[Federal Register Volume 80, Number 177 (Monday, September 14, 2015)]
[Proposed Rules]
[Pages 55038-55045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23021]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 80, No. 177 / Monday, September 14, 2015 / 
Proposed Rules  

[[Page 55038]]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2014-BT-STD-0031]
RIN 1904-AD20


Energy Conservation Program for Consumer Products: Energy 
Conservation Standards for Residential Furnaces

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

ACTION: Notice of data availability.

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

SUMMARY: The U.S. Department of Energy (DOE) has completed a 
provisional analysis of the potential economic impacts and energy 
savings that could result from promulgating amended energy conservation 
standards for residential non-weatherized gas furnaces (NWGFs) that 
include two product classes defined by input capacity and has published 
the data on its Web page. DOE encourages stakeholders to provide any 
additional data or information that may improve the analysis.

DATES: DOE will accept comments, data, and information regarding this 
NODA no later than October 14, 2015. See section IV for details.

ADDRESSES: Any comments submitted must identify the NODA for Energy 
Conservation Standards for Residential Furnaces, and provide docket 
number EERE-2014-BT-STD-0031 and/or regulatory information number (RIN) 
number 1904-AD20. Comments may be submitted using any of the following 
methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected]. Include the docket 
number and/or RIN in the subject line of the message. Submit electronic 
comments in Word Perfect, Microsoft Word, PDF, or ASCII file format, 
and avoid the use of special characters or any form on encryption.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue 
SW., Washington, DC 20585-0121. If possible, please submit all items on 
a compact disc (CD), in which case it is not necessary to include 
printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section IV of this document (Submission of 
Comments).
    Docket: The docket, which includes Federal Register documents, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    A link for access to the docket Web page can be found at: https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=62. The www.regulations.gov Web page contains 
instructions on how to access all documents in the docket.

FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: (202) 287-1692. Email: 
[email protected].
    Ms. Johanna Hariharan, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 586-9507 or (202) 287-6307. Email: 
[email protected].
    For further information on how to review other public comments and 
the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Summary of the Analyses Performed by DOE
    A. Introduction
    B. Engineering Analysis
    C. Life-Cycle Cost and Payback Period Analyses
    1. Furnace Size Assignment
    2. Energy Prices
    3. Other Updates
    D. National Impact Analysis
III. Results of the Analysis
    A. Economic Impacts on Consumers
    B. National Impacts
IV. Submission of Comments

I. Background

    On March 10, 2015, DOE published in the Federal Register a notice 
of proposed rulemaking (NOPR) and public meeting to amend energy 
conservation standards for residential non-weatherized gas furnaces 
(NWGF) and mobile home gas furnaces (MHGF). 80 FR 13119. The proposed 
standards, which are expressed as minimum annual fuel utilization 
efficiencies (AFUE), are shown in Table I.1. These proposed standards, 
if adopted, would apply to all products listed in Table I.1 and 
manufactured in, or imported into, the United States on or after the 
date 5 years after the publication of the final rule for this 
rulemaking.

     Table I.1--Proposed AFUE Energy Conservation Standards for Non-
      Weatherized Gas Furnaces and Mobile Home Gas Furnaces (TSL 3)
------------------------------------------------------------------------
                      Product class                           AFUE %
------------------------------------------------------------------------
Non-Weatherized Gas-Fired Furnaces......................              92
Mobile Home Gas-Fired Furnaces..........................              92
------------------------------------------------------------------------

    A number of stakeholders objected to a national standard at 92 
percent AFUE, which would effectively only be able to be met by using 
condensing technology. The objections raised by stakeholders covered a 
wide range of issues, but the negative impacts of the proposed

[[Page 55039]]

standards on some furnace consumers were highlighted by many 
stakeholders.
    A letter dated June 8, 2015, signed by 121 members of the U.S. 
House of Representatives, expressed concern that a nationwide energy 
efficiency standard that effectively precludes a consumer from choosing 
to install a non-condensing furnace would result in many homeowners 
either abandoning the use of natural gas to heat their homes or paying 
substantially more for the installation of a furnace that meets the new 
standard. It stated that many families will be faced with the difficult 
choice of having to replace their non-condensing furnace with either a 
condensing furnace with higher installation costs or electric heat and 
accompanying higher monthly energy bills. (United States House of 
Representatives, No. 67 at p. 1) Comments from the Pennsylvania 
Chambers of Commerce, Business, and Industry, Meeks, Payne, Jr., 
Bishop, Jr., and Carrier make similar statements. (Pennsylvania 
Chambers of Commerce, Business, and Industry, No. 82 at p. 1; Meeks, 
No. 140 at p. 1; Payne, Jr., No. 75 at p. 1; Bishop, Jr., No. 76 at p. 
1)
    The American Gas Association (AGA), Goodman, and American Energy 
Alliance (AEA et al.) stated that even assuming DOE's analysis is 
correct, many consumers could incur costs under the proposed standard. 
They stated that, according to DOE's analysis, 20 percent of households 
nationwide would face higher life-cycle costs under the proposed 
standard, and in the replacement market, one-quarter of all households 
replacing their natural gas furnaces would see a life-cycle cost 
increase. (AGA, No. 118 at p. 27; AEA et al., No. 69 at p. 1; Goodman, 
No. 135 at p. 2) AGA, Goodman, and Southern Gas Association (SGA) added 
that consumers in the South and low-income families would be 
disproportionately impacted. (AGA, No. 118 at p. 27; Goodman, No. 135 
at p. 2; SGA, No. 145 at p. 1)
    The Air-Conditioning, Heating, and Refrigeration Institute (AHRI), 
Carrier, Rheem, and Ingersoll Rand expressed concern that the proposed 
standards will result in 10-20 percent of homes switching from gas 
furnaces to electric heat pumps because venting of a condensing gas 
furnace is difficult to impossible. (AHRI, No. 159 at p. 3; Carrier, 
No. 116 at p. 2; Rheem, No. 142 at p. 3; Ingersoll Rand, No. 156 at p. 
2) AGA expressed a similar concern, and asserted that the resulting 
adverse energy and environmental impacts of this fuel switching are 
very substantial. (AGA, No. 118 at p. 28)
    Several stakeholders, who expressed general support for the 
proposed standards and suggested more stringent standards could be 
justified, provided a recommendation for reducing negative impacts on 
some furnace consumers while maintaining the overall economic and 
environmental benefits of the standards. The American Council for an 
Energy-Efficient Economy (ACEEE) recommended that DOE establish a 
separate product class for small furnaces (tentatively those with an 
input capacity of 50,000 Btu/hour or less) and leave the standard level 
for these units at 80-percent AFUE, while adopting a higher standard 
level of 95-percent AFUE for larger furnaces. (ACEEE, No. 113 at p. 1) 
The Alliance to Save Energy made a similar recommendation, but referred 
to an input capacity of no more than 50,000 to 65,000 Btu/hour for 
smaller furnaces. (Alliance to Save Energy, No. 115 at p. 1) The 
Natural Resources Defense Council (NRDC) urged DOE to adopt an 80-
percent AFUE standard level for furnaces below a specified maximum 
capacity threshold, and set the capacity threshold low enough that the 
national energy, economic, and environmental benefits are largely 
preserved while allowing consumers in small and moderately-sized, well 
insulated and weatherized homes in moderate and warm climates to have a 
non-condensing option. (NRDC, No. 134 at p. 2) AGLR stated that DOE 
should establish a separate product class for small furnaces with an 
input capacity of less than 45,000 Btu/hour, citing section 305(f) of 
EPCA as authority for DOE to establish separate product classes based 
on product capacity. (AGLR, No. 112 at pp. 15-16)
    ACEEE also stated that creating two product classes based on 
furnace size would reduce the number of households that would 
experience net costs under the proposed standard (many of whom are in 
the south). ACEEE stated that many of the consumers who would 
experience net costs will have small furnaces and recommended that DOE 
specifically examine this issue and estimate the economics of separate 
standard levels as a function of furnace input capacity. ACEEE noted 
that a size threshold provides another option for some households with 
very high installation costs--if they weatherize their home and get the 
needed capacity below 50,000 Btu/h, they can avoid the extra 
installation cost of a condensing furnace. ACEEE added that a size 
threshold would not present the potential enforcement challenges 
associated with regional standards. (ACEEE, No. 113 at p. 3)
    Although DOE believes that the standards proposed in the March 2015 
NOPR meet the statutory criteria for amended standards, given the 
concerns and suggestions described above, DOE undertook an analysis of 
the consumer economics and national impacts of establishing separate 
standard levels for large and small residential furnaces. In so doing, 
it examined the effect of alternative size thresholds for a small 
furnace. Because the issues raised by stakeholders primarily concern 
NWGFs, DOE only considered that product in its analysis and did not 
examine mobile home gas furnaces. The analysis is described in section 
II of this NODA; section III provides the results of the analysis.
    DOE notes that this NODA does not propose any energy conservation 
standards for residential furnaces. DOE may revise the analyses 
presented in today's NODA based on any new or updated information or 
data it obtains during the course of the rulemaking. DOE encourages 
stakeholders to provide any additional data or information that may 
improve the analysis.

II. Summary of the Analyses Performed by DOE

    DOE conducted an analysis of the consumer impacts (life-cycle cost 
and payback period) and national impacts (national energy savings and 
net present value of national benefits) of potential standard levels 
for the considered NWGF product classes. The tools used in preparing 
these analyses and their respective results are available at: https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=62. Each individual spreadsheet includes an 
introduction that provides an overview of the contents of the 
spreadsheet. These spreadsheets present the various inputs and outputs 
to the analysis and, where necessary, instructions. Brief descriptions 
of the analyses and of the supporting spreadsheet tools are provided 
below.
    If DOE were to consider adopting energy conservation standards for 
residential furnaces that set separate levels based on input capacity, 
it would do so in a future supplemental NOPR (SNOPR). DOE would also 
publish a technical support document (TSD) containing a detailed 
written account of the analyses performed in support of the SNOPR, 
which will include updates to the analyses made available in this NODA.
    The analysis conducted for this NODA used the same analytical

[[Page 55040]]

framework as the March 2015 NOPR.\1\ Key aspects of the present 
analysis and DOE's updates to the NOPR analysis are described in the 
sections below.
---------------------------------------------------------------------------

    \1\ Please see the March 2015 NOPR and the accompanying TSD for 
details, which are available at http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=62.
---------------------------------------------------------------------------

A. Introduction

    The analysis conducted for this NODA estimated impacts for the 
potential standard level combinations shown in Table II.1. The key 
aspect of this analysis is that only large furnaces would need to use 
condensing technology to meet the standard. Thus, households installing 
a small furnace would not need to incur the costs associated with 
installing a condensing furnace.

             Table II.1--Potential Standard Level Combinations Analyzed for Large and Small Furnaces
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Furnance size                                                 Annual fuel utilization efficiency (%)
----------------------------------------------------------------------------------------------------------------
Large...........................................              90              92              95              98
Small...........................................              80              80              80              80
----------------------------------------------------------------------------------------------------------------

    This NODA analysis used the same sample of residential furnace 
consumers as the March 2015 NOPR. Each sample household was assigned a 
furnace size (in terms of input capacity) based on a number of 
features, as discussed in section II.C. The share of households that 
would install a small furnace depends on how ``small furnace'' is 
defined in terms of input capacity. For this analysis, DOE considered 
the following small furnace definitions: <=45 kBtu/hour, <=50 kBtu/
hour, <=55 kBtu/hour, <=60 kBtu/hour, and <=65 kBtu/hour. In each case, 
large furnaces would be defined as all sizes above the given 
thresholds. The share of households that would install a furnace 
meeting a small furnace standard rises as the size cutoff in the small 
furnace definition increases, as illustrated in Table II.2.\2\
---------------------------------------------------------------------------

    \2\ The shares in Table II.2 reflect the likelihood that some 
consumers would down-size a new furnace to meet the ``small 
furnace'' definition. See section II.C for discussion.

                             Table II.2--Share of Sample Households by Furnace Size
                                                    [percent]
----------------------------------------------------------------------------------------------------------------
                                                             Small furnace definition
          Furnace size           -------------------------------------------------------------------------------
                                  <=45 kBtu/hour  <=50 kBtu/hour  <=55 kBtu/hour  <=60 kBtu/hour  <=65 kBtu/hour
----------------------------------------------------------------------------------------------------------------
Large...........................              92              86              85              68              62
Small...........................               8              14              15              32              38
                                 -------------------------------------------------------------------------------
    Total.......................             100             100             100             100             100
----------------------------------------------------------------------------------------------------------------

B. Engineering Analysis

    The engineering analysis establishes the relationship between the 
manufacturer production cost (MPC) and energy efficiency for 
residential furnaces. This relationship between MPC and energy 
efficiency serves as the basis for calculations performed in the other 
analysis tools to estimate the costs and benefits to individual 
consumers, manufacturers, and the nation. For each NWGF efficiency 
level that was analyzed, the MPC was estimated for four furnace 
capacities (60 kBtu/hour, 80 kBtu/hour, 100 kBtu/hour, and 120 kBtu/
hour). For the NODA analysis, DOE updated the MPCs from the NOPR to 
incorporate the most recent available data for material,\3\ component, 
labor, and overhead costs, and also updated the MPCs to 2014$.
---------------------------------------------------------------------------

    \3\ DOE uses 5-year averages for metal materials and current 
prices for all other materials.
---------------------------------------------------------------------------

C. Life-Cycle Cost and Payback Period Analyses

    The life-cycle cost (LCC) and payback period (PBP) analyses 
determine the economic impact of potential standards on individual 
consumers who purchase a furnace in the expected compliance year 
(assumed to be 2021 for this analysis). The LCC is the total cost of 
purchasing, installing and operating a residential furnace over the 
course of its lifetime. DOE determines the LCC by considering: (1) The 
total installed cost to the consumer (which consists of manufacturer 
selling price, distribution channel markups, sales taxes, and 
installation costs); (2) the annual energy consumption (natural gas or 
LPG and electricity) of residential furnaces as they are used in the 
field; (3) the operating cost of residential furnaces (i.e., energy 
cost and maintenance and repair cost); (4) equipment lifetime; and (5) 
a discount rate that reflects the consumer cost of capital and puts the 
LCC in present-value terms. The PBP represents the number of years 
needed to recover the increase in purchase price of higher-efficiency 
residential furnaces through savings in the operating cost.
    For each considered standards case, DOE measures the change in LCC 
relative to a no-new-standards case, which reflects the market in the 
absence of amended energy conservation standards, including market 
trends for equipment that exceeds the current energy conservation 
standards.
    In the March 2015 NOPR and in today's NODA, DOE developed 
nationally-representative household samples for residential furnaces 
from the 2009 Residential Energy Consumption Survey (RECS).\4\ DOE 
analyzed the net effect of potential amended residential furnace 
standards on consumers by calculating the LCC savings and PBP for each 
household by efficiency level.
---------------------------------------------------------------------------

    \4\ U.S. Department of Energy: Energy Information 
Administration, Residential Energy Consumption Survey: 2009 RECS 
Survey Data (2013), available at: http://www.eia.gov/consumption/residential/data/2009/ (last accessed July 29, 2015).
---------------------------------------------------------------------------

    DOE performed the LCC and PBP analyses using a spreadsheet model

[[Page 55041]]

combined with Crystal Ball \5\ to account for uncertainty and 
variability among the input variables. Each Monte Carlo simulation 
consists of 10,000 LCC and PBP calculations using input values that are 
either sampled from probability distributions and household samples or 
characterized with single point values. The analytical results include 
a distribution of 10,000 data points showing the range of LCC savings 
for a given efficiency level relative to the no-new-standards case 
efficiency distribution. In performing an iteration of the Monte Carlo 
simulation for a given consumer, product efficiency is chosen based on 
its probability. If the chosen product efficiency is greater than or 
equal to the efficiency of the standard level under consideration, the 
LCC and PBP calculation reveals that a consumer is not impacted by the 
standard level. By accounting for consumers who already purchase more-
efficient products, DOE avoids overstating the potential benefits from 
increasing product efficiency.
---------------------------------------------------------------------------

    \5\ Crystal Ball is a commercial software program developed by 
Oracle and used to conduct stochastic analysis using Monte Carlo 
simulation. A Monte Carlo simulation uses random sampling over many 
iterations of the simulation to obtain a probability distribution of 
results. Certain key inputs to the analysis are defined as 
probability distributions rather than single-point values.
---------------------------------------------------------------------------

1. Furnace Size Assignment
    For the March 2015 NOPR, DOE assigned an input capacity for the 
existing furnace of each housing unit based on an algorithm that 
correlates the heating square footage and the outdoor design 
temperature for heating (i.e., the temperature that is exceeded by the 
30-year minimum average temperature 1 percent of the time) with the 
distribution of input capacity of furnaces.\6\ DOE assumed that, for 
the new furnace installation, the input capacity would remain the same. 
DOE's analysis accounted for the typical over-sizing of furnace 
capacity (i.e., the furnace is larger than it needs to be to fulfill 
the building heating load).
---------------------------------------------------------------------------

    \6\ The distribution of input capacity is based on shipments 
data by input capacity bins for the year 2000 provided by AHRI (AHRI 
(formerly GAMA). Furnace and Boiler Shipments data provided to DOE 
for Furnace and Boiler ANOPR. January 23, 2002). AHRI data was 
further disaggregated into 5-kBtu/h bins using the reduced models 
dataset from the NOPR analysis. Appendix 7B of the NOPR TSD provides 
details about furnace sizing method.
---------------------------------------------------------------------------

    If there is a separate standard for small furnaces, DOE expects 
that some consumers who would otherwise install a typically-oversized 
furnace would choose to down-size in order to be able to purchase a 
non-condensing furnace. For the NODA analysis, DOE identified those 
sample households that might down-size at the considered small furnace 
definitions. DOE first determined if a household would install a non-
condensing furnace with an input capacity greater than the small 
furnace size limit without amended standards. In the standards case, 
DOE assumed that a fraction of such consumers would down-size to the 
input capacity limit for small furnaces.
2. Energy Prices
    For this NODA, DOE updated current energy prices and also the 
projection of future energy prices. Current average and marginal 
monthly energy prices are based on the latest data (2013 energy prices) 
from EIA (Form 861 data \7\ to calculate commercial electricity prices, 
Natural Gas Navigator \8\ to calculate commercial natural gas prices, 
and State Energy Data System \9\ to calculate LPG prices). The update 
to 2013 energy prices had a very small impact on the LCC and PBP 
results.\10\ Future energy prices are based on the projection of 
average annual percent change in national-average residential natural 
gas and electricity prices in the Annual Energy Outlook 2015 (AEO 
2015).
---------------------------------------------------------------------------

    \7\ Energy Information Administration (EIA), Survey form EIA-
861--Annual Electric Power Industry Report (Available at: http://www.eia.gov/electricity/data/eia861/index.html) (Last accessed July 
15, 2015).
    \8\ Energy Information Administration (EIA), Natural Gas 
Navigator (Available at: http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm) (Last accessed July 15, 2015).
    \9\ Energy Information Administration (EIA), State Energy Data 
System (SEDS) (Available at: http://www.eia.gov/state/seds/) (Last 
accessed July 15, 2015).
    \10\ For the NOPR, 2012 energy prices from the same sources were 
used.
---------------------------------------------------------------------------

3. Other Updates
    For this NODA, DOE updated the efficiency distribution in the no-
new-standards case to reflect AHRI shipments data from 2010 to 
2014.\11\ The update resulted in decreased fraction of consumers being 
impacted by an efficiency standard requiring efficiencies of 90-percent 
AFUE and above.\12\ DOE also made minor updates to the markups, product 
price trend, and the building shell efficiency and climate indexes used 
to adjust energy use. These are described in the LCC spreadsheet.
---------------------------------------------------------------------------

    \11\ Air-Conditioning, Heating, and Refrigeration Institute. 
Personal communication. May 12, 2015. http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0031-0052.
    \12\ For the NOPR, the AHRI shipments data was not available and 
DOE instead relied on shipments data from the ENERGY STAR program to 
derive its estimates. Based on the AHRI shipments data, DOE's 
estimate of the condensing furnace market share in 2021 increased 
from 47-percent in the NOPR to 53-percent in the NODA.
---------------------------------------------------------------------------

D. National Impact Analysis

    The national impacts analysis (NIA) estimates the national energy 
savings (NES) and the net present value (NPV) of total consumer costs 
and savings expected to result from potential new standards. DOE 
calculated NES and NPV as the difference between a case without amended 
standards and each standards case.
    DOE calculated the annual energy consumption for each case using 
the appropriate per-unit annual energy use data multiplied by the 
projected residential furnaces shipments for each year. To estimate 
impacts of separate standards for small and large furnaces, DOE needed 
to disaggregate NWGF shipments by input capacity. To do so, DOE assumed 
that the shares of each size category in NWGF shipments are the same as 
the shares estimated for the household sample. The shares were assumed 
to remain constant over time.
    Cumulative energy savings are the sum of the annual NES determined 
for the lifetime of furnaces shipped during a 30-year period assumed to 
start in the expected compliance year. Energy savings include the full-
fuel cycle energy savings (i.e., the energy needed to extract, process, 
and deliver primary fuel sources such as coal and natural gas, and the 
conversion and distribution losses of generating electricity from those 
fuel sources).
    To develop the national NPV of consumer benefits from potential 
energy conservation standards, DOE calculated projected annual 
operating costs (energy costs and repair and maintenance costs) and 
annual installation costs for the no-new-standards case and the 
standards cases. DOE calculated annual energy expenditures from annual 
energy consumption using forecasted energy prices in each year. DOE 
calculated annual product expenditures by multiplying the price per 
unit times the projected shipments in each year.
    The aggregate difference each year between operating cost savings 
and increased installation costs is the net savings or net costs. DOE 
multiplies the net savings in future years by a discount factor to 
determine their present value. DOE estimates the NPV of consumer 
benefits using both a 3-percent and a 7-percent real discount rate, in 
accordance with guidance provided by the Office of Management and 
Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\13\
---------------------------------------------------------------------------

    \13\ Office of Management and Budget, OMB Circular A-4, section 
E, Identifying and Measuring Benefits and Costs (2003), available at 
http://www.whitehouse.gov/omb/memoranda/m03-21.html.

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

[[Page 55042]]

    For the NODA analysis, DOE updated energy price trends and several 
other inputs with data from AEO 2015, as described in the NIA 
spreadsheet.

III. Results of the Analysis

A. Economic Impacts on Consumers

    As mentioned in section II.C, for each considered standards case, 
DOE measures the change in LCC relative to a no-new-standards case. For 
example, in the case of a separate standard of 90-percent AFUE for 
large furnaces and 80-percent AFUE for small furnaces, the analysis 
reflects the likelihood that some consumers would purchase a furnace at 
or above those efficiency levels without standards, and thus would not 
be affected by the standards. The average LCC savings in Table III.1 
only include those consumers who would be affected at a given standard 
level.
    Table III.2 shows the percentage of consumers that would experience 
a net cost under each considered standards case, and Table III.3 shows 
the percentage of consumers in the South that would experience a net 
cost.\14\ For these consumers, the LCC would increase under the 
standard compared to the furnace they would purchase in no-new-
standards case. As expected, the percentage of consumers that would 
experience a net cost declines as the definition of small furnace 
expands to include more furnaces.
---------------------------------------------------------------------------

    \14\ The analysis used the same definition of the South region 
as the March 2015 NOPR.

              Table III.1--Average LCC Savings for Alternative Furnace Standard Level Combinations
                                                     [2014$]
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                                   Average LCC savings (2014$) *
----------------------------------------------------------------------------------------------------------------
                                                   Small furnace definition (kBtu/hour)
      Large        Small ---------------------------------------------------------------------------------------
                                <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             90    80                $383              $400              $400             $492             $484
             92    80                 463               478               479              553              525
             95    80                 439               447               449              479              437
             98    80                 365               372               374              388              347
----------------------------------------------------------------------------------------------------------------
* The average LCC savings only include those consumers who would be affected at a given standard level.


 Table III.2--Share of All Consumers Experiencing a Net Cost for Alternative Furnace Standard Level Combinations
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                              % of consumers experiencing a net cost
----------------------------------------------------------------------------------------------------------------
                                                   Small furnace definition (kBtu/hour)
      Large        Small ---------------------------------------------------------------------------------------
                                <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             90    80                  19                15                13               11                7
             92    80                  17                13                12               10                6
             95    80                  21                17                15               12                9
             98    80                  35                34                33               26               23
----------------------------------------------------------------------------------------------------------------


   Table III.3--Share of Consumers in the South Experiencing a Net Cost for Alternative Furnace Standard Level
                                                  Combinations
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                        % of consumers in the south experiencing a net cost
----------------------------------------------------------------------------------------------------------------
                                                   Small furnace definition (kBtu/hour)
      Large        Small ---------------------------------------------------------------------------------------
                                <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             90    80                  27                20                19               13                7
             92    80                  25                18                17               11                7
             95    80                  28                22                21               14               10
             98    80                  35                31                30               20               14
----------------------------------------------------------------------------------------------------------------

    Table III.4 compares the key consumer economic impacts of a single 
standard for all furnaces to a separate standard for large and small 
furnaces.\15\ Under a separate standard for large and small furnaces, 
the average LCC savings increase somewhat but the share of consumers 
with a net cost declines considerably. The impacts of a separate 
standard for large and small furnaces would vary depending on the small 
furnace definition. For example, if the definition was <=60 kBtu/hour 
instead of <=55 kBtu/hour, the difference between the single standard 
for all furnaces and separate standards for large and small furnaces 
would be greater than shown.
---------------------------------------------------------------------------

    \15\ The results for a single standard for all furnaces differ 
slightly from the results in the March 2015 NOPR because of the 
input revisions discussed in section II. DOE believes that showing a 
direct comparison with the NOPR results would not serve the purpose 
of the NODA analysis.

[[Page 55043]]



                   Table III.4--Comparison of Consumer Impacts of Single Standard vs. Separate Standard for Large and Small Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Single standard for all furnaces                                      Separate standard for large and small furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Avg. LCC savings    Share of consumers                                 Avg. LCC savings    Share of consumers
                AFUE (%)                       (2014$)          with net cost (%)      AFUE (%) large/small           (2014$)         with net cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
90.....................................                 $347                   20   90/80.....................                 $400                   13
92.....................................                  425                   18   92/80.....................                  479                   12
95.....................................                  420                   22   95/80.....................                  449                   15
98.....................................                  343                   41   98/80.....................                  374                   33
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Using small furnace definition of <=55 kBtu/hour.

    Table III.5 and Table III.6 show a similar comparison for consumers 
in the south and low-income consumers, with similar results.\16\
---------------------------------------------------------------------------

    \16\ The results in Table III.6 overstate the percentage of low-
income households that would actually be negatively impacted by 
proposed higher-efficiency furnace standards. Close to 60 percent of 
low-income households in RECS 2009 are either renters or residents 
of public housing. In these cases, the furnace would be purchased by 
the property owner, and the cost of a higher-efficiency furnace 
might be passed on over time in the rent (or perhaps not all in the 
case of public housing). DOE's current analysis assumes that in 
cases where the property owner does not pay for energy, the cost of 
a higher-efficiency furnace is passed on immediately, which would 
tend to overstate any negative impact.

          Table III.5--Comparison of Impacts for Consumers in the South of Single Standard vs. Separate Standard for Large and Small Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Single standard for all furnaces                                      Separate standard for large and small furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Avg. LCC savings    Share of consumers                                 Avg. LCC savings    Share of consumers
                AFUE (%)                       (2014$)          with net cost (%)      AFUE (%) large/small           (2014$)         with net cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
90.....................................                 $291                   31   90/80.....................                 $335                   19
92.....................................                  357                   28   92/80.....................                  405                   17
95.....................................                  357                   33   95/80.....................                  379                   21
98.....................................                  319                   44   98/80.....................                  368                   30
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Using small furnace definition of <=55 kBtu/hour.


           Table III.6--Comparison of Impacts for Low-Income Consumers of Single Standard vs. Separate Standard for Large and Small Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Single standard for all furnaces                                      Separate standard for large and small furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Avg. LCC savings    Share of consumers                                 Avg. LCC savings    Share of consumers
                AFUE (%)                       (2014$)          with net cost (%)      AFUE (%) large/small           (2014$)         with net cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
90.....................................                 $210                   22   90/80.....................                 $274                   12
92.....................................                  301                   20   92/80.....................                  379                   11
95.....................................                  363                   24   95/80.....................                  423                   13
98.....................................                  356                   44   98/80.....................                  447                   31
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Using small furnace definition of <=55 kBtu/hour.

    In the NOPR analysis, DOE estimated that some consumers faced with 
significant costs to install a condensing furnace would instead choose 
to switch to electric heating with a heat pump or electric furnace. If 
there were a separate, lower standard level for small furnaces, fewer 
consumers would be faced with installing a condensing furnace, and 
there would be less switching. Table III.7 shows this outcome.

                Table III.7--Comparison of Fuel Switching Impacts of Single Standard vs. Separate Standard for Large and Small Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Single standard for all furnaces                                      Separate standard for large and small furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Switch to electric                                                     Switch to electric
                AFUE (%)                 Switch to heat pump      furnace (% of        AFUE (%) large/small     Switch to heat pump     furnace (% of
                                           (% of consumers)        consumers)                                     (% of consumers)        consumers)
--------------------------------------------------------------------------------------------------------------------------------------------------------
90.....................................                  6.7                  3.0   90/80.....................                  2.9                  1.8
92.....................................                  6.9                  3.1   92/80.....................                  3.0                  1.9
95.....................................                  8.3                  3.5   95/80.....................                  3.9                  2.3
98.....................................                 11.7                  4.2   98/80.....................                  6.5                  2.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Using small furnace definition of <=55 kBtu/hour.


[[Page 55044]]

B. National Impacts

    The estimated national energy savings (full-fuel-cycle) of the 
considered combinations of minimum AFUE for large and small furnaces 
are shown in Table III.8.
    Table III.9 and Table III.10 show the national NPV of benefits for 
alternative furnace standard level combinations at 7-percent and 3-
percent discount rates, respectively. The national energy savings 
decrease as the small furnace definition expands.

            Table III.8--National Energy Savings for Alternative Furnace Standard Level Combinations
                                                     [Quads]
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                               Small furnace definition (kBtu/hour)
----------------------------------------------------------------------------------------------------------------
      Large        Small        <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             92    80                 2.9               2.9               2.9              2.3              1.8
             95    80                 4.2               4.2               4.1              3.4              2.8
             98    80                 5.8               5.7               5.7              4.9              4.2
----------------------------------------------------------------------------------------------------------------


  Table III.9--National Net Present Value of Benefits for Alternative Furnace Standard Level Combinations at 7-
                                              Percent Discount Rate
                                                 [Billion 2014$]
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                               Small furnace definition (kBtu/hour)
----------------------------------------------------------------------------------------------------------------
      Large        Small        <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             92    80                 3.1               3.5               3.5              3.0              2.4
             95    80                 4.2               4.6               4.6              4.2              3.6
             98    80                 3.8               4.4               4.4              4.6              4.0
----------------------------------------------------------------------------------------------------------------


 Table III.10--National Net Present Value of Benefits for Alternative Furnace Standard Level Combinations at 3-
                                              Percent Discount Rate
                                                 [Billion 2014$]
----------------------------------------------------------------------------------------------------------------
    Minimum AFUE (%)                               Small furnace definition (kBtu/hour)
----------------------------------------------------------------------------------------------------------------
      Large        Small        <=45              <=50              <=55              <=60             <=65
----------------------------------------------------------------------------------------------------------------
             92    80                14.7              14.8              14.8             11.8              9.1
             95    80                20.2              20.1              20.0             16.9             13.9
             98    80                23.9              24.0              23.9             21.3             18.4
----------------------------------------------------------------------------------------------------------------

    Table III.11 compares the national energy savings and NPV of a 
single standard for all furnaces vs. a separate standard for large and 
small furnaces. The national energy savings are higher in the case of a 
separate standard for large and small furnaces mainly because there is 
less switching from gas to electric heating.\17\ The NPV is higher in 
the case of a separate standard for large and small furnaces mainly 
because the LCC savings are higher. The impacts of a separate standard 
for large and small furnaces would vary depending on the small furnace 
definition.
---------------------------------------------------------------------------

    \17\ In terms of FFC energy, switching from gas to electricity 
increases energy use considerably because of the losses in thermal 
electricity generation.

                  Table III.11--Comparison of National Impacts of Single Standard vs. Separate Standard for Large and Small Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Single standard for all furnaces                                      Separate standard for large and small furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              National net present                                                       National net
                AFUE (%)                   National energy     value, 7% (billion      AFUE (%) large/small       National energy     present value, 7%
                                           savings (quads)           2014$)                                       savings (quads)      (billion 2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
92.....................................                  2.6                  2.2   92/80.....................                  2.9                  3.5
95.....................................                  3.9                  3.3   95/80.....................                  4.1                  4.6
98.....................................                  5.4                  2.6   98/80.....................                  5.7                  4.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Using small furnace definition of <=55 kBtu/hour.


[[Page 55045]]

IV. Submission of Comments

    DOE will accept comments, data, and information regarding this 
analysis before or after the public meeting, but no later than the date 
provided in the DATES section at the beginning of this document. 
Interested parties may submit comments, data, and other information 
using any of the methods described in the ADDRESSES section at the 
beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov Web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section below.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery/courier, or 
mail also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Confidential Business Information. 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 via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. 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 that 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.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

    Issued in Washington, DC, on September 4, 2015.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and 
Renewable Energy.
[FR Doc. 2015-23021 Filed 9-11-15; 8:45 am]
BILLING CODE 6450-01-P