignition systems. DOE summarized the key issues in section IV.G.3.a of 
today's notice. One small business manufacturer objected to the 
potential elimination of standing pilot ignition systems, because 25 
percent of its unit shipments feature such ignition systems. This 
manufacturer noted that appliances with standing pilot lights have 
become a niche market, with progressively fewer competitors offering 
these types of products. DOE found some differences in the R&D emphasis 
and marketing strategies between small business manufacturers and large 
manufacturers, as smaller businesses tend to focus on appliance sizes 
not offered by larger manufacturers. However, DOE believes the GRIM 
analysis, which models each product class separately, still represents 
the small businesses affected by standards. The qualitative and 
quantitative GRIM results are summarized in section V.B.2 of today's 
notice.
    DOE reviewed the standard levels considered in today's notice of 
proposed rulemaking under the provisions of the Regulatory Flexibility 
Act and the procedures and policies published on February 19, 2003. 
Based on the foregoing, DOE determined that it cannot certify that 
these proposed energy conservation standard levels, if promulgated, 
would have no significant economic impact on a substantial number of 
small entities. DOE made this

[[Page 62129]]

determination because of the potential impacts that the proposed energy 
conservation standard levels under consideration for cooking appliances 
that eliminate standing pilots would have on the manufacturers, 
including the small businesses, which produce them. Consequently, DOE 
has prepared an initial regulatory flexibility analysis (IRFA) for this 
rulemaking. The IRFA describes potential impacts on small businesses 
associated with the elimination of standing pilots from conventional 
cooking appliance design and manufacturing.
    The potential impacts on cooking appliance manufacturers are 
discussed in the following sections. DOE has transmitted a copy of this 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration for review.
a. Reasons for the Proposed Rule
    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) 
provides for the ``Energy Conservation Program for Consumer Products 
Other Than Automobiles.'' The program covers consumer products and 
certain commercial products (all of which are referred to hereafter as 
``covered products''), including residential cooking products. (42 
U.S.C. 6292(10)) DOE is proposing in today's notice to amend energy 
conservation standards for conventional cooking appliances by 
eliminating standing pilot ignition systems.
b. Objectives of, and Legal Basis for, the Proposed Rule
    EPCA provides criteria for prescribing new or amended standards for 
covered products and equipment.\131\ As indicated above, any new or 
amended standard for either of the two appliance products must be 
designed to achieve the maximum improvement in energy efficiency that 
is technologically feasible and economically justified (42 U.S.C. 
6295(o)(2)(A)), although EPCA precludes DOE from adopting any standard 
that would not result in significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B)) Moreover, DOE may not prescribe a standard: (1) for 
certain products, if no test procedure has been established for the 
product; or (2) if DOE determines by rule that the standard is not 
technologically feasible or economically justified. (42 U.S.C. 
6295(o)(3)) The Act (42 U.S.C. 6295(o)(2)(B)(i)) also provides that, in 
deciding whether a standard is economically justified, DOE must, after 
receiving comments on the proposed standard, determine whether the 
benefits of the standard exceed its burdens by considering, to the 
greatest extent practicable, weighing seven factors as described in 
section II.B of the preamble. EPCA directs DOE to undertake energy 
conversation standards rulemakings for cooking products and CCWs 
according to the schedules established in 42 U.S.C. 6295(h)(2) and 42 
U.S.C. 6313(e)(2)(A)(i), respectively.
---------------------------------------------------------------------------

    \131\ The EPCA provisions discussed in the remainder of this 
subsection directly apply to covered products, and also apply to 
certain covered equipment, such as commercial clothes washers, by 
virtue of 42 U.S.C. 6316(a).
---------------------------------------------------------------------------

c. Description and Estimated Number of Small Entities Regulated
    Through market research, interviews with manufacturers of all 
sizes, and discussions with trade groups, DOE was able to identify two 
small businesses that manufacture conventional cooking appliances which 
would be affected by today's rule.
d. Description and Estimate of Compliance Requirements
    Potential impacts on all manufacturers of conventional cooking 
appliances vary by TSL. Margins for all businesses could be impacted 
negatively by the adoption of any TSL, since all manufacturers have 
expressed an inability to pass on cost increases to retailers and 
consumers. The two small domestic businesses under discussion differ 
from their competitors in that they are focused cooking appliance 
manufacturers, not diversified appliance manufacturers. Therefore, any 
rule affecting products manufactured by these small businesses will 
impact them disproportionately because of their size and their focus on 
cooking appliances. However, due to the low number of competitors that 
agreed to be interviewed, DOE was not able to characterize this 
industry segment with a separate cash-flow analysis due to concerns 
about maintaining confidentiality and uncertainty regarding the 
quantitative impact on revenues of a standing pilot ban.
    At TSL 1 for gas ovens and gas cooktops, the elimination of 
standing pilot lights would eliminate one of the niches that these two 
small businesses serve in the cooking appliance industry. Both 
businesses also manufacture ovens and cooktops with electronic ignition 
systems, but the ignition source would no longer be a differentiator 
within the industry as it is today. The result would be a potential 
loss of market share since consumers would be able to choose from a 
wider variety of competitors, all of which operate at much higher 
production scales.
    For all other TSLs concerning conventional cooking appliances 
(which are not being considered in today's rule), the impact on small, 
focused business entities would be proportionately greater than for 
their competitors since these businesses lack the scale to afford 
significant R&D expenses, capital expansion budgets, and other 
resources when compared to larger entities. The exact extent to which 
smaller entities would be affected, however, is hard to gauge since 
manufacturers did not respond to questions regarding all investment 
requirements by TSL during interviews. Notwithstanding this limitation, 
research associated with the LVM and other small entities in prior 
rulemakings suggests that many costs associated with complying with 
rulemakings are fixed, regardless of production volume.
    Since all domestic manufacturers already manufacture all of their 
conventional cooking appliances with electronic ignition modules as a 
standard feature or as an option for consumers, the cost of converting 
the remaining three domestic manufacturers exclusively to electronic 
ignition modules would be modest. However, given their focus and scale, 
any conventional cooking appliance rule would affect these two domestic 
small businesses disproportionately compared to their larger and more 
diversified competitor.
e. Duplication, Overlap, and Conflict with Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being considered today.
f. Significant Alternatives to the Proposed Rule
    In today's rule, the only TSL under consideration for conventional 
cooking appliances is the elimination of standing pilot ignition 
systems for gas ovens and gas cooktops. All manufacturers of such 
appliances with standing pilot systems stated during interviews that 
there are no known alternatives on the market today that would allow 
their appliances to meet safety standards (such as ANSI Z21.1), while 
not using a line-powered ignition system or standing pilots. While 
battery-powered ignition systems have found application in a few 
cooking products such as the outdoor gas barbeque market, none of such 
systems have yet to find application in or approval for indoor cooking 
appliances. During an MIA interview, one manufacturer

[[Page 62130]]

expressed doubt that any third-party supplier would develop such a 
solution, given the small, and shrinking market that standing pilot-
equipped ranges represent. Another manufacturer stated, however, that 
while the market share of gas cooking products with standing pilot 
ignition systems has been declining, a substantial market is still 
served by such appliances. DOE research suggests that battery-powered 
ignition systems could be incorporated by manufacturers at a modest 
cost if manufacturer's market research suggested that a substantial 
number of consumers found such a product attribute important. DOE notes 
that such systems have been incorporated successfully in a range of 
related appliances, such as instantaneous water heaters. Further, DOE 
believes that there is nothing in the applicable safety standards that 
would prohibit such ignition systems from being implemented on gas 
cooking products. Therefore, DOE believes that households that use gas 
for cooking and are without electricity will likely have technological 
options that would enable them to continue to use gas cooking if 
standing pilot ignition systems are eliminated.
    In addition to the TSL being considered, the TSD associated with 
this proposed rule includes a report referred to in section VI.A in the 
preamble as the regulatory impact analysis (RIA) (discussed earlier in 
this report and in detail in chapter 17 of the TSD). For conventional 
cooking appliances, this report discusses the following policy 
alternatives: (1) No standard, (2) consumer rebates, (3) consumer tax 
credits, (4) manufacturer tax credits, and (5) early replacement. With 
the exception of consumer rebates, the energy savings of these 
regulatory alternatives are at least three times smaller than those 
expected from the standard levels under consideration. The economic 
impacts mirror these regulatory alternatives.
    The conventional cooking appliance industry is very competitive. 
The two small businesses differentiate their products from most larger 
competitors by offering their products in non-traditional sizes and 
with standing pilot ignition systems. Three primary consumer groups 
purchasing standing pilot-equipped products were identified by 
manufacturers in their MIA interviews: (1) Consumers without line power 
near the range (or in the house); (2) consumers who prefer appliances 
without line power for religious reasons; and (3) consumers seeking the 
lowest initial appliance cost. Manufacturers could not identify the 
size of the respective market segments, but demographics suggest that 
initial price is the primary reason that consumers are opting for 
standing pilot-equipped ranges. Religious subgroups that eschew line 
power and homes without line power cannot alone explain why up to 18 
percent of gas cooking appliances are bought with standing pilot 
ignition systems. Furthermore, all manufacturers already make gas 
ranges with electronic ignition, including the high-volume domestic 
manufacturer of conventional cooking appliances with standing pilots. 
Thus, the primary benefit of standing pilot ignition systems appears to 
be that some differentiation from most higher-volume competitors. While 
the actual revenue benefit is hard to quantify, one small business 
manufacturer stated during interviews that the company would expect to 
experience material economic harm if standing pilot ignition systems 
were eliminated.
    Due to the low number of small business respondents to DOE 
inquiries and the uncertainty regarding the potential impact of TSL 1 
on small conventional cooking appliance manufacturers, DOE was not able 
to conduct a separate small business impact analysis. DOE continues to 
seek input from businesses that would be affected by the elimination of 
standing pilot ignition systems and will still consider this trial 
level for the purpose of the NOPR.
    As mentioned above, the other policy alternatives (no standard, 
consumer rebates, consumer tax credits, manufacturer tax credits, and 
early replacement) are described in section VI.A of the preamble and in 
the regulatory impact analysis (chapter 17 of the TSD accompanying this 
notice). Since the impacts of these policy alternatives are lower than 
the impacts described above for the proposed standard levels, DOE 
expects that the impacts to small manufacturers would also be less than 
the impacts described above for the proposed standard level. DOE 
requests comment on the impacts to small business manufacturers for 
these and any other possible alternatives to the proposed rule for 
these manufacturers. DOE will consider any comments received regarding 
impacts to small business manufacturers for all the alternatives 
identified (including those in the RIA,) when preparing the final rule.
2. Microwave Ovens
    The microwave oven industry consists of eight manufacturers with a 
market share larger than two percent. Most are large, foreign companies 
that import microwave ovens into the United States. There are two U.S. 
facilities that partially assemble microwave ovens. Both of these 
facilities are owned by large appliance manufacturers. None of the 
microwave oven manufacturers falls into any small business category. 
Thus, DOE did not address the microwave oven industry further in the 
small business analysis.
3. Commercial Clothes Washers
    The CCW industry consists of three principal competitors that make 
up almost 100 percent of the market share. Two of them are diversified 
appliance manufacturers, while the third is a focused laundry equipment 
manufacturer. Before issuing this notice of proposed rulemaking, DOE 
interviewed all CCW manufacturers. Since all CCW manufacturers also 
make RCWs, DOE also considered whether a CCW manufacturer could be 
considered a small business entity in that industry. None of the CCW 
manufacturers fall into any small business category. Thus, DOE did not 
address the CCW industry further in the small business analysis.

C. Review Under the Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), a person is not required to respond to a collection of 
information by a Federal agency, including a requirement to maintain 
records, unless the collection displays a valid OMB control number. (44 
U.S.C. 3506(c)(1)(B)(iii)(V)) This rulemaking imposes no new 
information or recordkeeping requirements. Accordingly, Office of 
Management and Budget clearance is not required under the PRA.

D. Review Under the National Environmental Policy Act

    DOE has prepared a draft environmental assessment (EA) of the 
impacts of the proposed rule pursuant to the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.), the regulations of the 
Council on Environmental Quality (40 CFR parts 1500-1508), and DOE's 
regulations for compliance with the National Environmental Policy Act 
(10 CFR part 1021). This assessment includes an examination of the 
potential effects of emission reductions likely to result from the rule 
in the context of global climate change, as well as other types of 
environmental impacts. The draft EA has been incorporated into the TSD; 
the environmental impact analyses are contained primarily in Chapter 16 
of that document. Before issuing a final rule for residential cooking 
products and CCWs, DOE will consider public

[[Page 62131]]

comments and, as appropriate, determine whether to issue a finding of 
no significant impact as part of a final EA or to prepare an 
environmental impact statement (EIS) for this rulemaking.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 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. The Executive Order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The Executive Order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have Federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations. 65 FR 13735. 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. EPCA governs and prescribes Federal 
preemption of State regulations as to energy conservation for the 
products that are the subject of today's proposed rule. States can 
petition DOE for exemption from such preemption to the extent, and 
based on criteria, set forth in EPCA. (42 U.S.C. 6297(d) and 
6316(b)(2)(D)) No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    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 (Feb. 7, 1996)) imposes on Federal 
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. 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 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 has 
completed the required review and determined that, to the extent 
permitted by law, this proposed rule meets the relevant standards of 
Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    DOE reviewed this regulatory action under Title II of the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4) (UMRA), which requires each 
Federal agency to assess the effects of Federal regulatory actions on 
State, local and Tribal governments and the private sector. For a 
proposed regulatory action likely to result in a rule that may cause 
the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted for inflation), section 202 of UMRA requires an agency 
to publish a written statement assessing the costs, benefits, and other 
effects of the rule on the national economy. (2 U.S.C. 1532(a), (b)) 
The UMRA also requires a Federal agency to develop an effective process 
to permit timely input by elected officers of State, local, and Tribal 
governments on a proposed ``significant intergovernmental mandate,'' 
and requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments before 
establishing any requirements that might significantly or uniquely 
affect small governments. On March 18, 1997, DOE published a statement 
of policy on its process for intergovernmental consultation under UMRA 
(62 FR 12820) (also available at http://www.gc.doe.gov). Although 
today's proposed rule does not contain a Federal intergovernmental 
mandate, it may impose expenditures of $100 million or more on the 
private sector.
    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 the ``Regulatory Impact Analysis'' section of the TSD for this 
proposed rule respond 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 42 U.S.C. 6295(h) and (o), 6313(e), and 6316(a), 
today's proposed rule would establish energy conservation standards for 
residential cooking products and CCWs 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 today's proposed 
rule.

H. Review Under the Treasury and General Government Appropriations Act, 
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 rule that may affect family well-being. 
This rule 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.

I. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, ``Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights,'' 53 FR 8859 (March 18, 1988), that this regulation would not 
result in any takings that would require compensation under the Fifth 
Amendment to the United States Constitution.

[[Page 62132]]

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. The OMB guidelines were published at 67 FR 8452 (Feb. 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE 
has reviewed this notice under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA), Office of 
Management and Budget, a Statement of Energy Effects for any proposed 
significant energy action. A ``significant energy action'' is defined 
as any action by an agency that promulgated or is expected to lead to 
promulgation of a final rule, and that: (1) Is a significant regulatory 
action under Executive Order 12866, or any successor order; and (2) is 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use.
    Today's regulatory action would not have a significant adverse 
effect on the supply, distribution, or use of energy and, therefore, is 
not a significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology (OSTP), issued its ``Final Information Quality 
Bulletin for Peer Review'' (the Bulletin), which was published in the 
Federal Register on January 14, 2005. 70 FR 2664. The Bulletin 
establishes that certain scientific information shall be peer reviewed 
by qualified specialists before it is disseminated by the Federal 
government, including influential scientific information related to 
agency regulatory actions. The purpose of the Bulletin is to enhance 
the quality and credibility of the Government's scientific information. 
Under the Bulletin, the energy conservation standards rulemakings 
analyses are ``influential scientific information.'' The Bulletin 
defines ``influential scientific information'' as ``scientific 
information the agency reasonably can determine will have, or does 
have, a clear and substantial impact on important public policies or 
private sector decisions.'' 70 FR 2664, 2667 (Jan. 14, 2005).
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation process 
using objective criteria and qualified and independent reviewers to 
make a judgment as to the technical/scientific/business merit, the 
actual or anticipated results, and the productivity and management 
effectiveness of programs and/or projects. The ``Energy Conservation 
Standards Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VII. Public Participation

A. Attendance at Public Meeting

    DOE will hold a public meeting on Thursday, November 13, 2008, from 
9 a.m. to 4 p.m., in Washington, DC. The public meeting will be held at 
the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 
Independence Avenue, SW, Washington, DC 20585. To attend the public 
meeting, please notify Ms. Brenda Edwards at (202) 586-2945 or 
[email protected]. As explained in the ADDRESSES section, 
foreign nationals visiting DOE Headquarters are subject to advance 
security screening procedures. Any foreign national wishing to 
participate in the meeting should advise DOE of this fact as soon as 
possible by contacting Ms. Brenda Edwards to initiate the necessary 
procedures.

B. Procedure for Submitting Requests to Speak

    Any person who has an interest in this notice, or who is a 
representative of a group or class of persons that has an interest in 
these issues, may request an opportunity to make an oral presentation. 
Such persons may hand-deliver requests to speak, along with a compact 
disc (CD) in WordPerfect, Microsoft Word, PDF, or text (ASCII) file 
format to the address shown in the ADDRESSES section at the beginning 
of this notice of proposed rulemaking between the hours of 9 a.m. and 4 
p.m., Monday through Friday, except Federal holidays. Requests may also 
be sent by mail or e-mail to: [email protected].
    Persons requesting to speak should briefly describe the nature of 
their interest in this rulemaking and provide a telephone number for 
contact. DOE requests persons scheduled to be heard to submit an 
advance copy of their statements at least two weeks before the public 
meeting. At its discretion, DOE may permit any person who cannot supply 
an advance copy of their statement to participate, if that person has 
made advance alternative arrangements with the Building Technologies 
Program. The request to give an oral presentation should ask for such 
alternative arrangements.

C. Conduct of Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of 
EPCA, 42 U.S.C. 6306. A court reporter will be present to record the 
proceedings and prepare a transcript. DOE reserves the right to 
schedule the order of presentations and to establish the procedures 
governing the conduct of the public meeting. After the public meeting, 
interested parties may submit further comments on the proceedings as 
well as on any aspect of the rulemaking until the end of the comment 
period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for presentations by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
prepared general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will

[[Page 62133]]

permit other participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    DOE will make the entire record of this proposed rulemaking, 
including the transcript from the public meeting, available for 
inspection at the U.S. Department of Energy, Resource Room of the 
Building Technologies Program, 950 L'Enfant Plaza, SW, Suite 600, 
Washington, DC, 20024, (202) 586-2945, between 9 a.m. and 4 p.m., 
Monday through Friday, except Federal holidays. Any person may buy a 
copy of the transcript from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding the 
proposed rule before or after the public meeting, but no later than the 
date provided at the beginning of this notice of proposed rulemaking. 
Information submitted should be identified by docket number EE-2006-
STD-0127 and/or RIN 1904-AB49. Comments, data, and information 
submitted to DOE's e-mail address for this rulemaking should be 
provided in WordPerfect, Microsoft Word, PDF, or text (ASCII) file 
format. Stakeholders should avoid the use of special characters or any 
form of encryption and, wherever possible, comments should carry the 
electronic signature of the author. Comments, data, and information 
submitted to DOE via mail or hand delivery/courier should include one 
signed original paper copy. No telefacsimiles (faxes) will be accepted.
    Pursuant to 10 CFR 1004.11, any person submitting information that 
he or she believes to be confidential and exempt by law from public 
disclosure should submit two copies: One copy of the document including 
all the information believed to be confidential, and one copy of the 
document with the information believed to be confidential deleted. DOE 
will make its own determination about the confidential status of the 
information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.

E. Issues on Which DOE Seeks Comment

    DOE is particularly interested in receiving comments and views of 
interested parties concerning:
    (1) The proposed standards for residential gas kitchen ranges and 
ovens, microwave ovens, and CCWs, as well as the proposed ``no-
standard'' standard for residential electric kitchen ranges and ovens 
other than microwave ovens;
    (2) Whether battery-powered spark ignition modules are a viable 
alternative to standing pilots for manufacturers of gas ranges, ovens, 
and cooktops;
    (3) The preliminary determination of the technical infeasibility of 
incorporating microwave oven cooking efficiency with standby mode and 
off mode power into a single metric for the purpose of developing 
energy conservation standards;
    (4) Input and data regarding off mode power for microwave ovens;
    (5) Input and data on the utility provided by specific features 
that contribute to microwave oven standby power. In particular, DOE 
seeks information on the utility of display technologies, as well as on 
cooking sensors that do not require standby power;
    (6) Input and data on control strategies available to allow 
manufacturers to make design tradeoffs between incorporating standby-
power-consuming features such as displays or cooking sensors and 
including a function to turn power off to these components during 
standby mode. DOE also seeks comment on the viability and cost of 
microwave oven control board circuitry that could accommodate 
transistors to switch off cooking sensors and displays;
    (7) Whether switching or similar modern power supplies can operate 
successfully inside a microwave oven and the associated efficiency 
impacts on standby power;
    (8) The selection of microwave oven standby standard levels for the 
engineering analysis;
    (9) Input and data on the estimated incremental manufacturing 
costs, as well as the assumed approaches to achieve each standby level 
for microwave ovens. DOE also seeks comment on whether any intellectual 
property or patent infringement issues are associated with the design 
options presented in the TSD to achieve each standby level;
    (10) Input and data on the estimated market share of microwave 
ovens at different standby power consumption levels;
    (11) The appropriateness of using other discount rates in addition 
to seven percent and three percent real to discount future emissions 
reductions; and
    (12) The determination of the anticipated environmental impacts of 
the proposed rule, particularly with respect to the methods for valuing 
the expected CO2 and NOX emissions savings due to 
the proposed standards.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this proposed 
rule.

List of Subjects

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Small businesses.

10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Reporting and recordkeeping 
requirements.

    Issued in Washington, DC, on September 29, 2008.
John F. Mizroch,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons stated in the preamble, chapter II, subchapter D, 
of Title 10 of the Code of Federal Regulations, Parts 430 and 431 are 
proposed to be amended to read as set forth below:

[[Page 62134]]

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 430.23 of subpart B is amended by revising paragraph 
(i)(3) to read as follows:


Sec.  430.23  Test procedures for the measurement of energy and water 
consumption.

* * * * *
    (i) * * *
    (3) The standby power for microwave ovens shall be determined 
according to 3.2.4 of appendix I to this subpart. The standby power 
shall be rounded off to the nearest 0.1 watt.
* * * * *
    3. Section 430.32 of subpart C is amended by revising paragraph (j) 
to read as follows:


Sec.  430.32  Energy and water conservation standards and effective 
dates.

* * * * *
    (j) Cooking Products. (1) Gas cooking products with an electrical 
supply cord shall not be equipped with a constant burning pilot light. 
This standard is effective on January 1, 1990.
    (2) Gas cooking products without an electrical supply cord shall 
not be equipped with a constant burning pilot light. This standard is 
effective on [DATE 3 YEARS AFTER FINAL RULE Federal Register 
PUBLICATION].
    (3) Microwave ovens shall have an average standby power not more 
than 1.0 watt. This standard is effective on [DATE 3 YEARS AFTER FINAL 
RULE Federal Register PUBLICATION].
* * * * *
    4. Section 430.62(a)(4) of subpart F is amended by redesignating 
paragraphs (a)(4)(xi) through (xvii) as (a)(4)(xii) through (xviii) 
respectively, and by adding new paragraph (a)(4)(xi) to read as 
follows:


Sec.  430.62  Submission of data.

    (a) * * *
    (4) * * *
    (xi) Microwave ovens, the average standby power in watts.
* * * * *

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

    5. The authority citation for part 431 continues to read as 
follows:

    Authority: 42 U.S.C. 6291-6317.

    6. Section 431.156 of subpart I is revised to read as follows:


Sec.  431.156  Energy and water conservation standards and effective 
dates.

    Each commercial clothes washer manufactured on or after [DATE 3 
YEARS AFTER FINAL RULE Federal Register PUBLICATION], shall have a 
modified energy factor no less than and a water factor no greater than:

------------------------------------------------------------------------
                                                  Modified
                                                   energy       Water
                 Product class                     factor       factor
                                                 (cu. ft./    (gal./cu.
                                                 kWh/cycle)   ft./cycle)
------------------------------------------------------------------------
i. Top-Loading................................         1.76          8.3
ii. Front-Loading.............................         2.00          5.5
------------------------------------------------------------------------

[FR Doc. E8-23405 Filed 10-16-08; 8:45 am]
BILLING CODE 6450-01-P