[Federal Register Volume 81, Number 113 (Monday, June 13, 2016)]
[Rules and Regulations]
[Pages 38338-38396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12881]
[[Page 38337]]
Vol. 81
Monday,
No. 113
June 13, 2016
Part III
Department of Energy
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10 CFR Parts 429 and 430
Energy Conservation Program: Energy Conservation Standards for
Dehumidifiers; Final Rule
Federal Register / Vol. 81 , No. 113 / Monday, June 13, 2016 / Rules
and Regulations
[[Page 38338]]
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DEPARTMENT OF ENERGY
10 CFR Parts 429 and 430
[Docket Number EERE-2012-BT-STD-0027]
RIN 1904-AC81
Energy Conservation Program: Energy Conservation Standards for
Dehumidifiers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as
amended, prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
dehumidifiers. EPCA also requires the U.S. Department of Energy (DOE)
to periodically determine whether more-stringent standards would be
technologically feasible and economically justified, and would save a
significant amount of energy. In this final rule, DOE is adopting more-
stringent energy conservation standards for dehumidifiers. It has
determined that the amended energy conservation standards for these
products would result in significant conservation of energy, and are
technologically feasible and economically justified.
DATES: The effective date of this rule is August 12, 2016. Compliance
with the amended standards established for dehumidifiers in this final
rule is required on and after June 13, 2019.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
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 to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0027. The
www.regulations.gov Web page will contain instructions on how to access
all documents, including public comments, in the docket.
For further information on how to review the docket, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. Bryan Berringer, 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) 586-0371. Email:
[email protected].
Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 586-7796. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Dehumidifiers
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
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. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
a. Preliminary Analysis and NOPR Proposals
b. Comments and Responses
c. Final Rule Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Levels
a. Baseline Efficiency Levels
b. Higher Energy Efficiency Levels
2. Manufacturer Production Cost Estimates
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model (GRIM)
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
3. Discussion of Comments
4. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Development of Social Cost of Carbon Values
c. Current Approach and Key Assumptions
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual 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
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect 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
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Dehumidifier
Standards
2. Summary of Annualized Benefits and Costs of the Adopted
Standards
VI. Certification Reporting and Enforcement Requirements
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Statement of the Need for, and Objectives of, the Rule
2. Significant Issues Raised by Public Comment
[[Page 38339]]
3. Response to Comments From the Small Business Administration's
Chief Counsel for Advocacy
4. Description and Estimated Number of Small Entities Regulated
a. Methodology for Estimating the Number of Small Entities
b. Manufacturer Participation
c. Comparison of Large and Small Entities
5. Description and Estimate of Compliance Requirements
6. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VIII. Approval of the Office of the Secretary
I. Synopsis of the Final Rule
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles.\2\ These products include
dehumidifiers, the subject of this document.
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Efficiency Improvement Act of 2015,
Public Law 114-11 (Apr. 30, 2015).
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6
years after issuance of any final rule establishing or amending a
standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a notice of
proposed rulemaking including new proposed energy conservation
standards. (42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE is adopting amended energy conservation standards
for dehumidifiers. The amended standards, which are expressed in the
minimum allowable integrated energy factor (IEF), expressed in liters
(L) of moisture removed per kilowatt-hour (kWh), are shown in Table
I.1. These standards apply to all products listed in Table I.1 and
manufactured in, or imported into, the United States on and after June
13, 2019.
Table I.1--Energy Conservation Standards for Dehumidifiers (Compliance
Starting June 13, 2019)
------------------------------------------------------------------------
Minimum
integrated
Portable dehumidifier product capacity (pints/day) energy factor
(L/kWh)
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25.00 or less........................................... 1.30
25.01-50.00............................................. 1.60
50.01 or more........................................... 2.80
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Whole-home dehumidifier product case volume (cubic feet)
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8.0 or less............................................. 1.77
More than 8.0........................................... 2.41
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A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
adopted standards on consumers of dehumidifiers, as measured by the
average life-cycle cost (LCC) savings and the simple payback period
(PBP).\3\ The average LCC savings are positive or zero for all product
classes, and the PBP is less than the average lifetime of portable and
whole-home dehumidifiers, which is estimated to be 11 years and 19
years, respectively (see section IV.F).
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\3\ The average LCC savings are measured relative to the
efficiency distribution in the no-new-standards case, which depicts
the market in the compliance year in the absence of standards (see
section IV.F.9). The simple PBP, which is designed to compare
specific dehumidifier efficiency levels, is measured relative to the
baseline model (see section IV.C.1.a).
Table I.2--Impacts of Amended Energy Conservation Standards on Consumers
of Dehumidifiers
------------------------------------------------------------------------
Average LCC Simple payback
Product class savings (2014$) period (years)
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PC1: Portable Dehumidifier: <=25.00 107 0.5
pints/day..........................
PC2: Portable Dehumidifier: 25.01- 119 0.4
50.00 pints/day....................
PC3: Portable Dehumidifier: >=50.01 142 4.5
pints/day..........................
PC4: Whole-home Dehumidifier:
<=8ft\3\...........................
PC5: Whole-home Dehumidifier:
>8ft\3\............................
------------------------------------------------------------------------
DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2016 to 2048). Using a real discount rate of 8.4
percent, DOE estimates that the INPV for manufacturers of dehumidifiers
in the case without amended standards is $179.5 million in 2014$. Under
the adopted standards, DOE expects that manufacturers may lose up to
20.9 percent of this INPV, which is approximately $37.5 million.
Additionally, DOE identified five other DOE regulations that impact
dehumidifier manufacturers and considered potential manufacturer
impacts associated with the cumulative burden of these regulations, as
discussed in section V.B.2.e of this document. Based on DOE's
interviews with the manufacturers of dehumidifiers and impacts
analysis, DOE does not expect significant impacts on manufacturing
capacity or loss of employment for the industry as a whole to result
from the standards for dehumidifiers.
DOE's analysis of the impacts of the adopted standards on
manufacturers is described in section IV.J of this document.
[[Page 38340]]
C. National Benefits and Costs 4
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\4\ All monetary values in this section are expressed in 2014
dollars and, where appropriate, are discounted to 2015 unless
explicitly stated otherwise. Energy savings in this section refer to
the full-fuel-cycle savings (see section IV.H for discussion).
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DOE's analyses indicate that the adopted energy conservation
standards for dehumidifiers would save a significant amount of energy.
Relative to the case without amended standards the lifetime energy
savings for dehumidifiers purchased in the 30-year period that begins
in the anticipated year of compliance with the amended standards (2019-
2048), amount to 0.30 quadrillion Btu (quads).\5\ This represents a
savings of 7.4 percent relative to the energy use of these products in
the case without amended standards (referred to as the ``no-new-
standards case'').
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\5\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more complete picture of the
impacts of energy efficiency standards. For more information on the
FFC metric, see section IV.H.2.
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The cumulative net present value (NPV) of total consumer costs and
savings of the standards for dehumidifiers ranges from $1.28 billion
(at a 7-percent discount rate) to $2.71 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product costs for
dehumidifiers purchased in 2019-2048.
In addition, the standards for dehumidifiers are projected to yield
significant environmental benefits. DOE estimates that the standards
would result in cumulative greenhouse gas emission reductions (over the
same period as for energy savings) of 18.6 million metric tons (Mt) \6\
of carbon dioxide (CO2), 11.0 thousand tons of sulfur
dioxide (SO2), 33.1 tons of nitrogen oxides
(NOX), 77.9 thousand tons of methane (CH4), 0.23
thousand tons of nitrous oxide (N2O), and 0.04 tons of
mercury (Hg).\7\ The cumulative reduction in CO2 emissions
through 2030 amounts to 5.3 Mt.
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2015 (AEO 2015) Reference case, which generally represents
current legislation and environmental regulations for which
implementing regulations were available as of October 31, 2014.
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The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the ``Social Cost of Carbon,'' or SCC) developed by a Federal
interagency working group.\8\ The derivation of the SCC values is
discussed in section 0. Using discount rates appropriate for each set
of SCC values, DOE estimates that the net present monetary value of the
CO2 emissions reduction (not including CO2
equivalent emissions of other gases with global warming potential) is
between $0.1 billion and $1.9 billion, with a value of $0.6 billion
using the central SCC case represented by $40.0/t in 2015. DOE also
estimates that the net present monetary value of the NOX
emissions reduction to be $0.03 billion at a 7-percent discount rate,
and $0.07 billion at a 3-percent discount rate.\9\
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\8\ Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. Interagency Working
Group on Social Cost of Carbon, United States Government. May 2013;
revised November 2013. Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
\9\ DOE estimated the monetized value of NOX
emissions reductions using benefit per ton estimates from the
Regulatory Impact Analysis for the Clean Power Plan Final Rule,
published in August 2015 by EPA's Office of Air Quality Planning and
Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section
IV.L.2 for further discussion. Note that the agency is primarily
using a national benefit-per-ton estimate for NOX emitted
from the Electricity Generating Unit sector based on an estimate of
premature mortality derived from the ACS study (Krewski et al.,
2009). If the benefit-per-ton estimates were based on the Six Cities
study (Lepuele et al., 2011), the values would be nearly two-and-a-
half times larger.
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Table I.3 summarizes the national economic benefits and costs
expected to result from the adopted standards for dehumidifiers.
Table I.3--Summary of National Economic Benefits and Costs of Amended
Energy Conservation Standards for Dehumidifiers *
------------------------------------------------------------------------
Present value
Category (billion Discount rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings....... 1.4 7
2.9 3
CO2 Reduction Value ($12.2/t case) **. 0.1 5
CO2 Reduction Value ($40.0/t case) **. 0.6 3
CO2 Reduction Value ($62.3/t case) **. 1.0 2.5
CO2 Reduction Value ($117/t case) **.. 1.9 3
NOX Reduction Value [dagger].......... 0.03 7
0.07 3
Total Benefits [dagger][dagger]....... 2.0 7
3.6 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs.. 0.11 7
0.19 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction 1.9 7
Monetized Value [dagger][dagger]..... 3.4 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with
dehumidifiers shipped in 2019-2048. These results include benefits to
consumers which accrue after 2048 from the products purchased in 2019-
2048. The costs account for the incremental variable and fixed costs
incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule.
[[Page 38341]]
** The CO2 values represent global monetized values of the SCC, in
2014$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated
using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
represents the 95th percentile of the SCC distribution calculated
using a 3% discount rate. The SCC time series incorporate an
escalation factor.
[dagger] The $/ton values used for NOX are described in section 0. DOE
estimated the monetized value of NOX emissions reductions using
benefit per ton estimates from the Regulatory Impact Analysis for the
Clean Power Plan Final Rule, published in August 2015 by EPA's Office
of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that
the agency is primarily using a national benefit-per-ton estimate for
NOX emitted from the Electricity Generating Unit sector based on an
estimate of premature mortality derived from the ACS study (Krewski et
al., 2009). If the benefit-per-ton estimates were based on the Six
Cities study (Lepuele et al., 2011), the values would be nearly two-
and-a-half times larger.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
using the series corresponding to average SCC with 3-percent discount
rate ($40.0/t case).
The benefits and costs of the adopted standards, for dehumidifiers
sold in 2019-2048, can also be expressed in terms of annualized values.
The monetary values for the total annualized net benefits are the sum
of (1) the national economic value of the benefits in reduced consumer
operating costs, minus (2) the increases in product purchase prices and
installation costs, plus (3) the value of the benefits of
CO2 and NOX emission reductions, all
annualized.\10\
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\10\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2015, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2015. The calculation uses discount rates of 3 and 7
percent for all costs and benefits except for the value of
CO2 reductions, for which DOE used case-specific discount
rates, as shown in Table I.3. Using the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in the compliance year that yields the same present value.
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Although the value of operating cost savings and CO2
emission reductions are both important, two issues are relevant. First,
the national operating cost savings are domestic U.S. consumer monetary
savings that occur as a result of market transactions, whereas the
value of CO2 reductions is based on a global value. Second,
the assessments of operating cost savings and CO2 savings
are performed with different methods that use different time frames for
analysis. The national operating cost savings is measured for the
lifetime of dehumidifiers shipped in 2019-2048. Because CO2
emissions have a very long residence time in the atmosphere,\11\ the
SCC values in future years reflect future CO2-emissions
impacts that continue beyond 2100.
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\11\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ (2005), ``Correction to
`Control of fossil-fuel particulate black carbon and organic matter,
possibly the most effective method of slowing global warming,' '' J.
Geophys. Res. 110. pp. D14105.
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Estimates of annualized benefits and costs of the adopted standards
are shown in Table I.4. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, (for which DOE used a 3-percent discount
rate along with the SCC series that has a value of $40.0/t in
2015),\12\ the estimated cost of the standards in this rule is $11
million per year in increased equipment costs, while the estimated
annual benefits are $136 million in reduced equipment operating costs,
$34 million in CO2 reductions, and $2.9 million in reduced
NOX emissions. In this case, the net benefit amounts to $163
million per year. Using a 3-percent discount rate for all benefits and
costs and the SCC series has a value of $40.0/t in 2015, the estimated
cost of the standards is $10 million per year in increased equipment
costs, while the estimated annual benefits are $162 million in reduced
operating costs, $34 million in CO2 reductions, and $3.7
million in reduced NOX emissions. In this case, the net
benefit amounts to $189 million per year.
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\12\ DOE used a 3-percent discount rate because the SCC values
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).
Table I.4--Annualized Benefits and Costs of Amended Standards for Dehumidifiers *
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Million 2014$/year
-----------------------------------------------------------------------------------
Discount rate High net benefits
Primary estimate Low net benefits estimate estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings... 7%.............................. 136....................... 131....................... 141.
3%.............................. 162....................... 154....................... 169.
CO2 Reduction Value ($12.2/t case) 5%.............................. 10........................ 10........................ 11.
**.
CO2 Reduction Value ($40.0/t case) 3%.............................. 34........................ 34........................ 35.
**.
CO2 Reduction Value ($62.3/t case) 2.5%............................ 50........................ 49........................ 51.
**.
CO2 Reduction Value ($117/t case) 3%.............................. 104....................... 102....................... 106.
**.
NOX Reduction Value [dagger]...... 7%.............................. 2.9....................... 2.9....................... 6.7.
3%.............................. 3.7....................... 3.7....................... 8.6.
Total Benefits [dagger][dagger]... 7% plus CO2 range............... 150 to 243................ 144 to 236................ 159 to 254.
7%.............................. 173....................... 167....................... 183.
3% plus CO2 range............... 176 to 269................ 168 to 260................ 188 to 284.
3%.............................. 200....................... 192....................... 213.
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Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7%.............................. 11........................ 11........................ 10.
3%.............................. 10........................ 12........................ 10.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]........ 7% plus CO2 range............... 139 to 232................ 132 to 224................ 148 to 244.
[[Page 38342]]
7%.............................. 163....................... 156....................... 173.
3% plus CO2 range............... 165 to 259................ 157 to 248................ 178 to 274.
3%.............................. 189....................... 180....................... 203.
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* This table presents the annualized costs and benefits associated with dehumidifiers shipped in 2019-2048. These results include benefits to consumers
which accrue after 2048 from the dehumidifiers purchased from 2019-2048. The results account for the incremental variable and fixed costs incurred by
manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates
utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high
decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three
cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For DOE's Primary Estimate and Low
Net Benefits Estimate, the agency used a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector
based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-
ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
labeled discount rate, and those values are added to the full range of CO2 values.
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.
D. Conclusion
Based on the analyses culminating in this final rule, DOE found the
benefits to the nation of the standards (energy savings, consumer LCC
savings, positive NPV of consumer benefit, and emission reductions)
outweigh the burdens (loss of INPV and LCC increases for some users of
these products). DOE has concluded that the standards in this final
rule represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in significant conservation of energy.
II. Introduction
The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the establishment of standards for dehumidifiers.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified)
established the Energy Conservation Program for Consumer Products Other
Than Automobiles, a program covering most major household appliances
(collectively referred to as ``covered products''), which includes the
dehumidifiers that are the subject of this rulemaking. (42 U.S.C.
6295(cc)) EPCA, as amended, prescribed energy conservation standards
for dehumidifiers \13\ manufactured on or after October 1, 2007, and
more stringent energy conservation standards for dehumidifiers
manufactured on or after October 1, 2012. (42 U.S.C. 6295(cc)) Under 42
U.S.C. 6295(m), the agency must periodically review its already
established energy conservation standards for a covered product.
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\13\ Dehumidifiers are defined as self-contained, electrically
operated, and mechanically encased assemblies consisting of: (1) A
refrigerated surface (evaporator) that condenses moisture from the
atmosphere; (2) a refrigerating system, including an electric motor;
(3) an air-circulating fan; and (4) a means for collecting or
disposing of the condensate. (42 U.S.C. 6291(34))
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Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2) labeling;
(3) the establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is primarily responsible for labeling, and DOE implements the
remainder of the program. Subject to certain criteria and conditions,
DOE is required to develop test procedures to measure the energy
efficiency, energy use, or estimated annual operating cost of each
covered product. (42 U.S.C. 6295(o)(3)(A)) Manufacturers of covered
products must use the prescribed DOE test procedure as the basis for
certifying to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test
procedures for dehumidifiers currently appear at title 10 of the Code
of Federal Regulations (CFR) part 430, subpart B, appendix X.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including dehumidifiers. Any
new or amended standard for a covered product must be designed to
achieve the maximum improvement in energy efficiency that is
technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard
that would not result in the significant conservation of energy. (42
U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For
certain products, including dehumidifiers, 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)(A)-(B)) In deciding whether a proposed standard
is economically justified, DOE must determine whether the benefits of
the standard exceed its burdens. (42
[[Page 38343]]
U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after
receiving comments on the proposed standard, and by considering, to the
greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from 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
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, 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 savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents 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. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States 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. (42 U.S.C.
6295(o)(4))
Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when
promulgating an energy conservation standard for a covered product that
has two or more subcategories. DOE must specify a different standard
level for a type or class of products that has the same function or
intended use if DOE determines that 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. (42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies 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 may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under 42
U.S.C. 6297(d)).
EPCA also requires that, for any final rule for new or amended
energy conservation standards promulgated after July 1, 2010, DOE must
address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3))
Specifically, when DOE adopts a standard for a covered product after
that date, it must, if justified by the criteria for adoption of
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and
off mode energy use into a single standard, or, if that is not
feasible, adopt a separate standard for such energy use for that
product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's test procedures for
dehumidifiers address standby mode and off mode energy use, as do the
amended standards adopted in this final rule.
B. Background
1. Current Standards
EPCA prescribes energy conservation standards for dehumidifiers
manufactured on or after October 1, 2012. In a final rule published on
March 23, 2009, DOE codified these standards at 10 CFR 430.32(v)(2). 74
FR 12058. These standards are set forth in Table II.1.
Table II.1--Federal Energy Efficiency Standards for Dehumidifiers *
------------------------------------------------------------------------
Energy factor
Product class * (pints/day) (EF) ** (L/
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
75.01 or more........................................... 2.5
------------------------------------------------------------------------
* Product capacity in pints/day is measured according to the DOE test
procedure in appendix X of 10 CFR 430.
** EF is a measure of the water removed from the air per unit of energy
consumed by a dehumidifier and is calculated according to appendix X.
2. History of Standards Rulemaking for Dehumidifiers
EPCA, as amended, established the first energy conservation
standards for dehumidifiers manufactured as of October 1, 2007, based
on the EF metric. As discussed in section II.B.1, subsequent amendments
prescribed energy conservation standards for dehumidifiers manufactured
on or after October 1, 2012. DOE is conducting this rulemaking pursuant
to 42 U.S.C. 6295(m)(1), which requires DOE, no later than 6 years
after issuance of any final rule establishing or amending a standard,
to publish either a notice of determination that standards for the
product do not need to be amended, or a NOPR that includes new proposed
energy conservation standards.
DOE initiated this rulemaking by issuing an analytical Framework
Document, ``Energy Conservation Standards Rulemaking Framework Document
for Dehumidifiers.'' 77 FR 49739 (Aug. 17, 2012). The Framework
Document explained the issues, analyses, and process that DOE
anticipated using to develop energy conservation standards for
dehumidifiers.
DOE held a public meeting on September 24, 2012, to solicit
comments from interested parties regarding the Framework Document and
DOE's proposed analytical approach. DOE sought feedback from interested
parties on these subjects and provided information regarding the
rulemaking process that DOE would follow. Interested parties discussed
the following major issues at the public meeting: Rulemaking schedule;
test procedure revisions; product classes; technology options;
efficiency levels; and approaches for each of the analyses performed by
DOE as part of the rulemaking process.
[[Page 38344]]
Comments received following the publication of the framework
document helped DOE identify and resolve issues related to the
subsequent preliminary analysis. In the preliminary analysis, DOE
conducted in-depth technical analyses in the following areas: (1)
Engineering; (2) markups to determine product price; (3) energy use;
(4) life-cycle cost and payback period; and (5) national impacts. The
preliminary technical support document (TSD) that presented the
methodology and results of each of these analyses is available at
http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0027-
0015.
DOE also conducted, and included in the preliminary TSD, several
other analyses that supported the major analyses. These analyses
included: (1) The market and technology assessment; (2) the screening
analysis, which contributes to the engineering analysis; and (3) the
shipments analysis,\14\ which contributes to the LCC and PBP analysis
and national impact analysis (NIA). In addition to these analyses, DOE
began preliminary work on the manufacturer impact analysis (MIA) and
identified the methods to be used for the consumer subgroup analysis,
the emissions analysis, the employment impact analysis, the regulatory
impact analysis, and the utility impact analysis.
---------------------------------------------------------------------------
\14\ Industry data track shipments from manufacturers into the
distribution chain. Data on national unit retail sales are lacking,
but are presumed to be close to shipments under normal
circumstances.
---------------------------------------------------------------------------
DOE published a notice of public meeting and availability of the
preliminary TSD on May 22, 2014. 79 FR 29380. DOE subsequently held a
public meeting on June 13, 2014, to discuss and receive comments on the
preliminary TSD. DOE received comments on topics including: Whole-home
dehumidifier coverage and test procedures, product classes, design
options, efficiency levels, use of experience curves, shipments
projections, social cost of carbon estimates and the associated
monetization of carbon dioxide, and small business impacts. After
reviewing these comments, DOE gathered additional information, held
further discussions with manufacturers, and completed and revised the
various analyses described in the preliminary analysis.
On June 3, 2015, DOE published a notice of proposed rulemaking
(hereafter, the ``June 2015 NOPR'') and notice of public meeting. 80 FR
31645. The June 2015 NOPR and accompanying TSD presented the results of
DOE's updated analyses and proposed amended standards for
dehumidifiers. On July 7, 2015, DOE held a public meeting to discuss
the issues detailed in the June 2015 NOPR. Interested parties commented
on various aspects of the proposed rule and submitted supplemental
written comments. Following the public meeting, DOE gathered additional
information and performed additional analyses to supplement the
analyses presented in the June 2015 NOPR. The results of these analyses
are detailed in the TSD accompanying this final rule, available in the
docket at the regulations.gov Web site. DOE considered the comments
received since publication of the June 2015 NOPR, including those
received at the NOPR public meeting, in developing amended standards
for dehumidifiers.
III. General Discussion
DOE developed this final rule after considering comments, data, and
information from interested parties that represent a variety of
interests. The following discussion addresses issues raised by these
commenters.
A. Product Classes and Scope of Coverage
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q))
Existing energy conservation standards divide portable and whole
home dehumidifiers into five product classes based on product capacity
in the number of pints per day (pints/day) of moisture that the product
removes from ambient air at test conditions, as measured by the
applicable DOE test procedure, appendix X. In this rulemaking, DOE is
establishing new product classes that differentiate dehumidifiers not
only by product capacity but by product configuration as well (i.e.,
between portable and whole-home configurations). For portable
dehumidifiers, DOE is establishing the following three product classes
based on the product capacity:\15\ (1) 25.00 pints/day or less; (2)
25.01 to 50.00 pints/day; and (3) 50.01 pints/day or more. For whole-
home dehumidifiers, DOE is adopting the following two product classes
based on product case volume:\16\ (1) Less than or equal to 8.0 ft\3\;
and (2) greater than 8.0 ft\3\.
---------------------------------------------------------------------------
\15\ Note that the test conditions for the new product classes
are different from those for the existing product classes.
\16\ Product case volume is the rectangular volume that the
product case occupies, exclusive of any duct attachment collars or
other external components.
---------------------------------------------------------------------------
The product classes for portable dehumidifiers analyzed for this
final rule are different from those examined in DOE's initial analysis
and the June 2015 NOPR, while the product classes for whole-home
dehumidifiers are the same. In the May 2014 Preliminary TSD, DOE
initially analyzed five product classes for portable dehumidifiers
based on product capacity. Due, in part, to comments received on the
preliminary TSD, DOE proposed only three product classes for portable
dehumidifiers in the June 2015 NOPR: (1) 30.00 pints/day or less; (2)
30.01 to 45.00 pints/day; and (3) 45.01 pints/day or more. For this
final rule, DOE adjusted the product capacity thresholds between these
three product classes after considering comments and conducting
additional discussions with manufacturers and further analysis.
Comments received relating to the scope of coverage and product classes
are discussed in section IV.A of this final rule.
B. Test Procedure
DOE's current energy conservation standards for dehumidifiers are
expressed in terms of EF, in L/kWh, and are a function of the product
capacity, expressed in pints/day. (See 10 CFR 430.32(v)(2)).
EPCA specifies that the dehumidifier test criteria used under the
ENERGY STAR \17\ program in effect as of January 1, 2001,\18\ must
serve as the basis for the DOE test procedure for dehumidifiers, unless
revised by DOE. (42 U.S.C. 6293(b)(13)) The ENERGY STAR test criteria
required that American National Standards Institute (ANSI)/Association
of Home Appliance Manufacturers (AHAM) Standard DH-1,
``Dehumidifiers,'' be used to measure product capacity while the
Canadian Standards Association (CAN/CSA) standard CAN/CSA-C749-1994
(R2005), ``Performance of Dehumidifiers,'' be used to calculate the EF.
The version of AHAM Standard DH-1 in use at the time the ENERGY STAR
test criteria were adopted was AHAM Standard DH-1-1992. In 2006, DOE
adopted these test criteria, along
[[Page 38345]]
with related definitions and tolerances, as its test procedure for
dehumidifiers at 10 CFR part 430, subpart B, appendix X. 71 FR 71340,
71347, 71366-71368 (Dec. 8, 2006).
---------------------------------------------------------------------------
\17\ For more information on the ENERGY STAR program, please
visit www.energystar.gov.
\18\ ``Energy Star Program Requirements for Dehumidifiers'',
Version 1.0, U.S. Environmental Protection Agency (EPA), available
online at: www.energystar.gov/products/specs/system/files/DehumProgReqV1.0.pdf.
---------------------------------------------------------------------------
On October 31, 2012, DOE published a final rule to establish a new
test procedure for dehumidifiers that references ANSI/AHAM Standard DH-
1-2008, ``Dehumidifiers,'' (ANSI/AHAM DH-1-2008) for both energy use
and product capacity measurements. 77 FR 65995 (Oct. 31, 2012). The
final rule also adopted standby and off mode provisions that satisfy
the requirement in EPCA for DOE to include measures of standby mode and
off mode energy consumption in its test procedures for residential
products, if technically feasible. (42 U.S.C. 6295(gg)(2)(A)) This new
DOE test procedure, codified at that time at 10 CFR part 430, subpart
B, appendix X1, established a new metric, IEF, which incorporates
measures of active, standby, and off mode energy use, in addition to
the existing EF metric.
DOE subsequently removed the existing test procedures at appendix X
and redesignated the test procedures at appendix X1 as appendix X. 79
FR 7366 (Feb. 7, 2014). Any representations of energy use, including
standby mode or off mode energy consumption, or efficiency of portable
dehumidifiers must be made in accordance with the results of testing
pursuant to the redesignated appendix X.
On May 21, 2014, DOE published a NOPR (the ``May 2014 Test
Procedure NOPR'') proposing further amendments to the dehumidifier test
procedures in appendix X. 79 FR 29272. In addition to making
clarifications and corrections in appendix X, DOE proposed creating a
new appendix, appendix X1, which would: (1) Require certain active mode
testing at a lower ambient temperature; (2) add a measure of fan-only
mode energy consumption in the IEF metric; and (3) include testing
methodology and measures of performance for whole-home dehumidifiers.
On February 4, 2015, DOE published a supplemental notice of
proposed rulemaking (the ``February 2015 Test Procedure SNOPR''). 80 FR
5994. In the SNOPR, DOE maintained its proposals from the NOPR, except
that DOE proposed: (1) Adjustments and clarifications to the whole-home
dehumidifier test setup and conduct; (2) a method to determine whole-
home dehumidifier case volume; (3) a method for measuring energy use in
off-cycle mode, including any fan operation; (4) a clarification to the
relative humidity and product capacity equations; and (5) additional
technical corrections and clarifications.
In response to the May 2014 Test Procedure NOPR, June 2014 public
meeting, and February 2015 Test Procedure SNOPR, DOE received comments
from interested parties related to the test procedure. DOE addressed
these issues in the test procedure final rule to establish a new
appendix X1 published on July 31, 2015 (the ``July 2015 Test Procedure
Final Rule,'' 80 FR 45801), and based its analysis in this notice on
product capacities and efficiencies determined according to the
appendix X1 test procedure.
C. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be
technologically feasible. 10 CFR part 430, subpart C, appendix A,
section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; and (3) adverse impacts on
health or safety. 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its
analysis any proprietary technology that is a unique pathway to
achieving a certain efficiency level. Section IV.B of this document
discusses the results of the screening analysis for dehumidifiers,
particularly the designs DOE considered, those it screened out, and
those that are the basis for the standards considered in this
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it 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)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
dehumidifiers, using the design parameters for the most efficient
products available on the market or in working prototypes. The max-tech
levels that DOE determined for this rulemaking are described in section
IV.C of this final rule and in chapter 5 of the final rule TSD.
D. Energy Savings
1. Determination of Savings
For each trial standard level (TSL), DOE projected energy savings
from application of the TSL to dehumidifiers purchased in the 30-year
period that begins in the year of compliance with any amended standards
(2019-2048).\19\ The savings are measured over the entire lifetime of
products purchased in the 30-year analysis period. DOE quantified the
energy savings attributable to each TSL as the difference in energy
consumption between each standards case and the no-new-standards case.
The no-new-standards case represents a projection of energy consumption
that reflects how the market for a product would likely evolve in the
absence of amended energy conservation standards.
---------------------------------------------------------------------------
\19\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its NIA spreadsheet models to estimate energy savings from
potential amended standards for dehumidifiers. The NIA spreadsheet
model (described in section IV.H of this document) calculates savings
in site energy, which is the energy directly consumed by products at
the locations where they are used. Based on the site energy, DOE
calculates national energy savings (NES) in terms of primary energy
savings at the site or at power plants, and also in terms of full-fuel-
cycle (FFC) energy savings. The FFC metric includes the energy consumed
in extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and thus presents a more complete
picture of the impacts of
[[Page 38346]]
energy conservation standards.\20\ DOE's approach is based on the
calculation of an FFC multiplier for each of the energy types used by
covered products or equipment. For more information on FFC energy
savings, see section IV.H.2 of this document. For natural gas, the
primary energy savings are considered to be equal to the site energy
savings.
---------------------------------------------------------------------------
\20\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------
2. Significance of Savings
To adopt standards for a covered product, DOE must determine that
such action would result in ``significant'' energy savings. (42 U.S.C.
6295(o)(3)(B)) Although the term ``significant'' is not defined in the
Act, the U.S. Court of Appeals, for the District of Columbia Circuit in
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373
(D.C. Cir. 1985), indicated opined that Congress intended
``significant'' energy savings in the context of EPCA to be savings
that were not ``genuinely trivial.'' The energy savings for all the
TSLs considered in this rulemaking, including the adopted standards,
are nontrivial, and, therefore, DOE considers them ``significant''
within the meaning of section 325 of EPCA.
E. Economic Justification
1. Specific Criteria
As noted in this preamble, EPCA provides seven factors to be
evaluated in determining whether a potential energy conservation
standard is economically justified. (42 U.S.C.
6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts an MIA, as discussed in section IV.J. DOE
first uses an annual cash-flow approach to determine the quantitative
impacts. This step includes both a short-term assessment--based on the
cost and capital requirements during the period between when a
regulation is issued and when entities must comply with the
regulation--and a long-term assessment over a 30-year period. The
industry-wide impacts analyzed include: (1) INPV, which values the
industry on the basis of expected future cash flows; (2) cash flows by
year; (3) changes in revenue and income; and (4) other measures of
impact, as appropriate. Second, DOE analyzes and reports the impacts on
different types of manufacturers, including impacts on small
manufacturers. Third, DOE considers the impact of standards on domestic
manufacturer employment and manufacturing capacity, as well as the
potential for standards to result in plant closures and loss of capital
investment. Finally, DOE takes into account cumulative impacts of
various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the economic impacts applicable to a particular rulemaking. DOE also
evaluates the LCC impacts of potential standards on identifiable
subgroups of consumers that may be affected disproportionately by a
national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product lifetime and discount rate, DOE uses a
distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first year of compliance with
amended standards. The LCC savings for the considered efficiency levels
are calculated relative to the case that reflects projected market
trends in the absence of amended standards. DOE's LCC and PBP analysis
is discussed in further detail in section IV.F.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting 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)) As
discussed in section IV.H, DOE uses the NIA spreadsheet models to
project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards adopted in this final rule would not
reduce the utility or performance of the products under consideration
in this rulemaking. DOE discusses potential impacts on product utility
in section IV.C.1.b of this document.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE transmitted
a copy of its proposed rule to the Attorney General with a request that
the Department of Justice (DOJ) provide its determination on this
issue. DOE received no adverse comments from DOJ regarding the proposed
rule.
[[Page 38347]]
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the
adopted standards are likely to provide improvements to the security
and reliability of the nation's energy system. Reductions in the demand
for electricity also may result in reduced costs for maintaining the
reliability of the nation's electricity system. DOE conducts a utility
impact analysis to estimate how standards may affect the nation's
needed power generation capacity, as discussed in section IV.M of this
document.
The adopted standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this document;
the emissions impacts are reported in section V.B.6 of this document.
DOE also estimates the economic value of emissions reductions resulting
from the considered TSLs, as discussed in section IV.L of this
document.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
To the extent interested parties submit any relevant information
regarding economic justification that does not fit into the other
categories described above, DOE could consider such information under
``other factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential amended
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this final rule.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to dehumidifiers. Separate subsections address
each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments forecasts and calculates
national energy savings and net present value of total consumer costs
and savings expected to result from potential energy conservation
standards. DOE uses the third spreadsheet tool, the Government
Regulatory Impact Model (GRIM), to assess manufacturer impacts of
potential standards. These three spreadsheet tools are available on the
DOE Web site for this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/55. Additionally,
DOE used output from the latest version of the Energy Information
Administration's (EIA) Annual Energy Outlook (AEO), a widely known
energy forecast for the United States, for the emissions and utility
impact analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include: (1) A determination of the
scope of the rulemaking and product classes; (2) manufacturers and
industry structure; (3) existing efficiency programs; (4) shipments
information; (5) market and industry trends; and (6) technologies or
design options that could improve the energy efficiency of
dehumidifiers. The key findings of DOE's market assessment are
summarized below. See chapter 3 of the final rule TSD for further
discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
EPCA defines a dehumidifier as product that is self-contained,
electrically operated, mechanically encased, and a product that
incorporates a refrigerated surface to condense moisture from the
atmosphere. It further defines it as having a refrigerating system with
an electric motor; a fan for air circulation; and a means for
collecting or disposing of the condensate. (42 U.S.C. 6291(34)) In the
July 2015 Test Procedure Final Rule, DOE clarified that this definition
of a dehumidifier, codified at 10 CFR 430.2, does not apply to portable
air conditioners, room air conditioners, or packaged terminal air
conditioners. 80 FR 45801, 45804-45805 (July 31, 2015).\21\
---------------------------------------------------------------------------
\21\ Room air conditioners and packaged terminal air
conditioners are defined as a separate covered products under EPCA.
(42 U.S.C. 6292(a)(2), 6295(c), 6311((1)(I), 6311(10)(A), and
6313(a)(3)) Portable air conditioners were determined by DOE to be
covered products under EPCA in a final determination published on 80
FR 45801, 45805-45806 (July 31, 2015).
---------------------------------------------------------------------------
In the July 2015 Test Procedure Final Rule, DOE also added
definitions to 10 CFR 430.2 for portable dehumidifiers and whole-home
dehumidifiers. Portable dehumidifiers are designed to operate within
the dehumidified space without ducting attached, although ducting may
be attached optionally. Whole-home dehumidifiers are designed to be
installed with inlet ducting for return process air and outlet ducting
that supplies dehumidified process air to one or more locations in the
dehumidified space. In the July 2015 Test Procedure Final rule, DOE
further established that dehumidifiers that are able to operate as both
a portable and whole-home dehumidifier be tested and rated for both
configurations. 80 FR 45801, 45805-45806 (July 31, 2015).
When evaluating and establishing energy conservation standards, DOE
may divide covered products into product classes by the type of energy
used, by capacity, or by other performance-related features that
justify
[[Page 38348]]
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q))
Under 42 U.S.C. 6295(cc)(2), standards are established for five
product classes of dehumidifiers, based on the capacity of the unit in
pints of water extracted per day, as shown in Table IV.1.
Representations of capacity to comply with the current dehumidifier
energy conservation standards are determined based on the current DOE
test procedure in appendix X, as designated in the test procedure final
rule published on February 7, 2014. 79 FR 7366.
Table IV.1--Current Dehumidifier Product Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
Capacity (pints/day):
Up to 35.00.
35.01-45.00.
45.01-54.00.
54.01-75.00.
75.00 or more.
------------------------------------------------------------------------
a. Preliminary Analysis and NOPR Proposals
In the preliminary analysis conducted for this rulemaking, DOE
considered the following portable dehumidifier product classes that
were based on the existing product classes, but with capacities
adjusted for the lower ambient temperature proposed in the May 2014
Test Procedure NOPR.
Table IV.2--Preliminary Analysis Portable Dehumidifier Product Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
Capacity (pints/day):
20.00 or less.
20.01 to 30.00.
30.01 to 35.00.
35.01 to 45.00.
45.01 or more.
------------------------------------------------------------------------
In the preliminary analysis, DOE also considered two product
classes for whole-home dehumidifiers, differentiated by product case
volume.
Table IV.3--Preliminary Analysis Whole-Home Dehumidifier Product Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
Case Volume (cubic feet):
less than or equal to 8.0.
greater than 8.0.
------------------------------------------------------------------------
In response to the preliminary analysis, DOE received comments
stating that the test procedure changes proposed in the May 2014 Test
Procedure NOPR would increase test-to-test variation and make it more
difficult to establish product classes based on capacity thresholds for
the portable dehumidifiers. DOE subsequently conducted additional
analysis that indicated that product construction and performance under
the proposed test conditions were similar for products with capacities
of 20 pints/day or less and 20.01 to 30 pints/day. DOE observed the
same similarities between products in the 30.01 to 35 pints/day and
35.01 to 45 pints/day product classes. DOE, therefore, proposed to
establish only three portable product classes based on capacity and
maintained the same two proposed product classes for whole-home
dehumidifiers. DOE proposed the revised product class structure in the
June 2015 NOPR. 80 FR 31645, 31656-31658 (June 3, 2015).
Table IV.4--June 2015 NOPR Dehumidifier Product Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
Portable (capacity, pints/day):
30.00 or less.
30.01 to 45.00.
45.01 or more.
Whole-Home (case volume, cubic feet):
less than or equal to 8.0.
greater than 8.0.
------------------------------------------------------------------------
b. Comments and Responses
Scope of Coverage
Aprilaire Inc. (Aprilaire) stated that not requiring air
conditioners to meet dehumidifier standards results in unfair
competition because air conditioners often provide a dehumidification
mode, yet are regulated only for cooling mode. (Aprilaire, No. 34 at p.
3; Aprilaire, Public Meeting Transcript, No. 35 at p.
27)22 23 DOE notes that the definition for dehumidifier in
10 CFR 430.2 specifically excludes portable air conditioners, room air
conditioners, and packaged terminal air conditioners because these
products are the subject of either existing energy conservation
standards (e.g., room air conditioners and packaged terminal air
conditioners (42 U.S.C. 6295(c) and 42 U.S.C. 6313(a)(3)) or a current
rulemaking considering new standards (e.g., portable air conditioners).
The existing or proposed energy conservation standards for these
products address representative energy use in active, standby, and off
modes. When evaluating new or amended standards, DOE will consider all
relevant operating modes, including any dehumidification mode.
---------------------------------------------------------------------------
\22\ A notation in the form ``Aprilaire, No. 34 at p. 3''
identifies a written comment: (1) Made by Aprilaire Inc.; (2)
recorded in document number 34 that is filed in the docked of this
standards rulemaking (Docket No. EERE-2012-BT-STD-0027) and
available for review at www.regulations.gov; and (3) which appears
on page 3 of document number 34.
\23\ A notation in the form ``Aprilaire, Public Meeting
Transcript, No. 35 at p. 27'' identifies an oral comment that DOE
received during the July 7, 2015, dehumidifier energy conservation
standards NOPR public meeting. Oral comments were recorded in the
public meeting transcript and are available the dehumidifier energy
conservation standards rulemaking docket (Docket No. EERE-2012-BT-
STD-0027). This particular notation refers to a comment: (1) Made by
Aprilaire Inc. during the public meeting; (2) recorded in document
number 35, which is the public meeting transcript that is filed in
the docket of this energy conservation standards rulemaking; and (3)
which appears on page 27 of document number 35.
---------------------------------------------------------------------------
Aprilaire does not believe that portable dehumidifiers and whole-
home dehumidifiers should be classified and regulated under the same
standards for the same reason that DOE does not regulate space heaters
and home heaters in the same category. (Aprilaire, No. 34 at p. 3)
Although portable dehumidifiers and whole-home dehumidifiers have
different applications and overall performance, they both: (1) Fall
under the statutory definition of a dehumidifier; (2) provide the same
dehumidification function: And (3) can be characterized with the same
energy efficiency performance metric. In contrast, EPCA provides
separate definitions of ``furnace,'' ``heat pump,'' and ``unit heater''
as mutually exclusive covered products (42 U.S.C. 6291(23), (24), and
(45)), subject to separate energy conservation standards (42 U.S.C.
6295(f), (d), and (aa)). In the absence of statutory differentiation
between portable dehumidifiers and whole-home dehumidifiers, DOE is
addressing both product configurations in this rulemaking for amended
dehumidifier standards. DOE, however, is establishing separate product
classes for portable and whole-home dehumidifiers.
Definitions
Aprilaire suggested that DOE re-evaluate the definition for whole-
home dehumidifiers because both whole-home dehumidifiers and portable
dehumidifiers may or may not include ducting. Aprilaire stated that the
correct distinction between the two is that whole-home dehumidifiers
come with integral or external controls that allow the dehumidifier to
function in concert with the central air distribution system. Aprilaire
commented that a definition based on a distinction of controls
compatibility with a central air system would include air conditioners,
which DOE specifically excluded from
[[Page 38349]]
coverage. Further, Aprilaire commented that the definitions of the two
types of dehumidifiers should reflect a number of other distinctions,
including: Application flexibility, air flow rates, typical
installation, and necessary installation expertise. (Aprilaire, No. 34
at pp. 3-4; Aprilaire, Public Meeting Transcript, No. 35 at p. 28) In
addition to establishing definitions for portable dehumidifiers and
whole-home dehumidifiers, DOE acknowledged in the July 2015 Test
Procedure Final Rule that certain dehumidifiers offer optional or
removable ducting, and therefore can be operated as either a portable
dehumidifier or a whole-home dehumidifier. DOE has addressed these
types of products in appendix X1 by requiring manufacturers to test and
rate these products in both configurations. For all other products
available on the market, the presence of ducts or lack thereof is the
only reliably identifiable characteristic to differentiate between the
two product types. For certain units, the additional characteristics
identified by Aprilaire may also differentiate between portable
dehumidifiers and whole-home dehumidifiers, but information on those
characteristics may be subjective or not publicly available. Therefore,
DOE is maintaining the presence of ducts as the primary differentiator
between portable dehumidifiers and whole-home dehumidifiers.
Product Classes
Pacific Gas and Electric Company, Southern California Gas Company,
San Diego Gas and Electric, and Southern California Edison (California
Investor-Owned Utilities (IOUs)) supported DOE's proposal to
consolidate dehumidifiers into fewer product classes; however, they
requested that DOE consider whether capacity or physical size and
weight is the more appropriate attribute for setting product classes.
They stated that if dehumidifiers are typically available in two size
and weight ranges and that physical size defines unique utility,
product class definitions should account for physical size in addition
to capacity. They warned that setting product classes based solely on
capacity ratings may inadvertently encourage manufacturers to build
units rated for low capacity by simply using larger components that
increase weight, resulting in negative impacts on portability and a
corresponding loss of utility to consumers. (California IOUs, No. 41 at
pp. 1-2) Therma-Stor LLC (Therma-Stor) and Aprilaire disagreed with the
proposed product classes based on capacity and/or physical size for the
purpose of applying substantially different minimum efficiency levels.
They commented that the establishment of classes is arbitrary and may
not have sufficient granularity. (Therma-Stor, No. 38 at p. 1;
Aprilaire, Public Meeting Transcript, No. 35 at p. 25; Aprilaire, No.
34 at p. 2) During interviews, multiple manufacturers of portable
dehumidifiers stated that their products are typically built upon two
product platforms with different case sizes. They noted that the two
product sizes provide consumers with unique utility because the smaller
units are more portable and weigh less than the large units. Typically,
condensate removal capacity is also correlated with case size. The
manufacturers stated that DOE should ensure that both product platforms
are maintained with any amended energy conservation standards to
provide consumers the option of purchasing the smaller, more portable
products. Consistent with 42 U.S.C. 6295(q), DOE retained multiple
portable dehumidifier product classes based on product capacity in this
final rule. In its engineering analysis, however, DOE did not consider
technology changes that would significantly impact the portability of
the two lower-capacity product classes. Manufacturers may choose
different pathways to improve efficiency, including by increasing
component sizes and weights, but DOE's analysis shows that there are
pathways to improving efficiency that would not affect consumer
utility.
For whole-home dehumidifiers, certain space-constrained
installation locations limit the case size that may be installed.
Accordingly, manufacturers of these space-constrained products would be
limited in their ability to increase component sizes to achieve higher
efficiencies. Because some technologies are only able to be implemented
in larger case volumes, DOE continues to base the whole-home
dehumidifier product classes on case volume to ensure that space-
constrained whole-home dehumidifiers would be able to maintain their
smaller product volumes at the analyzed efficiency levels.
Electrolux Major Appliances--North America (Electrolux) suggested
that the second portable dehumidifier product class include units with
capacities from 30.01 to 50.00 pints/day because, under the capacity
thresholds proposed in the June 2015 NOPR, units previously rated at 70
pints/day would inappropriately be categorized into the highest-
capacity proposed portable dehumidifier product class. According to
Electrolux, these products would be rated at 46 pints/day under
appendix X1, but based on DOE's description of products in each
proposed product class, Electrolux expects that DOE intended for these
products to be classified in the middle-capacity portable dehumidifier
product class. Electrolux stated that the current 70 pint/day unit,
which is a very high volume and popular capacity, would effectively be
eliminated from the market under the proposed standard level for the
highest-capacity portable dehumidifier product class. (Electrolux, No.
36 at p. 1)
AHAM noted that the reduced temperature conditions for portable
dehumidifiers in appendix X1 decrease the measured capacity by about 35
percent, on average, as compared to the previous test conditions.
Therefore, although AHAM and GE Appliances (GE) agreed with the
establishment of three product classes, they suggested that the
proposed product classes be slightly revised to reflect results from
the test procedure at appendix X1. They suggested that the new portable
dehumidifier product classes be: (1) less than 25.00 pints/day; (2)
25.01-50.00 pints/day; and (3) 50.01 pints/day or greater. (AHAM, No.
39 at pp. 2-4; GE, No. 42 at p. 1) Based on the comments in response to
the June 2015 NOPR and on information gathered during confidential
manufacturer interviews, DOE has revised the portable dehumidifier
product classes, consistent with AHAM's recommendation, to better
reflect how portable dehumidifiers are expected to perform when tested
according to appendix X1. DOE estimates that the distribution of
portable dehumidifier models among the three revised product classes is
the same as was originally determined in the NOPR analysis because the
rated capacity of these models would adjust in the same proportion as
the capacity thresholds between the classes.
c. Final Rule Product Classes
After reviewing comments received in response to the June 2015 NOPR
and evaluating additional information, DOE determined that an
adjustment of the portable dehumidifier product classes is appropriate.
DOE notes that these revised product classes more accurately capture
the intent of DOE's original proposals when considering the impacts of
the new test procedure at appendix X1, and are supported by data from
manufacturers. In summary, DOE is establishing the following three
portable dehumidifier product classes, based on product capacity, and
two whole-home dehumidifier product classes, based on case volume, in
this final rule.
[[Page 38350]]
Table IV.5--Final Rule Dehumidifier Product Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
Portable (capacity, pints/day):
25.00 or less.
25.01 to 50.00.
50.01 or more.
Whole-Home (case volume, cubic feet):
less than or equal to 8.0.
greater than 8.0.
------------------------------------------------------------------------
2. Technology Options
In the market analysis and technology assessment for the June 2015
NOPR, DOE identified 14 technology options that would be expected to
improve the efficiency of dehumidifiers, as measured by the DOE test
procedure (80 FR 31645, 31659 (June 3, 2015)):
Table IV.6--NOPR Technology Options for Dehumidifiers
------------------------------------------------------------------------
-------------------------------------------------------------------------
1. Built-in hygrometer/humidistat.
2. Improved compressor efficiency.
3. Improved condenser and evaporator performance.
4. Improved controls.
5. Improved defrost methods.
6. Improved demand-defrost controls.
7. Improved fan and fan-motor efficiency.
8. Improved flow-control devices.
9. Low-standby-loss electronic controls.
10. Washable air filters.
11. Pre-cooling air-to-air heat exchanger.
12. Heat pipes.
13. Improved refrigeration system insulation.
14. Refrigerant-desiccant systems.
------------------------------------------------------------------------
In the public meeting for the June 2015 NOPR, interested parties
discussed the use of alternative refrigerants as another possible
technology option for dehumidifiers. Aprilaire noted that dehumidifiers
are a relatively small market and there are currently no alternative
refrigerant compressors available for these products. (Aprilaire,
Public Meeting Transcript, No. 35 at p. 47) Southern Company suggested
that alternative refrigerants are currently being explored for
refrigerators, which will likely impact the dehumidifier and other
similar product's market in the near future. (Southern Company, Public
Meeting Transcript, No. 35 at p. 47) GE stated that dehumidifiers would
not transition to alternative refrigerants within the next five years.
(GE, Public Meeting Transcript, No. 35 at p. 48) DOE included
alternative refrigerants as a technology option for consideration in
the final rule analysis because available information indicates that
there are potential efficiency gains associated with this change.
After identifying all potential technology options for improving
the efficiency of dehumidifiers, DOE performed a screening analysis
(section IV.B of this document and chapter 4 of the final rule TSD) to
determine which technologies merited further consideration. See chapter
5 of the final rule TSD for additional information on the technology
options included in the engineering analysis.
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
1. Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
2. Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
3. Impacts on product utility or product availability. If it is
determined that a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not be
considered further.
4. Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further. 10 CFR part 430, subpart C, appendix
A, 4(a)(4) and 5(b).
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the above four criteria, it
will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed
below.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
For the June 2015 NOPR, DOE screened out pre-cooling air-to-air
heat exchangers and heat pipes for portable dehumidifiers with
capacities up to 45 pints/day because the likely increases in case size
and overall weight would result in adverse impacts on product utility
to consumers. 80 FR 31645, 31659-31660 (June 3, 2015).
Therma-Stor objected to the screening analysis determination that
certain technology options are not suitable for low-capacity portable
dehumidifiers. Therma-Stor believes that the improvements considered by
DOE are applicable for all capacities and sizes of dehumidifiers.
(Therma-Stor, No. 38 at p. 2) DOE agrees that these technology options
are feasible for dehumidifiers of all capacities. However, as discussed
in the June 2015 NOPR, DOE found that pre-cooling air-to-air heat
exchangers and heat pipes are not currently incorporated in low-
capacity portable dehumidifiers. DOE determined that including these
technologies would require significantly larger case sizes for the low-
capacity portable dehumidifiers, resulting in adverse impacts on
consumer utility. For high-capacity portable dehumidifiers, DOE
observes that certain products available on the market already
incorporate air-to-air heat exchangers and a similar case size increase
would be required for heat pipes. Therefore, DOE has maintained air-to-
air heat exchangers and heat pipes as potential design options for this
larger-capacity portable dehumidifier product class.
Although, as discussed in section b of this document, DOE is
establishing the high-capacity portable dehumidifier product class for
products with capacity greater than 50 pints/day rather than the 45
pints/day proposed in the June 2015 NOPR, the models that DOE
considered to be high-capacity portable units in the preliminary
analysis would remain classified in this product class based on
available test data. Therefore, the determination to screen out pre-
cooling air-to-air heat exchangers and heat pipes for portable
dehumidifiers other than high-capacity dehumidifiers remains unchanged.
DOE has retained these technology options for portable dehumidifiers
with capacities greater than 50 pints/day and whole-home dehumidifiers.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concludes that
all of the other identified technologies listed in section IV.A.2 met
all four screening criteria to be examined further as design
[[Page 38351]]
options in DOE's final rule analysis. In summary, DOE did not screen
out the following technology options:
Table IV.7--Final Rule Remaining Design Options for Dehumidifiers
------------------------------------------------------------------------
-------------------------------------------------------------------------
1. Built-in hygrometer/humidistat.
2. Improved compressor efficiency.
3. Improved condenser and evaporator performance.
4. Improved controls.
5. Improved defrost methods.
6. Improved demand-defrost controls.
7. Improved fan and fan-motor efficiency.
8. Improved flow-control devices.
9. Low-standby-loss electronic controls.
10. Washable air filters.
11. Pre-cooling air-to-air heat exchanger (high-capacity portable and
whole-home dehumidifiers).
12. Heat pipes (high-capacity portable and whole-home dehumidifiers).
13. Improved refrigeration system insulation.
14. Refrigerant-desiccant systems.
15. Alternative refrigerants.
------------------------------------------------------------------------
DOE determined that these design options are technologically
feasible because they are technologies included in commercially
available products or working prototypes. DOE also finds that all of
the remaining design options meet the other screening criteria (i.e.,
practicable to manufacture, install, and service and do not result in
adverse impacts on consumer utility, product availability, health, or
safety). For additional details, see chapter 4 of the final rule TSD.
C. Engineering Analysis
In the engineering analysis, DOE establishes the relationship
between the manufacturer production cost (MPC) and improved
dehumidifier efficiency. This relationship serves as the basis for
cost-benefit calculations for individual consumers, manufacturers, and
the Nation. DOE typically structures the engineering analysis using one
of three approaches: (1) Design option; (2) efficiency level; or (3)
reverse engineering (or cost assessment). The design-option approach
involves adding the estimated cost and associated efficiency of various
efficiency-improving design changes to the baseline product to model
different levels of efficiency. The efficiency-level approach uses
estimates of costs and efficiencies of products available on the market
at distinct efficiency levels to develop the cost-efficiency
relationship. The reverse-engineering approach involves testing
products for efficiency and determining cost from a detailed bill of
materials (BOM) derived from reverse engineering representative
products. The efficiency ranges from that of the least-efficient
dehumidifier sold today (i.e., the baseline) to the maximum
technologically feasible efficiency level. At each efficiency level
examined, DOE determines the MPC; this relationship is referred to as a
cost-efficiency curve.
1. Efficiency Levels
a. Baseline Efficiency Levels
A baseline unit is typically a product that just meets current
Federal energy conservation standards and provides basic consumer
utility. DOE uses the baseline unit for comparison in several phases of
its rulemaking analyses, including the engineering analysis, LCC
analysis, PBP analysis, and NIA. To determine energy savings that will
result from an amended energy conservation standard, DOE compares
energy use at each of the higher efficiency levels to the energy
consumption of the baseline unit. Similarly, to determine the changes
in price to the consumer that will result from an amended energy
conservation standard, DOE compares the price of a unit at each higher
efficiency level to the price of a unit at the baseline.
For the June 2015 NOPR, DOE determined baseline efficiency levels
by adjusting the existing minimum EF levels to IEF values as would be
measured under appendix X1. DOE determined the appropriate adjusted
baseline efficiency levels based on its test sample, which included a
market-representative range of manufacturers, capacities, and
efficiencies, and additional numerical adjustments for baseline
features identified through market analysis. The most significant
adjustments accounted for the lower ambient test temperature, and
energy consumption in standby mode, off mode, and fan-only mode. Where
DOE combined portable dehumidifier product classes between the
preliminary analysis and the June 2015 NOPR, it set the baseline
efficiency level for the combined product classes at the lower of the
two baseline IEF levels considered in the preliminary analysis for the
two previously separate product classes, which represents the minimum
IEF, as determined according to appendix X1, that DOE expects from any
dehumidifiers within the combined product class that are currently
compliant with the existing standards. DOE also proposed separate
baseline efficiencies for the two whole-home dehumidifier product
classes. 80 FR 31645, 31661 (June 3, 2015). Table IV.8 and Table IV.9
present the baseline efficiency levels proposed in the NOPR analysis.
Table IV.8--NOPR Portable Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
Capacity (pints/day) IEF (L/kWh)
------------------------------------------------------------------------
30.00 or less........................................... 0.77
30.01-45.00............................................. 0.94
45.01 or more........................................... 2.07
------------------------------------------------------------------------
Table IV.9--NOPR Whole-Home Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
Case Volume (cubic feet) IEF (L/kWh)
------------------------------------------------------------------------
8.0 or less............................................. 1.77
More than 8.0........................................... 2.41
------------------------------------------------------------------------
AHAM noted that DOE began the rulemaking analysis before the
compliance date of the current energy conservation standards, and
therefore the test sample may not represent products currently on the
market. AHAM offered to share performance data if it received data from
at least three manufacturers. (AHAM, Public Meeting Transcript, No. 35
at p. 40; AHAM, No. 39 at pp. 3-4) Although DOE conducted initial
testing and analysis on units manufactured prior to October 1, 2012,
DOE also supplemented that test sample when units complying with the
most recent standards became available, beginning in 2013. In preparing
and conducting the preliminary analysis, DOE acquired 12 additional
portable dehumidifiers and conducted testing and teardowns to assess
whether any technologies had changed to meet the currently applicable
standards. DOE found that manufacturers incorporated more efficient
compressors and larger heat exchangers to meet the new standards, but
otherwise the products were similar in construction. DOE considered the
more efficient components as technology options in the engineering
analysis for the preliminary analysis, the June 2015 NOPR, and this
final rule. DOE did not receive any additional performance data for
this final rule.
Following publication of the June 2015 NOPR, DOE became aware of
portable dehumidifiers available on the market with capacities greater
than 50 pints/day (as measured under the new test procedure in appendix
X1) that were not previously considered. The dehumidifiers previously
considered in this higher-capacity portable dehumidifier product class
are constructed similar to whole-home dehumidifiers, with more robust
construction materials and components,
[[Page 38352]]
but are not designed to be installed with duct connections. The newly
considered products are constructed similar to portable dehumidifiers
with capacities less than 50 pints/day, with cases primarily made of
plastic. DOE assessed the performance of these newly considered
dehumidifiers with capacities greater than 50 pints/day and determined
that they often include fan operation during off-cycle mode, as is
common for portable dehumidifiers with lower capacities. Therefore, DOE
determined that the baseline for this product class should be updated
to account for fan operation in off-cycle mode, thereby reducing the
baseline IEF. Based on test data, DOE estimated a fan power of 96.5
watts (W) for the greater than 50 pints/day product class, which was
higher than the fan power estimated for the two lower-capacity portable
dehumidifier product classes in order to maintain the necessary airflow
through larger heat exchangers. DOE also incorporated the highest
inactive mode or off-mode power, 2.12 W, observed in DOE's test sample
to estimate inactive and off-mode energy use for the high-capacity
portable dehumidifier product class.
Table IV.10 and Table IV.11 show the baseline efficiency levels for
portable dehumidifiers and whole-home dehumidifiers covered in this
final rule, respectively. Note that the whole-home dehumidifier
baseline efficiency levels are unchanged from the June 2015 NOPR.
Table IV.10--Final Rule Portable Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
Capacity (pints/day) IEF (L/kWh)
------------------------------------------------------------------------
25.00 or less........................................... 0.77
25.01-50.00............................................. 0.94
50.01 or more........................................... 1.73
------------------------------------------------------------------------
Table IV.11--Final Rule Whole-Home Dehumidifier Baseline Efficiency
Levels
------------------------------------------------------------------------
Case Volume (cubic feet) IEF (L/kWh)
------------------------------------------------------------------------
8.0 or less............................................. 1.77
More than 8.0........................................... 2.41
------------------------------------------------------------------------
Additional details on the selection of baseline units may be found
in chapter 5 of the final rule TSD.
b. Higher Energy Efficiency Levels
For the June 2015 NOPR, DOE considered incremental efficiency
levels beyond the baseline based on existing efficiency levels (e.g.,
the ENERGY STAR level) available in the market and observed during
investigative testing. Similar to the baseline efficiency levels
discussed above, DOE adjusted the efficiency levels to reflect values
that would be obtained when using appendix X1. In addition, DOE
proposed that the first incremental efficiency level beyond the
baseline for each portable dehumidifier product class, except for the
highest-capacity product class, be achieved by the elimination of fan-
only mode.
DOE further proposed max-tech efficiency levels that incorporate
additional design options beyond those observed in its test sample. DOE
then modeled the performance associated with these design options to
estimate the max-tech IEF levels. 80 FR 31645, 31662-31663 (June 3,
2015).
Table IV.12 and Table IV.13 present the efficiency levels DOE
considered in the June 2015 NOPR analysis.
Table IV.12--NOPR Portable Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Integrated energy factor efficiency levels (L/
kWh)
Efficiency level Efficiency level source -----------------------------------------------
30.00 pints/ 30.01-45.00 45.01 pints/
day or less pints/day day or more
----------------------------------------------------------------------------------------------------------------
Baseline....................... Current Baseline with Maximum 0.77 0.94 2.07
Observed Off-cycle Mode Power.
1.............................. Current Baseline with no Fan 1.10 1.20 2.40
Operation During Off-cycle
Mode/Gap Fill 1.
2.............................. Gap Fill 1/Gap Fill 2.......... 1.20 1.40 2.80
3.............................. Gap Fill 2/Max Tech............ 1.30 1.60 3.66
4.............................. Max Tech....................... 1.57 1.80 ..............
----------------------------------------------------------------------------------------------------------------
Table IV.13--NOPR Whole-Home Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Integrated energy factor
efficiency levels (L/kWh)
-------------------------------
Efficiency level Efficiency level source 8.0 ft \3\ or More than 8.0
less (case ft \3\ (case
volume) volume)
----------------------------------------------------------------------------------------------------------------
Baseline............................... Minimum Available...................... 1.77 2.41
1...................................... Gap Fill 1............................. 2.09 2.70
2...................................... Gap Fill 2/Max Tech.................... 2.53 3.52
3...................................... Max Tech............................... .............. 4.50
----------------------------------------------------------------------------------------------------------------
Additional details on the selection of incremental efficiency
levels may be found in chapter 5, section 5.3.2 of the June 2015 NOPR
TSD.
Fan Operation in Off-Cycle Mode
AHAM and GE suggested that elimination of fan operation in off-
cycle mode at Efficiency Level 1 for portable dehumidifiers would
impact air sampling and humidity control, and could require a change
from active defrost to passive defrost. AHAM and GE also expect that
Efficiency Level 1 would be difficult to achieve using other technology
options, should a manufacturer choose to maintain fan operation in off-
cycle mode. Therefore, they suggested that DOE include a gap fill
efficiency level between baseline and Efficiency Level 1 that would not
require the elimination of fan operation
[[Page 38353]]
in off-cycle mode. AHAM and GE further suggested that an IEF of 1.10
for portable dehumidifiers less than 30.00 pints/day is not an accurate
representation of baseline efficiency with no fan operation in off-
cycle mode. (AHAM, No. 39 at p. 5; GE, No. 42 at p. 2)
Due to the significant IEF decrease associated with continuous fan
operation in off-cycle mode and the low cost of eliminating continuous
fan operation, DOE continues to expect that manufacturers would
eliminate fan operation in off-cycle mode as a first step to improving
efficiency. Many dehumidifiers currently available on the market do not
continuously operate the fan in off-cycle mode. DOE sought comment on
this issue both in the proposed rule and in manufacturer interviews
conducted in support of this final rule. DOE received comments and
feedback that there would be no impact on consumer utility associated
with removing continuous fan operation in off-cycle mode, and that many
dehumidifiers either run the fan intermittently or for a short period
of time during off-cycle mode. DOE also notes that, although it expects
manufacturers to remove continuous fan operation in off-cycle mode to
reach Efficiency Level 1, manufacturers may elect to switch from
continuous fan operation to intermittent or short periods of fan
operations along with other design options to improve efficiency. For
its estimates of the IEF at the baseline, DOE assumed a baseline unit
with continuous operation of the highest power fan motor in off-cycle
mode, as observed in DOE's test sample. For Efficiency Level 1, DOE
assumed that the continuous highest-power fan operation would be
replaced by the typical off-cycle mode power consumption without a fan
running, as observed in its test sample.
Heat Exchanger Modifications
Aprilaire agreed with DOE that adjusting the size of the heat
exchanger coil is one of the primary means of improving dehumidifier
efficiency, and that modifying the blower motor has less of an impact
on efficiency. However, Aprilaire stated that installation size
restrictions for whole-home dehumidifiers often inhibit a
manufacturer's ability to increase the heat exchanger sizes to meet
higher efficiency levels. (Aprilaire, Public Meeting Transcript, No. 35
at p. 49; Aprilaire, No. 34 at p. 2) DOE recognizes the constraints on
case volume for whole-home dehumidifiers based on the installation
location. Therefore, DOE constructed the whole-home dehumidifier
product classes to ensure that units with case volume restrictions
(i.e., case volume of 8.0 cubic feet or less) would not be held to the
same energy conservations standards as those without size constraints
(i.e., case volume more than 8.0 cubic feet).
Electrolux requested additional information on how DOE determined
the increased heat exchanger size. (Electrolux, Public Meeting
Transcript, No. 35 at p. 52) When adjusting the heat exchanger size in
its model, DOE typically either added or removed a row of tube passes.
The fins and other components of the heat exchangers were adjusted
accordingly to accommodate the additional tube row, and the performance
impacts were determined through modeling. When discussing increased
heat exchanger size, DOE often refers to the resulting change in
frontal surface area, although other associated heat exchanger
characteristics were also adjusted.
Compressor Efficiency
In a joint comment, Appliance Standards Awareness Project (ASAP),
Alliance to Save Energy, American Council for an Energy-Efficient
Economy, Natural Resources Defense Council, and Northwest Energy
Efficiency Alliance (hereinafter the ``Joint Commenters'') commented
that although variable-speed compressors, which can achieve significant
energy savings in the field, would not improve dehumidifier efficiency
as measured by the DOE test procedure, these compressors generally have
higher efficiencies at full power compared to traditional compressors
currently used in dehumidifiers. For example, the Joint Commenters
stated that one compressor manufacturer offers R-410A permanent-magnet
inverter rotary compressors with energy efficiency ratio (EER) values
of 11.0-11.8 for cooling capacities of 7,600-13,700 British thermal
units per hour. (Joint Commenters, No. 40 at p. 2) While DOE is not
aware of any dehumidifiers currently available on the market or any
prototypes that incorporate variable-speed compressors, DOE considered
high-efficiency compressors for the higher efficiency levels.
Specifically, DOE accounted for compressors with EERs up to 11.2,
within the range identified by the Joint Commenters for variable-speed
compressors in its engineering analysis. See chapter 5 of the final
rule TSD for additional information.
The California IOUs recommended that DOE account for likely changes
in the room air conditioner and portable air conditioner markets,
including energy conservation standards that may lead to greater
availability of high efficiency compressors in the future. (California
IOUs, No. 41 at p. 3) In this engineering analysis, DOE has considered
the most efficient compressors currently available that are suitable
for dehumidifiers. While DOE expects that dehumidifier manufacturers
may shift to using more efficient available compressors in response to
these amended standards, DOE does not necessarily expect that the
maximum available compressor efficiency would increase in response to
standards for dehumidifiers or closely related air conditioning
products. If DOE becomes aware of more efficient compressors available
or in working prototypes, it may consider those as potential technology
options in any future rulemaking.
The California IOUs also recommended that DOE consider whether
compressor availability, and the potential unavailability of
dehumidifiers with certain capacities, would negatively impact
consumers, assuming that other dehumidifiers with higher capacities
were still available. Further, the California IOUs suggested that
lower-capacity units provide no distinct utility from higher capacity
units; instead, the product size and weight are more appropriate
characteristics to define utility. (California IOUs, No. 41 at pp. 3-4)
As discussed in section IV.A.1 of this document, DOE has established
product classes for portable dehumidifiers based on product capacity,
which is the primary consumer utility offered by dehumidifiers. DOE
agrees with the California IOUs that lower product size and weight
provide certain utility to consumers of low-capacity portable
dehumidifiers. However, DOE observed that size and weight are directly
correlated to product capacity, which is a measure of the primary
function of the product to remove moisture from the conditioned space;
therefore, DOE maintains capacity as the product class differentiator
for portable dehumidifiers.
Additional Portable Dehumidifier Efficiency Level
The California IOUs, Joint Commenters, and ASAP recommended that
DOE analyze an efficiency level for portable dehumidifiers at the
maximum available efficiency, which would fall between Efficiency Level
3 and Efficiency Level 4 in the June 2015 NOPR and would closely align
with Efficiency Level 4 from the preliminary analysis. According to
these commenters, such an additional efficiency level would capture a
[[Page 38354]]
majority of the additional energy savings that would be associated with
standards at the max-tech level while remaining cost-effective. The
California IOUs further requested that DOE consider evaluating an
additional efficiency level at ``near max-tech,'' excluding a shift to
the highest-efficiency compressors. Acknowledging that the availability
of high-efficiency compressors is currently a limiting factor, the
California IOUs believe cost-effective energy savings would be achieved
by optimizing other components without the use of the highest-
efficiency compressors. (California IOUs, No. 41 at pp. 2-3; Joint
Commenters, No. 40 at pp. 4-6; ASAP, Public Meeting Transcript, No. 35
at pp. 10, 38)
In the June 2015 NOPR analysis, DOE proposed the highest efficiency
level at the maximum technologically feasible efficiency, which for
dehumidifiers was slightly higher than the maximum efficiency available
on the market. Because the difference between the max-tech and maximum
available efficiencies was small (0.05 L/kWh) for the two lower-
capacity portable dehumidifier product classes, DOE did not consider
maintaining those maximum available efficiencies as separate efficiency
levels in the June 2015 NOPR. Further, DOE notes that the same concerns
regarding compressor availability would exist at a ``near max-tech''
level as at the max-tech. Accordingly, DOE did not analyze an
additional efficiency level at the maximum available efficiency.
High-Capacity Portable Dehumidifier Efficiency Levels
Therma-Stor commented that the proposed efficiency levels are
increased by a greater percentage for the higher-capacity portable
dehumidifiers than for the lower-capacity portable dehumidifiers.
Therma-Stor stated that high-capacity portable dehumidifiers already
incorporate one or more efficiency features, yet of its seven current
higher-capacity portable dehumidifier models, only one exceeds the
proposed standard level. (Therma-Stor, No. 38 at pp. 2-3) For each
product class analyzed in the standards rulemaking, DOE analyzed a
representative sample of products to determine an appropriate baseline
efficiency and improved efficiency levels. For the high-capacity
portable dehumidifiers (50.01 pints/day or greater), DOE has updated
the analysis for this product class to reflect new products on the
market; however, DOE notes that multiple products in its test sample
tested higher than the Efficiency Level 3 proposed in the June 2015
NOPR.
Whole-Home Dehumidifier Efficiency Levels
Aprilaire expressed concern that DOE's analysis of whole-home
dehumidifiers, with only two efficiency levels, lacked the granularity
of the portable dehumidifier analysis, and therefore may not properly
evaluate the whole-home dehumidifier market. (Aprilaire, No. 34 at p.
2) The efficiency levels considered in the engineering analysis are
developed based on the performance of products on the market and in
DOE's test sample with different combinations of design options. Based
on product testing and teardowns, DOE opted to include only one gap
fill efficiency level for whole-home dehumidifiers with a case volume
less than 8.0 cubic feet and two gap fill efficiency levels for whole-
home dehumidifiers with case volumes greater than 8.0 cubic feet. DOE
explains the design options associated with products at each of these
efficiency levels in chapter 5 of the final rule TSD.
Therma-Stor commented that DOE's analysis of the whole-home
dehumidifier market is incomplete due to the relatively small size of
the segment, and the lack of substantial field studies. (Therma-Stor,
No. 38 at p. 2) As described above for high-capacity portable
dehumidifiers, DOE analyzed a representative sample of products for
each whole-home dehumidifier product class to determine an appropriate
baseline efficiency and improved efficiency levels.
Impact of Efficiency Levels
Southern Company recommended that DOE perform additional analysis
to ensure that product utility is maintained at low temperatures when
increasing the minimum efficiency under normal operating conditions.
(Southern Company, Public Meeting Transcript, No. 35 at p. 38) In the
rulemaking that established appendix X1, DOE determined that the
representative operating condition for portable dehumidifiers is 65
degrees Fahrenheit ([deg]F) dry-bulb temperature, and established this
as the updated test condition for portable dehumidifiers. Accordingly,
DOE based this final rule analysis on this test condition, which is
lower than the dry-bulb temperature specified in the currently
applicable test procedure, appendix X. As Southern Company suggested,
lower operating temperatures may cause certain dehumidifiers to
initiate defrosts, and thereby reduce overall performance. However,
while some units designed to meet current energy conservation standards
may enter a defrost mode at the 65[emsp14][deg]F test condition, DOE
expects that manufacturers would adjust their refrigeration systems to
avoid defrosts due to any decrease in IEF required by amended
standards. DOE does not expect the design options considered in this
analysis to result in more frequent defrosts or any other impacts on
performance at the representative operating conditions that would
affect consumer utility compared to units currently available on the
market.
In sum, DOE modified the baseline efficiency level from that
proposed in the June 2015 NOPR and inserted a new Efficiency Level 1
for the high-capacity portable dehumidifier product class, and
maintained all other efficiency levels as analyzed in the June 2015
NOPR. Table IV.14 and Table IV.15 present the efficiency levels DOE
considered in this final rule analysis.
Table IV.14--Final Rule Portable Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Integrated energy factor efficiency levels
(L/kWh)
Efficiency level Efficiency level source -----------------------------------------------
25.00 pints/ 25.01-50.00 50.01 pints/
day or less pints/day day or more
----------------------------------------------------------------------------------------------------------------
Baseline....................... Current Baseline with Maximum 0.77 0.94 1.73
Observed Off-cycle Mode Power.
1.............................. Current Baseline with no Fan 1.10 1.20 2.15
Operation During Off-cycle
Mode.
2.............................. Gap Fill 1..................... 1.20 1.40 2.40
3.............................. Gap Fill 2..................... 1.30 1.60 2.80
4.............................. Max Tech....................... 1.57 1.80 3.66
----------------------------------------------------------------------------------------------------------------
[[Page 38355]]
Table IV.15--Final Rule Whole-Home Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Integrated energy factor
efficiency levels (L/kWh)
-------------------------------
Efficiency level Efficiency level source 8.0 ft \3\ or More than 8.0
less (case ft \3\ (case
volume) volume)
----------------------------------------------------------------------------------------------------------------
Baseline............................... Minimum Available...................... 1.77 2.41
1...................................... Gap Fill 1............................. 2.09 2.70
2...................................... Gap Fill 2/Max Tech.................... 2.53 3.52
3...................................... Max Tech............................... .............. 4.50
----------------------------------------------------------------------------------------------------------------
Additional details on the selection of incremental efficiency
levels may be found in chapter 5 of the final rule TSD.
2. Manufacturer Production Cost Estimates
Based on product teardowns and cost modeling, DOE developed overall
cost-efficiency relationships for each product class considered in that
analysis. DOE selected products covering the range of efficiencies
available on the market for the teardown analysis. During the teardown
process, DOE created detailed bills of materials (BOMs) that included
all components and processes used to manufacture the products. DOE used
the BOMs from the teardowns as an input to a cost model, which was used
to calculate the MPC for products covering the range of efficiencies
available on the market. The MPC accounts for labor, material,
overhead, and depreciation costs that a manufacturer would incur in
producing a specific dehumidifier. DOE also developed BOMs and MPCs for
theoretical units that would implement the identified max-tech
components for dehumidifiers.
DOE estimated that the costs for these products reflected the costs
for typical units at their respective efficiency levels, consistent
with the efficiency-level approach. DOE then used the design-option
approach to determine what changes would be needed for a particular
unit to meet each incrementally higher efficiency level. DOE
constructed cost-efficiency curves for multiple manufacturers to
reflect the incremental MPC corresponding to each manufacturer's
product line and available platforms. DOE combined the individual cost-
efficiency curves based on estimates of each manufacturer's market
share to develop an overall cost-efficiency curve representative of the
entire industry.
In improving the max-tech efficiencies beyond the maximum
available, as discussed in section IV.C.1.b of the June 2015 NOPR, DOE
determined that this was a technologically feasible change that would
improve product efficiencies. DOE's determination was based on the
general availability of these components, efficiency gains associated
with these technology options, and the minimal cost impacts beyond the
additional costs of the components. The MPCs for the June 2015 NOPR
analysis reflected this design option, as well as others, at the max-
tech efficiency level. 80 FR 31645, 31666 (June 3, 2015).
Table IV.16 presents the MPC estimates DOE developed for the June
2015 NOPR. Id.
Table IV.16--NOPR Dehumidifier Incremental Manufacturer Production Costs
[2013$]
----------------------------------------------------------------------------------------------------------------
Portable product class capacities (pints/day) Whole-home product class case
--------------------------------------------------------------------------------- volume (ft\3\)
-------------------------------
Efficiency level <=30.00 30.01-45.00 >45.00 <=8.0 >8.0
----------------------------------------------------------------------------------------------------------------
EL1............................. $-- $-- $42.81 $15.30 $6.20
EL2............................. 1.69 2.39 53.66 129.22 37.20
EL3............................. 4.27 8.07 120.33 N/A 161.39
EL4............................. 19.38 22.42 N/A N/A N/A
----------------------------------------------------------------------------------------------------------------
Chapter 5 of the June 2015 NOPR TSD contains additional details on
the analysis conducted in support of developing these MPC estimates.
Electrolux commented that a consumer would have to pay a cost adder
of approximately $40 to buy a unit rated at 30 pints/day under the new
test procedure at appendix X1 instead of a unit rated at 30 pints/day
under the current appendix X, because the unit rated under appendix X1
would be a larger design that achieves 50 pints/day under appendix X).
Electrolux was unsure whether the rated capacities at retail would
shift lower (with no cost impact) or remain the same and result in much
higher costs to consumers. (Electrolux, No. 36 at p. 1) As a result of
discussions with manufacturers in confidential interviews, DOE has
concluded that manufacturers will likely educate consumers to explain
the reduction in rated capacity under appendix X1. Therefore, DOE
believes that a consumer who previously would have purchased a 70
pints/day dehumidifier rated under appendix X would now purchase a
similarly constructed unit with a rated capacity between 25 and 50
pints/day.
In this final rule, DOE estimated, as it did previously with
portable dehumidifiers at lower capacities, that the cost to move from
the baseline efficiency level to Efficiency Level 1 for portable
dehumidifiers with capacities greater than 50 pints/day would not
require any increase in manufacturer production costs, as the removal
of fan operation in off-cycle mode is essentially a controls
programming adjustment. DOE further notes that the same design options
and subsequent efficiency improvements previously considered in the
June 2015 NOPR for this product class are still applicable.
In this final rule DOE also updated the MPCs to 2014$, the most
recent year for which full-year data was available at the time of this
analysis. DOE notes that
[[Page 38356]]
when updating the costs to current dollars, some variables based on
changing costs (e.g., materials, shipping, etc.) increased while others
decreased.
Table IV.17--Final Rule Dehumidifier Incremental Manufacturer Production Costs
[2014$]
----------------------------------------------------------------------------------------------------------------
Portable product class capacities (pints/day) Whole-Home product class case
------------------------------------------------ volume (ft \3\)
Efficiency level -------------------------------
<=25.00 25.01-50.00 >50.00 <=8.0 >8.0
----------------------------------------------------------------------------------------------------------------
EL1............................. .............. .............. .............. $15.78 $6.46
EL2............................. $1.69 $2.33 $49.27 125.95 38.82
EL3............................. 4.29 8.00 61.32 N/A 183.42
EL4............................. 19.63 22.62 173.63 N/A N/A
----------------------------------------------------------------------------------------------------------------
Additional details on the development of the incremental cost
estimates may be found in chapter 5 of the final rule TSD.
D. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the MPC estimates derived in the
engineering analysis to consumer prices. At each step in the
distribution channel, companies mark up the price of the product to
cover business costs and profit margin. For dehumidifiers, the main
parties in the distribution chain are manufacturers and retailers.
The manufacturer markup converts MPC to manufacturer selling price
(MSP). DOE developed an average manufacturer markup by examining the
annual Securities and Exchange Commission (SEC) 10-K reports filed by
publicly traded manufacturers primarily engaged in appliance
manufacturing and whose combined product range includes dehumidifiers.
For retailers, DOE developed separate markups for baseline products
(baseline markups) and for the incremental cost of more efficient
products (incremental markups). Incremental markups are coefficients
that relate the change in the MSP of higher-efficiency models to the
change in the retailer sales price. DOE relied on economic data from
the U.S. Census Bureau to estimate average baseline and incremental
markups.\24\
---------------------------------------------------------------------------
\24\ U.S. Census, 2012 Annual Retail Trade Survey (ARTS),
Electronics and Appliance Stores sectors.
---------------------------------------------------------------------------
Aprilaire urged that the analysis be expanded for whole-home
dehumidifiers to include the additional costs of shipping larger and
heavier products and additional installation costs for larger units.
(Aprilaire, No. 34 at p. 5)
As in the preliminary and NOPR analyses, DOE used two different
distribution channels for portable dehumidifiers and whole-home
dehumidifiers. For the final rule analysis, DOE amended the
distribution channel of the high-capacity portable dehumidifier product
class, PC3. A share of the PC3 market uses the same distribution
channel as PC1 and PC2: Units move from manufacturer to retailer to
consumer. For the other share of the PC3 market, the distribution
channel reflects its larger size and uses the whole-home dehumidifier
distribution channel. To represent additional steps in the purchase of
a larger unit, the whole-home dehumidifier distribution channel
reflects two additional markups to include wholesalers and contractors
used in the purchase of the larger dehumidifiers, including the third
portable dehumidifier product class and whole-home dehumidifiers. As a
result, DOE concluded that the wholesaler and contractor markups for
the larger units include additional costs of shipping and installation.
AHAM made the following comments regarding the use of incremental
markups for appliance retailers to estimate future prices of efficient
products: (1) The incremental markup approach relies on an assumption
of perfect competition, which is an outdated model of the economy; (2)
Relatively constant percent gross margins observed in aggregated
appliance retail industry data imply the use of fixed-percent markups
over time; (3) Interview responses from appliance retailers are
consistent with the use of fixed-percent markups. (AHAM, No. 39 at p.
7)
DOE responds to these points as follows:
(1) DOE's incremental markup approach is based on the widely
accepted economic view that prices closely reflect marginal costs in
competitive markets and in markets with some degree of
concentration.\25\ In the absence of data to support a different
assumption, DOE retains its assumption for this rulemaking.
---------------------------------------------------------------------------
\25\ Pindyck, R. and Rubinfeld, D. Microeconomics. 8th Edition.
Prentice Hall, 2012.
---------------------------------------------------------------------------
(2) In examining the relatively constant appliance retail percent
margin trend and its underlying prices, DOE found that the average
inflation-adjusted prices of appliances are relatively fixed during
this period as well. This set of historical data has no bearing on firm
markup behavior under product price increases, such as DOE projects
would occur when higher-efficiency products are introduced. If prices
are relatively constant, the incremental markup approach will arrive at
the same price prediction as applying fixed-percent margin; hence, the
historically constant percent margins do not necessarily imply a
constant percent margin in the future, especially in the case of
increased input prices. DOE evaluated time series margin and price data
from three industries that experienced rapidly changing input prices--
the LCD television retail market,\26\ the U.S. oil and gasoline
market,\27\ and the U.S. housing market.\28\ The results indicate that
dollar margins vary across different markets to reflect changes in
input price, but the percent margins do not remain fixed over time in
any of these industries. Appendix 6B in the TSD describes DOE's
findings.
---------------------------------------------------------------------------
\26\ LCD television data from DisplaySearch, a market research
company affiliated with NPD Group.
\27\ U.S. Energy Information Agency, Oil price: Spot price in
Cushing, Oklahoma for 42 gallon barrel of oil; Retail gas price:
U.S. average retail price of gasoline, all grades and formulations.
\28\ Standard and Poors, Case-Shiller home price index, CPI-
adjusted; REAL Trends, http://www.realtrends.com.
---------------------------------------------------------------------------
(3) Regarding the interviews with appliance retailers, it is
difficult for DOE to evaluate the characterization of the responses
without knowing what questions were posed to the retailers. DOE's
analysis necessarily considers a simplified version of appliance
retailing: Namely, a situation in which nothing changes except for
those changes in appliance offerings that
[[Page 38357]]
occur in response to new standards. DOE implicitly asks: Assuming the
product cost increases while the other costs remain constant (no change
in labor, material and operating costs), are retailers still able to
keep the same markup over time as before? DOE recognizes that retailers
are likely to seek to maintain the same markup on appliances if the
price they pay goes up as a result of appliance standards, but DOE
concludes that, over time, adjustment is likely to occur due to
competitive pressures. Other retailers may find that they can gain
sales by reducing the markup and maintaining the same per-unit
operating profit. The incremental markup approach embodies the same
perspective as the ``preservation of per-unit operating profit markup
scenario'' used in the MIA (see section IV.J of this document).
DOE concludes that there is not sufficient evidence to support the
application of fixed percent markups to the cost increment on efficient
equipment. Firms generally cannot maintain fixed percent margins in the
long run under changing cost conditions. Thus, DOE continues to apply
the incremental markup approach to estimate the price increase for more
efficient products.
Chapter 6 of the final rule TSD provides details on DOE's
development of markups for dehumidifiers.
E. Energy Use Analysis
DOE's energy use analysis estimated the range of energy use of
dehumidifiers in the field, i.e., as they are actually used by
consumers. The energy use analysis provided the basis for other
analyses DOE performed, particularly assessments of the energy savings
and the savings in consumer operating costs that could result from
adoption of amended standards.
A dehumidifier uses energy when the compressor is operating to
remove moisture from the air. When the compressor is not operating, the
dehumidifier may use energy by operating the fan to circulate air
through the unit to sample the ambient relative humidity and to defrost
the evaporator coils. When neither the fan nor the compressor is
operating, energy is used in standby mode or off mode to supply power
for functions such as keeping a user panel lit.\29\
---------------------------------------------------------------------------
\29\ The energy use operating mode names used in this standards
final rule to characterize energy use and subsequent analyses,
reflect dehumidifier use in the field and are not the same as the
test procedure operating mode names.
---------------------------------------------------------------------------
DOE determined the annual energy consumption of dehumidifiers by
multiplying the capacity (liters per day) by the hours of operation in
dehumidification mode, dividing that quantity by the product
efficiency, and adding the energy use for the fan mode and the standby
and off mode.
The efficiency and capacity values were measured using a
temperature of 73[emsp14][deg]F for whole-home dehumidifiers,
65[emsp14][deg]F for portable dehumidifiers, and a humidity set point
of 60 percent, as stipulated in the test procedure for dehumidifiers in
appendix X1.
To estimate hours of operation in each mode, DOE used two recent
field studies that measured daily hours of use in each operating mode
for both portable and whole-home dehumidifiers.\30\ DOE paired these
data with estimates of the number of months that dehumidifiers are used
in a representative sample of U.S. households. DOE used data from the
EIA's 2009 Residential Energy Consumption Survey (RECS 2009), which was
the most recent such survey available at the time of DOE's
analysis.\31\ RECS is a national sample survey of housing units that
collects statistical information on the consumption of and expenditures
for energy in housing units along with data on energy-related
characteristics of the housing units and occupants. RECS 2009
questioned each household on two aspects of dehumidifier use: (1)
Ownership and (2) number of months of dehumidifier use. DOE estimated
that consumers leave the dehumidifier to cycle on and off for the
entire month or months of the dehumidification season.
---------------------------------------------------------------------------
\30\ Willem, H., et al., Using Field-Metered Data to Quantify
Annual Energy Use of Residential Portable Unit Dehumidifiers,
Lawrence Berkeley National Laboratory (Nov. 2013); Burke, T., et
al., Whole-Home Dehumidifiers Energy Use: A Field-Monitoring Study,
Lawrence Berkeley National Laboratory (Dec. 2015).
\31\ 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/).
---------------------------------------------------------------------------
DOE estimated the energy use for off-cycle mode and the standby and
off mode using the hours of operation described above, along with data
on average power in off-cycle and standby modes from the field studies.
Therma-Stor believes that there are many factors which influence
dehumidifier operation and that there is no correlation between
dehumidifier capacity and the amount of water vapor which must be
removed. Therma-Stor stated that a dehumidifier will be run as long as
required to reduce humidity until it reaches the consumer's setting.
(Therma-Stor, No. 38 at pp. 1-2)
Based on available data, DOE has accounted for the factors
influencing dehumidifier operation in its analysis. The engineering
analysis provided data on capacities and efficiencies, field metered
data in available literature showed ranges of time percentages spent in
different modes of operation, and the RECS household sample showed
variation in months of dehumidifier use as reported by consumers. DOE
assumed that consumers use readily available guides when deciding the
size of dehumidifier they need to purchase given the amount of humidity
they experience.
Chapter 7 of the final rule TSD provides details on DOE's energy
use analysis for dehumidifiers.
F. Life-Cycle Cost and Payback Period Analysis
In determining whether an energy conservation standard is
economically justified, DOE considers the economic impact of potential
standards on consumers. The effect of new or amended energy
conservation standards on individual consumers usually involves a
reduction in operating cost and an increase in purchase cost. DOE used
the following two metrics to measure consumer impacts:
LCC (life-cycle cost) is the total consumer cost of an
appliance or product, generally over the life of the appliance or
product. The LCC calculation includes total installed cost (equipment
manufacturer selling price, distribution chain markups, sales tax, and
installation costs), operating costs (energy, repair, and maintenance
costs), equipment lifetime, and discount rate. Future operating costs
are discounted to the time of purchase and summed over the lifetime of
the appliance or product.
PBP (payback period) measures the amount of time it takes
consumers to recover the estimated higher purchase price of a more
energy-efficient product through reduced operating costs. Inputs to the
payback period calculation include the installed cost to the consumer
and first-year operating costs.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
market in the absence of new or amended energy conservation standards,
and includes baseline products as well as products with higher
efficiency. In contrast, the PBP for a given efficiency level is
measured relative to the baseline product only.
For each product class efficiency level, DOE calculated the LCC and
PBP for a nationally representative set of housing units. As stated
previously, DOE developed household samples with RECS 2009 data. For
each sample household, DOE determined the energy
[[Page 38358]]
consumption for the dehumidifier and the appropriate electricity price.
By developing a representative sample of households, the analysis
captured the variability in energy consumption and energy prices
associated with the use of dehumidifiers.
The LCC and PBP analyses are designed to support DOE's
consideration of the economic impact of potential standards on
consumers of the products subject to the standard, as required by EPCA.
(42 U.S.C. 6295(o)(2)(B)(i)(I)) The use of RECS 2009 to develop a
consumer sample and to provide data for estimation of product energy
use allows DOE to characterize the range of conditions in which covered
appliances are operated. As a result, DOE is able to estimate how the
energy savings would vary among households for each considered
efficiency level.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor markups, and sales taxes--and installation costs. Inputs to
the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates. DOE created
distributions of values for product lifetime, discount rates, and sales
taxes, with probabilities attached to each value, to account for their
uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP, which
incorporates Crystal Ball\TM\ (a commercially available software
program), relies on a Monte Carlo simulation to incorporate uncertainty
and variability into the analysis. The Monte Carlo simulations randomly
sample input values from the probability distributions and dehumidifier
user samples. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 housing units per simulation run.
DOE calculated the LCC and PBP for all customers as if each were to
purchase a new product in the expected year of compliance with amended
standards. The amended standards apply to dehumidifiers manufactured 3
years after the date on which the amended standards for dehumidifiers
are published. Therefore, for purposes of its analysis, DOE used 2019
as the first year of compliance with these amended standards.
Table IV.18 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the final rule TSD and its appendices.
Table IV.18--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Inputs Source/Method
------------------------------------------------------------------------
Product Cost................. Derived by multiplying MPCs by
manufacturer and retailer markups and
sales tax, as appropriate. Used
historical data to derive a price
scaling index to forecast product costs.
Installation Costs........... For portable dehumidifiers, DOE assumed
no installation costs with the baseline
unit and no cost with efficiency level.
For whole-home dehumidifiers, baseline
installation cost were determined with
data from RS Means Residential Cost
Data. DOE assumed incremental
installation costs with efficiency
level.
Annual Energy Use............ The total annual energy use derived from
power demand of each mode multiplied by
the hours per year. Average number of
hours based on field data.
Variability: Based on the 2009 RECS.
Energy Prices................ Average and Marginal Electricity: Based
on EEI 2014.
Variability: Regional energy prices
determined for 27 regions.
Energy Price Trends.......... Based on AEO 2015 price forecasts.
Repair and Maintenance Costs. Assumed no change with efficiency level.
Product Lifetime............. Appliance Magazine (2005), ACEEE (2001),
Northeast Energy Star Lighting and
Appliance.
Discount Rates............... Approach involves identifying all
possible debt or asset classes that
might be used to purchase the considered
appliances, or might be affected
indirectly. Primary data source was the
Federal Reserve Board's Survey of
Consumer Finances** for 1995, 1998,
2001, 2004, 2007, 2010, and 2013.
Compliance Date.............. 2019.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the final rule
TSD.
** Survey of Consumer Finances.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described in this
preamble (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE used data from
the 2015 R.S. Means Residential Cost Data book to estimate the baseline
installation cost for whole-home dehumidifiers. DOE assumed that
installation costs would not be impacted with increased efficiency
levels in the NOPR analysis.
Aprilaire commented that large whole-home units will require
additional installation work. (Aprilaire, No. 34 at p. 2) For this
final rule, DOE reviewed the R.S. Means Residential Data, and estimated
incremental installation costs for each efficiency level based on
additional labor costs for larger sizes of HVAC ventilation work. See
chapter 8 of the final rule TSD for further information on the
derivation of the installation costs for whole-home dehumidifiers.
3. Annual Energy Consumption
For each sampled household, DOE determined the energy consumption
for a dehumidifier at different efficiency levels using the approach
described in section IV.E of this document.
4. Energy Prices
DOE derived marginal residential electricity and natural gas prices
for 27 geographic areas.\32\ Marginal prices are
[[Page 38359]]
appropriate for determining energy cost savings associated with
possible changes to efficiency standards.
---------------------------------------------------------------------------
\32\ DOE characterized the geographic distribution into 27
geographic areas to be consistent with the 27 states and group of
states reported in RECS 2009.
---------------------------------------------------------------------------
For electricity, DOE derived marginal and average prices which vary
by season, region, and baseline electricity consumption level. DOE
estimated these prices using data published with the Edison Electric
Institute (EEI), Typical Bill and Average Rates reports for summer and
winter 2014.\33\ For the residential sector each report provides, for
most of the major investor-owned utilities (IOUs) in the country, the
total bill assuming household consumption levels of 500, 750, and 1,000
kWh for the billing period. DOE defined the average price as the ratio
of the total bill to the total electricity consumption. DOE also used
the EEI data to define a marginal price as the ratio of the change in
the bill to the change in energy consumption.
---------------------------------------------------------------------------
\33\ Edison Electric Institute. Typical Bills and Average Rates
Report. Winter 2014 published April 2014, Summer 2014 published
October 2014. Available at: http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------
For the residential sector, DOE defined the average price as the
ratio of the total bill to the total electricity consumption. DOE also
used the EEI data to define a marginal price as the ratio of the change
in the bill to the change in energy consumption. DOE first calculated
weighted-average values for each geographic area for each type of
price. Each EEI utility in an area was assigned a weight based on the
number of consumers it serves. Consumer counts were taken from the most
recent EIA Form 861 data (2012).\34\
---------------------------------------------------------------------------
\34\ U. S. Department of Energy, Energy Information
Administration. Form EIA-861 Annual Electric Power Industry
Database. http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------
DOE assigned seasonal average prices to all households in the LCC
sample based on its location and its baseline monthly electricity
consumption for an average summer or winter month. For sampled
households who were assigned a product efficiency greater than or equal
to the considered level for a standard, DOE then assigned marginal
price to each household based on its location and the decremented
electricity consumption. In the LCC sample, households could be
assigned to one of 27 geographic areas.
To estimate future trends in electricity and natural gas prices,
DOE used price forecasts in AEO 2015. To arrive at prices in future
years, DOE multiplied the average and marginal prices described above
by the forecast of annual average changes in national-average
residential electricity and natural gas prices. Because the AEO 2015
forecasts prices only to 2040, DOE used the average rate of change
during 2025-2040 to estimate the price trends beyond 2040.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency produce no, or only
minor, changes in repair and maintenance costs.
During the 2013 preliminary analysis phase of the rulemaking, DOE
requested information as to whether maintenance and repair costs are a
function of efficiency level and product class. Manufacturers responded
that these costs would not increase with efficiency. As a result, DOE
assumed that repair and maintenance costs do not scale with the
efficiency of dehumidifiers.
6. Product Lifetime
For portable dehumidifiers, DOE used lifetime estimates from the
Appliance Magazine (2005),\35\ an appliance lifetime report (Kubo, et
al., 2001),\36\ and Northeast Energy Star Lighting and Appliance.\37\
DOE assumed whole-home dehumidifiers have the same life span as
residential room air conditioners and applied the lifetime parameters
derived for room air conditioners in the 2011 rulemaking to whole-home
dehumidifiers.\38\ The analysis yielded an estimate of mean lifetime of
approximately 11 years for portable dehumidifiers and approximately 19
years for whole-home dehumidifiers. DOE also used the data to develop a
survival function that was incorporated as a probability distribution
in the LCC analysis. See chapter 8, section 8.2.2.8 of the final rule
TSD for further details on the method and sources DOE used to develop
product lifetimes.
---------------------------------------------------------------------------
\35\ The Life Expectancy/Replacement Picture. Appliance
Magazine, September, 2005. Vol. 62, No. 9.
\36\ Kubo, T., S. Nadel, and H. Sachs. Opportunities for New
Appliance and Equipment Efficiency Standards: Energy and Economic
Savings Beyond Current Standards Programs, September, 2001.
Washington, DC: American Council for an Energy Efficient Economy
(ACEEE). Report Number A016. <http://aceee.org/research-report/a016>.
\37\ Northeast Energy Star Lighting and Appliance.
Dehumidifiers. Accessed June 26, 2006. <http://www.myenergystar.com/Dehumidifiers.aspx>
\38\ DOE-Energy Efficiency and Renewable Energy, Energy
Conservation Program for Consumer Products, Technical Support
Document: Energy Efficiency Program for Consumer Products and
Commercial and Industrial Equipment, Residential Clothes Dryers and
Room Air Conditioners (2011) (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2007-BT-STD-0010-0053).
---------------------------------------------------------------------------
AHAM commented that DOE should use 10 years as the lifetime for
portable dehumidifiers. (AHAM, No. 39 at p. 5) DOE used publically data
and information including the three studies cited above to conclude
that 11 years is the average lifetime for portable dehumidifiers.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating costs.
DOE estimated a distribution of residential discount rates for
dehumidifiers based on consumer financing costs and opportunity cost of
funds related to appliance energy cost savings and maintenance costs.
To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings and maintenance costs. DOE then estimated the
average percentage shares of the various types of debt and equity by
household income group using data from the Federal Reserve Board's
Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007,
2010, and 2013.\39\ Using the SCF and other sources, DOE then developed
a distribution of rates for each type of debt and asset by income group
to represent the rates that may apply in the year in which amended
standards would take effect. DOE assigned each sample household a
specific discount rate drawn from one of the distributions. The average
rate across all types of household debt and equity and income groups,
weighted by the shares of each class, is 4.4 percent. See chapter 8,
section 8.2.3 of the final rule TSD for further details on the
development of consumer discount rates.
---------------------------------------------------------------------------
\39\ Note that two older versions of the SCF are also available
(1989 and 1992). These surveys were not used in this analysis
because they do not provide all of the necessary types of data
(e.g., credit card interest rates). DOE determines that the 15-year
span covered by the six surveys included is sufficiently
representative of recent debt and equity shares and interest rates.
---------------------------------------------------------------------------
8. Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a standard at a particular efficiency level, DOE's LCC
analysis considered the projected distribution of product efficiencies
in the no-new-standards case (i.e., the case without new energy
[[Page 38360]]
efficiency standards). DOE refers to this distribution of product
efficiencies as a no-new-standards case efficiency distribution.
To estimate the efficiency distribution of dehumidifiers for 2019,
DOE analyzed its Compliance Certification Database for dehumidifiers.
To project the efficiency trend between 2019 and 2048, DOE used a 0.25
percent annual increase in shipment-weighted efficiency, as discussed
in section IV.H. See chapter 8 of the final rule TSD for further
information on the derivation of the efficiency distributions.
9. Payback Period Analysis
The PBP is the amount of time it takes the consumer to recover the
additional installed cost of more efficient products, compared to
baseline products, through energy cost savings. PBPs are expressed in
years. PBPs that exceed 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 for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
As noted above, EPCA, as amended, 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 first year's energy savings resulting from
the standard, as calculated under the applicable test procedure. (42
U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by multiplying
the energy savings by the average energy price forecast for the year in
which compliance with the amended standard would be required. The
results of the rebuttable presumption PBP analysis are summarized in
section V.B.1.c of this document.
G. Shipments Analysis
DOE uses forecasts of annual product shipments to calculate the
national impacts of potential amended energy conservation standards on
energy use, NPV, and future manufacturer cash flows.\40\ The shipments
model takes an accounting approach, tracking market shares of each
product class and the vintage of units in the stock. Stock accounting
uses product shipments as inputs to estimate the age distribution of
in-service product stocks for all years. The age distribution of in-
service product stocks is a key input to calculations of both the NES
and NPV, because operating costs for any year depend on the age
distribution of the stock.
---------------------------------------------------------------------------
\40\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
To determine shipments to the replacement market, DOE estimated a
stock of dehumidifiers by vintage by integrating historical shipments
starting from 1972 for portable dehumidifiers and from 2004 for whole-
home dehumidifiers. Over time, some units are retired and removed from
the stock, triggering the shipment of a replacement unit. Depending on
the vintage, a certain percentage of each type of unit will fail and
need to be replaced. DOE based the retirement function on a probability
distribution for the product lifetime that was developed in the LCC
analysis. The shipments model assumes that no units are retired below a
minimum product lifetime and that all units are retired before
exceeding a maximum product lifetime.
To calibrate the estimated shipments with the historical data, DOE
introduced into the model a market segment identified as existing
households without dehumidifiers, also referred to as first-time
owners. Based on the calibration, DOE estimated that 0.35 percent of
existing households without a dehumidifier would annually purchase this
product over the analysis period, 2019-2048.
For the final rule analysis, DOE applied price and efficiency
elasticity parameters to estimate the effect of new standards on
dehumidifier shipments. DOE estimated the price and efficiency
elasticity parameters from a regression analysis that incorporated
shipments, purchase price, and efficiency data specific to several
residential appliances during 1989-2009. Based on evidence that the
price elasticity of demand is significantly different over the short
run and long run for other consumer goods (i.e., automobiles), DOE
assumed that these elasticities decline over time. DOE estimated
shipments in each standards case using the price and efficiency
elasticity along with the change in the product price and operating
costs between a standards case and the no-new-standards case. For
details on the shipments analysis, see chapter 9 of the final rule TSD.
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the national
net present value (NPV) from a national perspective of total consumer
costs and savings that would be expected to result from new or amended
standards at specific efficiency levels.\41\ (``Consumer'' in this
context refers to consumers of the product being regulated.) DOE
calculates the NES and NPV based on projections of annual product
shipments, along with the annual energy consumption and total installed
cost data from the energy use and LCC analyses.\42\ For the present
analysis, DOE forecasted the energy savings, operating cost savings,
product costs, and NPV of consumer benefits over the lifetime of
dehumidifiers sold from 2019 through 2048.
---------------------------------------------------------------------------
\41\ The NIA accounts for impacts in the 50 states and U.S.
territories.
\42\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------
DOE evaluates the impacts of new and amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
[[Page 38361]]
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.19 summarizes the inputs and methods DOE used for the NIA
analysis for the final rule. Discussion of these inputs and methods
follows the table. See chapter 10 of the final rule TSD for further
details.
Table IV.19--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model.
Compliance Date of Standard....... 2019.
Efficiency Trends................. No-New-Standards case: Shipment-
Weighted Integrated Energy Factor
(SWIEF) determined in 2019 for each
of the considered products classes.
Annual growth rate of 0.25 percent
assumed for determining SWIEF
between 2019 and 2048.
Standard cases: Roll-up and shift
scenario for 2019.
Annual Energy Consumption per Unit Annual weighted-average values are a
function of energy use at each TSL.
Total Installed Cost per Unit..... Annual weighted-average values are a
function of cost at each TSL.
Incorporates forecast of future
product prices based on historical
data.
Annual Energy Cost per Unit....... Annual weighted-average values as a
function of the annual energy
consumption per unit and energy
prices.
Repair and Maintenance Cost per Annual values do not change with
Unit. efficiency level.
Energy Prices..................... AEO 2015 forecasts (to 2040) and
extrapolation through 2048.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. derived from AEO 2015.
Discount Rate..................... Three and seven percent real.
Present Year...................... Future costs and savings are
discounted to 2015.
------------------------------------------------------------------------
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered product classes for the first year of the forecast period.
To project the trend in efficiency for dehumidifiers over the entire
shipments projection period, DOE employed shipments-weighted integrated
energy factors (SWIEF) as a starting point for 2014 and assumed a 0.25
percent annual increase in shipment-weighted efficiency between 2014
and 2048. The approach is further described in chapter 10 of the final
rule TSD.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2019). In this scenario, the market of
products in the no-new-standards case that do not meet the standard
under consideration would ``roll up'' to meet the new standard level,
and the market share of products above the standard would remain
unchanged. For its projected efficiencies of TSLs, in addition to a
``roll-up'' scenario, DOE developed a shift scenario. In the shift
scenario DOE developed growth trends for each trial standard level that
maintained the same per-unit average total installed cost difference
for the year 2019 between the no-new-standards case and each standards
case over the entire projection period (2019-2048).
2. National Energy Savings
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (NEMS) is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \43\
that EIA uses to prepare its Annual Energy Outlook. The approach used
for deriving FFC measures of energy use and emissions is described in
appendix 10C of the final rule TSD.
---------------------------------------------------------------------------
\43\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb.1998)
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------
Aprilaire commented that DOE should separately show energy savings
of whole-home dehumidifiers and portable dehumidifiers and stated that
DOE has not shown that whole-home dehumidifier regulation will meet the
requirement of ``substantial'' energy savings nor has DOE shown it
meets the term used in the public meeting as ``non-trivial.''
(Aprilaire, No. 38 at p. 5) DOE shows energy savings for each product
class in the National Impact Analysis. However when analyzing whether
standards meet the EPCA requirement of ``significant'' energy savings,
DOE considers the product type as a whole.
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) Total annual installed cost; (2)
total annual savings in operating costs; and (3) a discount factor to
calculate the present value of costs and savings. DOE calculates net
savings each year as the difference between the no-new-standards case
and each standards case in terms of total savings in operating costs
versus total increases in installed costs. DOE calculates operating
cost savings over the lifetime of each product shipped during the
forecast period.
As discussed in section IV.F.1 of this document, DOE developed
dehumidifier
[[Page 38362]]
price trends based on historical Producer Price Index (PPI) data.
Within the portable and whole-home product groups, DOE applied the same
trends to forecast prices for each product class at each considered
efficiency level. By 2048, which is the end date of the forecast
period, the average dehumidifier price is forecasted to drop 37 percent
relative to 2013. DOE's projection of product prices for dehumidifiers
is described in further detail in appendix 10C of the final rule TSD.
To evaluate the effect of uncertainty regarding price trends, DOE
examined the effect of various product price forecasts on the consumer
NPV for the considered TSLs for dehumidifiers. In addition to the
default price trend, DOE considered separate product price sensitivity
cases for portable dehumidifiers and whole-home dehumidifiers. For
portable dehumidifiers, DOE considered a case for a low price decline
based on estimating an experience curve using PPI data for ``small
electric household appliances'' from 1990 to 2009. A case for high
price decline was based on the price forecast of the ``furniture and
appliances'' series from AEO 2015. For whole-home dehumidifiers, a case
for a low price decline was based on an exponential fit to the PPI from
1978 to 2014 for ``air-conditioning, refrigeration, and forced air
heating equipment.'' The high price decline was based on the price
forecast of the ``furniture and appliances'' series from AEO 2015. The
approach used to forecast the price trends and the results of the
sensitivity cases are described in appendix 10C of the final rule TSD.
The operating cost savings are energy cost savings, which are
calculated using the estimated energy savings in each year and the
projected price of the appropriate form of energy. To estimate energy
prices in future years, DOE multiplied the average and marginal energy
prices by the forecast of annual national-average residential energy
price changes in the reference case from AEO 2015, which has an end
year of 2040. To estimate price trends after 2040, DOE used the average
annual rate of change in prices from 2020 to 2040. As part of the NIA,
DOE also analyzed scenarios that used inputs from the AEO 2015 Low
Economic Growth and High Economic Growth cases. Those cases have higher
and lower energy price trends compared to the Reference case. NIA
results based on these cases are presented in appendix 10C of the final
rule TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. 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.\44\ The discount rates for the determination of NPV are in
contrast to the discount rates used in the LCC analysis, which are
designed to reflect a consumer's perspective. The 7-percent real value
is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. The 3-percent real value represents the
``social rate of time preference,'' which is the rate at which society
discounts future consumption flows to their present value.
---------------------------------------------------------------------------
\44\ United States Office of Management and Budget, ``Circular
A-4: Regulatory Analysis,'' Section E (Sept. 17, 2003) (Available
at: www.whitehouse.gov/omb/memoranda/m03-21.html.http://www.whitehouse.gov/omb/circulars_a004_a-4/).
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I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
consumers, DOE evaluates the impact on identifiable subgroups of
consumers that may be disproportionately affected by a national
standard. DOE evaluates impacts on particular subgroups of consumers by
analyzing the LCC impacts and PBP for those particular consumers from
alternative standard levels. For this final rule, DOE analyzed the
impacts of the considered standard levels on low-income households and
senior-only households. Chapter 11 in the final rule TSD describes the
consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of dehumidifiers and to
estimate the potential impacts of such standards on employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects and includes analyses of forecasted industry cash flows, the
INPV, investments in research and development (R&D) and manufacturing
capital, and domestic manufacturing employment. Additionally, the MIA
seeks to determine how amended energy conservation standards might
affect manufacturing employment, capacity, and competition, as well as
how standards contribute to overall regulatory burden. Finally, the MIA
serves to identify any disproportionate impacts on manufacturer
subgroups, including small business manufacturers.
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (GRIM), an industry cash flow model with inputs
specific to this rulemaking. The key GRIM inputs include data on the
industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various TSLs. To capture the
uncertainty relating to manufacturer pricing strategy following amended
standards, the GRIM estimates a range of possible impacts under
different markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as manufacturing capacity, competition within the industry, the
cumulative impact of other DOE and non-DOE regulations, and impacts on
manufacturer subgroups. The complete MIA is outlined in chapter 12 of
the final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE conducted detailed interviews with manufacturers and
prepared a profile of the dehumidifier manufacturing industry. During
manufacturer interviews, DOE discussed engineering, manufacturing, and
financial topics in order to identify concerns and to inform and
validate assumptions used in the GRIM. See appendix 5A and 5B of the
final rule TSD for a copy of the interview guides. See section IV.J.4
for a description of the key issues raised by manufacturers during the
interviews.
Based on these manufacturer interviews, the market and technology
assessment, and publicly available information, DOE derived financial
inputs for the GRIM (e.g., revenues; materials, labor, overhead, and
depreciation expenses; selling, general, and administrative expenses
(SG&A); and R&D expenses). The public sources
[[Page 38363]]
of information DOE used in developing its characterization of the
dehumidifier manufacturing industry, include company filings of form
SEC 10-K filings,\45\ corporate annual reports, the U.S. Census
Bureau's Economic Census,\46\ and Hoover's reports.\47\
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\45\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) (Available at: http://www.sec.gov/edgar/searchedgar/companysearch.html).
\46\ U.S. Census Bureau, Annual Survey of Manufacturers: General
Statistics: Statistics for Industry Groups and Industries (2011)
(Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
\47\ Hoovers Inc. Company Profiles. Various Companies.
www.hoovers.com.
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In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis
to quantify the potential impacts of amended energy conservation
standards. The GRIM uses several factors to determine a series of
annual cash flows starting with the announcement of the standard and
extending over a 30-year period following the compliance date of the
standard. These factors include annual expected revenues, costs of
sales, SG&A and R&D expenses, taxes, and capital expenditures (derived
during Phase 1). In general, energy conservation standards can affect
manufacturer cash flow in three distinct ways: (1) Create a need for
increased investment; (2) raise production costs per unit; and (3)
alter revenue due to higher per-unit prices and changes in sales
volumes.
In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers
that may be disproportionately impacted by amended standards or that
may not be accurately represented by the average cost assumptions used
to develop the industry cash flow analysis. Such manufacturer subgroups
always include small business manufacturers, but may also include low-
volume manufacturers (LVMs), niche players, and/or manufacturers
exhibiting a cost structure that largely differs from the industry
average. DOE identified one dehumidifier manufacturer subgroup for
which average cost assumptions may not hold: Small businesses.
To identify small businesses for this analysis, DOE applied the
size standards published by the Small Business Administration (SBA) to
determine whether a company is considered a small business. See 13 CFR
part 121. To be categorized as a small business manufacturer of
dehumidifiers under North American Industry Classification System
(NAICS) codes 333415 (``Air-Conditioning and Warm Air Heating Equipment
and Commercial and Industrial Refrigeration Equipment Manufacturing'')
or 335210 (``Small Electrical Appliance Manufacturing''), a
dehumidifier manufacturer and its affiliates may employ a maximum of
1,250 employees or 1,500 employees, respectively. These thresholds
include all employees in a business' parent company and any other
subsidiaries. Using these classifications in conjunction with a search
of industry databases and the SBA member directory, DOE identified five
manufacturers of dehumidifiers that qualify as small businesses, all of
which are manufacturers of whole-home dehumidifiers and high-capacity
portable dehumidifiers.
The dehumidifier manufacturer subgroup analysis is discussed in
greater detail in chapter 12 of the final rule TSD and in section
V.B.2.d of this document.
In Phase 3, DOE also analyzed impacts of amended energy
conservation standards for dehumidifiers on manufacturing capacity,
direct employment, and cumulative regulatory burdens. Section V.B.2
discusses the findings of these analyses.
2. Government Regulatory Impact Model (GRIM)
DOE uses the GRIM to quantify the changes in industry cash flows
resulting from amended energy conservation standards. The GRIM uses
manufacturer costs, markups, shipments, and industry financial
information to arrive at a series of no-new-standards-case annual cash
flows absent new or amended standards, beginning with the present year,
2016, and continuing through 2048. The GRIM then models changes in
costs, investments, shipments, and manufacturer margins that may result
from new or amended energy conservation standards and compares these
results against those in the no-new-standards-case forecast of annual
cash flows. The primary quantitative output of the GRIM is the INPV,
which DOE calculates by summing the stream of annual discounted cash
flows over the full analysis period. For manufacturers of
dehumidifiers, DOE used a real discount rate of 8.43 percent, the
weighted-average cost of capital derived from industry financials and
modified based on feedback received during confidential interviews with
manufacturers.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and the
various TSLs. The difference in INPV between the no-new-standards case
and a standards case represents the financial impact of the amended
standard on manufacturers at that particular TSL. As discussed
previously, DOE collected the necessary information to develop key GRIM
inputs from a number of sources, including publicly available data and
interviews with manufacturers (described in section IV.J.4 of this
document). The GRIM results are shown in section V.B.2.a of this
document. Additional details about the GRIM can be found in chapter 12
of the final rule TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing a higher efficiency product is typically more
expensive than manufacturing a baseline product due to the use of more
complex and typically more costly components. The changes in the MPCs
of the analyzed products can affect the revenues, gross margins, and
cash flow of the industry, making product cost data key GRIM inputs for
DOE's analysis. For each efficiency level for each product class, DOE
used the MPCs developed in the engineering analysis, as described in
section IV.C.2 of this document and further detailed in chapter 5 of
the final rule TSD. Additionally, DOE used information from its
teardown analysis, described in section IV.C of this final rule, to
disaggregate the MPCs into material and labor costs. These cost
breakdowns and equipment markups were validated with manufacturers
during interviews.
No-New-Standards-Case Shipments Forecast
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of shipments by efficiency
level. Changes in sales volumes and efficiency mix over time can
significantly affect manufacturer finances. For this analysis, the GRIM
used the NIA's annual shipment forecasts derived from the shipments
analysis from 2016 (the base year) to 2048 (the end of the analysis
period). See chapter 9 of the final rule TSD for additional details on
the shipments analysis.
Standards-Case Shipments Forecast
For each standards case, the GRIM assumes a small, constant
percentage shift in shipments to higher efficiency levels, reflecting
the idea that some efficiency improvements will occur independent of
amended standards. The GRIM also assumes all remaining shipments of
products below the projected minimum standard levels would roll up
(i.e., be added) to the standard efficiency levels in response to
[[Page 38364]]
an increase in energy conservation standards. The GRIM also assumes
that demand for higher-efficiency products (that are above the
minimally compliant level) is a function of price, and is independent
of the standard level.
Product and Capital Conversion Costs
Amended energy conservation standards may cause manufacturers to
incur 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 conversion costs into two major groups: (1)
Product conversion costs and (2) capital conversion costs. Product
conversion costs are investments in research, development, testing, and
marketing, focused on making product designs comply with the new energy
conservation standard. Capital conversion expenditures are investments
in property, plant, and equipment to adapt or change existing
production facilities so that new product designs can be fabricated and
assembled.
Stranded Assets
If new or amended energy conservation standards require investment
in new manufacturing capital, there also exists the possibility that
they will render existing manufacturing capital obsolete. If the
obsolete manufacturing capital is not fully depreciated at the time new
or amended standards go into effect, these assets would be stranded and
the manufacturer would have to write-down the residual value that had
not yet been depreciated.
DOE used multiple sources of data to evaluate the level of product
and capital conversion costs and stranded assets manufacturers would
likely face to comply with amended dehumidifier energy conservation
standards. DOE used manufacturer interviews to gather data on the level
of investment anticipated at each proposed efficiency level and
validated these assumptions using estimates of capital requirements
derived from the product teardown analysis and engineering model
described in section IV.C of this final rule. These estimates were then
aggregated and scaled to derive total industry estimates of product and
capital conversion costs and to protect confidential information.
In general, DOE assumes that all conversion-related investments
occur between the year the final rule is published and the year by
which manufacturers must comply with the new or amended standards. The
investment figures used in the GRIM can be found in section V.B.2 of
this document. For additional information on the estimated product
conversion and capital conversion costs, see chapter 12 of the final
rule TSD.
b. Government Regulatory Impact Model Scenarios
No-New-Standards-Case Markup
As discussed in section IV.D of this final rule, MSPs include
direct manufacturing production costs (i.e., labor, material, overhead,
and depreciation estimated in DOE's MPCs) and all non-production costs
(i.e., SG&A, R&D, and interest), along with profit. To calculate the
MSPs in the GRIM, DOE applied manufacturer markups to the MPCs
estimated in the engineering analysis. Based on publicly available
financial information for manufacturers of dehumidifiers and comments
from manufacturer interviews, DOE assumed the industry average no-new-
standards-case markup on production costs to be 1.45. This markup takes
into account the two-tiered sourcing structure of the majority of the
portable dehumidifier segment, detailed below, in addition to the
traditional one-tiered structure of the domestically-produced whole-
home (and similarly constructed high-capacity portable) dehumidifier
segment.
Lower-capacity portable dehumidifiers (product classes 1 and 2) and
some high-capacity dehumidifiers (product class 3) are manufactured
under contract by an overseas original equipment manufacturer (OEM).
The engineering analysis, as detailed in chapter 5 of the final rule
TSD, estimates the cost of manufacturing at the OEM. This production
cost is marked up once by the OEM to the company contracting its
manufacturer and again by the contracting company who imports the
product and sells it to retailers. For imported portable dehumidifiers,
the industry average baseline markup breaks down as follows:
Table IV.20--Industry-Average Baseline Markups
------------------------------------------------------------------------
------------------------------------------------------------------------
OEM to Contracting Company Markup............................. 1.20
Contracting Company to First Customer Markup.................. 1.21
Overall OEM to First Customer Markup.......................... 1.45
------------------------------------------------------------------------
Markup Scenarios
Modifying the aforementioned no-new-standards-case markups in the
standards case yields different sets of impacts on manufacturers. For
the MIA, DOE modeled two standards-case markup scenarios to represent
the uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) A preservation of gross margin \48\
(percentage) scenario; and (2) a preservation of per-unit operating
profits scenario. These scenarios lead to different markups values
that, when applied to the MPCs, result in varying revenue and cash flow
impacts.
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\48\ ``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.
---------------------------------------------------------------------------
The preservation of gross margin as a percentage of revenues markup
scenario assumes that the baseline markup of 1.45 is maintained for all
products in the standards case. Typically, this scenario represents the
upper bound of industry profitability as manufacturers are able to
fully pass through additional costs due to standards to their customers
under this scenario.
The preservation of per-unit operating profits markup scenario is
similar to the preservation of gross margin as a percentage of revenues
markup scenario with the exception that in the standards case,
minimally compliant products lose a fraction of the baseline markup.
Typically, this scenario represents the lower bound profitability and a
more substantial impact on the industry as manufacturers accept a lower
margin in an attempt to offer price competitive entry level products
while maintaining the same level of absolute operating profits, on a
per-unit basis, that they saw prior to amended standards. Under this
scenario, gross margin as a percentage decreases in the standards case.
3. Discussion of Comments
Manufacturers and trade organizations provided several comments on
the potential impact of amended energy conservation standards on
manufacturers. These comments are outlined below. DOE considered these
comments when updating the analysis for this final rule.
AHAM cautioned that DOE not overlook the considerable capital and
product conversion expenditures that manufacturers must face in
redesigning significant component systems to meet TSL 3 with the new
test procedure, appendix X1. AHAM commented that DOE should revise its
analysis based on
[[Page 38365]]
additional data from AHAM and manufacturer interviews, which may show
that TSL 3 is no longer justified. (AHAM, No. 39 at p. 6) Additionally,
AHAM commented that DOE should consider marketing costs necessary to
explain to the public the change in capacities of units. (AHAM, No. 39
at p. 3)
DOE recognizes that the revised test procedure resulted in changes
in capacity and efficiency. 80 FR 45802 (July 31, 2015). To ensure that
the conversion cost estimates provided by manufacturers were reflective
of the conversion costs dehumidifier manufacturers will face as a
result of amended energy conservation standards, DOE conducted another
round of manufacturer interviews following the June 2015 NOPR
publication. DOE solicited information on all conversion costs during
these interviews and was particularly interested in understanding the
product conversion costs necessary for marketing, training, consumer
education, and labeling that would help buyers of these products
understand the new ranges of capacity and efficiency. (See the final
rule TSD appendix 12A for the list of topics included in post-NOPR
manufacturer interviews.) Based on feedback from these interviews, DOE
has revised its conversion cost estimates, where applicable, for this
final rule. See section V.B.2 of this final rule and chapter 12 of the
final rule TSD for details on the revised industry conversion costs.
Aprilaire and Therma-Stor provided comments describing the
potential impacts on the high-capacity portable dehumidifier and whole-
home dehumidifier market segments. Aprilaire commented that it does not
support DOE regulating the whole-home dehumidifier industry at this
time, as it believes the small American-based businesses would face
high, disproportionate impacts. (Aprilaire, No. 34 at p. 1)
Additionally, Aprilaire commented that any decrease in market size and
jobs for whole-home dehumidifiers would have a disproportionate effect
on employment in the United States, and the job market specifically in
Wisconsin. (Aprilaire, No. 34 at p. 5) Therma-Stor, also a small
manufacturer located in Wisconsin, commented that if the June 2015 NOPR
proposal goes into effect unchanged, it could put them and other
domestic manufacturers out of business. Therma-Stor stated that it
expects to reduce its employment headcount by one-half under the June
2015 NOPR proposal, which it stated was biased against manufacturers of
high-capacity portable dehumidifiers and whole-home dehumidifiers.
(Therma-Stor, No. 38 at p. 3)
DOE acknowledges that amended energy conservation standards for
dehumidifiers could disproportionately impact small domestic
manufacturers. As mentioned above, as a result of these and other
comments submitted in response to the June 2015 NOPR, DOE solicited
additional information from small and large dehumidifier manufacturers
on the expected financial burdens related to compliance with the
standard levels considered in the NOPR. Based on new feedback, for this
final rule, DOE has updated the MIA, including its analysis of small
business impacts and discussions of potential impacts on domestic
production employment and manufacturing capacity. DOE based its
selection of efficiency levels in this final rule on its updated
analysis. See section V.B.2 of this final rule for DOE's updated
analysis of INPV impacts, and direct employment and manufacturing
capacity impacts. See section VII.B of this final rule for a discussion
of disproportionate impacts on small domestic dehumidifier
manufacturers.
Regarding the baseline and incremental efficiency levels analyzed
in the June 2015 NOPR, Therma-Stor commented that DOE's determination
that low-capacity portable dehumidifiers cannot be designed with
efficiency enhancements to establish a minimum efficiency level two to
three times less than high capacity portable dehumidifiers and whole-
home dehumidifiers leads to an unfair and anti-competitive bias in
favor of the manufacturers and importers of low-capacity portable
dehumidifiers. (Therma-Stor, No. 38 at p. 2) Aprilaire commented that
the whole-home dehumidifier industry has been analyzed at only two
efficiency levels and asked why DOE did not analyze other efficiency
levels, which may have less of an impact on the small businesses and
the whole-home dehumidifier industry. (Aprilaire, Public Meeting
Transcript, No. 35 at p. 83)
As described in section IV.C.1 of this final rule, DOE analyzed a
representative sample of products in each product class to determine an
appropriate baseline efficiency level and subsequent improved
efficiency levels. For high-capacity portable dehumidifiers (50.01
pints/day or greater), DOE has updated the analysis and included an
additional efficiency level for this product class to reflect products
currently available on the market. Based on product testing and
teardowns, DOE included only one gap fill efficiency level for whole-
home dehumidifiers with a case volume less than 8.0 cubic feet and two
gap fill efficiency levels for whole-home dehumidifiers with case
volumes greater than 8.0 cubic feet. Based on the new feedback from
interested parties, DOE has updated the MIA in this final rule,
including its analysis of small, domestic business impacts, and its
analysis of potential impacts on domestic production employment and
manufacturing capacity. This updated analysis has directly impacted the
selection of standard efficiency levels in this final rule. See section
V.B.2 of this final rule for DOE's updated analysis of INPV impacts,
and direct employment and manufacturing capacity impacts.
4. Manufacturer Interviews
As a result of public comments received from interested parties
following the publication of the June 2015 NOPR and DOE's amended test
procedure,\49\ DOE conducted additional confidential interviews with
manufacturers. During interviews, DOE asked manufacturers to describe
their recommendations relating to updates to the June 2015 NOPR
analyses, particularly those that would be affected by the new
dehumidifier test procedure. Specifically, DOE solicited feedback on
product classes, efficiency levels, and industry conversion costs.
Technical data obtained during these interviews informed updates to the
engineering analysis for this final rule, where applicable. See
sections IV.A.1 and IV.C.1 of this document for information about the
changes to product classes and efficiency levels for this final rule.
---------------------------------------------------------------------------
\49\ Section IV.C.1.a describes the updated engineering analysis
based on the test procedure in appendix X1.
---------------------------------------------------------------------------
The following sections describe the issues identified by
manufacturers relating to DOE's June 2015 NOPR analyses. These concerns
are also presented in chapter 12 of the final rule TSD.
Unavailability of Products
Most manufacturers interviewed expressed concern that the proposed
dehumidifier standards were too aggressive and could result in the
unavailability of products of certain capacities. In particular,
manufacturers stated that the efficiency levels proposed in the June
2015 NOPR for high-capacity portable dehumidifiers and whole-home
dehumidifiers are too stringent relative to those for lower-capacity
dehumidifiers. Manufacturers stated that this would reduce the
[[Page 38366]]
competitiveness of high-capacity portable dehumidifiers and whole-home
dehumidifiers, making them uneconomical to produce. Relatedly, other
manufacturers noted that they would not enter the high-capacity
portable dehumidifier market in the future because the high standard
efficiency levels for these products would make it difficult to meet
their price targets. Public comments relating to the impact of this
rulemaking on the availability of certain product types are discussed
in sections IV.J.3 and V.C of this final rule.
Impacts on Small Business
Similarly, manufacturers expressed concerns that small business
manufacturers currently producing high-capacity portable dehumidifiers
and whole-home dehumidifiers may have to exit the market if the
standards proposed in the June 2015 NOPR become final. This would
negatively impact domestic manufacturing employment and capacity in the
dehumidifier market.
In addition to the prohibitive capital costs associated with
compliance with the standard levels proposed in the June 2015 NOPR,
small manufacturers of whole-home dehumidifiers cited the re-education
of distributors as a source of substantial financial burden resulting
from the new test procedure and amended standards for whole-home
products. Public comments relating to small business impacts are
addressed in section IV.J.3 of this final rule.
Consumer Confusion
Finally, manufacturers expressed concerns regarding the potential
confusion faced by consumers as a result of new product capacity
ratings under the appendix X1 test procedure. Manufacturers believe
this confusion will be particularly detrimental in the short-term, when
consumers will have a selection of both newly rated products and the
existing inventory of products rated using the appendix X test
procedure. One manufacturer commented that it would like DOE to develop
a standardized label for dehumidifiers to help educate consumers on the
new ratings. Public comments relating to consumer confusion and
labeling are discussed in section IV.J.3 of this final rule.
Additionally, as stated in section II.A of this final rule, the FTC is
primarily responsible for the labeling of consumer products.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions to emissions of all species
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion. The associated emissions are referred
to as upstream emissions.
The analysis of power sector emissions uses marginal emissions
factors that were derived from data in AEO 2015, as described in
section IV.M. The methodology is described in chapter 13 and 15 of the
final rule TSD.
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA, GHG
Emissions Factors Hub.\50\ The FFC upstream emissions are estimated
based on the methodology described in chapter 15 of the final rule TSD.
The upstream emissions include both emissions from fuel combustion
during extraction, processing, and transportation of fuel, and
``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2.
---------------------------------------------------------------------------
\50\ Available at: http://www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. Total emissions
reductions are estimated using the energy savings calculated in the
national impact analysis.
For CH4 and N2O, DOE calculated emissions
reduction in tons and also in terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted to CO2eq
by multiplying each ton of gas by the gas' global warming potential
(GWP) over a 100-year time horizon. Based on the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change,\51\ DOE used
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------
\51\ IPCC, 2013: Climate Change 2013: The Physical Science
Basis. Contribution of Working Group I to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Stocker,
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A.
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA.
Chapter 8.
---------------------------------------------------------------------------
The AEO incorporates the projected impacts of existing air quality
regulations on emissions. AEO 2015 generally represents current
legislation and environmental regulations, including recent government
actions, for which implementing regulations were available as of
October 31, 2014. DOE's estimation of impacts accounts for the presence
of the emissions control programs discussed in the following
paragraphs.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and the
District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from 28 eastern States and DC were also limited under the
Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR
created an allowance-based trading program that operates along with the
Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court
of Appeals for the District of Columbia Circuit, but it remained in
effect.\52\ In 2011, EPA issued a replacement for CAIR, the Cross-State
Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21,
2012, the DC Circuit issued a decision to vacate CSAPR,\53\ and the
court ordered EPA to continue administering CAIR. On April 29, 2014,
the U.S. Supreme Court reversed the judgment of the DC Circuit and
remanded the case for further proceedings consistent with the Supreme
Court's opinion.\54\ On October 23, 2014, the DC Circuit lifted the
stay of CSAPR.\55\ Pursuant to this action, CSAPR went into effect (and
CAIR ceased to be in effect) as of January 1, 2015.
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\52\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
\53\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696,
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
\54\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610
(U.S. 2014). The Supreme Court held in part that EPA's methodology
for quantifying emissions that must be eliminated in certain States
due to their impacts in other downwind States was based on a
permissible, workable, and equitable interpretation of the Clean Air
Act provision that provides statutory authority for CSAPR.
\55\ See Georgia v. EPA, Order (D.C. Cir. filed October 23,
2014) (No. 11-1302).
---------------------------------------------------------------------------
EIA was not able to incorporate CSAPR into AEO 2015, so it assumes
implementation of CAIR. Although DOE's analysis used emissions factors
that assume that CAIR, not CSAPR, is the regulation in force, the
difference between CAIR and CSAPR is not significant for the purpose of
DOE's analysis of emissions impacts from energy conservation standards.
The attainment of emissions caps is typically flexible among EGUs
and is
[[Page 38367]]
enforced through the use of emissions allowances and tradable permits.
Under existing EPA regulations, any excess SO2 emissions
allowances resulting from the lower electricity demand caused by the
adoption of an efficiency standard could be used to permit offsetting
increases in SO2 emissions by any regulated EGU. In past
rulemakings, DOE recognized that there was uncertainty about the
effects of efficiency standards on SO2 emissions covered by
the existing cap-and-trade system, but it concluded that negligible
reductions in power sector SO2 emissions would occur as a
result of standards.
Beginning in 2016, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants.
77 FR 9304 (Feb. 16, 2012). In the MATS rule, EPA established a
standard for hydrogen chloride as a surrogate for acid gas hazardous
air pollutants (HAP), and also established a standard for
SO2 (a non-HAP acid gas) as an alternative equivalent
surrogate standard for acid gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be
reduced as a result of the control technologies installed on coal-fired
power plants to comply with the MATS requirements for acid gas. AEO
2015 assumes that, in order to continue operating, coal plants must
have either flue gas desulfurization or dry sorbent injection systems
installed by 2016. Both technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions. Under the MATS,
emissions will be far below the cap established by CAIR, so it is
unlikely that excess SO2 emissions allowances resulting from
the lower electricity demand would be needed or used to permit
offsetting increases in SO2 emissions by any regulated
EGU.\56\ Therefore, DOE believes that energy conservation standards
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------
\56\ DOE notes that the Supreme Court remanded EPA's 2012 rule
regarding national emission standards for hazardous air pollutants
from certain electric utility steam generating units. See Michigan
v. EPA (Case No. 14-46, 2015). DOE has tentatively determined that
the remand of the MATS rule does not change the assumptions
regarding the impact of energy efficiency standards on
SO2 emissions. Further, while the remand of the MATS rule
may have an impact on the overall amount of mercury emitted by power
plants, it does not change the impact of the energy efficiency
standards on mercury emissions. DOE will continue to monitor
developments related to this case and respond to them as
appropriate.
---------------------------------------------------------------------------
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia.\57\ Energy conservation standards
are expected to have little effect on NOX emissions in those
States covered by CAIR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions from other
facilities. However, standards would be expected to reduce
NOX emissions in the States not affected by the caps, so DOE
estimated NOX emissions reductions from the standards
considered in this final rule for these States.
---------------------------------------------------------------------------
\57\ CSAPR also applies to NOX and it supersedes the
regulation of NOX under CAIR. As stated previously, the
current analysis assumes that CAIR, not CSAPR, is the regulation in
force. The difference between CAIR and CSAPR with regard to DOE's
analysis of NOX emissions is slight.
---------------------------------------------------------------------------
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. DOE estimated mercury
emissions reduction using emissions factors based on AEO 2015, which
incorporates the MATS.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this rule, DOE considered the
estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the TSLs considered. In order to make this calculation analogous to
the calculation of the NPV of consumer benefit, DOE considered the
reduced emissions expected to result over the lifetime of products
shipped in the forecast period for each TSL. This section summarizes
the basis for the monetary values used for CO2 and
NOX emissions and presents the values considered in this
final rule.
For this final rule, DOE relied on a set of values for the social
cost of carbon (SCC) that was developed by a Federal interagency
process. The basis for these values is summarized in the next section,
and a more detailed description of the methodologies used is provided
as an appendix to chapter 14 of the final rule TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, and the value of ecosystem services.
Estimates of the SCC are provided in dollars per metric ton of
CO2. A domestic SCC value is meant to reflect the value of
damages in the United States resulting from a unit change in
CO2 emissions, while a global SCC value is meant to reflect
the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to
the extent permitted by law, ``assess both the costs and the benefits
of the intended regulation and, recognizing that some costs and
benefits are difficult to quantify, propose or adopt a regulation only
upon a reasoned determination that the benefits of the intended
regulation justify its costs.'' The purpose of the SCC estimates
presented here is to allow agencies to incorporate the monetized social
benefits of reducing CO2 emissions into cost-benefit
analyses of regulatory actions. The estimates are presented with an
acknowledgement of the many uncertainties involved and with a clear
understanding that they should be updated over time to reflect
increasing knowledge of the science and economics of climate impacts.
As part of the interagency process that developed these SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
CO2 emissions, the analyst faces a number of challenges. A
report from the National Research Council \58\ points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) Future emissions of GHGs; (2) the effects of
past and future emissions on the climate system; (3) the impact of
changes in climate on the physical and biological environment; and (4)
the translation of these environmental impacts into economic damages.
As a result, any effort to quantify and
[[Page 38368]]
monetize the harms associated with climate change will raise questions
of science, economics, and ethics and should be viewed as provisional.
---------------------------------------------------------------------------
\58\ National Research Council, Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use, National Academies Press:
Washington, DC (2009).
---------------------------------------------------------------------------
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
CO2 emissions. The agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across Federal agencies, the Administration
sought to develop a transparent and defensible method, specifically
designed for the rulemaking process, to quantify avoided climate change
damages from reduced CO2 emissions. The interagency group
did not undertake any original analysis. Instead, it combined SCC
estimates from the existing literature to use as interim values until a
more comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per metric ton of CO2. These interim values
represented the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
c. Current Approach and Key Assumptions
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specially, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: The FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change (IPCC).
Each model was given equal weight in the SCC values that were
developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models, while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: Climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for
use in regulatory analyses. Three sets of values are based on the
average SCC from the three integrated assessment models, at discount
rates of 2.5, 3, and 5 percent. The fourth set, which represents the
95th percentile SCC estimate across all three models at a 3-percent
discount rate, was included to represent higher-than-expected impacts
from climate change further out in the tails of the SCC distribution.
The values grow in real terms over time. Additionally, the interagency
group determined that a range of values from 7 percent to 23 percent
should be used to adjust the global SCC to calculate domestic
effects,\59\ although preference is given to consideration of the
global benefits of reducing CO2 emissions. Table IV.21
presents the values in the 2010 interagency group report,\60\ which is
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------
\59\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
\60\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government (February 2010) (Available at:
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
Table IV.21--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 4.7 21.4 35.1 64.9
2015............................................ 5.7 23.8 38.4 72.8
2020............................................ 6.8 26.3 41.7 80.7
2025............................................ 8.2 29.6 45.9 90.4
2030............................................ 9.7 32.8 50.0 100.0
2035............................................ 11.2 36.0 54.2 109.7
2040............................................ 12.7 39.2 58.4 119.3
2045............................................ 14.2 42.1 61.7 127.8
2050............................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
[[Page 38369]]
The SCC values used for this document were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature, as described in the
2013 update from the interagency working group (revised July 2015).\61\
Table IV.22 shows the updated sets of SCC estimates from the latest
interagency update in 5-year increments from 2010 to 2050. The full set
of annual SCC estimates between 2010 and 2050 is reported in appendix
14B of the final rule TSD. The central value that emerges is the
average SCC across models at the 3-percent discount rate. However, for
purposes of capturing the uncertainties involved in regulatory impact
analysis, the interagency group emphasizes the importance of including
all four sets of SCC values.
---------------------------------------------------------------------------
\61\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, United States Government
(May 2013; revised July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
Table IV.22--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount Rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 10 31 50 86
2015............................................ 11 36 56 105
2020............................................ 12 42 62 123
2025............................................ 14 46 68 138
2030............................................ 16 50 73 152
2035............................................ 18 55 78 168
2040............................................ 21 60 84 183
2045............................................ 23 64 89 197
2050............................................ 26 69 95 212
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable because they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned previously points out that there is tension
between the goal of producing quantified estimates of the economic
damages from an incremental ton of carbon and the limits of existing
efforts to model these effects. There are a number of analytical
challenges that are being addressed by the research community,
including research programs housed in many of the Federal agencies
participating in the interagency process to estimate the SCC. The
interagency group intends to periodically review and reconsider those
estimates to reflect increasing knowledge of the science and economics
of climate impacts, as well as improvements in modeling.\62\
---------------------------------------------------------------------------
\62\ In November 2013, OMB announced a new opportunity for
public comment on the interagency technical support document
underlying the revised SCC estimates. 78 FR 70586. In July 2015 OMB
published a detailed summary and formal response to the many
comments that were received. https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It
also stated its intention to seek independent expert advice on
opportunities to improve the estimates, including many of the
approaches suggested by commenters.
---------------------------------------------------------------------------
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the values from the
2013 interagency report (revised July 2015), adjusted to 2014$ using
the implicit price deflator for gross domestic product (GDP) from the
Bureau of Economic Analysis. For each of the four sets of SCC cases
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3,
and $117 per metric ton avoided (values expressed in 2014$). DOE
derived values after 2050 based on the trend in 2010-2050 in each of
the four cases.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
2. Social Cost of Other Air Pollutants
As noted previously, DOE has estimated how the considered energy
conservation standards would decrease power sector NOX
emissions in those 22 States not affected by the CAIR.
DOE estimated the monetized value of NOX emissions
reductions using benefit per ton estimates from the Regulatory Impact
Analysis for the Clean Power Plan Final Rule, published in August 2015
by EPA's Office of Air Quality Planning and Standards.\63\ The report
includes high and low values for NOX (as PM2.5)
for 2020, 2025, and 2030 discounted at 3 percent and 7 percent; \64\
these values are presented in chapter 14 of the final rule TSD. DOE
assigned values for 2021-2024 and 2026-2029 using, respectively, the
values for 2020 and 2025. DOE assigned values after 2030 using the
value for 2030. DOE developed values specific to the end-use category
for dehumidifiers using a method described in appendix 14C.
---------------------------------------------------------------------------
\63\ Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See Tables 4A-3,
4A-4, and 4A-5 in the report.
\64\ For the monetized NOX benefits associated with
PM2.5, the related benefits (derived from benefit-per-ton
values) are primarily based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009), which is the
lower of the two EPA central tendencies. Using the lower value is
more conservative when making the policy decision concerning whether
a particular standard level is economically justified. If the
benefit-per-ton estimates were based on the Six Cities study
(Lepuele et al., 2012), the values would be nearly two-and-a-half
times larger. (See chapter 14 of the final rule TSD for further
description of the studies mentioned in this preamble.)
---------------------------------------------------------------------------
DOE multiplied the emissions reduction (tons) in each year by the
associated $/ton values, and then discounted each series using discount
rates of 3-percent and 7-percent as appropriate. DOE will continue to
evaluate the monetization of avoided NOX emissions and will
make any appropriate updates in energy conservation standards
rulemakings.
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. DOE has not
[[Page 38370]]
included monetization of those emissions in the current analysis.
AHAM commented that monetization of avoided CO2
emissions should include a more comprehensive analysis to understand
the total environmental impact. It stated that any CO2
analysis should include CO2 emissions that are caused
indirectly, as well as directly, from a standards change, such as
increased carbon emissions required to manufacture a given standard
level, the increased transportation and related emissions required for
a given standard level, and reduced carbon emissions from peak load
reductions. (AHAM, No. 39 at p. 7)
In response, DOE notes that EPCA directs DOE to consider the total
projected amount of energy, or as applicable, water, savings likely to
result directly from the imposition of the standard when determining
whether a standard is economically justified. (42 U.S.C.
6295(o)(2)(B)(i)(III)) DOE interprets this to include energy used in
the generation, transmission, and distribution of fuels used by
appliances or equipment. In addition, DOE is using the FFC measure,
which includes the energy consumed in extracting, processing, and
transporting primary fuels. DOE's current accounting of primary energy
savings and the FFC measure are directly linked to the energy used by
appliances or equipment. DOE believes that energy used in manufacturing
or transporting appliances or equipment falls outside the boundaries of
``directly'' as intended by EPCA. Thus, DOE did not consider such
energy use and air emissions in the NIA or in the emissions analysis.
DOE's analysis does account for impacts on CO2 emissions
from electricity load reduction.
The U.S. Chamber of Commerce objected to the continued use of the
SCC in the cost-benefit analysis performed. AHAM stated that DOE should
wait for comments on the 2013 interagency report to be resolved before
it relies on the 2013 estimates, and, until that time DOE should rely
on the 2010 estimates as it has done in rulemakings prior to May 2013.
(U.S. Chamber of Commerce, No. 37 at p. 4; AHAM, No. 39 at p. 7)
The 2013 report provides an update of the SCC estimates based
solely on the latest peer-reviewed version of the models, replacing
model versions that were developed up to ten years ago in a rapidly
evolving field. It does not revisit other assumptions with regard to
the discount rate, reference case socioeconomic and emission scenarios,
or equilibrium climate sensitivity. Improvements in the way damages are
modeled are confined to those that have been incorporated into the
latest versions of the models by the developers themselves in the peer-
reviewed literature. Given the above, using the 2010 estimates would be
inconsistent with DOE's objective of using the best available
information in its analyses. As noted previously, OMB published a
detailed summary and formal response to the many comments that were
received on the 2013 interagency report.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the
electric power generation industry that would result from the adoption
of new or amended energy conservation standards. The utility impact
analysis estimates the changes in installed electrical capacity and
generation that would result for each TSL. The analysis is based on
published output from the NEMS associated with AEO 2015. NEMS produces
the AEO Reference case, as well as a number of side cases that estimate
the economy-wide impacts of changes to energy supply and demand. DOE
uses published side cases to estimate the marginal impacts of reduced
energy demand on the utility sector. These marginal factors are
estimated based on the changes to electricity sector generation,
installed capacity, fuel consumption and emissions in the AEO Reference
case and various side cases. Details of the methodology are provided in
the appendices to chapters 13 and 15 of the final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of new or amended
energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are any changes in the number of employees of
manufacturers of the products subject to standards, their suppliers,
and related service firms. The MIA addresses those impacts. Indirect
employment impacts are changes in national employment that occur due to
the shift in expenditures and capital investment caused by the purchase
and operation of more-efficient appliances. 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, caused by: (1) Reduced spending by end users on energy; (2)
reduced spending on new energy supply by the utility industry; (3)
increased consumer spending on new products to which the new standards
apply; and (4) the effects of those three factors throughout the
economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS).\65\ 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.\66\ 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. Energy
conservation 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 service sectors). Thus, the BLS
data suggest that net national employment may increase due to shifts in
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------
\65\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to [email protected].
\66\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this final rule using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies version 3.1.1
(ImSET).\67\
[[Page 38371]]
ImSET is a special-purpose version of the ``U.S. Benchmark National
Input-Output'' (I-O) model, which was designed to estimate the national
employment and income effects of energy-saving technologies. The ImSET
software includes a computer-based I-O model having structural
coefficients that characterize economic flows among 187 sectors most
relevant to industrial, commercial, and residential building energy
use.
---------------------------------------------------------------------------
\67\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact
of Sector Energy Technologies, PNNL-18412, Pacific Northwest
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.)
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run for this rule. Therefore, DOE generated
results for near-term timeframes, where these uncertainties are
reduced. For more details on the employment impact analysis, see
chapter 16 of the final rule TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
dehumidifiers. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for dehumidifiers, and the standards levels that DOE is
adopting in this final rule. Additional details regarding DOE's
analyses are contained in the final rule TSD supporting this document.
A. Trial Standard Levels
DOE analyzed the benefits and burdens of four TSLs for
dehumidifiers. These TSLs were developed by combining specific
efficiency levels for each of the five product classes analyzed by DOE.
DOE presents the results for the TSLs in this document, while the
results for all efficiency levels that DOE analyzed are in the final
rule TSD. Table V.1 presents the TSLs and the corresponding efficiency
levels for dehumidifiers. TSL 4 represents the max-tech energy
efficiency for all product classes. TSL 3 consists of the efficiency
levels below the max-tech level for all product classes. The efficiency
level for TSL 2 for product classes 1, 2, and 3 is one below the max-
tech level, the same level as TSL3. The efficiency level for TSL 2 for
product classes 4 and 5 is the baseline. TSL 1 consists of Efficiency
Level 2 for product classes 1, 2, and 3 and the baseline for product
classes 4 and 5.
Table V.1--Trial Standard Levels for Dehumidifiers
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 PC2 PC3 PC4 PC5
-------------------------------------------------------------------------------------------------------------
<=25.00 pints/day 25.01-50.00 pints/ >=50.01 pints/day <=8.0 ft\3\ >8.0 ft\3\
TSL ---------------------- day -----------------------------------------------------------------
----------------------
EL AEU (kWh/ AEU (kWh/ EL AEU (kWh/ EL AEU (kWh/ EL AEU (kWh/
yr) EL yr) yr) yr) yr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 505 0 808 0 867 0 809 0 967
1......................................... 2 460 2 688 2 778 0 809 0 967
2......................................... 3 422 3 603 3 665 0 809 0 967
3......................................... 3 422 3 603 3 665 1 681 2 660
4......................................... 4 351 4 534 4 509 2 565 3 519
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on dehumidifier consumers by
looking at the effects potential amended standards at each TSL would
have on the LCC and PBP. DOE also examined the impacts of potential
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) Purchase price increases, and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the final rule
TSD provides detailed information on the LCC and PBP analyses.
Table V.2 through Table V.3 show the LCC and PBP results for the
TSL efficiency levels considered for each product class. In the first
of each pair of tables, the simple payback is measured relative to the
baseline product. In the second table, the impacts are measured
relative to the efficiency distribution in the no-new-standards case in
the compliance year (see section IV.F.8 of this document). Because some
consumers purchase products with higher efficiency in the no-new-
standards case, the average savings are less than the difference
between the average LCC of Efficiency Level 0 (baseline) and the
average LCC at each TSL. The savings refer only to consumers who are
affected by a standard at a given TSL. Those who already purchase a
product with efficiency at or above a given TSL are not affected.
Consumers for whom the LCC increases at a given TSL experience a net
cost.
[[Page 38372]]
Table V.2--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC1
[<=25.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 208 78 736 944 .............. 11
1....................................... 2 210 71 674 884 0.4 11
2, 3.................................... 3 214 66 622 836 0.5 11
4....................................... 4 238 56 525 763 1.3 11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline (EL 0) product.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Dehumidifier PC1
[<=25.00 pints/day]
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-----------------------------------
Percent of
TSL EL Average LCC consumers that
savings * experience net
(2014$) cost (%)
----------------------------------------------------------------------------------------------------------------
1........................................................... 2 60 0
2, 3........................................................ 3 107 0.1
4........................................................... 4 110 11.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.4--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC2
[25.01-50.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple PBP Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 252 124 1,173 1,425 .............. 11
1....................................... 2 255 107 1,010 1,265 0.2 11
2, 3.................................... 3 264 95 895 1,158 0.4 11
4....................................... 4 286 85 800 1,086 0.9 11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.5--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC2
[25.01-50.00 pints/day]
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-----------------------------------
Percent of
TSL EL Average LCC consumers that
savings * experience net
(2014$) cost (%)
----------------------------------------------------------------------------------------------------------------
1........................................................... 2 157 0
2,3......................................................... 3 119 0.7
4........................................................... 4 191 5.1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
[[Page 38373]]
Table V.6--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC3
[>50.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple PBP Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 1,302 134 1,269 2,571 .............. 11
1....................................... 2 1,407 121 1,147 2,554 8.2 11
2,3..................................... 3 1,433 105 994 2,427 4.5 11
4....................................... 4 1,673 83 782 2,455 7.2 11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.7--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC3
[>50.00 pints/day]
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-----------------------------------
Percent of
TSL EL Average LCC consumers that
savings * experience net
(2014$) cost (%)
----------------------------------------------------------------------------------------------------------------
1........................................................... 2 17 44.9
2,3......................................................... 3 142 28.7
4........................................................... 4 96 54.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.8--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC4
[<=8.0 ft\3\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple PBP Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2..................................... 0 1,733 129 1,893 3,626 .............. 19
3....................................... 1 1,769 110 1,613 3,382 1.9 19
4....................................... 2 1,977 93 1,361 3,339 6.8 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.9--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC4
[<=8.0 ft\3\]
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-----------------------------------
Percent of
TSL EL Average LCC consumers that
savings * experience net
(2014$) cost (%)
----------------------------------------------------------------------------------------------------------------
1,2......................................................... 0 ................ ................
3........................................................... 1 242 9.9
4........................................................... 2 242 42.6
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.10--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC5
[>8.0 ft\3\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple PBP Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2..................................... 0 2,233 153 2,250 4,483 .............. 19
[[Page 38374]]
3....................................... 2 2,325 108 1,581 3,906 2.0 19
4....................................... 3 2,617 87 1,273 3,890 5.8 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.11--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC5
[>8.0 ft\3\]
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-----------------------------------
Percent of
TSL EL Average LCC consumers that
savings * experience net
(2014$) cost (%)
----------------------------------------------------------------------------------------------------------------
1,2......................................................... 1 ................ ................
3........................................................... 2 479 10.8
4........................................................... 3 386 43.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
b. Consumer Subgroup Analysis
As described in section IV.I of this document, DOE estimated the
impact of the considered TSLs on low-income households and senior-only
households. Table V.12 through Table V.16 compare the average LCC
savings at each efficiency level for the two consumer subgroups, along
with the average LCC savings for the entire sample. In most cases, the
average LCC savings and PBP for low-income households and senior-only
households at the considered efficiency levels are not substantially
different from the average for all households. Chapter 11 of the final
rule TSD presents the complete LCC and PBP results for the two
subgroups.
Table V.12--Dehumidifier PC1 (<=25.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Low-income Senior-only Low-income Senior-only
households households All households households households All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 55 48 60 0.4 0.5 0.4
2,3..................................................... 99 86 107 0.6 0.7 0.5
4....................................................... 101 85 110 1.4 1.6 1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.13--Dehumidifier PC2 (25.01-50.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Low-income Senior-only Low-income Senior-only
households households All households households households All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 149 127 157 0.2 0.2 0.2
2,3..................................................... 112 97 119 0.4 0.5 0.4
4....................................................... 178 151 191 0.9 1.1 0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 38375]]
Table V.14--Dehumidifier PC3 (>50.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Low-income Senior-only Low-income Senior-only
households households All households households households All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 9 (6) 17 8.6 9.9 8.2
2,3..................................................... 126 95 142 4.7 5.5 4.5
4....................................................... 69 17 96 7.5 8.7 7.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.15--Dehumidifier PC4 (<=8.0 ft\3\): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Low-income Senior-only Low-income Senior-only
households households All households households households All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2..................................................... .............. .............. .............. .............. .............. ..............
3....................................................... 135 251 242 2.7 1.8 1.9
4....................................................... 64 259 242 9.6 6.5 6.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.16--Dehumidifier PC5 (>8.0 ft\3\): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Low-income Senior-only Low-income Senior-only
households households All households households households All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2..................................................... .............. .............. .............. .............. .............. ..............
3....................................................... 261 496 479 2.9 2.0 2.0
4....................................................... 105 409 386 8.3 5.6 5.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in this preamble, EPCA provides a rebuttable
presumption that 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. In calculating a rebuttable
presumption PBP for the considered standard levels, DOE used discrete
values and, as required by EPCA, based the energy use calculation on
the DOE test procedure for dehumidifiers in appendix X1. In contrast,
the PBPs presented in section V.B.1.a were calculated using
distributions for input values, with energy use based on field studies
and RECS data.
Table V.17 presents the rebuttable-presumption PBPs for the
considered TSLs.\68\ While DOE examined the rebuttable-presumption
criterion, it further considered whether the standard levels considered
for the NOPR are economically justified through a more detailed
analysis of the economic impacts of those levels pursuant to 42 U.S.C.
6295(o)(2)(B)(i). The results of that analysis serve as the basis for
DOE to evaluate the economic justification for a potential standard
level (thereby supporting or rebutting the results of any preliminary
determination of economic justification).
---------------------------------------------------------------------------
\68\ The PBPs in Table V.17 differ from those shown in Tables
V.2, V.4, V.6, V.8 and V.10 because the rebuttable PBPs are
calculated with energy use based on the DOE test procedure, whereas
the PBPs in the earlier tables are calculated with energy use based
on field studies and RECS data.
Table V.17--Dehumidifiers: Rebuttable Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
Trial standard level
Product class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)......................... 0.5 0.6 0.6 1.6
PC2 (25.00-50.00 pints/day)..................... 0.2 0.5 0.5 1.0
PC3 (>=50.01 pints/day)......................... 8.7 4.8 4.8 7.7
PC4 (<=8.0 ft\3\)............................... .............. .............. 2.2 7.8
PC5 (>8.0 ft\3\)................................ .............. .............. 2.3 6.7
----------------------------------------------------------------------------------------------------------------
[[Page 38376]]
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of dehumidifiers. The section
below describes the expected impacts on manufacturers at each TSL.
Chapter 12 of the final rule TSD explains the analysis in further
detail.
a. Industry Cash Flow Analysis Results
The following tables illustrate the estimated financial impacts
(represented by changes in INPV) of amended energy conservation
standards on manufacturers of dehumidifiers, as well as the conversion
costs that DOE estimates manufacturers would incur for each product
class at each TSL. To evaluate the range of cash-flow impacts on the
dehumidifier manufacturing industry, DOE used two different markup
scenarios to model the range of anticipated market responses to amended
energy conservation standards.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled a preservation of gross margin percentage markup
scenario, in which a flat markup of 1.45 (i.e., the baseline
manufacturer markup) is applied across all efficiency levels. In this
scenario, DOE assumed that a manufacturer's absolute dollar markup
would increase as production costs increase in the amended energy
conservation standards case. Manufacturers have indicated that it is
optimistic to assume that they would be able to maintain the same gross
margin markup as their production costs increase in response to a new
or amended energy conservation standard, particularly at higher TSLs.
To assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of per-unit operating profit
markup scenario, which assumes that manufacturers would not be able to
preserve the same overall gross margin, but instead would cut their
markup for minimally compliant products to maintain a cost competitive
product offering while maintaining the same overall level of operating
profit in absolute dollars as in the no-new-standards case. The two
tables below show the range of potential INPV impacts for manufacturers
of dehumidifiers. Table V.18 reflects the lower bound of impacts
(higher profitability) and Table V.19 represents the upper bound of
impacts (lower profitability).
Each scenario results in a unique set of cash flows and
corresponding industry values at each TSL. In the following discussion,
the INPV results refer to the sum of discounted cash flows through
2048, the difference in INPV between the no-new-standards case and each
standards case, and the total industry conversion costs required for
each standards case.
Table V.18--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario for Analysis Period
[2016-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................... 2014$ Millions................. 179.5 176.5 145.5 140.7 126.9
Change in INPV......................... 2014$ Millions................. .............. (3.0) (34.0) (38.7) (52.6)
(%)............................ .............. (1.7%) (18.9%) (21.6%) (29.3%)
Free Cash Flow (2018).................. 2014$ Millions................. 15.0 13.2 (4.2) (6.7) (19.7)
Change in Free Cash Flow (2018)........ (%)............................ .............. (12.4%) (128.3%) (144.9%) (231.4%)
Product Conversion Costs............... 2014$ Millions................. .............. 3.0 29.9 35.4 55.2
Capital Conversion Costs............... 2014$ Millions................. .............. 2.1 22.6 24.5 39.1
-------------------------------------------------------------------------------
Total Conversion Costs............. 2014$ Millions................. .............. 5.1 52.5 59.8 94.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Table V.19--Manufacturer Impact Analysis Under the Preservation of Per-Unit Operating Profit Markup Scenario for Analysis Period
[2016-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................... 2014$ Millions................. 179.5 175.8 142.0 137.1 106.8
Change in INPV......................... 2014$ Millions................. .............. (3.6) (37.5) (42.4) (72.7)
(%)............................ .............. (2.0%) (20.9%) (23.6%) (40.5%)
Free Cash Flow (2018).................. 2014$ Millions................. 15.0 13.2 (4.2) (6.7) (19.7)
Decrease in Free Cash Flow (2018)...... (%)............................ .............. (12.4%) (128.3%) (144.9%) (231.4%)
Product Conversion Costs............... 2014$ Millions................. .............. 3.0 29.9 35.4 55.2
Capital Conversion Costs............... 2014$ Millions................. .............. 2.1 22.6 24.5 39.1
-------------------------------------------------------------------------------
Total Conversion Costs............. 2014$ Millions................. .............. 5.1 52.5 59.8 94.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Beyond impacts on INPV, DOE includes a comparison of free cash flow
between the no-new-standards case and the standards case at each TSL in
the year before amended standards take effect to provide perspective on
the short-run cash flow impacts in the discussion of the results below.
At TSL 1, DOE estimates the impact on INPV for manufacturers of
dehumidifiers to range from -$3.6 million to -$3.0 million, or a change
in INPV of -2.0 percent to -1.7 percent under the preservation of per-
unit operating profit markup scenario and
[[Page 38377]]
preservation of gross margin percentage markup scenario, respectively.
At this TSL, industry free cash flow is estimated to decrease by
approximately 12.4 percent to $13.2 million, compared to the no-new-
standards-case value of $15.0 million in 2018, the year before the
projected compliance date.
At TSL 1, the industry as a whole is expected to incur $3.0 million
in product conversion costs attributed to upfront research,
development, testing, and certification, as well as $2.1 million in
investments in property, plant and equipment (PP&E) necessary to
manufacture redesigned platforms. Industry conversion cost burden at
TSL 1 would be felt by manufacturers of both lower-capacity and high-
capacity portable dehumidifiers, although 83 percent of conversion
costs relate to higher-capacity portable dehumidifier platform
redesigns. At TSL 1, approximately 1 percent of portable platforms will
require complete platform redesigns to reach the improved efficiency,
which involve moving to a new case size to accommodate larger heat
exchangers. These changes require upfront capital investments for new
tooling to manufacturing production lines, among other changes.
Additionally, it is assumed that manufacturers of high-capacity
portable dehumidifiers, the majority of which are small business
manufacturers, will have to outsource testing of their products to
third-party testing facilities, contributing to greater product
conversion costs. In contrast, the large manufacturers of portable
dehumidifiers are assumed to have in-house testing capabilities, which
significantly reduce the cost of testing. DOE confirmed these
assumptions regarding testing burdens during manufacturer interviews.
At TSL 2, DOE estimates the impact on INPV for dehumidifier
manufacturers to range from -$37.5 million to -$34.0 million, or a
change in INPV of -20.9 percent to -18.9 percent under the preservation
of per-unit operating profit markup scenario and the preservation of
gross margin percentage markup scenario, respectively. At this TSL,
industry free cash flow is estimated to decrease by approximately 128.3
percent to -$4.2 million, compared to the no-new-standards-case free
cash flow of $15.0 million in 2018, the year before the projected
compliance date.
At TSL 2, the industry as a whole is expected to incur $29.9
million in product conversion costs associated with upfront research,
development, testing, and certification, as well as $22.6 million in
investments in PP&E to manufacture products requiring platform
redesigns. At TSL 2, the industry conversion cost burden will be felt
by manufacturers of both low-capacity and high-capacity portable
dehumidifiers, as approximately 50 percent of portable dehumidifier
platforms will require complete platform redesigns. Platform redesigns
at TSL 2 will include moving to a new case size to accommodate larger
heat exchangers, and will necessitate upfront capital investments for
new tooling. Because lower-capacity portable units represent
approximately 98.5 percent of the market, conversion costs associated
with this segment have a significant impact on total industry
conversion costs for TSL 2.
At TSL 3, DOE estimates the impact on INPV for dehumidifier
manufacturers to range from -$42.4 million to -$38.7 million, or a
change in INPV of -23.6 percent to -21.6 percent under the preservation
of per-unit operating profit markup scenario and the preservation of
gross margin percentage markup scenario, respectively. At this TSL,
industry free cash flow is estimated to decrease by approximately 144.9
percent to -$6.7 million, compared to the no-new-standards-case free
cash flow of $15.0 million in 2018, the year before the projected
compliance date.
At TSL 3, the industry as a whole is expected to spend $35.4
million in product conversion costs associated with upfront research,
development, testing, and certification, as well as $24.5 million in
investments in PP&E to manufacture redesigned platforms. While
conversion costs remain constant for manufacturers of portable
dehumidifiers between TSLs 2 and 3, the conversion costs for
manufacturers of whole-home dehumidifiers increase substantially at TSL
3, as nearly 80 percent of these products will require total platform
redesigns. As with the portable dehumidifier market segment, platform
redesigns for whole-home units will consist of moving products to a new
case size to accommodate larger heat exchangers, and in turn will
require capital investments in new tooling for larger cases. This
upfront investment is in addition to higher R&D and testing
expenditures. Despite increased conversion costs associated with the
whole-home segment, because lower-capacity portable units represent
approximately 98.5 percent of the market, conversion costs associated
with this segment have a significant impact on total industry
conversion costs for TSL 3.
At TSL 4, DOE estimates the impact on INPV for manufacturers of
dehumidifiers to range from -$72.7 million to -$52.6 million, or a
change in INPV of -40.5 percent to -29.3 percent the preservation of
per-unit operating profit markup scenario and the preservation of gross
margin percentage markup scenario, respectively. At this TSL, industry
free cash flow is estimated to decrease by approximately 231.4 percent
to -$19.7 million, compared to the no-new-standards-case free cash flow
of $15.0 million in 2018, the year before the projected compliance
date.
At TSL 4, the industry as a whole is expected to spend $55.2
million in product conversion costs associated with upfront research,
development, testing, and certification, as well as $40.5 million in
investments in PP&E for platform redesigns. At TSL 4, approximately 63
percent of dehumidifier platforms will require complete redesigns in
the form of larger chassis. Again, since lower-capacity portable units
represent approximately 98.5 percent of the market, conversion costs
associated with this segment have a significant impact on total
industry conversion costs for TSL 4.
b. Impacts on Direct Employment
DOE used the GRIM to estimate the domestic labor expenditures and
number of domestic production workers in the no-new-standards case and
at each TSL from 2016 to 2048. DOE used statistical data from the U.S.
Census Bureau's 2013 Annual Survey of Manufactures, the results of the
engineering analysis, and interviews with manufacturers to determine
the inputs necessary to calculate industry-wide labor expenditures and
domestic employment levels at each TSL. Labor expenditures for the
manufacture of a product are a function of the labor intensity of the
product, the sales volume, and an assumption that wages in real terms
remain constant. The total labor expenditures in each year are
calculated by multiplying the MPCs by the labor percentage of MPCs. DOE
estimates that all whole-home dehumidifiers and 50 percent of high-
capacity portable dehumidifiers are produced domestically. This
represents approximately 1 percent of dehumidifiers sold in the United
States.
The total labor expenditures in the GRIM were then converted to
domestic production employment levels by dividing production labor
expenditures by the annual payment per production worker (production
worker hours times the labor rate found in the U.S. Census Bureau's
2013 Annual Survey of Manufactures). The production worker estimates in
this section only cover workers up to the line-supervisor level who are
directly involved in fabricating
[[Page 38378]]
and assembling a product within an original equipment manufacturer
(OEM) facility. Workers performing services that are closely associated
with production operations, such as materials handling tasks using
forklifts, are also included as production labor. DOE's estimates only
account for production workers who manufacture the specific products
covered by this rulemaking.
Because production employment expenditures are assumed to be a
fixed percentage of cost of goods sold and the MPCs typically increase
with more efficient products, labor tracks the increased prices in the
GRIM. As efficiency of dehumidifiers increase, so does the complexity
of the products, generally requiring more labor to produce. Based on
industry feedback, DOE believes that manufacturers that use domestic
production currently will continue to produce the same scope of covered
products in domestic production facilities. DOE does not expect
production to shift to lower labor cost countries. However, in public
comments submitted in response to the NOPR and in manufacturer
interviews, stakeholders provided feedback indicating that amended
energy conservation standards could have a negative impact on domestic
production employment, depending on the standard level.
Using the GRIM, DOE estimates that in the absence of amended energy
conservation standards, there would be 88 domestic production workers
in the dehumidifier industry. As noted previously, DOE estimates that 1
percent of dehumidifier units sold in the United States are
manufactured domestically. Table V.20 shows the range of the impacts of
potential amended energy conservation standards on U.S. production
workers of dehumidifiers. A complete description of the assumptions
used to generate these upper and lower bounds can be found in chapter
12 of the final rule TSD.
Table V.20--Change in Total Number of Domestic Production Employees in 2019 in the Dehumidifier Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new- standards case
* TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Total Number of ...................... 0 to 1................ 0 to 1................ (44) to 2............. (88) to 11
Domestic Production Workers in
2019.**
--------------------------------------------------------------------------------------------------------------------------------------------------------
* No-new-standards case estimates 88 domestic production workers in the dehumidifier industry in 2019.
** Parentheses indicate negative values.
The upper end of the range estimates the maximum increase in the
number of production workers in the dehumidifier industry after
implementation of an emended energy conservation standard. It assumes
that manufacturers would continue to produce the same scope of covered
products within the United States and would require some additional
labor to produce more efficient products.
The lower end of the range represents the maximum decrease in total
number of U.S. production workers that could result from an amended
energy conservation standard and is based on direct feedback from
interested parties. Feedback from manufacturers during interviews
indicated that some domestic small businesses in the dehumidifier
industry (specifically in the high-capacity portable dehumidifier and
whole-home dehumidifier segments) may be forced to reduce employment,
shift production abroad, or exit the dehumidifier market as a result of
amended energy conservation standards. This lower bound of direct
employment impacts reflects the worst-case scenario of impacts.
This conclusion is independent of any conclusions regarding
indirect employment impacts in the broader U.S. economy, which are
documented in Chapter 16 of the TSD.
c. Impacts on Manufacturing Capacity
As noted previously, the majority of dehumidifiers sold in the
United States are not produced domestically. However, in response to
standard levels analyzed in the June 2015 NOPR, domestic manufacturers
of high-capacity portable dehumidifiers and whole-home dehumidifiers
commented that production of these products could shift to lower-cost
countries or halt altogether as a result of amended energy conservation
standards, depending on the level selected. This could lead to a
permanently lower production capacity within the dehumidifier industry.
d. Impacts on Subgroups of Manufacturers
Small manufacturers, niche equipment manufacturers, and
manufacturers exhibiting a cost structure substantially different from
the industry average could be affected disproportionately. Using
average cost assumptions to develop an industry cash-flow estimate is
inadequate to assess differential impacts among manufacturer subgroups.
For dehumidifier equipment, DOE identified and evaluated the impact
of amended energy conservation standards on one subgroup: Small
manufacturers. The SBA defines a ``small business'' as having 1,250
employees or less for NAICS 333415 (``Air-Conditioning and Warm Air
Heating Equipment and Commercial and Industrial Refrigeration Equipment
Manufacturing'') or 1,500 employees or less for NAICS 335210 (``Small
Electrical Appliance Manufacturing''). Based on this definition, DOE
identified five manufacturers in the dehumidifier equipment industry
that are small businesses.
For a discussion of the impacts on the small manufacturer subgroup,
see the Regulatory Flexibility Analysis in section VII.B of this final
rule and chapter 12 of the final rule TSD.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves looking at 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.
Multiple regulations affecting the same manufacturer can strain profits
and lead companies to abandon product lines or markets with lower
expected
[[Page 38379]]
future returns than competing products. In addition to DOE's energy
conservation regulations for dehumidifiers, several other existing and
pending regulations apply to these products and other equipment
produced by the same manufacturers. DOE looks at these regulations that
could affect dehumidifier manufacturers that will take effect
approximately 3 years before or after the 2019 compliance date of
amended energy conservation standards for dehumidifiers. Additionally,
DOE will evaluate its approach to assessing cumulative regulatory
burden for use in future rulemakings to ensure that it is effectively
capturing the overlapping impacts of its regulations. In particular,
DOE will assess whether looking at rules where any portion of the
compliance period potentially overlaps with the compliance period for
the subject rulemaking would yield a more accurate reflection of
cumulative regulatory burden. For example, DOE recognizes that if it
were to undertake a rulemaking to amend the standards for room air
conditioners pursuant to the 6-year look back requirement under 42
U.S.C. 6295(m), any future room air conditioner rule could have a
cumulative impact on manufacturers of dehumidifiers during the
compliance period for these dehumidifiers standards.
The compliance years and expected industry conversion costs of
energy conservation standards that may also impact dehumidifier
manufacturers are indicated in Table V.21. For each rule, the table
also contains the number of affected dehumidifier original equipment
manufacturers (OEMs). DOE excludes companies that import and relabel
dehumidifiers from this count, as DOE's analysis indicates that OEMs
bear the majority of the economic burden for a given rule. Only 50
percent of the companies selling dehumidifiers in the United States are
OEMs (12 of 24). None of the OEMs identified in this table are domestic
in terms of ownership or manufacturing site.
Table V.21--Other Federal Energy Conservation Standards Affecting Dehumidifier OEMs
----------------------------------------------------------------------------------------------------------------
Estimated total Number of
Number of Estimated INPV industry Compliance affected
DOE Regulation manufacturers * *** (No new conversion date dehumidifier
standards case) costs OEMs
----------------------------------------------------------------------------------------------------------------
Microwave Ovens, 78 FR 36316 12 1,386.5 Million 43.1 Million 2016 1
(June 17, 2013). (2011$). (2011$).
Residential Clothes Washers, 16 2,586.0 Million 418.5 Million 2018 2
77 FR 32308 (May 31, 2012). (2010$). (2010$).
Ceiling Fans, 81 FR 1688, 31 1,308.7 Million 9.4 Million ** 2019 1
(January 13, 2016). (2014$). (2014$).
Furnace Fans, 79 FR 38129 37 349.6 Million 40.6 Million 2019 2
(July 3, 2014). (2013$). (2013$).
Portable Air Conditioners 29 725.5 Million 302.8 Million ** 2021 4
Pre-publication NOPR issued (2014$). (2014$).
on April 27, 2016.
----------------------------------------------------------------------------------------------------------------
* The number of manufacturers listed in the final rule for the energy conservation standard that is contributing
to cumulative regulatory burden.
** The dates listed are an approximation. The exact dates are pending final DOE action.
*** The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base
year through the end of the analysis period of the rulemaking (typically 30 years).
In addition to other Federal energy conservation standards,
manufacturers cited third-party certification programs (e.g., UL safety
standards certification for dehumidifiers) as a source of cumulative
regulatory burden for dehumidifier manufacturers. For more details, see
chapter 12 of the final rule TSD.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the energy savings attributable to potential standards
for dehumidifiers, DOE compared the energy consumption of those
products under the base case to their anticipated energy consumption
under each TSL. Table V.22 presents DOE's projections of the national
energy savings for each TSL considered for dehumidifiers shipped in the
2019-2048 period. The savings were calculated using the approach
described in section IV.H.1 of this document.
Table V.22--Dehumidifiers: Cumulative National Energy Savings
[Shipments in 2019-2048]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Savings ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads).................. 0.07 0.29 0.30 0.79
FFC Energy Savings (quads)...................... 0.07 0.30 0.31 0.82
----------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \69\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9, rather than 30, years of
product shipments. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of, and compliance with, such revised
standards.\70\ The review
[[Page 38380]]
timeframe established in EPCA is generally not synchronized with the
product lifetime, product manufacturing cycles, or other factors
specific to dehumidifiers. Thus, such results are presented for
informational purposes only and are not indicative of any change in
DOE's analytical methodology. The NES sensitivity analysis results
based on a 9-year analytical period are presented in Table V.23. The
impacts are counted over the lifetime of dehumidifiers purchased in
2019-2027.
---------------------------------------------------------------------------
\69\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
\70\ Under 42 U.S.C. 6295(m)(1), no later than 6 years after DOE
issues a final rule establishing or amending an energy conservation
standard, DOE must publish a notice of determination that standards
for the product do not need to be amended or a NOPR that includes
new proposed standards. The 9-year analytical period includes this
6-year period and an additional 3 years to issue the final rule and
allow time for industry compliance.
Table V.23--Dehumidifiers: Cumulative National Energy Savings for Products Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
Trial standard level
Savings ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads).................. 0.02 0.09 0.10 0.23
FFC Energy Savings (quads)...................... 0.02 0.10 0.10 0.25
----------------------------------------------------------------------------------------------------------------
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the standard levels considered for
dehumidifiers. In accordance with the OMB's guidelines on regulatory
analysis,\71\ DOE calculated NPV using both a 7-percent and a 3-percent
real discount rate.
---------------------------------------------------------------------------
\71\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis,'' Section E, (September 17, 2003) (Available
at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------
Table V.24 shows the consumer NPV results for each TSL DOE
considered for dehumidifiers. The impacts are counted over the lifetime
of products purchased in 2019-2048.
Table V.24--Dehumidifiers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level (Billion 2014$)
Discount rate ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
3 percent....................................... 0.61 2.71 2.77 6.74
7 percent....................................... 0.28 1.28 1.30 3.04
----------------------------------------------------------------------------------------------------------------
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.25. The impacts are counted over the
lifetime of products purchased in 2019-2027. As mentioned previously,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology or decision
criteria.
Table V.25--Dehumidifiers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
Trial standard level (Billion 2014$)
Discount rate ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
3 percent....................................... 0.22 1.05 1.07 2.41
7 percent....................................... 0.14 0.65 0.66 1.47
----------------------------------------------------------------------------------------------------------------
The above results reflect the use of a default trend to estimate
the change in price for dehumidifiers over the analysis period (see
section IV.F.1 of this document). DOE also conducted a sensitivity
analysis that considered one scenario with a lower rate of price
decline than the reference case and one scenario with a higher rate of
price decline than the reference case. The results of these alternative
cases are presented in appendix 10C of the final rule TSD. In the high
price decline case, the NPV of consumer benefits is higher than in the
default case. In the low price decline case, the NPV of consumer
benefits is lower than in the default case.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for dehumidifiers to
reduce energy bills for consumers of those products, with the resulting
net savings being redirected to other forms of economic activity. These
expected shifts in spending and economic activity could affect the
demand for labor. As described in section IV.N of this document, DOE
used an input/output model of the U.S. economy to estimate indirect
employment impacts of the TSLs that DOE considered in this rulemaking.
DOE understands that there are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term timeframes
(2019-2048), where these uncertainties are reduced.
[[Page 38381]]
The results suggest that the adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the final rule TSD presents detailed results
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
Based on testing conducted in support of this rule, discussed in
section IV.C of this document, DOE has concluded that the standards
adopted in this final rule would not reduce the utility or performance
of the dehumidifiers under consideration in this rulemaking.
Manufacturers of these products currently offer units that meet or
exceed the adopted standards.
5. Impact of Any Lessening of Competition
As discussed in section e, the Attorney General of the United
States (Attorney General) determines the impact, if any, of any
lessening of competition likely to result from a proposed standard and
to transmit such determination in writing to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. To assist the Attorney General
in making such determination, DOE provided the Department of Justice
(DOJ) with copies of the NOPR and the TSD for review. In its assessment
letter responding to DOE, DOJ concluded that the proposed energy
conservation standards for dehumidifiers are unlikely to have a
significant adverse impact on competition. DOE is publishing the
Attorney General's assessment at the end of this final rule.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. As a measure of this reduced
demand, chapter 15 in the final rule TSD presents the estimated
reduction in generating capacity, relative to the no-new-standards
case, for the TSLs that DOE considered in this rulemaking.
Energy conservation resulting from amended standards for
dehumidifiers is expected to yield environmental benefits in the form
of reduced emissions of air pollutants and greenhouse gases. Table V.26
provides DOE's estimate of cumulative emissions reductions expected to
result from the TSLs considered in this rulemaking. The table includes
both power sector emissions and upstream emissions. The emissions were
calculated using the multipliers discussed in section IV.K. DOE reports
annual emissions reductions for each TSL in chapter 13 of the final
rule TSD.
Table V.26--Cumulative Emissions Reduction for Dehumidifiers Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 4.0 17.7 18.1 47.5
SO2 (thousand tons)............................. 2.4 10.8 11.1 29.0
NOX (thousand tons)............................. 4.4 19.3 19.7 52.0
Hg (tons)....................................... 0.01 0.04 0.04 0.11
CH4 (thousand tons)............................. 0.4 1.5 1.6 4.1
N2O (thousand tons)............................. 0.05 0.22 0.22 0.59
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 0.2 1.0 1.0 2.6
SO2 (thousand tons)............................. 0.0 0.2 0.2 0.5
NOX (thousand tons)............................. 3.2 13.8 14.1 37.4
Hg (tons)....................................... 0.0 0.0 0.0 0.0
CH4 (thousand tons)............................. 17.4 76.4 78.1 206.6
N2O (thousand tons)............................. 0.00 0.01 0.01 0.02
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 4.2 18.6 19.0 50.1
SO2 (thousand tons)............................. 2.5 11.0 11.3 29.5
NOX (thousand tons)............................. 7.5 33.1 33.9 89.4
Hg (tons)....................................... 0.01 0.04 0.04 0.11
CH4 (thousand tons)............................. 17.8 77.9 79.7 210.7
CH4 (thousand tons CO2eq) *..................... 498 2,182 2,231 5,900
N2O (thousand tons)............................. 0.05 0.23 0.23 0.61
N2O (thousand tons CO2eq) *..................... 13.7 60.5 61.8 162.2
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the considered TSLs
for dehumidifiers. As discussed in section IV.K of this document, for
CO2, DOE used the most recent values for the SCC developed
by an interagency process. The four sets of SCC values for
CO2 emissions reductions in 2015 resulting from that process
(expressed in 2014$) are represented by $12.2/metric ton (the average
value from a distribution that uses a 5-percent discount rate), $40.0/
[[Page 38382]]
metric ton (the average value from a distribution that uses a 3-percent
discount rate), $62.3/metric ton (the average value from a distribution
that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-
percentile value from a distribution that uses a 3-percent discount
rate). The values for later years are higher due to increasing damages
(public health, economic and environmental) as the projected magnitude
of climate change increases.
Table V.27 presents the global value of CO2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values; these results are presented in chapter
14 of the final rule TSD.
Table V.27--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
SCC case * (million 2014$)
---------------------------------------------------------------
TSL 3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 29.2 131.0 207.2 398.6
2............................................... 129.7 580.0 916.2 1,763
3............................................... 132.6 592.9 936.6 1,802
4............................................... 343.9 1,547 2,447 4,705
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 1.6 7.1 11.3 21.7
2............................................... 7.0 31.4 49.7 95.6
3............................................... 7.1 32.1 50.8 97.7
4............................................... 18.5 84.2 133.4 256.3
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 30.8 138.2 218.5 420.3
2............................................... 136.7 611.4 965.9 1,859
3............................................... 139.7 625.0 987.4 1,900
4............................................... 362.4 1,631 2,580 4,961
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy continues to evolve rapidly. Thus, any value placed on
reduced CO2 emissions in this rulemaking is subject to
change. DOE, together with other Federal agencies, will continue to
review various methodologies for estimating the monetary value of
reductions in CO2 and other GHG emissions. This ongoing
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this rule the most
recent values and analyses resulting from the interagency review
process.
DOE also estimated the cumulative monetary value of the economic
benefits associated with NOX emissions reductions
anticipated to result from the considered TSLs for dehumidifiers. The
dollar-per-ton values that DOE used are discussed in section IV.L of
this document. Table V.28 presents the cumulative present value for
NOX emissions for each TSL calculated using 7-percent and 3-
percent discount rates. This table presents values that use the low
dollar-per-ton values, which reflect DOE's primary estimate. Results
that reflect the range of NOX dollar-per-ton values are
presented in Table V.29.
Table V.28--Estimates of Present Value of NOX Emissions Reduction for
Dehumidifiers Shipped in 2019-2048 *
------------------------------------------------------------------------
Million 2014$
-------------------------------
TSL 3% discount 7% discount
rate rate
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1....................................... 8.7 3.9
2....................................... 38.9 17.6
3....................................... 39.7 18.0
4....................................... 102.9 45.7
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....................................... 6.2 2.7
2....................................... 27.7 12.2
3....................................... 28.3 12.5
4....................................... 73.6 31.8
------------------------------------------------------------------------
Total FFC Emissions
------------------------------------------------------------------------
1....................................... 15.0 6.6
2....................................... 66.6 29.8
3....................................... 68.0 30.4
4....................................... 176.5 77.4
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider
[[Page 38383]]
any other factors that the Secretary deems to be relevant. (42 U.S.C.
6295(o)(2)(B)(i)(VII)) No other factors were considered in this
analysis.
8. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.29 presents the NPV values that result from adding the estimates of
the potential economic benefits resulting from reduced CO2
and NOX emissions in each of four valuation scenarios to the
NPV of consumer savings calculated for each TSL considered in this
rulemaking, at both a 7-percent and 3-percent discount rate. The
CO2 values used in the columns of each table correspond to
the four sets of SCC values discussed above.
Table V.29--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with: (Billion 2014$)
---------------------------------------------------------------------------
TSL SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/
metric ton and metric ton and metric ton and metric ton and
3% low NOX value 3% low NOX value 3% low NOX value 3% low NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 0.7 0.8 0.8 1.0
2................................... 2.9 3.4 3.7 4.6
3................................... 3.0 3.5 3.8 4.7
4................................... 7.3 8.5 9.5 11.9
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with: (billion 2014$)
---------------------------------------------------------------------------
TSL SCC Case $12.2/ SCC Case $40.0/ SCC Case $62.3/ SCC Case $117/
metric ton and 7% metric ton and 7% metric ton and 7% metric ton and 7%
low NOX value low NOX value low NOX value low NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 0.3 0.4 0.5 0.7
2................................... 1.4 1.9 2.3 3.2
3................................... 1.5 2.0 2.3 3.2
4................................... 3.5 4.7 5.7 8.1
----------------------------------------------------------------------------------------------------------------
Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case.
In considering the above results, two issues are relevant. First,
the national operating cost savings are domestic U.S. monetary savings
that occur as a result of market transactions, while the value of
CO2 reductions is based on a global value. Second, the
assessments of operating cost savings and the SCC are performed with
different methods that use different time frames for analysis. The
national operating cost savings is measured for the lifetime of
products shipped in 2019 to 2048. Because CO2 emissions have
a very long residence time in the atmosphere,\72\ the SCC values in
future years reflect future climate-related impacts that continue
beyond 2100.
---------------------------------------------------------------------------
\72\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming,' '' J. Geophys.
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------
C. Conclusion
When considering standards, the new or amended energy conservation
standards that DOE adopts for any type (or class) of covered product
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
In the June 2015 NOPR, DOE proposed energy conservation standards
for dehumidifiers at TSL 3, as constructed for that analysis. The
minimum IEFs corresponding to TSL 3 from the June 2015 NOPR are shown
in Table V.30. 80 FR 31645, 31696 (June 3, 2015).
Table V.30--NOPR Proposed Amended Energy Conservation Standards for
Dehumidifiers
------------------------------------------------------------------------
Minimum
integrated
Portable dehumidifier product capacity (pints/day) energy factor
(L/kWh)
------------------------------------------------------------------------
30.00 or less........................................... 1.30
30.01-45.00............................................. 1.60
45.01 or more........................................... 2.80
------------------------------------------------------------------------
Whole-home dehumidifier
product case volume
(cubic feet)
------------------------------------------------------------------------
8.0 or less............................................. 2.09
More than 8.0........................................... 3.52
------------------------------------------------------------------------
Aprilaire encouraged DOE to analyze portable dehumidifiers and
whole-home dehumidifiers as separate markets with separate regulations
and test procedures and to suspend proposed regulations on the whole-
home dehumidifier market. Aprilaire suggested that in lieu of proposing
whole-home dehumidifier standards, that DOE use the Build America
program to better understand the market and applications. (Aprilaire,
No. 34 at pp. 1, 3) Further, Aprilaire commented that because whole-
home
[[Page 38384]]
dehumidifiers are a subsystem of energy control in the home, regulating
that market may have a detrimental effect on the overall goal of
reducing energy use in the home. (Aprilaire, Public Meeting Transcript,
No. 35 at pp. 94-95) In this final rule, DOE considered multiple TSLs
representing both energy conservation standards at the baseline
efficiency level and higher efficiency levels for whole-home
dehumidifiers. Section V.C.1 of this document describes how DOE
selected the energy conservation standards established in this final
rule.
Therma-Stor recommended a single minimum efficiency level be
established for all portable dehumidifiers and a single minimum
efficiency level be established for whole-home dehumidifiers based upon
the test procedure in appendix X1. (Therma-Stor, No. 38 at pp. 2-3) As
discussed in section IV.A.1 of this document, DOE separated both
portable dehumidifiers and whole-home dehumidifiers into multiple
product classes to ensure that consumer utility is maintained under any
amended energy conservation standards. Section IV.C.1 of this final
rule explains the efficiency levels DOE analyzed for each of the
product classes. In that discussion, DOE explains how different IEF
values define each efficiency level for the different product classes.
In constructing TSLs for this final rule, DOE selected efficiency
levels for each individual product class. Accordingly, DOE considered
different minimum efficiency levels for the individual product classes
in each TSL.
Therma-Stor commented that only two of its seven whole-home
dehumidifier models exceed the proposed minimum efficiency level from
the June 2015 NOPR. Therma-Stor cautioned that the proposed regulation
would reduce the number of efficient high-capacity portable
dehumidifier and whole-home dehumidifier choices available to consumers
who would instead purchase one, or multiple, inefficient low-capacity
portable dehumidifiers. (Therma-Stor, No. 38 at pp. 2-3) In this final
rule analysis, DOE updated its estimates of manufacturer impacts at the
different analyzed efficiency levels. (See section IV.J of this
document.) DOE considered these impacts for each TSL when determining
appropriate standards for dehumidifiers. Section V.C.1 of this document
details the benefits and burdens of each TSL considered in this final
rule.
Therma-Stor stated that the test procedure for whole-home
dehumidifiers in appendix X1 specifies an external static pressure
which increases the necessary fan power beyond that specified for
portable dehumidifiers. Therefore, Therma-Stor expressed concern that,
although there are no whole-home dehumidifiers currently in the market
that are more efficient than a similar-capacity portable dehumidifier,
the proposed efficiency level for ``large'' whole-home dehumidifiers is
26 percent higher than the level proposed for high-capacity portable
dehumidifiers. (Therma-Stor, No. 38 at pp. 2-3) Although whole-home
dehumidifiers are tested with a ducted setup that imposes an external
static pressure on the unit, which increases power consumption, the
higher ambient test temperature increases overall dehumidification
capacity compared to a portable dehumidifier. As a result, a whole-home
dehumidifier would typically have a higher rated IEF than a portable
dehumidifier with similar components.
ASAP and the Joint Commenters supported the proposed levels for
high-capacity portable dehumidifiers and whole-home dehumidifiers,
while they urged DOE to consider adopting TSL 4 in the final rule for
the two portable dehumidifier product classes with capacities less than
or equal to 45 pints/day. (ASAP, Public Meeting Transcript, No. 35 at
pp. 9-10; Joint Commenters, No. 40 at pp. 1-4) The Joint Commenters
stated that multiple market and policy changes will likely increase the
demand for high-efficiency compressors for room air conditioners, which
would increase the availability of high-efficiency compressors for
dehumidifiers. The Joint Commenters commented that impacts on
manufacturers would be substantially reduced by maintaining the
proposed TSL 3 for high-capacity portable dehumidifiers and whole-home
dehumidifiers while adopting the proposed TSL 4 for portable
dehumidifiers with capacities <=45 pints/day. They stated that adopting
the proposed TSL 3 for high-capacity portable dehumidifiers and whole-
home dehumidifiers would limit impacts on small domestic manufacturers
and eliminate DOE's concern regarding the availability of high-
efficiency compressors for high-capacity portable dehumidifiers and
whole-home dehumidifiers. (Joint Commenters, No. 40 at pp. 1, 3-4)
AHAM disagreed with adopting the proposed TSL 4 instead of the
proposed TSL 3 for portable dehumidifiers less than 45 pints per day.
AHAM noted that TSL 4 is the max-tech level for which no units are
currently on the market, and stated that selecting TSL 4 may contribute
to the potential unavailability of products at certain capacities
across that product class. To meet TSL 4, AHAM suggested that
manufacturers would have to incorporate the highest efficiency
compressors, but few are available; therefore, several dehumidifier
platforms could be unable to meet the max-tech IEF. (AHAM, No. 39 at p.
6)
DOE reviewed the comments submitted by ASAP, the Joint Commenters,
and AHAM that directly addressed the proposed standards and TSLs
analyzed in the June 2015 NOPR. In this final rule, DOE reassessed the
benefits and burdens of the TSLs, including newly constructed TSLs for
this final rule analysis, while considering all comments received, as
detailed below.
For this final rule, DOE considered the impacts of amended
standards for dehumidifiers at each TSL, beginning with the maximum
technologically feasible level, to determine whether that level was
economically justified. Where the max-tech level was not justified, DOE
then considered the next most efficient level and undertook the same
evaluation until it reached the highest efficiency level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. There is evidence that consumers
undervalue future energy savings as a result of: (1) A lack of
information; (2) a lack of sufficient salience of the long-term or
aggregate benefits; (3) a lack of sufficient savings to warrant
delaying or altering purchases; (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs; and (6) a divergence in incentives (for example,
[[Page 38385]]
between renters and owners, or builders and purchasers). Having less
than perfect foresight and a high degree of uncertainty about the
future, consumers may trade off these types of investments at a higher
than expected rate between current consumption and uncertain future
energy cost savings.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a regulatory option decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the final rule TSD. However, DOE's current analysis does not
explicitly control for heterogeneity in consumer preferences,
preferences across subcategories of products or specific features, or
consumer price sensitivity variation according to household income.\73\
---------------------------------------------------------------------------
\73\ P.C. Reiss and M.W. White, Household Electricity Demand,
Revisited, Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy conservation
standards, and potential enhancements to the methodology by which these
impacts are defined and estimated in the regulatory process.\74\ DOE
welcomes comments on how to more fully assess the potential impact of
energy conservation standards on consumer choice and how to quantify
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------
\74\ Alan Sanstad, Notes on the Economics of Household Energy
Consumption and Technology Choice. Lawrence Berkeley National
Laboratory (2010) (Available online at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------
1. Benefits and Burdens of TSLs Considered for Dehumidifier Standards
Table V.31 and Table V.32 summarize the quantitative impacts
estimated for each TSL for dehumidifiers. The efficiency levels
contained in each TSL are described in section V.A of this document.
Table V.31--Dehumidifier Trial Standard Levels: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.07......................... 0.30........................ 0.31........................ 0.82.
--------------------------------------------------------------------------------------------------------------------------------------------------------
NPV of Customer Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate............... 0.61......................... 2.71........................ 2.77........................ 6.74.
7% discount rate............... 0.28......................... 1.28........................ 1.30........................ 3.04.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...... 4.2.......................... 18.6........................ 19.0........................ 50.1.
NOX (thousand tons)............ 7.5.......................... 33.1........................ 33.9........................ 89.4.
Hg (tons)...................... 0.01......................... 0.04........................ 0.04........................ 0.11.
N2O (thousand tons)............ 0.05......................... 0.23........................ 0.23........................ 0.61.
N2O (thousand tons CO2eq *).... 13.7......................... 60.5........................ 61.8........................ 162.2.
CH4 (thousand tons)............ 17.8......................... 77.9........................ 79.7........................ 210.7.
CH4 (thousand tons CO2eq *).... 498.......................... 2,182....................... 2,231....................... 5,900.
SO2 (thousand tons)............ 2.5.......................... 11.0........................ 11.3........................ 29.5.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2014$ million) **......... 31 to 420.................... 137 to 1,859................ 140 to 1,900................ 362 to 4,961.
NOX--3% discount rate (2014$ 15.0 to 34.2................. 66.6 to 151.8............... 68.0 to 155.1............... 176.5 to 402.3.
million).
NOX--7% discount rate (2014$ 6.6 to 14.9.................. 29.8 to 67.1................ 30.4 to 68.6................ 77.4 to 174.6.
million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* CO2eq is the quantity of CO2 that would have the same GWP.
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Table V.32--Dehumidifier Trial Standard Levels: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ millions) 175.8 to 176.5............... 142.0 to 145.5.............. 137.1 to 140.7.............. 106.8 to 126.9.
(No-New-Standards INPV =
179.5).
Industry NPV (% change)........ (2.0%) to (1.7%)............. (20.9%) to (18.9%).......... (23.6%) to (21.6%).......... (40.5%) to (29.3%).
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 38386]]
Consumer Average LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........ 60........................... 107......................... 107......................... 110.
PC2 (25.01-50.00 pints/day).... 157.......................... 119......................... 119......................... 191.
PC3 (>50.00 pints/day)......... 17........................... 142......................... 142......................... 96.
PC4 (<=8.0 ft \3\)............. ............................. ............................ 242......................... 242.
PC5 (>8.0 ft \3\).............. ............................. ............................ 479......................... 386.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........ 0.4.......................... 0.5......................... 0.5......................... 1.3.
PC2 (25.01-50.00 pints/day).... 0.2.......................... 0.4......................... 0.4......................... 0.9.
PC3 (>50.00 pints/day)......... 8.2.......................... 4.5......................... 4.5......................... 7.2.
PC4 (<=8.0 ft \3\)............. ............................. ............................ 1.9......................... 6.8.
PC5 (>8.0 ft \3\).............. ............................. ............................ 2.0......................... 5.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
% of Consumers That Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........ 0............................ 0.1......................... 0.1......................... 11.5.
PC2 (25.01-50.00 pints/day).... 0............................ 0.7......................... 0.7......................... 5.1.
PC3 (>50.00 pints/day)......... 44.9......................... 28.7........................ 28.7........................ 54.3.
PC4 (<=8.0 ft \3\)............. ............................. ............................ 9.9......................... 42.6.
PC5 (>8.0 ft \3\).............. ............................. ............................ 10.8........................ 43.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
DOE first considered TSL 4, which represents the max-tech
efficiency levels. TSL 4 would save 0.82 quads of energy, an amount DOE
considers significant. Under TSL 4, the NPV of consumer benefit would
be $3.04 billion using a discount rate of 7 percent, and $6.74 billion
using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 50.1 Mt of
CO2, 89.4 thousand tons of NOX, 29.5 thousand
tons of SO2, 0.11 ton of Hg, 0.61 thousand tons of
N2O, and 210.7 thousand tons of CH4. The
estimated monetary value of the CO2 emissions reductions at
TSL 4 ranges from $362 million to $4,961 million.
At TSL 4, the average LCC impact is a savings of $110 for PC1, $191
for PC2, $96 for PC3, $242 for PC4, and $386 for PC5. The simple PBP is
1.3 years for PC1, 0.9 years for PC2, 7.2 years for PC3, 6.8 years for
PC4, and 5.8 years for PC5. The fraction of consumers experiencing a
net LCC cost is 11.5 percent for PC1, 5.1 percent for PC2, 54.3 percent
for PC3, 42.6 percent for PC4, and 43.4 percent for PC5.
At TSL 4, the projected change in INPV ranges from a decrease of
$72.7 million to a decrease of $52.6 million. If the high end of the
range of impacts is reached, TSL 4 could result in a net loss of up to
40.5 percent in INPV for manufacturers. Products that meet the
efficiency standards specified by this TSL are estimated to represent
less than 2 percent of current annual shipments. As such, manufacturers
would have to redesign nearly all products by the expected 2019
projected compliance date to meet demand. Redesigning all units to meet
the current max-tech efficiency levels would require considerable
capital and product conversion expenditures. At TSL 4, the capital
conversion costs total as much as $39.1 million, 3.8 times the industry
annual ordinary capital expenditure in 2018 (the year leading up to
amended standards). DOE estimates that complete platform redesigns
would cost the industry $55.2 million in product conversion costs.
These conversion costs largely relate to the extensive research
programs required to develop new products that meet the efficiency
standards at TSL 4. These costs are equivalent to 10.9 times the
industry annual budget for research and development. As such, the
conversion costs associated with the changes in products and
manufacturing facilities required at TSL 4 would require significant
use of manufacturers' financial reserves (manufacturer capital pools),
impacting other areas of business that compete for these resources and
significantly reducing INPV. In addition, manufacturers could face a
substantial impact on profitability at TSL 4. Because manufacturers are
more likely to reduce their margins to maintain a price-competitive
product at higher TSLs, especially in the lower-capacity portable
dehumidifier segment, DOE expects that TSL 4 would yield impacts closer
to the high end of the range of INPV impacts. If the high end of the
range of impacts is reached, as DOE expects, TSL 4 could result in a
net loss to manufacturers of 40.5 percent of INPV. Additionally, TSL 4
could result in a net loss to whole-home dehumidifier manufacturers of
174.7 percent of INPV, or cause some domestic manufacturers to exit the
whole-home dehumidifier market altogether.
Beyond the direct financial impact on manufacturers, TSL 4 may also
contribute to the potential unavailability of products at certain
capacities across the five product classes. To meet TSL 4, all products
would be required to incorporate the highest efficiency compressors;
however, manufacturers indicated that few such compressors are
available in the range of compressor capacities suitable for
dehumidifiers, and it is unlikely that substantially more would become
available if standards at TSL 4 were adopted. In addition, the specific
compressor capacities available at any given time are driven largely by
the markets for other products with higher shipments (e.g., room air
conditioners), and thus dehumidifier manufacturers may be constrained
in their design choices. Because DOE assumed manufacturers would
optimize all components at TSL 4, including the use of high-efficiency
compressors as well as larger heat exchangers and permanent-magnet
blower motors, DOE expects that those dehumidifier platforms for which
a suitable high efficiency compressor is not available would be unable
to meet the max-tech efficiency levels associated with TSL 4. While
this would likely not eliminate entire product classes from the market,
[[Page 38387]]
it has the potential to eliminate dehumidifiers of certain capacities
within a given product class. The potential for this impact on
manufacturers of high-capacity portable dehumidifiers and whole-home
dehumidifiers is exacerbated by this segment's low production volumes,
which limits manufacturers' ability to influence the availability of
higher efficiency components from their vendors.
Therefore, the Secretary concludes that at TSL 4 for dehumidifiers,
the benefits of energy savings, positive NPV of consumer benefits,
emission reductions, and the estimated monetary value of the
CO2 emissions reductions would be outweighed by the economic
burden on some consumers, the potential impact on product availability,
and the impacts on manufacturers, including significantly negative
impacts on small domestic manufacturers of high-capacity portable and
whole-home dehumidifiers. Consequently, the Secretary has concluded
that TSL 4 is not economically justified.
DOE then considered TSL 3, which would save an estimated 0.31 quads
of energy, an amount DOE considers significant. Under TSL 3, the NPV of
consumer benefit would be $1.30 billion using a discount rate of 7
percent, and $2.77 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 19.0 Mt of
CO2, 33.9 thousand tons of NOX, 11.3 thousand
tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of
N2O, and 79.7 thousand tons of CH4. The estimated
monetary value of the CO2 emissions reductions at TSL 3
ranges from $140 million to $1,900 million.
At TSL 3, the average LCC impact is a savings of $107 for PC1, $119
for PC2, $142 for PC3, $242 for PC4, and $479 for PC5. The simple PBP
is 0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, 1.9 years for
PC4, and 2.0 years for PC5. The fraction of consumers experiencing a
net LCC cost is 0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent
for PC3, 9.9 percent for PC4, and 10.8 percent for PC5.
At TSL 3, the projected change in INPV ranges from a decrease of
$42.4 million to a decrease of $38.7 million. If the high end of the
range of impacts is reached, TSL 3 could result in a net loss of up to
23.6 percent in INPV for manufacturers, with high disproportionate
impacts to small, domestic manufacturers of whole-home and high-
capacity portable dehumidifiers. The capital conversion costs required
by whole-home dehumidifier manufacturers (which includes four small,
domestic manufacturers and one larger foreign manufacturer) in order to
comply with TSL 3 are estimated to be $1.8 million, 5.4 times the
whole-home dehumidifier industry annual ordinary capital expenditure in
2018 (the year leading up to amended standards). DOE estimates that
complete platform redesigns would cost the industry $5.5 million in
product conversion costs, equivalent to 32.7 times the whole-home
dehumidifier industry annual budget for research and development. As a
result, TSL 3 could result in a net loss to whole-home dehumidifier
industry of 101.4 percent of INPV or cause some domestic manufacturers
to exit the whole-home dehumidifier market altogether. Additionally,
the manufacturers with the greatest share of the whole-home
dehumidifier market are small and domestic and also produce high-
capacity portable dehumidifiers. Accordingly, these manufacturers will
incur the added burden of compliance with EL 3 for their high-capacity
portable dehumidifiers as well as with standards above the baseline for
their whole-home dehumidifiers. In aggregate, as detailed in section
VII.B of this document, at TSL 3, the typical small manufacturer may
incur $2.3 million in capital and product conversion costs in order to
maintain existing product lines for both portable and whole-home
dehumidifiers. This equates to approximately 56.1 percent of the
typical small manufacturer's annual revenue and 945.1 percent of its
annual operating profit.
Although some portable dehumidifiers may require higher efficiency
compressors, the efficiency levels specified at TSL 3 offer
manufacturers multiple design pathways to meet the standard. This in
turn would allow manufacturers to maintain product offerings should a
high efficiency compressor be unavailable at a given compressor
capacity. In addition, a wide variety of units are already available
that meet the efficiency levels for portable dehumidifiers specified at
TSL 3.
The Secretary concludes that at TSL 3 for dehumidifiers, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, and the estimated monetary value of the CO2
emissions reductions would be outweighed by the significantly negative
impacts on small domestic manufacturers of high-capacity portable and
whole-home dehumidifiers. Consequently, the Secretary has concluded
that TSL 3 is not economically justified.
DOE then considered TSL 2, which would save an estimated 0.30 quads
of energy, an amount DOE considers significant. Under TSL 3, the NPV of
consumer benefit would be $1.28 billion using a discount rate of 7
percent, and $2.71 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 18.6 Mt of
CO2, 33.1 thousand tons of NOX, 11.0 thousand
tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of
N2O, and 77.9 thousand tons of CH4. The estimated
monetary value of the CO2 emissions reductions at TSL 3
ranges from $137 million to $1,859 million.
At TSL 2, the average LCC impact is a savings of $107 for PC1, $119
for PC2, $142 for PC3, $0 for PC4, and $0 for PC5. The simple PBP is
0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, and zero years for
PC4 and PC5. The fraction of consumers experiencing a net LCC cost is
0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent for PC3, and
zero percent for PC4 and PC5 because TSL 2 is set at the baseline
efficiency level for PC4 and PC5.
At TSL 2, the projected change in INPV ranges from a decrease of
$37.5 million to a decrease of $34.0 million. If the high end of the
range of impacts is reached, TSL 2 could result in a net loss of up to
20.9 percent in INPV for manufacturers. In contrast to TSL 3 and TSL 4,
TSL 2 would not result in disproportionate impacts to the whole-home
dehumidifier industry because TSL 2 corresponds to the baseline
efficiency level for the whole-home product classes. Products that meet
the efficiency standards specified at this TSL level represent 39
percent of shipments of all dehumidifiers in 2018 (the year leading up
to amended standards). In order to bring the remaining products into
compliance with TSL 2, the portable dehumidifier industry may incur
capital and product conversion costs of $22.6 million and $29.9
million, respectively. Although, at TSL 2, three out of the five small,
domestic manufacturers will incur some costs associated with
redesigning high-capacity portable products, only one of these five
manufacturers limits its product offerings in the dehumidifier market
to the high-capacity portable segment, with most of its products
comprising commercial units that are not covered products under this
rulemaking. The other two small, domestic manufacturers that produce
high-capacity portable products also manufacture whole-home
dehumidifiers, and thus their impacts at TSL 2 will be significantly
lower than at TSL 3 and TSL 4. TSL 2 will result
[[Page 38388]]
in little to no adverse impacts for whole-home dehumidifier
manufacturing, including the two small, domestic manufacturers that
focus exclusively on these dehumidifiers. For these reasons, TSL 2 will
minimize disproportionate impacts to small, domestic dehumidifier
manufacturers relative to TSL 3 and TSL 4.
Although some dehumidifiers may require higher efficiency
compressors, the efficiency levels specified at TSL 2 offer
manufacturers multiple design pathways to meet the standard. This
allows manufacturers to maintain product offerings should a high
efficiency compressor be unavailable at a given compressor capacity. In
addition, units are already available that meet the efficiency levels
specified at TSL 2.
The Secretary concludes that at TSL 2 for dehumidifiers, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, estimated monetary value of the CO2 emissions
reductions, and positive average LCC savings would outweigh the
negative impacts on some consumers and on manufacturers, including the
conversion costs that could result in a reduction in INPV for
manufacturers of portable dehumidifiers.
After carefully considering the analysis and the benefits and
burdens of TSL 2, the Secretary concludes that this TSL will offer the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, and will result in significant
conservation of energy without eliminating or making unavailable any
product classes or portions of product classes. Therefore, DOE is
establishing amended energy conservation standards for dehumidifiers at
TSL 2, as indicated in Table V.33.
Table V.33--Amended Energy Conservation Standards for Dehumidifiers
------------------------------------------------------------------------
Minimum
integrated
Portable dehumidifier product capacity (pints/day) energy factor
(L/kWh)
------------------------------------------------------------------------
25.00 or less........................................... 1.30
25.01-50.00............................................. 1.60
50.01 or more........................................... 2.80
------------------------------------------------------------------------
Whole-home dehumidifier ..............
product case volume
(cubic feet)
------------------------------------------------------------------------
8.0 or less............................................. 1.77
More than 8.0........................................... 2.41
------------------------------------------------------------------------
2. Summary of Annualized Benefits and Costs of the Adopted Standards
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The annualized net benefit is
the sum of: (1) The annualized national economic value of the benefits
from operating products that meet the proposed standards (consisting
primarily of operating cost savings from using less energy, minus
increases in product purchase costs, which is another way of
representing consumer NPV), and (2) the monetary value of the benefits
of CO2 and NOX emission reductions.\75\
---------------------------------------------------------------------------
\75\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2014, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(2020, 2030, etc.), and then discounted the present value from each
year to 2014. The calculation uses discount rates of 3 and 7 percent
for all costs and benefits except for the value of CO2
reductions, for which DOE used case-specific discount rates, as
shown in Table V.22. Using the present value, DOE then calculated
the fixed annual payment over a 30-year period, starting in the
compliance year that yields the same present value.
---------------------------------------------------------------------------
Table V.34 shows the annualized values for dehumidifiers under TSL
3, expressed in 2014$. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reductions, for which DOE used a 3-percent discount
rate along with the SCC series corresponding to a value of $40.5/ton in
2015 (in 2014$), the estimated cost of the proposed standards for
dehumidifiers is $11 million per year in increased equipment costs,
while the estimated annualized benefits are $136 million per year in
reduced equipment operating costs, $34 million per year in
CO2 reductions, and $2.9 million per year in reduced
NOX emissions. In this case, the net benefit amounts to $163
million per year.
Using a 3-percent discount rate for all benefits and costs and the
SCC series corresponding to a value of $40.5/ton in 2015 (in 2014$),
the estimated cost of the proposed standards for dehumidifiers in
today's rule is $10 million per year in increased equipment costs,
while the benefits are $162 million per year in reduced operating
costs, $34 million per year in CO2 reductions, and $3.7
million per year in reduced NOX emissions. In this case, the
net benefit amounts to $189 million per year.
Table V.34--Annualized Benefits and Costs of Proposed Amended Standards (TSL 3) for Dehumidifiers Sold in 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
-----------------------------------------------------------------------------------
Discount rate Low net benefits estimate High net benefits estimate
Primary estimate * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings... 7%.............................. 136....................... 131....................... 141.
3%.............................. 162....................... 154....................... 169.
CO2 Reduction at $12.2/t **....... 5%.............................. 10........................ 10........................ 11.
CO2 Reduction at $40.0/t **....... 3%.............................. 34........................ 34........................ 35.
CO2 Reduction at $62.3/t **....... 2.5%............................ 50........................ 49........................ 51.
CO2 Reduction at $117/t **........ 3%.............................. 104....................... 102....................... 106.
NOX Reduction [dagger]............ 7%.............................. 2.9....................... 2.9....................... 6.7.
3%.............................. 3.7....................... 3.7....................... 8.6.
Total Benefits [dagger][dagger]... 7% plus CO2 range............... 150 to 243................ 144 to 236................ 159 to 254.
7%.............................. 173....................... 167....................... 183.
[[Page 38389]]
3% plus CO2 range............... 176 to 269................ 168 to 260................ 188 to 284.
3%.............................. 200....................... 192....................... 213.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7%.............................. 11........................ 11........................ 10.
3%.............................. 10........................ 12........................ 10.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............ 7% plus CO2 range............... 139 to 232................ 132 to 224................ 148 to 244.
7%.............................. 163....................... 156....................... 173.
3% plus CO2 range............... 165 to 259................ 157 to 248................ 178 to 274.
3%.............................. 189....................... 180....................... 203.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the costs and benefits associated with dehumidifiers shipped in 2019-2048. These results include benefits to consumers which
accrue after 2048 from the products purchased in 2019-2048. The costs account for the incremental variable and fixed costs incurred by manufacturers
due to the standard, some of which may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three
cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section 0. DOE estimated the monetized value of NOX emissions reductions using benefit per ton
estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning
and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for
further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit
sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on
the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate
($40.0/t case).
VI. Certification Reporting and Enforcement Requirements
In the July 2015 Test Procedure Final Rule, DOE amended the
sampling plan and certification reporting requirements for
dehumidifiers in 10 CFR 429.36 to clarify how manufacturers must make
representations of capacity, and for whole-home dehumidifiers, the case
volume of a basic model. DOE also amended the certification reporting
requirements to specify the product-specific information that must be
reported for each basic model. 80 FR 45801, 45819 (July 31, 2015).
In this final rule, DOE further amends section 10 CFR 429.36(a) to
provide rounding instructions for the reported IEF and to require that
products capable of operating as both a portable and whole-home
dehumidifier be rated and certified under both configurations, and
section 10 CFR 429.36(b)(2) to detail the specific reporting
requirements when testing according to appendix X and appendix X1.
In the July 2015 Test Procedure Final Rule, DOE amended the
enforcement requirements for dehumidifiers in 10 CFR 429.134(f). Id. In
this final rule, DOE amends the enforcement provisions to update the
referenced efficiency metric to also include IEF.
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems that the adopted standards for dehumidifiers are intended
to address are as follows:
(1) Insufficient information and the high costs of gathering and
analyzing relevant information leads some consumers to miss
opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when the equipment purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of appliances that are not captured by the users of such
equipment. These benefits include externalities related to public
health, environmental protection and national energy security that are
not reflected in energy prices, such as reduced emissions of air
pollutants and greenhouse gases that impact human health and global
warming. DOE attempts to qualify some of the external benefits through
use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory
Affairs (OIRA) in the OMB has determined that the proposed regulatory
action is a significant regulatory action under section (3)(f) of
Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of
the Order, DOE has provided to OIRA: (i) The text of the draft
regulatory action, together with a reasonably detailed description of
the need for the regulatory action and an explanation of how the
regulatory action will meet that need; and (ii) An assessment of the
potential costs and benefits of the regulatory action, including an
explanation of the manner in which the regulatory action is consistent
with a statutory mandate. DOE has included these documents in the
rulemaking record.
[[Page 38390]]
In addition, the Administrator of OIRA has determined that the
proposed regulatory action is an ``economically'' significant
regulatory action under section (3)(f)(1) of Executive Order 12866.
Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has
provided to OIRA an assessment, including the underlying analysis, of
benefits and costs anticipated from the regulatory action, together
with, to the extent feasible, a quantification of those costs; and an
assessment, including the underlying analysis, of costs and benefits of
potentially effective and reasonably feasible alternatives to the
planned regulation, and an explanation why the planned regulatory
action is preferable to the identified potential alternatives. These
assessments can be found in the technical support document for this
rulemaking.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011)
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, OIRA has emphasized that such techniques may include
identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes. For the
reasons stated in the preamble, DOE believes that this final rule is
consistent with these principles, including the requirement that, to
the extent permitted by law, benefits justify costs and that net
benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of a final regulatory flexibility analysis (FRFA) for any
final rule where the agency was first required by law to publish a
proposed rule for public comment. As required by Executive Order 13272,
``Proper Consideration of Small Entities in Agency Rulemaking,'' 67 FR
53461 (Aug. 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 the General Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for the products
that are the subject of this rulemaking.
1. Statement of the Need for, and Objectives of, the Rule
The need for, and objectives of this final rule are stated
elsewhere in the preamble and not repeated here.
2. Significant Issues Raised by Public Comment
Significant issues raised by public comment in response to the
initial regulatory flexibility analysis and the economic impacts of the
rule are provided in section IV.J.3 and not repeated here. As discussed
in section IV.J.3, based on those comments, DOE updated its analysis of
manufacturer impacts, including small business impacts, for this final
rule. The standard levels adopted in this final rule were selected
based on updated engineering and economic analyses.
3. Response to Comments From the Small Business Administration's Chief
Counsel for Advocacy
The SBA's Chief Counsel for Advocacy did not submit comments on
this rulemaking.
4. Description and Estimated Number of Small Entities Regulated
a. Methodology for Estimating the Number of Small Entities
For the manufacturers of dehumidifiers, the SBA has set a size
threshold, which defines those entities classified as ``small
businesses'' for the purposes of the Regulatory Flexibility Act. DOE
used the SBA's small business size standards to determine whether any
small entities would be subject to the requirements of the rule. See 13
CFR part 121. The size standards are listed by North American Industry
Classification System (NAICS) code and industry description and are
available at: www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of whole-home dehumidifiers is
classified under NAICS codes 333415: Air-Conditioning and Warm Air
Heating Equipment and Commercial and Industrial Refrigeration Equipment
Manufacturing, whereas manufacturing of portable dehumidifiers is
classified under 335210: Small Electrical Appliance Manufacturing. The
SBA sets a threshold of 1,250 employees or less and 1,500 employees or
less for an entity to be considered as a small business in these
industry categories, respectively.
To estimate the number of companies that could be small business
manufacturers of products covered by this rulemaking, DOE conducted a
market survey using available public information to identify potential
small manufacturers. DOE's research included searches of public
databases (e.g., DOE's Compliance Certification Database,\76\ the SBA
Database \77\), individual company Web sites, and market research tools
(e.g., Hoovers Web site \78\) to create a list of companies that
manufacture or sell products covered by this rulemaking. DOE also asked
stakeholders and industry representatives if they were aware of any
other small manufacturers during manufacturer interviews and at DOE
public meetings. DOE reviewed publicly available data and contacted
select companies on its list, as necessary, to determine whether they
met the SBA's definition of a small business manufacturer of covered
dehumidifiers. DOE screened out companies that do not manufacture
products covered by this rulemaking, do not meet the
[[Page 38391]]
definition of a ``small business,'' or are foreign owned and operated.
---------------------------------------------------------------------------
\76\ See http://www.regulations.doe.gov/certification-data/.
\77\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
\78\ See http://www.hoovers.com/.
---------------------------------------------------------------------------
DOE initially identified 25 manufacturers of dehumidifier products
sold in the United States. DOE then determined that of the 25
companies, 20 were either large manufacturers, exclusively import
products manufactured overseas, or are foreign owned and operated. DOE
identified the remaining five manufacturers as domestic manufacturers
that meet the SBA's definition of a ``small business'' and manufacture
products covered by this rulemaking.
The five domestic small business manufacturers of dehumidifiers
identified account for a small fraction of total industry shipments. In
2015, 98.5 percent of dehumidifiers sold in the United States were
small portable units (belonging to product classes 1 and 2) and were
made by large, diversified manufacturers. The remaining 1.5 percent of
the market consists of high-capacity portable and whole-home
dehumidifiers, which are primarily manufactured by small business
manufacturers. It is estimated that small, domestic manufacturers
account for 50 percent of high-capacity portable U.S. shipments and the
overwhelming majority of whole-home dehumidifier U.S. shipments. The
two small, domestic manufacturers that account for the greatest share
of the combined high-capacity portable and whole-home market segments
manufacture both high-capacity portable and whole-home products. Of the
remaining small, domestic manufacturers, one produces only high-
capacity portable dehumidifiers and two produce only whole-home
dehumidifiers.
b. Manufacturer Participation
Before issuing this final rule, DOE attempted to contact all the
small business manufacturers of dehumidifiers identified. Two of these
small business manufacturers responded to DOE and consented to being
interviewed as part of the manufacturing impact analysis. DOE also
obtained information about small business impacts while interviewing
large manufacturers.
c. Comparison of Large and Small Entities
Several factors may contribute to a disproportionate burden on
small business manufacturers from amended energy conservation standards
for dehumidifiers relative to their larger counterparts. One way in
which small manufacturers could be at a disadvantage is that they may
be disproportionately affected by product and capital conversion costs.
Product redesign, testing, and certification costs tend to be fixed per
basic model and do not scale with sales volume. Both large and small
business manufacturers must make investments in R&D to redesign their
products, but small businesses lack the sales volumes to sufficiently
recoup these upfront investments without substantially marking up their
products. Similarly, upfront capital investments in new manufacturing
capital for platform redesigns, as well as depreciated manufacturing
capital, can be spread across a lower volume of shipments for small
business manufacturers.
In addition, because small business manufacturers typically have
fewer engineers than large manufacturers, they must allocate a greater
portion of their available human resources to meet an amended
regulatory standard. Because engineers may need to spend more time
redesigning and testing existing models as a result of the amended
standard, they may have less time to develop new products.
Furthermore, smaller manufacturers may lack the purchasing power of
larger manufacturers. For example, because fan motor suppliers give
volume discounts to manufacturers based on the number of motors they
purchase, larger manufacturers may have a pricing advantage because
they make higher volume purchases. This purchasing power difference
between high-volume and low-volume orders applies to other dehumidifier
components as well, including compressors and heat exchangers. DOE
expects that certain larger manufacturers of lower-capacity portable
dehumidifiers may even manufacture heat exchangers in-house.
Additionally, because small business manufacturers produce higher-
capacity dehumidifiers, they typically require larger and/or custom-
made components (e.g., larger compressors and heat exchangers),
compared to the lower-capacity portable dehumidifier manufacturers that
account for the majority of the dehumidifier market. Because of the
low-volume nature of the high-capacity portable dehumidifier and whole-
home dehumidifier market, certain technological improvements to
components may be developed only for lower-capacity portable products,
or with significant lag time for application in high-capacity portable
dehumidifier and whole-home dehumidifier products.
In terms of cumulative regulatory burden faced by small domestic
dehumidifier manufacturers, the small manufacturers with the greatest
dehumidifier market share are more specialized and concentrated in
dehumidifier manufacturing and, thus, manufacture a smaller range of
products than larger companies. The other products that some of the
small manufacturers also produce include humidifiers, air purifiers and
desiccant wheels. None of these are currently regulated by DOE.
However, one small manufacturer (with low market share among small
dehumidifier manufacturers) also produces residential furnaces. This
small manufacturer produces only whole-home dehumidifiers and would not
be burdened by the whole-home standard level established in this
document.
In terms of access to the capital required to cover the conversion
costs associated with reaching the proposed standards, small business
manufacturers would likely need to take on additional debt, whereas
larger diversified manufacturers of small portable products would be
better equipped to fund purchases with existing cash flow from
operations. Additionally, since the recession of 2007 and 2008, small
business lending has dropped substantially due to a combination of
tightened lending standards, increasing collateral requirements and
reduced focus on small business credit markets. Thus, small businesses
generally have less access to capital than larger companies.
5. Description and Estimate of Compliance Requirements
DOE derived industry conversion costs using a top-down approach
described in section IV.J.2.a. Using product platform counts by product
class and manufacturer, DOE estimated the distribution of industry
conversion costs between small manufacturers and large manufacturers.
Using its count of manufacturers, DOE calculated capital conversion
costs (Table VII.1) and product conversion costs (Table VII.2) for an
average small manufacturer versus an average large manufacturer. To
provide context on the size of the conversion costs relative to the
size of the businesses, DOE presents the conversion costs relative to
annual revenue and annual operating profit at each TSL for the average
small manufacturer (Table VII.3) and the average large manufacturer
(Table VII.4). The current annual revenue and annual operating profit
estimates are derived from the GRIM's industry revenue calculations and
the market share breakdowns of small versus large manufacturers.
[[Page 38392]]
Table VII.1--Comparison of Typical Small and Large Manufacturer's Capital Conversion Costs
----------------------------------------------------------------------------------------------------------------
Capital conversion costs Capital conversion costs
Trial standard level for typical small for typical large
manufacturer (2014 $M) manufacturer (2014 $M)
----------------------------------------------------------------------------------------------------------------
TSL 1..................................................... $0.2 $0.1
TSL 2..................................................... 0.2 1.3
TSL 3..................................................... 0.6 1.3
TSL 4..................................................... 0.8 2.1
----------------------------------------------------------------------------------------------------------------
Table VII.2--Comparison of Typical Small and Large Manufacturer's Product Conversion Costs
----------------------------------------------------------------------------------------------------------------
Product conversion costs Product conversion costs
Trial standard level for typical small for typical large
manufacturer (2014 $M) manufacturer (2014 $M)
----------------------------------------------------------------------------------------------------------------
TSL 1..................................................... $0.5 $0.0
TSL 2..................................................... 0.8 1.5
TSL 3..................................................... 1.7 1.5
TSL 4..................................................... 2.4 2.5
----------------------------------------------------------------------------------------------------------------
Table VII.3--Impacts of Conversion Costs on a Typical Small Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conversion
Capital Product Conversion Conversion costs/
conversion conversion Conversion costs/ annual costs/ conversion
Trial standard level costs (2014 costs (2014 costs/ annual operating conversion period
$M) $M) revenue (%) profit (%) period revenue operating
* (%) profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1................................................... $0.2 $0.5 15.3 258.1 5.1 86.0
TSL 2................................................... 0.2 0.8 24.9 419.1 8.3 139.7
TSL 3................................................... 0.6 1.9 56.1 945.1 18.7 315.0
TSL 4................................................... 0.8 2.5 78.0 1313.8 26.0 437.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual
Revenues, and Operating Profit figures are for 2015.
Table VII.4--Impacts of Conversion Costs on a Typical Large Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conversion
Capital Product Conversion Conversion costs/
conversion conversion Conversion costs/ annual costs/ conversion
Trial standard level costs (2014 costs (2014 costs/ annual operating conversion period
$M) $M) revenue (%) profit (%) period revenue operating
* (%) profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1................................................... $0.1 $0.0 0.0 0.6 0.0 0.2
TSL 2................................................... 1.3 1.5 0.8 13.1 0.3 4.4
TSL 3................................................... 1.3 1.5 0.8 13.1 0.3 4.4
TSL 4................................................... 2.1 2.5 1.3 21.4 0.4 7.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual
Revenues, and Operating Profit figures are for 2015.
At the established standard level (TSL 2), DOE estimates total
conversion costs associated with amended energy conservation standards
for an average small manufacturer to be $1.01 million, which is
approximately 24.9 percent of annual revenue and 419.1 percent of
annual operating profit. This suggests that an average small
manufacturer would need to reinvest roughly 139.7 percent of its
operating profit per year over the conversion period to comply with
standards. At this TSL, the standard level for whole-home dehumidifiers
is the baseline. Accordingly three of the five small, domestic
manufacturers may incur costs associated only with the high-capacity
portable segment of their business.
The total conversion costs associated with new and amended energy
conservation standards for an average large manufacturer is $2.79
million, which is approximately 0.8 percent of annual revenue and 13.1
percent of annual operating profit. This suggests that an average large
manufacturer would need to reinvest roughly 4.4 percent of its
operating profit per year over the 3-year conversion period.
6. Significant Alternatives to the Rule
The discussion in the previous section analyzes impacts on small
businesses that would result from the adopted standards, represented by
TSL 2. In reviewing alternatives to the adopted standards, DOE examined
an energy conservation standard set at both higher and lower efficiency
levels.
As discussed in section V. C., DOE's analysis shows that TSL 3
achieves
[[Page 38393]]
approximately 3 percent higher energy savings than TSL 2. TSL 4
achieves approximately 173 percent higher savings than TSL 2. However,
as discussed in section V.C., DOE rejected these TSLs in part due to
the negative INPV results and substantial small business impacts. The
estimated conversion costs for small business manufacturers are
significantly higher at TSL 3 and TSL 4 than at TSL 2. To comply with
TSL 3, the average small manufacturer must make $2.27 million in
conversion cost investments, which is $1.26 million more than at TSL 2.
At TSL 3, the projected change in INPV also ranges from a decrease of
$42.4 million to a decrease of $38.7 million. If the high end of the
range of impacts is reached, TSL 3 could result in a net loss of up to
23.6 percent in INPV for manufacturers, with high disproportionate
impacts to whole-home dehumidifier manufacturers, the majority of which
are small, domestic companies. The capital conversion costs required by
whole-home dehumidifier manufacturers to comply with TSL 3 are
estimated to be $1.8 million, 5.4 times the whole-home dehumidifier
industry annual ordinary capital expenditure in 2018 (the year leading
up to amended standards). DOE estimates that complete platform
redesigns would cost the industry $5.5 million in product conversion
costs, equivalent to 32.7 times the whole-home dehumidifier industry
annual budget for research and development. As a result, TSL 3 could
result in a net loss to whole-home dehumidifier manufacturers of 101.4
percent of INPV (compared to no impacts at TSL 2) or cause some
domestic manufacturers to exit the whole-home dehumidifier market
altogether. To comply with TSL 4, the average small manufacturer must
make $3.15 million in conversion cost investments, which is $2.15
million more than at TSL 2. INPV losses and impacts to the industry,
and particularly to small manufacturers, would be even more significant
than at TSL 3. DOE's analysis also shows that while TSL 1 would reduce
the impacts on small business manufacturers ($0.62 million conversion
costs for the typical small manufacturers), it would come at the
expense of a reduction in energy savings. TSL 1 achieves 77-percent
lower energy savings compared to the energy savings at TSL 2.
DOE has concluded that establishing standards at TSL 2 balances the
benefits of the energy savings at TSL 2 with the potential burdens
placed on dehumidifier manufacturers, including small business
manufacturers. As required by EPCA, DOE adopts in this final rule the
energy conservation standards that achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. Accordingly, DOE is not adopting one of the other TSLs
considered in the analysis, or the other policy alternatives examined
as part of the regulatory impacts analysis and included in chapter 17
of the final rule TSD.
Additional compliance flexibilities may be available through other
means. For example, individual manufacturers may petition for a waiver
of the applicable test procedure. (See 10 CFR 431.401) Further, EPCA
provides that a manufacturer whose annual gross revenue from all of its
operations does not exceed $8 million may apply for an exemption from
all or part of an energy conservation standard for a period not longer
than 24 months after the effective date of a final rule establishing
the standard. Additionally, Section 504 of the Department of Energy
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary
to adjust a rule issued under EPCA in order to prevent ``special
hardship, inequity, or unfair distribution of burdens'' that may be
imposed on that manufacturer as a result of such rule. Manufacturers
should refer to 10 CFR part 430, subpart E, and part 1003 for
additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of dehumidifiers must certify to DOE that their
products comply with any applicable energy conservation standards. In
certifying compliance, manufacturers must test their products according
to the DOE test procedures for dehumidifiers, including any amendments
adopted for those test procedures. DOE has established regulations for
the certification and recordkeeping requirements for all covered
consumer products and commercial equipment, including dehumidifiers.
See generally 10 CFR part 429. The collection-of-information
requirement for the certification and recordkeeping is subject to
review and approval by OMB under the Paperwork Reduction Act (PRA).
This requirement has been approved by OMB under OMB control number
1910-1400. Public reporting burden for the certification is estimated
to average 30 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the rule fits within the category of actions
included in Categorical Exclusion (CX) B5.1 and otherwise meets the
requirements for application of a CX. See 10 CFR part 1021, App. B,
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The rule fits within this
category of actions because it is a rulemaking that establishes energy
conservation standards for consumer products or industrial equipment,
and for which none of the exceptions identified in CX B5.1(b) apply.
Therefore, DOE has made a CX determination for this rulemaking, and DOE
does not need to prepare an Environmental Assessment or Environmental
Impact Statement for this rule. DOE's CX determination for this rule is
available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal 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 this
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
[[Page 38394]]
prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of this final 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)
Therefore, 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,'' 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; (3)
provide a clear legal standard for affected conduct rather than a
general standard; and (4) promote simplification and burden reduction.
61 FR 4729 (Feb. 7, 1996). Regarding the review required by section
3(a), section 3(b) of Executive Order 12988 specifically requires that
Executive agencies make every reasonable effort to ensure that the
regulation: (1) Clearly specifies the preemptive effect, if any; (2)
clearly specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines 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 final rule meets the
relevant standards of Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a 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 annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects 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 ``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 them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this final rule does not require
expenditures of $100 million or more in any one year on the private
sector. The final rule is likely to result in expenditures of $100
million or more, but there is no requirement that mandates that result.
Such expenditures may include: (1) Investment in research and
development and in capital expenditures by dehumidifier manufacturers
in the years between the final rule and the compliance date for the new
standards, and (2) incremental additional expenditures by consumers to
purchase higher-efficiency dehumidifiers, starting at the compliance
date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the final 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 this document and chapter 17 of
the TSD for this final 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. (2 U.S.C. 1535(a)) 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. In accordance with the statutory
provisions discussed in this document, this final rule establishes
amended energy conservation standards for dehumidifiers 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 chapter 17 of the TSD for this final 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
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights'' 53 FR
8859 (March 18, 1988), DOE has determined that this rule would not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.
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 Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's 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 final rule 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 OIRA
at OMB, a Statement of Energy Effects for any significant energy
action. A ``significant
[[Page 38395]]
energy action'' is defined as any action by an agency that promulgates
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
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.
DOE has concluded that this regulatory action, which sets forth
amended energy conservation standards for dehumidifiers, is not a
significant energy action because the standards are not likely to have
a significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this final rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). 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 rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines 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.'' Id at FR 2667.
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 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:
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is a ``major rule'' as
defined by 5 U.S.C. 804(2).
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects
10 CFR Part 429
Energy conservation, Household appliances, Imports.
10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, Small
businesses.
Issued in Washington, DC, on May 20, 2016.
David Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable
Energy.
For the reasons set forth in the preamble, DOE amends parts 429 and
430 of chapter II of title 10 of the Code of Federal Regulations, as
set forth below:
PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 429 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 429.36 is amended by adding paragraphs (a)(5) and (6) and
revising paragraph (b)(2) to read as follows:
Sec. 429.36 Dehumidifiers.
(a) * * *
(5) Round the value of energy factor or integrated energy factor
for a basic model to two decimal places.
(6) Dehumidifiers distributed in commerce by the manufacturer with
the ability to operate as both a portable and whole-home dehumidifier
by means of installation or removal of an optional ducting kit, must be
rated and certified under both configurations.
(b) * * *
(2) Pursuant to Sec. 429.12(b)(13), a certification report must
include the following public product-specific information:
(i) For dehumidifiers tested in accordance with appendix X: The
energy factor in liters per kilowatt hour (liters/kWh) and capacity in
pints per day.
(ii) For dehumidifiers tested in accordance with appendix X1: The
integrated energy factor in liters per kilowatt hour (liters/kWh),
capacity in pints per day, and for whole-home dehumidifiers, case
volume in cubic feet.
0
3. Section 429.134 is amended by revising paragraph (f) to read as
follows:
Sec. 429.134 Product-specific enforcement provisions.
* * * * *
(f) Dehumidifiers--(1) Verification of capacity. The capacity will
be measured pursuant to the test requirements of part 430 for each unit
tested. The results of the measurement(s) will be averaged and compared
to the value of capacity certified by the manufacturer for the basic
model. The certified capacity will be considered valid only if the
measurement is within five percent, or 1.00 pint per day, whichever is
greater, of the certified capacity.
(i) If the certified capacity is found to be valid, the certified
capacity will be used as the basis for determining the minimum energy
factor or integrated energy factor allowed for the basic model.
(ii) If the certified capacity is found to be invalid, the average
measured capacity of the units in the sample will be used as the basis
for determining the minimum energy factor or integrated energy factor
allowed for the basic model.
(2) Verification of whole-home dehumidifier case volume. The case
volume will be measured pursuant to the test requirements of part 430
for each unit tested. The results of the measurement(s) will be
averaged and compared to the value of case volume certified by the
manufacturer for the basic model. The certified case volume will be
considered valid only if the measurement is within two percent, or
[[Page 38396]]
0.2 cubic feet, whichever is greater, of the certified case volume.
(i) If the certified case volume is found to be valid, the
certified case volume will be used as the basis for determining the
minimum integrated energy factor allowed for the basic model.
(ii) If the certified case volume is found to be invalid, the
average measured case volume of the units in the sample will be used as
the basis for determining the minimum integrated energy factor allowed
for the basic model.
* * * * *
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
4. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
5. Section 430.32 is amended by adding paragraph (v)(3) to read as
follows:
Sec. 430.32 Energy and water conservation standards and their
effective dates.
* * * * *
(v) * * *
(3) Dehumidifiers manufactured on or after June 13, 2019, shall
have an integrated energy efficiency ratio that meets or exceeds the
following values:
------------------------------------------------------------------------
Minimum integrated
energy efficiency
factor (liters/kWh)
------------------------------------------------------------------------
Portable dehumidifier Product Capacity
(pints/day)
------------------------------------------------------------------------
25.00 or less...................................... 1.30
25.01-50.00........................................ 1.60
50.01 or more...................................... 2.80
------------------------------------------------------------------------
Whole-home dehumidifier product case volume
(cubic feet)
------------------------------------------------------------------------
8.0 or less........................................ 1.77
More than 8.0...................................... 2.41
------------------------------------------------------------------------
* * * * *
[FR Doc. 2016-12881 Filed 6-10-16; 8:45 am]
BILLING CODE 6450-01-P