[Federal Register Volume 87, Number 73 (Friday, April 15, 2022)]
[Proposed Rules]
[Pages 22640-22718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07145]



[[Page 22639]]

Vol. 87

Friday,

No. 73

April 15, 2022

Part II





Department of Energy





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10 CFR Parts 429 and 430





Energy Conservation Program: Energy Conservation Standards for Consumer 
Pool Heaters; Proposed Rule

  Federal Register / Vol. 87 , No. 73 / Friday, April 15, 2022 / 
Proposed Rules  

[[Page 22640]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[EERE-2021-BT-STD-0020]
RIN 1904-AD49


Energy Conservation Program: Energy Conservation Standards for 
Consumer Pool Heaters

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

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

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''), 
prescribes energy conservation standards for various consumer products 
and certain commercial and industrial equipment, including consumer 
pool heaters. 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 
result in significant energy savings. In this notice of proposed 
rulemaking (``NOPR''), DOE proposes definitions for the different 
classes of pool heaters, amended energy conservation standards for gas-
fired pool heaters, new energy conservation standards for electric pool 
heaters, and also announces a public meeting to receive comment on 
these proposed standards and associated analyses and results.

DATES: Meeting: DOE will hold a public meeting via webinar on this NOPR 
on Wednesday, May 4, 2022, from 1 p.m. to 4 p.m. See section VII, 
``Public Participation,'' for webinar registration information, 
participant instructions, and information about the capabilities 
available to webinar participants.
    Comments: Comments regarding the likely competitive impact of the 
proposed standard should be sent to the Department of Justice contact 
listed in the ADDRESSES section on or before May 16, 2022.
    DOE will accept comments, data, and information regarding this NOPR 
no later than June 14, 2022.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at www.regulations.gov. Follow the 
instructions for submitting comments. Alternatively, interested persons 
may submit comments by email to the following address: 
[email protected]. Include ``Energy Conservation 
Standards for Consumer Pool Heaters'' and the docket number EERE-2021-
BT-STD-0020 and/or RIN number 1904-AD49 in the subject line of the 
message. Submit electronic comments in WordPerfect, Microsoft Word, 
PDF, or ASCII file format, and avoid the use of special characters or 
any form of encryption.
    Although DOE has routinely accepted public comment submissions 
through a variety of mechanisms, including postal mail and hand 
delivery/courier, the Department has found it necessary to make 
temporary modifications to the comment submission process in light of 
the ongoing Covid-19 pandemic. DOE is currently suspending receipt of 
public comments via postal mail and hand delivery/courier. If a 
commenter finds that this change poses an undue hardship, please 
contact Appliance Standards Program staff at (202) 586-1445 to discuss 
the need for alternative arrangements. Once the Covid-19 pandemic 
health emergency is resolved, DOE anticipates resuming all of its 
regular options for public comment submission, including postal mail 
and hand delivery/courier.
    No telefacsimiles (``faxes'') will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section VII of this document.
    Docket: The docket for this activity, which includes Federal 
Register notices, 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.
    The docket web page can be found at www.regulations.gov/#!docketDetail;D=EERE-2021-BT-STD-0020. The docket web page contains 
instructions on how to access all documents, including public comments, 
in the docket. See section VII for information on how to submit 
comments through www.regulations.gov.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to the Office of Energy Efficiency and 
Renewable Energy following the instructions at www.regulations.gov.
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] on or 
before the date specified in the DATES section. Please indicate in the 
``Subject'' line of your email the title and Docket Number of this 
proposed rulemaking.

FOR FURTHER INFORMATION CONTACT: 
    Ms. Julia Hegarty, 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: 
(240) 597-6737. Email: [email protected].
    Ms. Kathryn McIntosh, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC, 
20585-0121. Telephone: (202) 586-2002. Email: 
[email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the webinar, contact 
the Appliance and Equipment Standards Program staff at (202) 287-1445 
or by email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed 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 Rulemakings for Consumer Pool Heaters
    C. Deviation From Appendix A
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
    2. Rebuttable Presumption
    F. Other Issues
    1. Regulatory Approach For Consumer Pool Heaters
    2. Certification and Enforcement
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage and Product Classes

[[Page 22641]]

    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency analysis
    2. Cost Analysis
    D. Markups Analysis
    E. Energy Use Analysis
    1. Pool Heater Consumer Samples
    2. Energy Use Estimation
    3. Energy Use Results
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Repair and Maintenance Costs
    6. Product Lifetime
    7. Discount Rates
    8. Energy 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 and Key Inputs
    3. Manufacturer Interviews
    K. Emissions Analysis
    1. Air Quality Regulations Incorporated in DOE's Analysis
    L. Monetizing Emissions Impacts
    1. Monetization of Greenhouse Gas Emissions
    2. Monetization 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
    2. Economic Impacts on Manufacturers
    3. National Impact Analysis
    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 Consumer Pool 
Heater Standards
    2. Annualized Benefits and Costs of the Proposed Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    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. Information Quality
    M. Description of Materials Incorporated by Reference
VII. Public Participation
    A. Participation in the Webinar
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Webinar
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III, Part B \1\ of EPCA,\2\ established the Energy 
Conservation Program for Consumer Products Other Than Automobiles. (42 
U.S.C. 6291-6309) These products include consumer pool heaters, the 
subject of this rulemaking. (42 U.S.C. 6292(a)(11))
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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 Act of 2020, Public Law 116-260 (Dec. 
27, 2020).
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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 a 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 (proceeding to a final rule, as appropriate). (42 U.S.C. 
6295(m)(1))
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes amended energy conservation standards 
for gas-fired pool heaters and new energy conservation standards for 
electric pool heaters. In addition, the proposed new and amended 
standards are expressed in terms of the integrated thermal efficiency 
(TEI) metric, which replaces the thermal efficiency (TE) 
metric for gas-fired pool heaters, and are shown in Table I.1. The 
proposed TEI standards are expressed as a function of the 
active mode electrical input power (PE) in British thermal units per 
hour (Btu/h) for electric pool heaters and the gas input rating 
(QIN) in Btu/h for gas-fired pool heaters. These proposed 
standards, if adopted, would apply to all consumer pool heaters listed 
in Table I.1 manufactured in, or imported into, the United States 
starting on the date 5 years after the publication of the final rule 
for this rulemaking. (42 U.S.C. 6295(m)(4)(A)(ii))

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[GRAPHIC] [TIFF OMITTED] TP15AP22.000

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of consumer pool heaters, as measured 
by the average life-cycle cost (``LCC'') savings and the simple payback 
period (``PBP'').\3\ The average LCC savings are positive for electric 
pool heaters and gas-fired pool heaters, and the PBP is less than the 
average lifetime of electric pool heaters and gas-fired pool heaters, 
which is estimated to be 11.2 years (see section IV.F.6 of this NOPR).
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    \3\ The average LCC savings refer to consumers that are affected 
by a standard and 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 new or amended standards 
(see section IV.F.9 of this NOPR). The simple PBP, which is designed 
to compare specific efficiency levels, is measured relative to the 
baseline product (see section IV.C of this NOPR).

     Table I.2--Impacts of Proposed Energy Conservation Standards on
                        Consumers of Pool Heaters
------------------------------------------------------------------------
                                            Average LCC   Simple payback
              Product class                savings 2020$   period years
------------------------------------------------------------------------
Electric Pool Heater....................           1,029             0.7
Gas-fired Pool Heater...................              43             1.5
------------------------------------------------------------------------

    DOE's analysis of the impacts of the proposed 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 reference year through 
the end of the analysis period (2021-2057). Using a real discount rate 
of 7.4 percent,\4\ DOE estimates that the INPV for manufacturers of 
consumer pool heaters in the case without new and amended energy 
conservation standards is $188.7 million in 2020$. Under the proposed 
standards, the change in INPV is estimated to range from -14.7 percent 
to -7.7 percent, which is approximately -$27.7 million to -$14.4 
million. In order to bring products into compliance with the proposed 
standards, it is estimated that the consumer pool heater industry would 
incur conversion costs of approximately $38.8 million.
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    \4\ The discount rate was derived from industry financials from 
publicly traded companies and then modified according to feedback 
received during manufacturer interviews.
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    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section IV.J of this document. The 
analytic results of the manufacturer impact analysis (``MIA'') are 
presented in section V.B.2 of this document.

C. National Benefits and Costs 5
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    \5\ All monetary values in this document are expressed in 2020 
dollars.
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    DOE's analyses indicate that the proposed energy conservation 
standards for consumer pool heaters would save a significant amount of 
energy. Relative to the case without new or amended standards, the 
lifetime energy savings for consumer pool heaters purchased in the 30-
year period that begins in the anticipated first full year of 
compliance with the new or amended standards (2028-2057) amount to 0.49 
quadrillion British thermal units (``Btu''), or quads.\6\ This 
represents a savings of 5.3 percent relative to the energy use of 
electric and gas-fired pool heaters in the case without amended 
standards (referred to as the ``no-new-standards case'').
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    \6\ 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.1 of this document.
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    The cumulative net present value (``NPV'') of total consumer 
benefits of the proposed standards for consumer pool heaters ranges 
from $0.95 billion (at a 7-percent discount rate) to $2.39 billion (at 
a 3-percent discount rate). This NPV expresses the estimated total 
value of future operating-cost savings minus the estimated increased 
product and installation costs for consumer pool heaters purchased in 
2028-2057.
    In addition, the proposed standards for consumer pool heaters are 
projected to yield significant environmental benefits. DOE estimates 
that the proposed standards would result in cumulative emission 
reductions (over the same period as for energy savings) of 19 million 
metric tons (``Mt'') \7\ of carbon dioxide (``CO2''), 5.5 
thousand tons of sulfur dioxide (``SO2''), 90 thousand tons 
of nitrogen oxides

[[Page 22643]]

(``NOX''), 161 thousand tons of methane 
(``CH4''), 0.15 thousand tons of nitrous oxide 
(``N2O''), and 0.03 tons of mercury (``Hg'').\8\
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    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2021 (``AEO2021). AEO2021 represents current federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K for further discussion of 
AEO2021 assumptions that effect air pollutant emissions.
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    DOE estimates the value of climate benefits from a reduction in 
greenhouse gases using four different estimates of the social cost of 
CO2 (``SC-CO2''), the social cost of methane 
(``SC-CH4''), and the social cost of nitrous oxide (``SC-
N2O''). Together these represent the social cost of 
greenhouse gases (SC-GHG). DOE used interim SC-GHG values developed by 
an Interagency Working Group on the Social Cost of Greenhouse Gases 
(IWG).\9\ The derivation of these values is discussed in section IV.L 
of this document. For presentational purposes, the climate benefits 
associated with the average SC-GHG at a 3-percent discount rate are 
estimated to be $0.9 billion. DOE does not have a single central SC-GHG 
point estimate and it emphasizes the importance and value of 
considering the benefits calculated using all four SC-GHG estimates.
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    \9\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. Available at: www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 
(last accessed March 17, 2022).
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    DOE also estimates health benefits from SO2 and 
NOX emissions reductions.\10\ DOE estimates the present 
value of the health benefits would be $0.1 billion using a 7-percent 
discount rate, and $0.3 billion using a 3-percent discount rate.\11\ 
DOE is currently only monetizing (for SO2 and 
NOX) PM2.5 precursor health benefits and (for 
NOX) ozone precursor health benefits but will continue to 
assess the ability to monetize other effects such as health benefits 
from reductions in direct PM2.5 emissions 12 13
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    \10\ DOE estimated the monetized value of SO2 and 
NOX emissions reductions associated with site and 
electricity savings using benefit per ton estimates from the 
scientific literature. See section IV.L.2 of this document for 
further discussion.
    \11\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
    \12\ DOE plans to update its methodology to reflect the 
Environmental Protection Agency's recent updates to benefit-per-ton 
values in a future impact analysis if DOE issues a final rule and 
generally for forthcoming rulemakings, but DOE does not have time to 
fully vet the new methods for this impact analysis.
    \13\ On March 16, 2022, the Fifth Circuit Court of Appeals (No. 
22-30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction 
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a 
result of the Fifth Circuit's order, the preliminary injunction is 
no longer in effect, pending resolution of the federal government's 
appeal of that injunction or a further court order. Among other 
things, the preliminary injunction enjoined the defendants in that 
case from ``adopting, employing, treating as binding, or relying 
upon'' the interim estimates of the social cost of greenhouse 
gases--which were issued by the Interagency Working Group on the 
Social Cost of Greenhouse Gases on February 26, 2021--to monetize 
the benefits of reducing greenhouse gas emissions. In the absence of 
further intervening court orders, DOE will revert to its approach 
prior to the injunction and present monetized benefits where 
appropriate and permissible under law.
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    Table I.3 summarizes the economic benefits and costs expected to 
result from the proposed standards for consumer pool heaters. In the 
table, total benefits for both the 3-percent and 7-percent cases are 
presented using the average GHG social costs with 3-percent discount 
rate. DOE does not have a single central SC-GHG point estimate and it 
emphasizes the importance and value of considering the benefits 
calculated using all four SC-GHG estimates. The estimated total net 
benefits using each of the four SC-GHG estimates are presented in 
section V.B.8. of this document.

 Table I.3--Summary of Monetized Economic Benefits and Costs of Proposed
         Energy Conservation Standards for Consumer Pool Heaters
                                 [TSL 5]
------------------------------------------------------------------------
                                                           Billion 2020$
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             3.2
Climate Benefits *......................................             0.9
Health Benefits **......................................             0.3
Total Benefits [dagger].................................             4.4
Consumer Incremental Product Costs [Dagger].............             0.8
Net Benefits............................................             3.6
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             1.4
Climate Benefits *......................................             0.9
Health Benefits **......................................             0.1
Total Benefits [dagger].................................             2.4
Consumer Incremental Product costs [Dagger].............             0.4
Net Benefits............................................             2.0
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  consumer pool heaters shipped in 2028-2057. These results include
  benefits to consumers which accrue after 2057 from the products
  shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.17 through Table V.19. Together these represent the global
  social cost of greenhouse gases (SC-GHG). For presentational purposes
  of this table, the climate benefits associated with the average SC-GHG
  at a 3 percent discount rate are shown, but the Department does not
  have a single central SC-GHG point estimate. See section. IV.L of this
  document for more details
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing PM2.5 and (for NOX) ozone
  precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in
  direct PM2.5 emissions. The health benefits are presented at real
  discount rates of 3 and 7 percent. See section IV.L of this document
  for more details.

[[Page 22644]]

 
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.22 for net benefits using all four SC-GHG
  estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No.
  22-30087) granted the federal government's emergency motion for stay
  pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
  of the Fifth Circuit's order, the preliminary injunction is no longer
  in effect, pending resolution of the federal government's appeal of
  that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and present monetized benefits where appropriate and
  permissible under law.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    The benefits and costs of the proposed standards, for consumer pool 
heaters sold in 2028-2057, can also be expressed in terms of annualized 
values. The monetary values for the total annualized net benefits are 
(1) the reduced consumer operating costs, minus (2) the increase in 
product purchase prices and installation costs, plus (3) the value of 
the benefits of GHGs, SO2 and NOX emission 
reductions, all annualized.\14\
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    \14\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2028, 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., 2030), and then discounted the present value from each year 
to 2028. The calculation uses discount rates of 3 and 7 percent for 
all costs and benefits. 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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    The national operating savings are domestic private U.S. consumer 
monetary savings that occur as a result of purchasing the covered 
products and are measured for the lifetime of consumer pool heaters 
shipped in 2028-2057. The climate and health benefits associated with 
reduced emissions achieved as a result of the proposed standards are 
also calculated based on the lifetime of consumer pool heaters shipped 
in 2028-2057.
    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.4. The results under the primary 
estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated cost of the standards 
proposed in this rule is $49.0 million per year in increased equipment 
costs, while the estimated annual benefits are $164 million in reduced 
equipment operating costs, $54.5 million in climate benefits, and $15.6 
million in health benefits. In this case, the net benefit would amount 
to $185 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards is $49.3 million per year in 
increased equipment costs, while the estimated annual benefits are $195 
million in reduced operating costs, $54.5 million in climate benefits, 
and $19.6 million in health benefits. In this case, the net benefit 
would amount to $220 million per year.

 Table I.4--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for Consumer Pool
                                                     Heaters
                                                     [TSL 5]
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2020$/year
                                                                 -----------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           194.9           179.0           212.8
Climate Benefits *..............................................            54.5            52.4            56.6
Health Benefits **..............................................            19.6            18.9            20.4
Total Benefits [dagger].........................................             269             250             290
Consumer Incremental Product Costs [Dagger].....................            49.3            51.4            49.4
Net Benefits....................................................             220             199             240
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           164.2           152.7           177.7
Climate Benefits *..............................................            54.5            52.4            56.6
Health Benefits **..............................................            15.6            15.0            16.1
Total Benefits [dagger].........................................             234             220             250
Consumer Incremental Product Costs [Dagger].....................            49.0            50.7            49.2
Net Benefits....................................................             185             169             201
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer pool heaters shipped in 2028-2057.
  These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate). Together these represent the global social cost of greenhouse
  gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-
  GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
  GHG estimates. See section. IV.L of this document for more details.

[[Page 22645]]

 
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  PM2.5 and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented
  at real discount rates of 3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for
  stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-
  1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in
  effect, pending resolution of the federal government's appeal of that injunction or a further court order.
  Among other things, the preliminary injunction enjoined the defendants in that case from ``adopting,
  employing, treating as binding, or relying upon'' the interim estimates of the social cost of greenhouse
  gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February
  26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the absence of further intervening
  court orders, DOE will revert to its approach prior to the injunction and present monetized benefits where
  appropriate and permissible under law.
[Dagger] Costs include incremental equipment costs as well as installation costs.

    DOE's analysis of the national impacts of the proposed standards is 
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified and would result in the significant 
conservation of energy. DOE further notes that products achieving these 
standard levels are already commercially available for all product 
classes covered by this proposal. Based on the analyses described 
previously, DOE has tentatively concluded that the benefits of the 
proposed standards to the Nation (energy savings, positive NPV of 
consumer benefits, consumer LCC savings, and emission reductions) would 
outweigh the burdens (loss of INPV for manufacturers and LCC increases 
for some consumers).
    DOE also considered more-stringent energy efficiency levels as 
potential standards and is still considering them in this rulemaking. 
However, DOE has tentatively concluded that the potential burdens of 
the more-stringent energy efficiency levels would outweigh the 
projected benefits.
    Based on consideration of the public comments DOE received in 
response to this document and related information collected and 
analyzed during the course of this rulemaking effort, DOE may adopt 
energy efficiency levels presented in this document that are either 
higher or lower than the proposed standards, or some combination of 
level(s) that incorporate the proposed standards in part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed rule, as well as some of the relevant 
historical background related to the establishment of standards for 
consumer pool heaters.

A. Authority

    EPCA authorizes DOE to regulate the energy efficiency of a number 
of consumer products and certain industrial equipment. Title III, Part 
B of EPCA established the Energy Conservation Program for Consumer 
Products Other Than Automobiles. These products include consumer pool 
heaters, the subject of this document. (42 U.S.C. 6292(a)(11)) EPCA 
prescribed energy conservation standards for these products (42 U.S.C. 
6295(e)(2)) and directs DOE to conduct two cycles rulemakings to 
determine whether to amend these standards. (42 U.S.C. 6295(e)(4)) EPCA 
further provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation 
standards (proceeding to a final rule, as appropriate). (42 U.S.C. 
6295(m)(1))
    The energy conservation program for covered products under EPCA 
consists essentially of four parts: (1) Testing, (2) labeling, (3) the 
establishment of Federal energy conservation standards, and (4) 
certification and enforcement procedures. Relevant provisions of EPCA 
specifically include definitions (42 U.S.C. 6291), test procedures (42 
U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation 
standards (42 U.S.C. 6295), and the authority to require information 
and reports from manufacturers (42 U.S.C. 6296).
    Federal energy efficiency requirements for covered products 
established under EPCA generally supersede State laws and 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 EPCA. (See 42 
U.S.C. 6297(d))
    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) and 42 U.S.C. 6295(r)) 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 42 U.S.C. 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 consumer pool heaters appear at title 10 of the 
Code of Federal Regulations (``CFR'') part 430, subpart B, appendix P 
(``appendix P'').
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including consumer pool 
heaters. Any new or amended standard for a covered product must be 
designed to achieve the maximum improvement in energy efficiency that 
the Secretary of Energy determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 
6295(o)(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)(B))
    Moreover, DOE may not prescribe a standard: (1) For certain 
products, including consumer pool heaters, 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 U.S.C. 6295(o)(2)(B)(i)) DOE must 
make this determination after receiving comments on the proposed 
standard,

[[Page 22646]]

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 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 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, EPCA 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 product 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 the 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))
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to 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 current test procedures for consumer pool 
heaters, which measures integrated thermal efficiency, addresses 
standby mode and off mode energy use. In this rulemaking, DOE intends 
to incorporate such energy use into any new or amended energy 
conservation standards it adopts in the final rule through use of 
integrated thermal efficiency as the regulating metric.

B. Background

1. Current Standards
    The current energy conservation standard for gas-fired pool heaters 
is set forth in DOE's regulations at 10 CFR 430.32(k) and is repeated 
in Table II.1 of this document. The current energy conservation 
standard for gas-fired pool heaters is in terms of thermal efficiency, 
which measures only active mode efficiency. Electric pool heaters are a 
covered product under EPCA, but there is currently no Federal energy 
conservation standard.

   Table II.1--Federal Energy Conservation Standards for Consumer Pool
                                 Heaters
------------------------------------------------------------------------
                                                         Minimum thermal
                     Product class                          efficiency
                                                            (percent)
------------------------------------------------------------------------
Gas-Fired Pool Heaters.................................              82
------------------------------------------------------------------------

2. History of Standards Rulemakings for Consumer Pool Heaters
    On April 16, 2010, DOE published a final rule in which it concluded 
the first round of rulemaking required under EPCA and established an 
amended energy conservation standard for consumer pool heaters. 75 FR 
20112 (``April 2010 final rule'').\15\ In relevant part, the April 2010 
final rule amended the statutorily prescribed standards for gas-fired 
pool heaters with a compliance date of April 16, 2013, on and after 
which gas-fired pool heaters were required to achieve a thermal 
efficiency of 82 percent.
---------------------------------------------------------------------------

    \15\ A correction notice was published on April 27, 2010, 
correcting a reference to the compliance date for the energy 
conservation standard. 75 FR 21981.
---------------------------------------------------------------------------

    On December 17, 2012, DOE published a final rule in the Federal 
Register that established a new efficiency metric for gas-fired pool 
heaters, ``integrated thermal efficiency.'' 77 FR 74559, 74565 
(``December 2012 TP final rule''). The integrated thermal efficiency 
(TEI) metric built on the existing thermal efficiency metric 
for measuring active mode energy efficiency, and also accounts for the 
energy consumption during standby mode and off mode operation. DOE 
stated in the December 2012 TP final rule that for purposes of 
compliance with the energy conservation standard, the test procedure 
amendments related to standby mode and off mode (i.e., integrated 
thermal efficiency) are not required until the compliance date of the 
next standards final rule, which addresses standby and off mode. 77 FR 
74559, 74559.
    On January 6, 2015, DOE published a final rule pertaining to its 
test procedures for direct heating equipment (``DHE'') and consumer 
pool heaters. 80 FR 792 (``January 2015 TP final rule''). In that final 
rule, DOE established test methods for measuring the integrated thermal 
efficiency of electric resistance and electric heat pump pool heaters.
    To evaluate whether to propose amendments to the energy 
conservation standard for consumer pool heaters, DOE issued a request 
for information (``RFI'') in the Federal Register on March 26, 2015. 80 
FR 15922 (``March

[[Page 22647]]

2015 RFI''). Through the March 2015 RFI, DOE requested data and 
information pertaining to its planned technical and economic analyses 
for DHE and consumer pool heaters. Among other topics, the March 2015 
RFI sought data and information pertaining to electric pool heaters. 80 
FR 15922, 15924-15925. Although the March 2015 RFI and the previous 
energy conservation standards rulemaking (concluding with the April 
2010 final rule) included both DHE and consumer pool heaters, DOE has 
elected to review its energy conservation standards for each of these 
products separately.\16\
---------------------------------------------------------------------------

    \16\ The rulemaking docket for DHE can be found at: 
www.regulations.gov/#!docketDetail;D=EERE-2016-BT-STD-0007.
---------------------------------------------------------------------------

    DOE subsequently published a notice of data availability (``NODA'') 
in the Federal Register on October 26, 2015, which announced the 
availability of its analyses for electric pool heaters. 80 FR 65169 
(``October 2015 NODA''). The purpose of the October 2015 NODA was to 
make publicly available the initial technical and economic analyses 
conducted for electric pool heaters, and present initial results of 
those analyses to seek further input from stakeholders. DOE did not 
propose new or amended standards for consumer pool heaters at that 
time. The initial technical support document (``TSD'') and accompanying 
analytical spreadsheets for the October 2015 NODA provided the analyses 
DOE undertook to examine the potential for establishing energy 
conservation standards for electric pool heaters and provided 
preliminary discussions in response to a number of issues raised by 
comments to the March 2015 RFI. It described the analytical methodology 
that DOE used and each analysis DOE had performed.
    In response to the publication of the March 2015 RFI, DOE received 
seven comments from interested parties regarding DOE's analytical 
approach pertaining to both electric and gas-fired pool heaters. The 
March 2015 RFI comments relating to electric pool heaters were 
addressed in chapter 2 of the October 2015 NODA TSD. DOE received nine 
comments in response to the October 2015 NODA. Commenters on the March 
2015 RFI and October 2015 NODA are listed in Table II.2 of this 
document. The comments received in response to October 2015 NODA, as 
well as those comments received in response to the March 2015 RFI not 
previously addressed in the October 2015 NODA, are discussed in the 
appropriate sections of this document.

 Table II.2--Interested Parties Providing Written Comment in Response to
               the March 2015 RFI and/or October 2015 NODA
------------------------------------------------------------------------
            Name(s)                Commenter type *          Acronym
------------------------------------------------------------------------
Association of Pool and Spa     TA                      APSP and IHTA.
 Professionals and
 International Hot Tub
 Association (Joint Comment).
Appliance Standard Awareness    EA                      ASAP and NRDC.
 Project and Natural Resources
 Defense Council (Joint
 Comment).
Appliance Standard Awareness    EA                      ASAP et al.
 Project, Natural Resources
 Defense Council, Alliance to
 Save Energy, American Council
 for an Energy-Efficient
 Economy, and National
 Consumer Law Center (Joint
 Comment).
Laclede Group.................  U                       Laclede.
National Propane Gas            U                       NPGA.
 Association.
Air-Conditioning, Heating and   TA                      AHRI.
 Refrigeration Institute.
Edison Electric Institute.....  U                       EEI.
California Investor Owned       U                       CA IOUs.
 Utilities.
Adriana Murray................  I                       Murray.
Jeffery Tawney................  I                       Tawney.
Raypak, Inc...................  M                       Raypak.
Lochinvar, LLC................  M                       Lochinvar.
Coates Heater Manufacturing     M                       Coates.
 Co., Inc.
------------------------------------------------------------------------
* EA: Efficiency/Environmental Advocate; I: Individual; M: Manufacturer;
  TA: Trade Association; U: Utility or Utility Trade Association.

    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\17\
---------------------------------------------------------------------------

    \17\ The parenthetical reference provides a reference for 
information located in the docket of DOE's rulemaking to develop 
energy conservation standards for pool heaters. (Docket No. EERE-
2021-BT-STD-0020, which is maintained at www.regulations.gov). The 
references are arranged as follows: (Commenter name, comment docket 
ID number, page of that document).
---------------------------------------------------------------------------

C. Deviation From Appendix A

    In accordance with section 3(a) of 10 CFR part 430, subpart C, 
appendix A (``appendix A''), DOE notes that it is deviating from the 
provision in appendix A regarding the pre-NOPR stages for an energy 
conservation standards rulemaking. Section 6(d)(2) of appendix A 
specifies that the length of the public comment period for a NOPR will 
vary depending upon the circumstances of the particular rulemaking, but 
will not be less than 75 calendar days. For this NOPR, DOE has opted to 
instead provide a 60-day comment period. As stated, DOE requested 
comment in the March 2015 RFI on the technical and economic analyses 
and provided stakeholders a 30-day comment period. 80 FR 15922. 
Additionally, DOE provided a 45-day comment period for the October 2015 
notice of data availability 80 FR 65169. DOE has relied on many of the 
same analytical assumptions and approaches as used in the preliminary 
assessment presented in the notice of data availability and has 
determined that a 60-day comment period in conjunction with the prior 
comment periods provides sufficient time for interested parties to 
review the proposed rule and develop comments.

III. General Discussion

    DOE developed this proposal after considering written 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

[[Page 22648]]

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 determining 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)(1))
    This NOPR covers consumer ``pool heaters'' defined as an appliance 
designed for heating nonpotable water contained at atmospheric 
pressure, including heating water in swimming pools, spas, hot tubs and 
similar applications. 10 CFR 430.2. The scope of coverage and product 
classes for this NOPR are discussed in further detail in section IV.A.1 
of this NOPR.

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. DOE's 
current energy conservation standards for consumer pool heaters are 
expressed in terms of thermal efficiency. See 10 CFR 430.32(k)(2). As 
stated in section II.A, DOE's test procedure for consumer pool heaters 
is found at appendix P.
    As discussed in section II of this document, EISA 2007 amended EPCA 
to require DOE to amend its test procedures for covered consumer 
products generally to include measurement of standby mode and off mode 
energy consumption. (42 U.S.C. 6295(gg)(2)(A)) The test procedure 
applicable to fossil fuel-fired pool heaters, as amended in the 
December 2012 TP final rule, relies on the TEI metric, which 
accounts for energy consumption during active mode operation (sections 
2.1.1, 3.1.1, and 4.1.1 of appendix P) and standby mode (sections 2.2, 
3.2, and 4.2 of appendix P) and off mode operation (sections 2.3, 3.2, 
and 4.3 of appendix P), as required by EISA 2007. 77 FR 74559, 74572. 
See also, 77 FR 74559, 74564-74565.
    The DOE test procedure for electric resistance and electric heat 
pump pool heaters incorporates by reference Air-Conditioning, Heating, 
and Refrigeration Institute (``AHRI'') Standard 1160-2009, 
``Performance Rating of Heat Pump Pool Heaters'' (``AHRI 1160'') and 
American National Standards Institute (``ANSI'')/American Society of 
Heating, Refrigerating, and Air-Conditioning Engineers (``ASHRAE'') 
Standard 146-2011, ``Method of Testing and Rating Pool Heaters'' 
(``ASHRAE 146''). The procedures referenced in AHRI 1160 and ASHRAE 146 
are used to determine the active mode energy use for electric 
resistance (sections 2.1.2, 3.1.2, and 4.1.2 of appendix P) and 
electric heat pump pool heaters (sections 2.1.3, 3.1.3, and 4.1.3 of 
appendix P). Standby mode and off mode energy use are also recorded 
using the same procedures used for fossil-fuel fired pool heaters 
(sections 2.2, 3.2, and 4.2 and 2.3, 3.2, and 4.3 of appendix P, 
respectively). The active mode, standby mode, and off mode energy use 
is then combined into the TEI metric (section 5 of appendix 
P).
    In this document, DOE is proposing new and amended energy 
conservation standards for consumer pool heaters. To the extent DOE is 
also proposing amendments to the test procedure, such proposed 
amendments are limited to those necessary to accommodate the proposed 
definitions and the proposed product classes. As discussed further in 
sections III.F.2 and IV.A.1 of this document, DOE is proposing to amend 
appendix P to add definitions for active electrical power, input 
capacity, and output capacity, add a calculation to determine the 
output capacity for electric pool heaters, and clarify the calculation 
of input capacity for fossil fuel-fired pool heaters. The proposed 
amendments to appendix P, if made final, would not impact how the test 
procedure is conducted in terms of the measurements taken, but rather 
the additional provisions use existing measurements to calculate the 
values necessary for comparing product efficiency to the proposed 
standards.
    In response to the March 2015 RFI and October 2015 NODA, DOE 
received several comments from stakeholders relating to the consumer 
pool heater test procedure, which DOE will consider further in the next 
revision of its consumer pool heater test procedure.

C. Technological Feasibility

1. General
    In evaluating potential amendments to energy conservation 
standards, 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. 
Sections 6(c)(1), (2) of 10 CFR part 430, subpart C, appendix A. 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. Sections 6(b)(3)(i) and 7(b)(1) of appendix A 
to part 430, subpart C.
    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; (3) adverse impacts on 
health or safety, and (4) unique-pathway proprietary technologies. 
Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of appendix A to part 430 
subpart C. Section IV.B of this document discusses the results of the 
screening analysis for consumer pool heaters, 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 NOPR 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 consumer 
pool heaters, 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.1.c of this document and in chapter 5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to consumer pool heaters purchased 
in the 30-year period that begins in the first full year of compliance 
with the proposed standards (2028-2057).\18\ The savings

[[Page 22649]]

are measured over the entire lifetime of consumer pool heaters 
purchased in the previous 30-year 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 new or amended energy conservation standards.
---------------------------------------------------------------------------

    \18\ Each TSL is composed of specific efficiency levels for each 
product class. The TSLs considered for this NOPR are described in 
section V.A of this document. DOE conducted a sensitivity analysis 
that considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (``NIA'') spreadsheet model 
to estimate national energy savings (``NES'') from potential amended or 
new standards for consumer pool heaters. The NIA spreadsheet model 
(described in section IV.H of this document) calculates energy savings 
in terms of site energy, which is the energy directly consumed by 
products at the locations where they are used. For electricity, DOE 
reports national energy savings in terms of primary energy savings, 
which is the savings in the energy that is used to generate and 
transmit the site electricity. For natural gas, the primary energy 
savings are considered to be equal to the site energy savings. DOE also 
calculates NES 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 
energy conservation standards.\19\ 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.1 of this document.
---------------------------------------------------------------------------

    \19\ 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 
EPCA, 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), opined that Congress intended ``significant'' energy 
savings in the context of EPCA to be savings that were not ``genuinely 
trivial.''
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\20\ For 
example, the United States has now rejoined the Paris Agreement and 
will exert leadership in confronting the climate crisis. Additionally, 
some covered products and equipment have most of their energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand. In evaluating the 
significance of energy savings, DOE considers differences in primary 
energy and full-fuel-cycle (``FFC'') effects for different covered 
products and equipment when determining whether energy savings are 
significant. Primary energy and FFC effects include the energy consumed 
in electricity production (depending on load shape), in distribution 
and transmission, and in extracting, processing, and transporting 
primary fuels (i.e., coal, natural gas, petroleum fuels), and thus 
present a more complete picture of the impacts of energy conservation 
standards.
---------------------------------------------------------------------------

    \20\ A numeric threshold for determining the significance of 
energy savings was established in a final rule published on February 
14, 2020 (85 FR 8626, 8670), but was subsequently eliminated in a 
final rule published on December 13, 2021 (86 FR 70892).
---------------------------------------------------------------------------

    Accordingly, DOE evaluated the significance of energy savings on a 
case-by-case basis. As discussed in section V.C of this document, DOE 
is proposing to adopt TSL 5, which would save an estimated 0.49 quads 
of energy (FFC). DOE has initially determined the energy savings for 
the TSL proposed in this proposed rulemaking are nontrivial, and, 
therefore, DOE considers them ``significant'' within the meaning of 42 
U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria
    As noted previously, 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 a MIA, as discussed in section IV.J of this 
document. 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 consumer costs and benefits expected to result from particular 
standards. DOE also evaluates the impacts of potential standards on 
identifiable subgroups of consumers that may be affected 
disproportionately by a 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 expense (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

[[Page 22650]]

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 full year of compliance with 
new or 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 new or amended standards. DOE's LCC and 
PBP analysis is discussed in further detail in section IV.F of this 
document.
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 III.D of this document, 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 proposed in this document would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
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 proposed 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 proposed 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 will transmit a copy of this proposed 
rule to the Attorney General with a request that the Department of 
Justice (``DOJ'') provide its determination on this issue. DOE will 
publish and respond to the Attorney General's determination in the 
final rule. DOE invites comment from the public regarding the 
competitive impacts that are likely to result from this proposed rule. 
In addition, stakeholders may also provide comments separately to DOJ 
regarding these potential impacts. See the ADDRESSES section for 
information to send comments to DOJ.
f. Need for National Energy Conservation
    DOE also considers the need for national energy and water 
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 proposed 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.
    DOE maintains that environmental and public health benefits 
associated with the more efficient use of energy are important to take 
into account when considering the need for national energy 
conservation. The proposed standards are likely to result in 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases (``GHGs'') associated with energy 
production and use. As part of the analysis of the need for national 
energy and water conservation, DOE conducts an emissions analysis to 
estimate how potential standards may affect these emissions, as 
discussed in section IV.K of this document; the estimated emissions 
impacts are reported in section V.B.7 of this document.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To 
the extent DOE identifies any relevant information regarding economic 
justification that does not fit into the other categories described 
previously, DOE could consider such information under ``other 
factors.'' No other factors were considered in this analysis.
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 effects that proposed 
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.9 of this document.

F. Other Issues

1. Regulatory Approach for Consumer Pool Heaters
    In response to the March 2015 RFI, EEI stated that if DOE intends 
to establish new energy efficiency standards for electric resistance 
pool heaters and electric heat pump pool heaters, it must follow the 
process used by DOE when considering whether to include a product as a 
covered product under EPCA. (EEI, No. 6 at p. 2) In response, DOE notes 
that the December 11, 2009 NOPR that preceded the April 2010 final rule 
explained in detail that the definition of ``pool heater'' in EPCA 
covers both gas-fired pool heaters and electric pool heaters, including 
heat pump pool heaters. 74 FR 65852, 65866-65867. And, as noted 
previously, DOE has established a test procedure for electric pool 
heaters and is now proposing standards in this document.
    In the October 2015 NODA, DOE requested comment on its 
determination

[[Page 22651]]

to forgo a preliminary analysis for gas-fired pool heaters and noted 
that interested parties will have the opportunity to comment on DOE's 
analyses for gas-fired pool heaters during the next phase of the 
analysis. 80 FR 65169, 65171. In response, NPGA and EEI argued that DOE 
should publish a NODA for gas-fired pool heaters in order to provide 
the public with equal opportunities to provide comments for both 
products. (NPGA, No. 15 at p. 2; EEI, No. 21 at p. 2)
    In response to these comments, DOE notes that the analysis 
conducted for gas-fired pool heaters in this proposed rulemaking 
follows similar methodologies to those presented and used in the April 
2010 final rule. Stakeholders were informed that the analysis 
methodology employed in this proposed determination would be based on 
the prior rulemaking. As such, DOE determined that a preliminary 
analysis was not necessary for gas-fired pool heaters. Interested 
parties have an opportunity to comment on the analysis during the 
course of this proposed rulemaking.
    Laclede stated that it opposes any limitation of minimum efficiency 
standards for consumer pool heaters to those fueled by natural gas and 
propane. (Laclede Group, No. 17 at p. 3) As noted previously, DOE is 
proposing to adopt the TEI metric for gas-fired pool heater 
standard, as well as proposing to establish a new standard for electric 
pool heaters, in this document.
    The CA IOUs encouraged DOE to establish standards for standby and 
off mode energy consumption separately from thermal efficiency, because 
establishing a requirement for an integrated thermal efficiency metric 
may lead to the standby and off mode energy consumption not being 
considered by manufacturers, as they are small relative to overall 
consumer pool heater energy consumption. The CA IOUs added that 
establishing separate standby and off mode requirements and thermal 
efficiency requirements will ensure that seasonal off switches remain 
on most consumer pool heaters. (CA IOUs, No. 20 at p. 3) In response, 
DOE notes that it is required by EISA 2007 to include the standby and 
off mode energy consumption in the test procedure of all covered 
products unless such an integrated test procedure is technically 
infeasible for a covered product. (42 U.S.C. 6295(gg)(2)(A)) DOE must 
prescribe separate standby mode and off mode energy use test procedure 
if an integrated test procedure is deemed technically infeasible. (42 
U.S.C. 6295(gg)(2)(A)(ii)) DOE notes that such determinations are based 
on the technical characteristics of a product and, as such, are product 
specific. In the case of consumer pool heaters, in the December 2012 TP 
final rule DOE determined that the inclusion of the standby and off 
mode energy use into an integrated metric would provide a measurable 
performance differentiation and concluded that an integrated metric is 
technically feasible. 77 FR 74559, 74564 (December 17, 2012). DOE 
disagrees with the CA IOUs' assertion that the integrated thermal 
efficiency may lead to standby and off mode energy consumption not 
being considered by manufacturers. DOE has initially found that the 
presence of a seasonal off switch improves the integrated thermal 
efficiency and has included it as a technology option in its analysis. 
Standby and off mode energy consumption may have a large impact on the 
integrated thermal efficiency, primarily due to the large number of 
operational hours in standby and off modes as compared to active mode. 
For instance, the standby fuel consumption of a pilot light on a gas-
fired pool heater has a dramatic impact on its integrated thermal 
efficiency. Likewise, DOE estimates that for a heat pump pool heater 
inclusion of the standby and off mode energy consumption can reduce the 
overall efficiency by as much as 8 percent.
2. Certification and Enforcement
    DOE reviewed its certification and enforcement provisions as they 
pertain to consumer pool heaters and proposes several provisions to 
clarify its procedures for gas-fired pool heaters.
    DOE proposes to harmonize its terminology related to the capacity 
of consumer pool heaters as it relates to certification. For gas-fired 
pool heaters, DOE proposes to use the term ``input capacity'' in its 
provisions. DOE notes that input capacity is already certified for 
basic models of gas-fired pool heaters and DOE's proposed revisions to 
its regulations are a clarification only. If standards for gas-fired 
pool heaters are adopted via this proposed rulemaking, DOE would 
consider requirements for reporting and certifying to TEI in 
lieu of TE in a separate rulemaking.
    If standards for electric pool heaters are adopted via this 
rulemaking, DOE would consider requirements for reporting and 
certifying active electrical power (as applicable) along with the 
representative value for integrated thermal efficiency in a separate 
rulemaking.
    To provide clarity on how values would be determined for 
certification, DOE also proposes clarifications in its test procedure 
found in appendix P by adding definitions for the terms ``input 
capacity'' (QIN), ``active electrical power'' (PE), and 
``output capacity'' (QOUT) and identifying which measured 
variables in the test procedure represent these characteristics. 
Specifically, DOE proposes to: Use values measured during the active 
mode test described in Section 2.10.1 of ANSI Z21.56 (i.e., heating 
value times correction factor times the quantity of fossil-fuel used 
divided by the length of the test) to determine the input capacity of a 
fossil fuel-fired water heater, as this calculation was not stated 
clearly within appendix P; to clarify that active electrical power is 
represented by the variable PE; and to provide a calculation for output 
capacity so the product class for an electric pool heater can be 
appropriately determined.
    Also, DOE proposes that for enforcement testing, the input capacity 
or active electrical power (as applicable) would be measured pursuant 
to appendix P and compared against the rated value certified by the 
manufacturer. If the measured input capacity or active electrical power 
(as applicable) is within 2 percent of the certified value, 
then DOE would use the certified value when determining the applicable 
standard. The 2 percent threshold is already used \21\ 
within the DOE enforcement provisions and test procedures as a 
reasonable range for input capacity to account for manufacturing 
variations that may affect the input capacity.
---------------------------------------------------------------------------

    \21\ For example, the enforcement provisions for commercial 
water heating equipment, at 10 CFR 429.134(n), requires that the 
tested input rate be within 2 percent of the certified rated input.
---------------------------------------------------------------------------

    During enforcement testing for a gas-fired pool heater, if the 
measured input capacity is not within 2 percent of the 
certified value, then DOE would follow these steps to attempt to bring 
the fuel input rate to within 2 percent of the certified 
value. First, DOE would attempt to adjust the gas pressure in order to 
increase or decrease the input capacity as necessary. If the input 
capacity is still not within 2 percent of the certified 
value, DOE would then attempt to modify the gas inlet orifice (i.e., 
drill) if the unit is equipped with one. Finally, if these measures do 
not bring the input capacity to within 2 percent of the 
certified value, DOE would use the mean measured input capacity (either 
for a single unit sample or the average for a multiple unit sample) 
when determining the applicable standard for the basic model.

[[Page 22652]]

    For an electric pool heater, DOE would not take any steps to modify 
the unit to bring the active electrical power of the unit within the 
2 percent threshold. Rather, if the active electrical power 
is not within 2 percent of the certified value, DOE would 
use the measured active electrical power (either for a single unit 
sample or the average for a multiple unit sample) when determining the 
applicable standard for the basic model. DOE proposes this verification 
process to provide manufacturers with additional information about how 
DOE will evaluate compliance.
    DOE requests comment on the proposal to add to its enforcement 
provisions to use a 2 percent threshold on the certified 
value of input capacity or active electrical power (as applicable) when 
determining the applicable energy conservation standard for the basic 
model.
    In response to the October 2015 NODA, AHRI expressed concern 
regarding the representation of the integrated thermal efficiency 
values. AHRI acknowledged that the inclusion of the standby and off 
mode consumptions in the TEI calculation results in 
percentages that are lower than the coefficient of performance 
(``COP'') equivalent, but suggested that the relative scale of the 
ratings has been lost in this process. AHRI suggested that for products 
where the efficiency ratings are less than 100 percent, a change of one 
or two percentage points may make a difference. However, for products 
such as heat pump pool heaters with efficiency ratings that exceed 300 
percent,\22\ a difference of 1 or 2 points is inconsequential. (AHRI, 
No. 16 at p. 3)
---------------------------------------------------------------------------

    \22\ Heat pump pool heaters move heat from the ambient air and 
to the pool water instead of heating the pool water directly, as is 
done with electric resistance pool heaters. Heat pumps move heat as 
opposed to generating heat, so a relatively small amount of energy 
is required to provide a large amount of heat.
---------------------------------------------------------------------------

    In response, in the context of an initial analysis, DOE used the 
test procedure equations in appendix P to arrive at the analyzed 
efficiency levels examined in the NODA. See chapter 5 of the NODA TSD. 
For this NOPR, however, DOE proposes capacity-dependent standards as 
described in section IV.C.1 of this document. It is important to 
preserve a higher level of precision in the test procedure and 
certification criteria because the evaluated standards are continuous 
functions that vary greatly dependent on capacity of the pool heater 
(input capacity or active electrical power, as applicable). In order to 
clarify this precision, DOE would consider rounding requirements for 
consumer pool heater in a separate rulemaking addressing certification 
reports.
    In response to the March 2015 RFI, Lochinvar and Raypak expressed 
concern that the use of the integrated thermal efficiency metric would 
reduce the efficiency ratings for consumer pool heaters. (Lochinvar, 
No. 2 at p. 2; Raypak, No. 4 at p. 2) Lochinvar highlighted that the 
small reduction in the efficiency rating would impose a significant 
burden on manufacturers who will be required to assign new model 
numbers to all products due to the efficiency reduction. (Lochinvar, 
No. 2 at p. 2) AHRI requested that DOE clarify whether manufacturers 
will be required to change model numbers when implementing the new 
efficiency metric. (AHRI, No. 7 at p. 2) Raypak requested clarification 
on how DOE will address products that currently meet the minimum 82% 
thermal efficiency requirement but would no longer meet the minimum 
standard. (Raypak, No. 4 at p. 2)
    In response, DOE first clarifies that specifying amended energy 
conservation standards for consumer pool heaters in terms of 
TEI rather than in terms of TE would not require new basic 
model numbers. Were certification to TEI required, pursuant 
to 10 CFR 429.12(b)(7), manufacturers may submit updated or corrected 
certification information for basic models. Therefore, at such time as 
certification were required using TEI manufacturers could 
submit an updated certification report with the TEI for a 
given basic model rather than assign a new basic model number upon the 
compliance date of amended energy conservation standards.
    Regarding the reduction in efficiency ratings for models rated 
using the TEI metric relative to the TE metric, DOE 
accounted for the differences between the metrics in its analysis. DOE 
examined efficiency levels, including the baseline efficiency level 
corresponding to the current energy conservation standards, in terms of 
TEI that account for to the inclusion of standby mode and 
off mode energy consumption and electrical energy consumption that will 
cause the TEI value to be lower than the TE value of a given 
model. See section IV.C.1 for discussion of the TEI 
efficiency levels analyzed. Furthermore, EPCA requires that when a test 
procedure amendment changes the measured energy efficiency, models in 
use before the date on which the amended energy conservation standard 
becomes effective that comply with the energy conservation standard 
applicable to such covered products on the day before such date shall 
be deemed to comply with the amended energy conservation standard. (42 
U.S.C. 6293(e)(3))
    DOE seeks comment on its proposed certification and enforcement 
provisions and clarifications.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to consumer pool heaters. Separate subsections 
address each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed 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 NIA uses a second spreadsheet set 
that provides shipments projections 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 website for this 
proposed rulemaking: www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=44&action=viewcurrent. 
Additionally, DOE used output from the latest version of the Energy 
Information Administration's (``EIA's'') Annual Energy Outlook 
(``AEO'') 2020, a widely known energy projection 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 consumer pool heaters. The

[[Page 22653]]

findings of the market assessment inform downstream analyses, such as 
the engineering analysis and LCC analysis, and are presented in detail 
in chapter 3 of the NOPR TSD. In addition, chapter 3 of the TSD 
includes a detailed discussion of technology options for improving the 
energy efficiency of consumer pool heaters; the key findings and 
updates to the technology assessment are summarized in the following 
section.
1. Scope of Coverage and Product Classes
    Under EPCA, pool heaters (which include electric pool heaters, and 
gas-fired pool heaters, and oil-fired pool heaters) are covered 
products. (42 U.S.C. 6292(a)(11)) EPCA defines ``pool heater'' as an 
``appliance designed for heating nonpotable water contained at 
atmospheric pressure, including heating water in swimming pools, spas, 
hot tubs and similar applications.'' (42 U.S.C. 6291(25)) However, 
energy conservation standards have only been established for gas-fired 
pool heaters.\23\ For this proposed rulemaking, DOE proposes to 
establish additional product classes for electric pool heaters, 
establish energy conservation standards for electric pool heaters, and 
for gas-fired pool heaters, to translate the existing standard from the 
TE metric to an equivalent level in terms of the TEI metric 
and to amend the energy conservation standards. DOE has tentatively 
determined not to analyze potential standards for oil-fired pool 
heaters based on the understanding that such standards would result in 
minimal energy savings. DOE also did not perform energy conservation 
standards analysis for electric spa heaters as DOE was unable to 
identify technology options available to improve the efficiency of such 
products. Accordingly, DOE is not proposing amended standards for these 
products in this NOPR.
---------------------------------------------------------------------------

    \23\ EPCA prescribed a minimum thermal efficiency of pool 
heaters and initially only defined thermal efficiency of pool 
heaters in the context of test conditions for gas-fired pool 
heaters. (See 42 U.S.C. 6295(e)(2) and 42 U.S.C. 6291(26))
---------------------------------------------------------------------------

    In the March 2015 RFI, DOE noted that oil-fired pool heaters have 
an extremely small market share and requested comment on the potential 
energy savings that could result from energy conservation standards for 
oil-fired pool heaters. 80 FR 15922, 15925. In response, Raypak and 
AHRI indicated that there is little opportunity for savings. (Raypak, 
No. 4 at p. 3; AHRI, No. 7 at p. 3) AHRI noted that they only knew of 
one oil-fired pool heater on the market currently. (AHRI, No. 7 at p. 
3) EEI suggested that DOE should analyze oil-fired pool heaters if they 
have significant market share (i.e., greater than 2%) in order to 
maintain fuel and market neutrality. (EEI, No. 6 at p. 4) For this 
NOPR, DOE tentatively determined not to analyze potential standards for 
oil-fired pool heaters based on its previous understanding that the 
market for oil-fired pool heaters is extremely limited and, thus, any 
standards would be unlikely to result in significant energy savings. 
DOE's market research and the comments from AHRI and Raypak indicate 
that oil-fired pool heaters comprise a very small share of the consumer 
pool heater market. DOE does not anticipate a significant number of 
consumers would choose an oil-fired pool heater as a substitute for a 
gas-fired or electric pool heater due to the high first cost associated 
with installing a fuel oil tank, and the ongoing cost of fuel oil for 
pool heating.
    In response to the March 2015 RFI, AHRI suggested that DOE limit 
the scope to less than 400,000 Btu/h for gas- and oil-fired pool 
heaters and less than or equal to 140,000 Btu/h for heat pump pool 
heaters to make a clear distinction between residential and commercial 
products. (AHRI, No. 7 at p. 2) Raypak stated that gas-fired pool 
heaters typically range from 50,000 Btu/h to 400,000 Btu/h for 
residential pools and commercial pool heaters typically range from 
200,000 Btu/h to 4,000,000 Btu/hr. Raypak also stated that it is not 
uncommon to see multiple smaller pool heaters used together instead of 
utilizing a larger pool heater(s). (Raypak, No. 4 at p. 4)
    EPCA places no capacity limit on the pool heaters it covers in 
terms of its definition of ``pool heater.'' (42 U.S.C. 6291(25)) 
Furthermore, EPCA covers pool heaters as a ``consumer product,'' (42 
U.S.C. 6291(2), 42 U.S.C. 6292(a)(11)) and defines ``consumer 
product,'' in part, as an article that ``to any significant extent, is 
distributed in commerce for personal use or consumption by 
individuals.'' (42 U.S.C. 6291(1)) Standards established for pool 
heaters as a consumer product under EPCA apply to any pool heater 
distributed to any significant extent as a consumer product for 
residential use, regardless of input capacity and including consumer 
pool heater models that may also be installed in commercial 
applications. DOE has initially concluded that further delineation by 
adding an input capacity limit is not necessary. As discussed in the 
April 2010 final rule, pool heaters marketed as commercial equipment 
contain additional design modifications related to safety requirements 
for installation in commercial buildings. 75 FR 20112, 20127. In that 
final rule, DOE noted that this would include pool heating systems that 
are designed to meet a high volume flow and are matched with a pump 
from the point of manufacture to accommodate the needs of commercial 
facilities. Id. DOE stated that manufacturers can distinguish those 
units from pool heaters distributed to any significant extent as a 
consumer product for residential use, regardless of input capacity. Id. 
at 75 FR 20127-20128. Moreover, standards for gas-fired pool heaters 
regardless of size have been in place since 1990, and to place a 
capacity limit on standards now would result in backsliding for 
products over the capacity limit, which would be contrary to the anti-
backsliding provision in EPCA. (42 U.S.C. 6295(o)(1))
    In response to the March 2015 RFI, AHRI suggested that DOE consider 
atmospheric gas-fired heaters separately from fan-assist gas-fired 
heaters. Similarly, AHRI suggested that DOE consider condensing and 
non-condensing products separately as well. (AHRI, No. 7 at p. 4)
    EPCA requires that a rule prescribing an energy conservation 
standard for a type (or class) of covered products must specify a level 
of energy use higher or efficiency lower, than that which applies (or 
would apply) for such type (or class) for any group of covered products 
which have the same function or intended use, if the Secretary 
determines that covered 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 from that which applies (or will apply) to other products 
within such type (or class). (42 U.S.C. 6295(q)(1)) In making a 
determination concerning whether a performance-related feature 
justifies the establishment of a higher or lower standard, the 
Secretary shall consider such factors as the utility to the consumer of 
such a feature, and such other factors as the Secretary deems 
appropriate. (Id.) DOE is not proposing to increase the stringency of 
the standard for gas-fired pool heaters to a level that would be 
unachievable by the gas-fired pool heaters described by AHRI. The gas-
fired pool heaters described by AHRI are subject to the current 
standard and presently there are atmospheric, fan-assist, non-
condensing, and condensing models on the market in compliance with that

[[Page 22654]]

standard. As such, there is no need to evaluate in the present document 
whether atmospheric, fan-assist, non-condensing, and/or condensing gas-
fired pool heaters provide a unique feature and if so whether such 
feature justifies a different standard for gas-fired pool heaters.
    In the March 2015 RFI, DOE requested comment on whether capacity or 
other performance related features that may affect efficiency would 
justify the establishment of consumer pool heater product classes that 
would be subject to different energy conservation standards. 80 FR 
15922, 15925. Specifically, DOE sought comment on whether heat pump 
technology was a viable design for applications which typically utilize 
electric resistance pool heaters.
    The CA IOUs and ASAP et al. both encouraged DOE to regulate 
electric pool heaters under a single product class, and to consider 
heat pump technology as a design option for electric pool heaters. (CA 
IOUs, No. 5 at p. 5 and No. 20 at p. 5; ASAP et al., No. 3 at p. 1-2) 
Murray stated support for a uniform homogenous standard for all 
consumer pool heaters. (Murray, No. 14 at p. 1) The CA IOUs further 
noted that in DOE's residential water heater standard, electric 
resistance and heat pump water heaters are combined into one product 
class and are not treated separately. (CA IOUs, No. 5 at p. 5) The CA 
IOUs encouraged DOE to investigate the national savings potential from 
water heating in portable electric spas which is almost entirely 
provided by electric resistance heating. (CA IOUs, No. 5 at p. 5)
    EEI suggested that separate product classes should be established 
for electric resistance pool heaters and heat pump pool heaters in 
DOE's analysis, and AHRI recommended that each fuel type (gas, 
electric, and heat pump) be analyzed separately. (EEI, No. 6 at p. 2; 
AHRI, No. 7 at p. 2) EEI asserted that electric resistance pool heaters 
and heat pump pool heaters are distinct products with different 
characteristics and as such require different product classes. EEI 
stated that key differences include space constraints and operational 
considerations. (EEI, No. 6 at pp. 2-3)
    AHRI and Raypak stated that heat pump technology is not a viable 
design for all applications in which electric resistance pool heaters 
are found. (AHRI, No. 7 at p. 3; Raypak, No. 4 at p. 2) The electric 
resistance-type units are typically installed as a component into a 
larger, more complex piece of equipment such as a spa or hot tub. AHRI 
stated that heat pumps could not typically be installed in the same 
housing. They further asserted that electric resistance pool heaters 
are typically installed in indoor applications where heat pump 
technology is not a cost-effective substitution. (AHRI, No. 7 at p. 3)
    Coates stated that heat pump pool heaters have proven ineffective 
in climates that do not have high temperature and high humidity, being 
expensive and unable to perform as needed. Coates indicated that 
electric resistance spa heaters range from 1.5 kW to 11 kW. Coates 
added that heat pump pool heaters are usually not acceptable for spas 
due to their slow heat-up time, high cost, and inability to heat during 
the cool or cold months in northern climates. (Coates, No. 8 at p. 2)
    In response to Murray's comment, DOE notes that, in evaluating and 
establishing energy conservation standards, EPCA directs DOE to divide 
covered products into classes based on the type of energy used. EPCA 
also directs DOE to divide covered products into classes based on 
capacity or other performance-related feature if such feature justifies 
a different standard. (42 U.S.C. 6295(q))
    DOE considered comments raised by stakeholders when considering 
whether separate product classes should be evaluated in its analysis of 
potential standards for electric resistance pool heaters and electric 
heat pump pool heaters. DOE recognizes that that the performance of a 
heat pump is dependent upon the air temperature and air humidity at 
which it operates. However, DOE disagrees with Coates's assertion that 
heat pump pool heaters are ineffective in colder climates. Although 
heat pump pool heaters perform best when operating within an 
environment with high air temperature and high air humidity, they are 
nonetheless capable of operating effectively in cooler climates during 
the swimming season. DOE is aware of consumer heat pump pool heaters 
currently on the market with the capability of operating at below-
freezing temperatures. DOE recognizes that heat pump pool heaters may 
have difficulty providing adequate heat to pools if operating during 
the colder months in northern climates. Rare cases such as these could 
be accommodated through the use of heat pump pool heaters that 
incorporate electric resistance backup in their designs (as is done in 
the case of some heat pump water heater designs \24\). Therefore, DOE 
proposes to maintain a single product class for electric pool heaters.
---------------------------------------------------------------------------

    \24\ DOE gave similar consideration to establishing a separate 
product class for heat pump water heaters and consistent with the 
proposal in this document, DOE determined that heat pump electric 
water heaters do not warrant a separate product class. See, 75 FR 
20112, 20135 (April 16, 2010).
---------------------------------------------------------------------------

    For this analysis, DOE has tentatively determined to separate 
certain electric pool heaters into an ``electric spa heaters'' product 
class. ANSI/APSP/International Code Council (``ICC'') Standard 6-2013, 
``American National Standard for Residential Portable Spas and Swim 
Spas'' (ANSI 6) provides recommended minimum guidelines for the design, 
equipment, installation, and use of residential portable spas and swim 
spas. Spas and hot tubs come in many different configurations but are 
distinguished in section 1 of ANSI 6 based on whether they are portable 
or built-in and within the portable distinction whether they are self-
contained or non-self-contained. Lower capacity electric heaters used 
to heat water in spas are a covered product by virtue of being within 
EPCA's definition of pool heater. (42 U.S.C. 6291(25)) Electric spa 
heaters are often incorporated into the construction of a self-
contained spa or hot tub, resulting in the heater performing its major 
function (heating spa water) in a space constrained environment. These 
space constraints preclude the use of higher efficiency technologies 
(heat pump) and manufacturers instead rely on electric resistance 
heating elements. DOE has initially determined that heat pump 
technology is not a viable option for electric spa heaters designed for 
use within a self-contained portable electric spa because the space 
required for a heat pump impedes its incorporation into the 
construction of a spa or hot tub. DOE has also initially determined 
that heat pump technology is a viable option for heating a spa or hot 
tub if the heater is separate from the construction of the hot tub or 
spa (i.e., non-self-contained as defined in section 1 of ANSI 6). As a 
result, DOE has separated electric spa heaters from the analysis of 
electric pool heaters. The proposed definition of ``electric spa 
heater'' distinguishes this product based on capacity and whether the 
product is designed to be installed within a portable electric spa. The 
proposed definitions for ``electric spa heater'' and ``portable 
electric spa'' are presented later in this section.
    Electric spa heaters rely on electric heating elements for which 
there is currently negligible opportunity for efficiency gains. 
Consequently, DOE did not perform energy conservation standards 
analysis for electric spa heaters as DOE did not initially identify 
technology options that could be implemented to improve the efficiency 
of these products.
    For the October 2015 NODA analysis, DOE defined electric spa 
heaters to be

[[Page 22655]]

heaters that: (1) Have a rated output capacity of 11 kW (37,534 Btu/h) 
or less; and (2) are factory- or field-assembled within the envelope of 
a spa, hot tub, or pool as defined by 10 CFR 430.2. See chapter 3 of 
the October 2015 NODA TSD. In the October 2015 NODA, DOE identified the 
11 kW threshold as being a typical output capacity below which electric 
resistance heaters are integrated in spas. Id. DOE tentatively used 
this threshold in the October 2015 NODA analysis based on its 
assessment of the market. The threshold was also suggested in response 
to the March 2015 RFI by Coates, a manufacturer of electric resistance 
spa and pool heaters. (Coates, No. 8 at p. 2) Table IV.1 lists the 
product classes for consumer pool heaters outlined in Table 2.4.1 of 
the October 2015 NODA TSD.

 Table IV.1--October 2015 NODA Product Classes for Consumer Pool Heaters
------------------------------------------------------------------------
                                                           Analyzed in
         Product class          Additional description    October 2015
                                                              NODA?
------------------------------------------------------------------------
Gas-fired Pool Heater.........  ......................  No.
Electric Pool Heater..........  ......................  Yes.
Electric Spa Heater...........  Output Capacity <=11    No.
                                 kW; Assembled within
                                 spa, hot tub, or pool
                                 envelope.
------------------------------------------------------------------------

    In response to the scope of coverage presented in the October 2015 
NODA, AHRI stated that the analysis appears not to consider the market 
segment \25\ that may require capacities much higher than the largest 
heat pump pool heaters available on the market. AHRI stated that the 
analysis must consider the entire current market for electric pool 
heaters and should not establish an efficiency standard that will make 
products unavailable for some segments of that market. AHRI recommended 
DOE establish separate product classes for electric pool heaters based 
on a capacity breakpoint. (AHRI, No. 16 at p. 1)
---------------------------------------------------------------------------

    \25\ Very large pools or pool in colder climates. (AHRI, No. 16, 
at p. 1)
---------------------------------------------------------------------------

    DOE's review of the heat pump pool heater market found that most 
models have output capacities less than 200,000 Btu/h, however, DOE did 
find electric heat pump pool heaters with output capacities up to 
500,000 Btu/h. Whereas gas-fired pool heaters are available with output 
capacities approaching 4,100,000 Btu/h. Therefore, DOE agrees with 
AHRI's comment that heat pump technology is not currently utilized to a 
significant extent in the high capacity pool heater market segment. As 
discussed in section IV.C.1 of this document, DOE is proposing capacity 
dependent energy conservation standards for gas-fired and electric pool 
heaters. Further, the estimated TEI values for the high 
capacity heat pump pool heaters available on the market are greater 
than the proposed efficiency levels discussed in section V.C, 
therefore, there DOE has tentatively determined that it is not 
currently necessary to establish separate product classes for electric 
pool heaters based on a capacity breakpoint.
    DOE requested comment regarding whether the product classes 
outlined in the October 2015 NODA adequately describes the electric 
pool heater market. See chapter 3 of the October 2015 NODA.
    Several commenters agreed with DOE's position to exclude electric 
spa heaters from the analysis. (CA IOUs, No. 20 at p. 6; APSP and IHTA 
No. 18 at p. 1) APSP and AHRI agreed with DOE's assumption that heat 
pump technology could not be implemented within a spa heater. (APSP and 
IHTA No. 18 at p. 1; AHRI, No. 16 at p. 2) The CA IOUs encouraged DOE 
to explore the energy savings potential from portable electric spas in 
another rulemaking. (CA IOUs, No. 20 at p. 6)
    AHRI agreed that the basic concept of the product classes is 
adequate for the consumer pool heater market but suggested further 
development be made to the electric spa heater definition. AHRI agreed 
with the specification of a maximum output capacity as part of the 
definition of the electric spa heater product class, noting that the 11 
kW limit is reasonable for spa heaters. However, AHRI stated that the 
second part of the definition (assembled within spa, hot tub, or pool 
envelope) is not clear enough. AHRI noted that the definition appears 
to exclude spa heaters that may be physically separate from the spa, 
hot tub, or pool but which are required to heat water for those units. 
AHRI suggested that either the specification of an ``envelope'' needs 
to be described in greater detail, or such specification should be 
reconsidered. (AHRI, No. 16 at p. 2)
    DOE has considered AHRI's comment and agrees that the criterion 
that an electric spa heater is shipped within the spa envelope may 
cause confusion and issues for replacement electric spa heaters 
intended for existing portable electric spas. Due to these concerns, 
DOE has amended the envelope criterion in the definition of an electric 
spa heater to include electric spa heaters that are designed to be 
installed within a portable electric spa, which does not preclude 
electric spa heaters that are sold and shipped outside of the envelope 
of a spa, hot tub, or pool. The updated proposed definition is 
presented later in this section of this document.
    In response to the product classes presented in the October 2015 
NODA, Tawney suggested that DOE set separate standards for electric 
pool heaters that have both heating and cooling capabilities. Tawney 
stated that the addition of reversing components creates a diminished 
performance for all other components (i.e., the compressor, evaporator, 
and condenser) and, therefore, requiring the minimum efficiency level 
to be set equal for these two different types of products would create 
design issues for the manufacturer and consumers. (Tawney, No. 13 at p. 
1)
    DOE recognizes that heat/cool heat pumps have reverse cycle 
capabilities to provide the cooling function, and, theoretically, 
manufacturers could design products intended for heating and cooling 
differently from those intended for heating only (i.e., different size 
heat exchanger coils). However, based on DOE's review of products 
currently on the market, DOE does not expect the reverse cycle 
capability would negatively impact the integrated thermal efficiency of 
heat/cool heat pumps in heating mode. DOE examined parts diagrams found 
in manufacturer literature of traditional heat pump pool heaters and 
heat/cool heat pump models within the same product family which 
revealed the addition of a reversing valve as the only differentiator 
between the two products. DOE then compared the rated heating 
efficiency of both models and found them to be identical in the 
majority of cases, indicating that the presence of the reversing valve 
and reverse cycle capability does not inherently reduce heating 
performance. Therefore, DOE has tentatively determined that the 
creation of a separate product classes for heat pump

[[Page 22656]]

pool heaters with cooling capability is not necessary.
    DOE requests comment on its assumption that electric pool heaters 
that have both heating and cooling capabilities do not suffer 
diminished efficiency performance in heating mode.
    DOE analyzed new and amended standards for gas-fired pool heaters 
and electric pool heaters but did not analyze energy conservation 
standards for electric spa heaters (i.e., electric pool heaters with 
output capacity <= 11 kW that are designed to be installed in a 
portable electric spa).
    DOE requests comment on the product classes analyzed for this 
proposed rulemaking.
    DOE is proposing definitions for electric pool heaters, electric 
spa heaters, gas-fired pool heaters, oil-fired pool heaters, and 
portable electric spas to clarify its regulations as they apply to 
consumer pool heaters. Based on comments received in response to the 
October 2015 NODA, DOE refined its definition for electric spa heaters. 
The proposed definitions are as follows:
    Electric pool heater means a pool heater other than an electric spa 
heater that uses electricity as its primary energy source.
    Electric spa heater means a pool heater that (1) uses electricity 
as its primary energy source; (2) has an output capacity (as measured 
according to appendix P to subpart B of part 430) of 11 kW or less; and 
(3) is designed to be installed within a portable electric spa.
    Gas-fired pool heater means a pool heater that uses gas as its 
primary energy source.
    Oil-fired pool heater means a pool heater that uses oil as its 
primary energy source.
    Portable electric spa means a self-contained, factory-built spa or 
hot tub in which all control, water heating and water circulating 
equipment is an integral part of the product. Self-contained spas may 
be permanently wired or cord connected.
    DOE requests comment on the proposed definitions for electric pool 
heater, electric spa heater, gas-fired pool heater, oil-fired pool 
heater, and portable electric spa.
    DOE also proposes to define output capacity and provide equations 
for its calculation for electric pool and spa heaters in its test 
procedure at appendix P. As described in section III.B of this 
document, appendix P incorporates by reference ASHRAE 146. DOE's 
proposed calculation for output capacity for an electric pool or spa 
heater utilizes measurements already taken for other calculations in 
appendix P and therefore DOE does not consider this provision to result 
in any additional test procedure burden. DOE proposes to define the 
output capacity for electric pool heaters and spa heaters as follows:
    Output capacity for an electric pool or spa heater means the 
maximum rate at which energy is transferred to the water.
    DOE proposes separate equations for the calculation of output 
capacity of an electric resistance pool heater and electric heat pump 
pool heater. For electric pool heaters that rely on electric resistance 
heating elements, DOE proposes that the output capacity be calculated 
as:

QOUT,ER = k * W * (Tmo - Tmi) * (60/
30)

where k is the specific heat of water, W is the mass of water collected 
during the test, Tmo is the average outlet water temperature 
recorded during the primary test, Tmi is the average inlet 
water temperature record during the primary test, all as defined in 
Section 11.1 of ASHRAE 146, and (60/30) is the conversion factor to 
convert unit from per 30 minutes to per hour.
    DOE proposes that the output capacity of an electric pool heater 
that uses heat pump technology be calculated as:

QOUT,HP = k * W * (Tohp - Tihp) * (60/
tHP)

where k is the specific heat of water, W is the mass of water collected 
during the test, Tohp is the average outlet water 
temperature during the standard rating test, Tihp is the 
average inlet water temperature during the standard rating test, all as 
defined in Section 11.2 of ASHRAE 146, and tHP is the 
elapsed time of data recording during the thermal efficiency test on 
electric heat pump pool heater, as defined in Section 9.1 of ASHRAE 
146, in minutes.
    DOE requests comment on its proposed definition for output 
capacity, as well as its proposed calculations for determining the 
output capacity of electric pool heaters.
2. Technology Options
    In response to the March 2015 RFI, Coates stated their concern that 
DOE used the term ``less efficient products, such as electric 
resistance pool heaters'' and that the efficiency of electric pool and 
spa heaters is very high (98 percent or higher). (Coates, No. 8 at p. 
5) DOE agrees that electric resistance pool heaters have efficiencies 
around 98 percent. However, the statement DOE made compares the 
efficiency of electric resistance pool heaters to heat pump pool 
heaters which have efficiencies greater than 100 percent. 80 FR 15922, 
15929 (March 26, 2015). Therefore, electric resistance pool heaters are 
less efficient than heat pump pool heaters.
    In the October 2015 NODA market and technology analysis for 
electric pool heaters, DOE identified eight technology options that 
would be expected to improve the efficiency of electric pool heaters, 
as measured by the DOE test procedure: Insulation improvements; control 
improvements; heat pump technology; heat exchanger improvements (heat 
pump); compressor improvements (heat pump); expansion valve 
improvements (heat pump); fan improvements (heat pump); and off switch. 
See section 3.3 of chapter 3 of the October 2015 NODA TSD.
    DOE received no comments suggesting technology options be added to 
those listed in the October 2015 NODA analysis for electric pool 
heaters. In this NOPR analysis, DOE added switching mode power supply 
to the list of technology options for electric pool heaters.
    In the March 2015 RFI, DOE identified five technology options that 
it expected to improve the efficiency of gas-fired pool heaters, as 
measured by the DOE test procedure: Insulation improvements; control 
improvements; improved heat exchanger design; condensing heat exchanger 
technology; and electronic ignition systems. 80 FR 15922, 15925.
    In response to the potential technology options identified for gas-
fired pool heaters in the March 2015 RFI, Raypak stated that improved 
insulation, improved controls, and improved ignition systems are 
currently widely used and have little opportunity to provide 
improvements in thermal efficiency. (Raypak, No. at 4 at p. 3) AHRI 
stated that improved controls are expected to have minimal or negative 
impact on efficiency due to the large size of pools as modulating heat 
is not an effective way to heat up pools. AHRI stated that most gas-
fired pool heaters on the market currently are equipped with electronic 
ignition systems and the pilot light only comes on when heat is called. 
AHRI also opined that condensing heat exchanger technology is not an 
economically feasible option for gas-fired pool heaters due to the 
relatively short burner operating hours. (AHRI, No. 7 at p. 3)
    In response, DOE notes that in its review of the market and during 
the engineering analysis (see section IV.C of this document), DOE 
generally identifies technologies that are commonly incorporated at the 
baseline efficiency level, as well as those typically implemented to 
achieve higher efficiencies. In the technology assessment DOE 
identifies all

[[Page 22657]]

technologies that are possibilities for improving efficiency, in the 
event that any models do not already utilize them. DOE's engineering 
analysis is based on the typical technology or combination of 
technologies used to achieve each efficiency level, as observed in 
products on the market.
    For this NOPR analysis, DOE identified three more technology 
options that would be expected to improve the integrated thermal 
efficiency of gas-fired pool heaters as measured by the test procedure, 
which were not listed in the March 2015 RFI. These technologies 
include: Condensing pulse combustion, switch mode power supply, and 
seasonal off switch.
    After identifying all potential technology options for improving 
the efficiency of consumer pool heaters, DOE performed the screening 
analysis (see section IV.B of this document or chapter 4 of the TSD) on 
these technologies to determine which could be considered further in 
the analysis and which should be eliminated.

B. Screening Analysis

    DOE uses the following five 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 a significant adverse impact on 
the utility of the product for 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.
    (5) Unique-Pathway Proprietary Technologies. If a design option 
utilizes proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further, due to the potential for monopolistic concerns.
    10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
    In summary, if DOE determines that a technology, or a combination 
of technologies, fails to meet one or more of the listed five criteria, 
it will be excluded from further consideration in the engineering 
analysis.
    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. DOE did not receive any 
comments from interested parties related to the screening analysis.
1. Screened-Out Technologies
    DOE eliminated condensing pulse combustion from its analysis having 
tentatively determined that it is not technologically feasible and not 
practical to manufacture, install, and service. Although condensing 
pulse combustion technology shows promising results in increasing 
efficiency, it has not yet penetrated the consumer pool heater market, 
and similar efficiencies are achievable with other technologies that 
have already been introduced on the market.
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 five screening criteria to be examined further as design options in 
DOE's NOPR analysis. In summary, DOE did not screen out the technology 
options shown in Table IV.2 of this document and considers them as 
design options in the engineering analysis.

     Table IV.2--Technology Options Which Passed Screening Criteria
------------------------------------------------------------------------
                                         Electric pool    Gas-fired pool
           Technology option                 heater           heater
------------------------------------------------------------------------
Insulation improvements...............               X                X
Control improvements..................               X                X
Heat pump technology..................               X   ...............
Heat exchanger improvements...........               X                X
Expansion valve improvements..........               X   ...............
Fan improvements......................               X   ...............
Condensing heat exchanger.............  ...............               X
Electronic ignition systems...........  ...............               X
Switch mode power supply..............               X                X
Seasonal off switch...................               X                X
------------------------------------------------------------------------

    DOE has initially determined that these technology options are 
technologically feasible because they are being used or have previously 
been used in commercially-available products or commercially viable, 
existing prototypes. DOE also finds that all of the remaining 
technology 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, 
unique-pathway proprietary technologies). For additional details, see 
chapter 4 of the NOPR TSD.

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of consumer pool heaters. 
There are two elements to consider in the engineering analysis; the 
selection of efficiency levels to analyze (i.e., the ``efficiency 
analysis'') and the determination of product cost at each efficiency 
level (i.e., the ``cost analysis''). In determining the performance of 
higher-efficiency products, DOE considers technologies and design 
option combinations not

[[Page 22658]]

eliminated by the screening analysis. For each product class, DOE 
estimates the baseline cost, as well as the incremental cost for the 
product at efficiency levels above the baseline. The output of the 
engineering analysis is a set of cost-efficiency ``curves'' that are 
used in downstream analyses (i.e., the LCC and PBP analyses and the 
NIA).
1. Efficiency Analysis
    DOE typically uses one of two approaches to develop energy 
efficiency levels for the engineering analysis: (1) Relying on observed 
efficiency levels in the market (i.e., the efficiency-level approach), 
or (2) determining the incremental efficiency improvements associated 
with incorporating specific design options to a baseline model (i.e., 
the design-option approach). Using the efficiency-level approach, the 
efficiency levels established for the analysis are determined based on 
the market distribution of existing products (in other words, based on 
the range of efficiencies and efficiency level ``clusters'' that 
already exist on the market). Using the design option approach, the 
efficiency levels established for the analysis are determined through 
detailed engineering calculations and/or computer simulations of the 
efficiency improvements from implementing specific design options that 
have been identified in the technology assessment. DOE may also rely on 
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended 
using the design option approach to ``gap fill'' levels (to bridge 
large gaps between other identified efficiency levels) and/or to 
extrapolate to the max-tech level (particularly in cases where the max-
tech level exceeds the maximum efficiency level currently available on 
the market).
    In this proposed rulemaking, DOE relies on the efficiency-level 
approach. For the October 2015 NODA, DOE identified the efficiency 
levels for analysis based on a review of products on the market and 
then, as described in section IV.C.2 of this document, used a cost-
assessment approach which includes product teardowns to determine the 
technologies used at each efficiency level and the associated 
manufacturing costs at those levels. See section 5.7 of chapter 5 of 
the October 2015 NODA TSD.
    DOE continued to use the same analytical approaches for this NOPR. 
DOE received specific comments from interested parties on certain 
aspects of the engineering analysis in response to the October 2015 
NODA. A brief overview of the methodology, a discussion of the comments 
DOE received, DOE's response to those comments, and any adjustments 
made to the engineering analysis methodology or assumptions as a result 
of those comments is presented in the sections below. See chapter 5 of 
the NOPR TSD for additional details about the engineering analysis.
a. Efficiency Levels
    As noted previously, for analysis of consumer pool heater 
standards, DOE used an efficiency-level approach to identify 
incremental improvements in efficiency for each product class. An 
efficiency-level approach enabled DOE to identify incremental 
improvements in efficiency for efficiency-improving technologies that 
consumer pool heater manufacturers already incorporate in commercially 
available models. After identifying efficiency levels for analysis, DOE 
used a cost-assessment approach (section IV.C.2 of this document) to 
determine the manufacturer production cost (``MPC'') at each efficiency 
level identified for analysis.
    Integrated thermal efficiency accounts for the fuel and electricity 
consumption in active, standby, and off modes. However, at the time the 
engineering analysis for this NOPR was performed, manufacturers had not 
yet begun publishing the integrated thermal efficiency of their 
products (there are no existing standards for electric pool heaters, 
and standards for gas-fired pool heaters are currently in terms of 
thermal efficiency as described in section III.B of this document). 
Therefore, in the gathering of information to inform the engineering 
analysis, DOE was limited to thermal efficiency in the case of gas-
fired pool heaters, and coefficients of performance (``COP'') (set 
equal to thermal efficiency by the test procedure) in the case of heat 
pump pool heaters. DOE then calculated the integrated thermal 
efficiency by combining the thermal efficiency (as defined in section 
5.1 of the DOE test procedure) of the product, with typical values for 
active mode, standby mode, and off mode energy consumption. DOE derived 
these typical values from test data and sought manufacturer feedback 
during confidential manufacturer interviews to confirm that the values 
were appropriate.
    The energy consumption rate measurements that contribute to the 
integrated thermal efficiency metric are presented in Table IV.3 of 
this document, and vary by consumer pool heater type (i.e., electric 
resistance, electric heat pump, and gas-fired). DOE notes that these 
measurements also vary by efficiency level. The ``typical case'' energy 
use assumptions used to determine the efficiency levels are presented 
in greater detail in sections IV.C.1.b and IV.C.1.c of this document.

  Table IV.3--Inputs to Integrated Thermal Efficiency by Consumer Pool
                               Heater Type
------------------------------------------------------------------------
   Consumer pool heater type      Inputs to TEI         Description
------------------------------------------------------------------------
Electric Resistance Pool        Et...............  Thermal efficiency
 Heater.                                            (11.1 of ASHRAE
                                                    146).
                                PE...............  Average annual
                                                    electrical energy
                                                    consumption.
                                EC...............  Electrical
                                                    consumption in Btu
                                                    per 30 mins.
                                PW,SB............  Standby power
                                                    consumption rate.
                                PW,OFF...........  Off power consumption
                                                    rate.
Heat Pump Pool Heater.........  Et...............  Thermal efficiency
                                                    (11.1 of ASHRAE
                                                    146).
                                PE...............  Average annual
                                                    electrical energy
                                                    consumption.
                                Ec,hp............  Electrical
                                                    consumption during
                                                    test time.
                                tHP..............  Test time.
                                PW,SB............  Standby power
                                                    consumption rate.
                                PW,OFF...........  Off power consumption
                                                    rate.
Gas-Fired Pool Heater.........  Et...............  Thermal efficiency
                                                    (2.10 of ANSI
                                                    Z21.56).
                                EC...............  Electrical
                                                    consumption in Btu
                                                    per 30 mins.
                                QPR..............  Consumption rate of
                                                    pilot.
                                Qoff,R...........  Off mode fuel
                                                    consumption rate.
                                PW,SB............  Standby power
                                                    consumption rate.
                                PW,OFF...........  Off Power consumption
                                                    rate.
------------------------------------------------------------------------


[[Page 22659]]

    The integrated thermal efficiency metric is the ratio of the 
seasonal useful output of the consumer pool heater divided by the 
annual input to the consumer pool heater. Based on manufacturer 
interviews, DOE has tentatively determined that standby and off mode 
electricity consumption do not increase as capacity increases. This 
causes differences in the resulting integrated thermal efficiencies for 
units at different capacities that have the same thermal efficiency and 
same standby and off mode energy consumption. Lower capacity units will 
have lower integrated thermal efficiency ratings due to standby and off 
mode energy use comprising a larger share of the total energy use of 
the product than for larger capacity units. To account for this, 
instead of standards that are fixed integrated thermal efficiency 
levels as presented in section 5.3 of chapter 5 of the October 2015 
NODA TSD, DOE is proposing equation-based efficiency levels in which 
the integrated thermal efficiency level is a function of the capacity 
of the unit.
    DOE developed these integrated thermal efficiency equations using a 
similar methodology to the one used to develop the integrated thermal 
efficiency levels in the October 2015 NODA analysis for electric pool 
heaters. See section 5.3 of chapter 5 of the October 2015 NODA. 
Specifically, DOE selected the efficiency levels based on thermal 
efficiency, and then determined the typical values for all other energy 
consumption rate values that contribute to the integrated thermal 
efficiency metric (i.e., standby mode, off mode). DOE then calculated 
the integrated thermal efficiency as a function of capacity by 
utilizing these typical values for all efficiency levels other than the 
max-tech level. As discussed further in section IV.C.1.c of this 
document, the max-tech level is the maximum efficiency theoretically 
possible and uses technologies (i.e., seasonal off switch and switch 
mode power supply) that result in energy consumption rate values that 
are lower than the typical values used for the other efficiency levels.
    Additional information regarding the selection of efficiency levels 
is provided in the following sections and in chapter 5 of the NOPR TSD.
b. Baseline Levels
    For each product class, DOE generally selects a baseline model as a 
reference point for each class, and measures changes resulting from 
potential energy conservation standards against the baseline. The 
baseline model in each product class represents the characteristics of 
a product typical of that class (e.g., capacity, physical size). 
Generally, a baseline model is one that just meets current energy 
conservation standards, or, if no standards are in place, the baseline 
is typically the most common or least efficient unit on the market.
    DOE uses the baseline model for comparison in several phases of the 
analyses, including the engineering analysis, LCC analysis, PBP 
analysis, and NIA. To determine energy savings that will result from a 
new or amended energy conservation standard, DOE compares energy use at 
each of the higher energy 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 baseline unit to the price of a 
unit at each higher efficiency level. In the March 2015 RFI, DOE 
requested information regarding typical energy use (fossil fuel and 
electricity) in all modes, including standby and off modes for all 
consumer pool heater types. 80 FR 15992, 15924.
    Raypak responded that the typical fossil fuel energy use in standby 
and off modes is zero because gas-fired pool heaters only fire when 
there is a call for heat to maintain a set temperature. Raypak 
commented that the electricity consumption is limited to standby and 
off mode for all types of consumer pool heaters and that the magnitude 
of these electricity consumption values may change slightly based on 
the input capacity of the unit. (Raypak, No. 4 at p. 2)
    DOE has found several consumer pool heaters on the market which 
utilize standing pilots. These pilot lights operate when the consumer 
pool heater is not in use and contribute to fossil fuel energy use in 
standby mode. DOE does not disagree that electricity consumption may 
change slightly based on input capacity but has tentatively determined 
to use a single typical value for the various types of electrical 
energy consumption based on feedback received during confidential 
manufacturer interviews. Table IV.4 of this document presents the 
baseline efficiency level identified for gas-fired pool heaters.
[GRAPHIC] [TIFF OMITTED] TP15AP22.001

    Table IV.5 of this document presents the baseline efficiency level 
identified for electric pool heaters. No comments were received in 
response to the October 2015 NODA in regard to the baseline efficiency 
level for electric pool heaters.

[[Page 22660]]

[GRAPHIC] [TIFF OMITTED] TP15AP22.002

    Additional details on the selection of baseline models and the 
development of the baseline efficiency equations may be found in 
chapter 5 of the NOPR TSD.
c. Other Efficiency Levels
    As part of DOE's analysis, the maximum available efficiency level 
is the highest efficiency model currently available on the market. DOE 
also defines a ``max-tech'' efficiency level to represent the maximum 
possible efficiency for a given product.
    Table IV.6 of this document shows the efficiency levels DOE 
selected for the October 2015 NODA analysis. See section 5.3 of chapter 
5 of the October 2015 NODA. As described previously in this section, 
all else being equal, the integrated thermal efficiency metric is 
expected to vary depending on a consumer pool heater's capacity. The 
integrated thermal efficiencies listed in Table IV.6 are based on an 
output capacity of 110,000 Btu/h. (Note, the large increase in 
integrated thermal efficiency between EL 0 and EL 1 is the result of a 
technology option change from electric resistance elements as the heat 
source to a heat pump.)

  Table IV.6--October 2015 NODA Efficiency Level for Electric Pool Heaters at Output Capacity of 110,000 Btu/h
----------------------------------------------------------------------------------------------------------------
                                                   Et (percent)     PW,SB (W) *    PW,OFF (W) *       TEI **
                Efficiency level                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
EL 0............................................              99             1.2             1.2              99
EL 1............................................             360             5.2             5.2             344
EL 2............................................             520             5.2             5.2             486
EL 3............................................             580             5.2             5.2             538
EL 4............................................             600             5.2             5.2             556
EL 5............................................             610             5.2             5.2             564
----------------------------------------------------------------------------------------------------------------
* Presented in terms of Btu/h in appendix P.
** Values are based on Et and assumptions for PW,SB and PW,OFF at left, and uses equation 5.4.3 in the DOE test
  procedure found in appendix P.

    DOE requested comment on the efficiency levels presented in the 
October 2015 NODA analysis, including the typical standby and off mode 
energy consumption of electric pool heaters.
    In response to the October 2015 NODA analysis, AHRI stated that 
many manufacturers have not measured the standby and off mode 
consumption for many of their consumer pool heater models. Therefore, 
AHRI stated that they are not able to address the ``typical'' values 
used in the preliminary analysis. AHRI also stated that the efficiency 
levels presented in the October 2015 NODA analysis were acceptable. 
(AHRI, No. 16 at p. 2, 3)
    In response to the efficiency levels presented in the October 2015 
NODA for electric pool heaters ASAP and NRDC and CA IOUs encouraged DOE 
to re-evaluate the max-tech level for electric pool heaters. The 
commenters stated that the AHRI database includes models that exceed a 
COP of 6.1, the level presented as max-tech in the October 2015 NODA. 
The commenters stated that those units with a COP greater than 6.1 are 
smaller in capacity than the representative unit size of 110,000 Btu/h. 
(CA IOUs, No. 20 at p. 5; ASAP and NRDC, No. 19 at p. 2) CA IOUs stated 
their belief that larger capacity units could achieve similarly high 
COP levels. (CA IOUs, No. 20, at p. 5)
    DOE recognizes that there are models on the market with higher COP 
ratings than the assumed COP rating used in the max-tech energy level. 
However, as noted by commenters, these units have a lower capacity than 
DOE's representative capacity. DOE has not identified larger 
residential heat pump pool heaters with a COP rating greater than 6.1 
on the market or in prototypes. Smaller heat pump pool heaters with a 
COP greater than 6.1 may not be representative of efficiency 
improvements of which larger heat pump pool heaters are capable. 
Therefore, DOE maintained the same COP max-tech level used in the 
October 2015 NODA as an input to the integrated thermal efficiency 
equation for this analysis.
    ASAP and NRDC urged DOE to evaluate a level that incorporates 
technology options presented in the October 2015 NODA TSD that may not 
be present in currently available consumer pool heaters including 
electronically commutated motor (``ECM'') fan motors (i.e., brushless 
permanent magnet (``BPM'') motors),\26\ toroidal transformers, and an 
off switch. (ASAP and NRDC, No. 19 at p. 3)
---------------------------------------------------------------------------

    \26\ ``ECM'' refers to the constant-airflow BPM offerings of a 
specific motor manufacturer. DOE refers to this technology using the 
generic term, ``BPM motor.''
---------------------------------------------------------------------------

    In response to these comments, DOE has incorporated standby and off 
mode technology options at the max-tech level to decrease the standby 
and off mode electricity consumption and thereby increase the 
integrated thermal efficiency at that level. These technology options 
include: Transformer improvements, switching mode power supply, and a 
seasonal off switch.
    As was noted in chapter 3 of the October 2015 NODA TSD, the 
efficiency

[[Page 22661]]

of permanent split capacitor (``PSC'') motors is highest at a single 
speed, with significant diminishing operation efficiency at other 
speeds, whereas BPM motors are capable of maintaining a high operating 
efficiency at multiple speeds. However, the energy savings associated 
with this technology may be limited as heat pump pool heaters operate 
at full capacity to satisfy the call for heat. As noted by ASAP and 
NRDC, heat pump pool heaters on the market do not currently utilize BPM 
fan motors. Therefore, DOE has not been able to test products in order 
to determine the magnitude of efficiency improvement, if any, that 
could be expected due to the incorporation of BPM motors.
    DOE requests comment on the efficiency improvement expected from 
replacing a PSC fan motor with a BPM fan motor in heat pump pool 
heater.
    AHRI stated that the use of straight (EL 1) or twisted (EL 2) 
titanium tube coils are two different ways to get to the same end. AHRI 
further commented that the two different design features described for 
EL 1 and EL 2, respectively, do not inherently result in the 
significantly different efficiencies estimated in the analysis. AHRI 
stated that the efficiency that will result from the use of straight or 
twisted titanium tubing will be based on the effectiveness of the 
overall design of the heat exchanger; the twisted tube provides no 
significant efficiency improvement of itself. (AHRI, No. 16 at pp. 3-4)
    In response to AHRI's assertions, DOE notes that for electric pool 
heaters it selected efficiency levels and units for teardown based on 
the published coefficients of performance of models currently on the 
market (as integrated thermal efficiency data were not yet available). 
As shown in Table IV.7, the heat exchanger design of the model DOE 
analyzed at EL 1 in the October 2015 NODA included two straight 
titanium tube coils in submerged water tanks; at EL2, the model that 
was analyzed had a heat exchanger consisting of a single twisted 
titanium tube coil in concentric counter-flow PVC pipe. These models 
were included in the engineering analysis described in chapter 5 of the 
October 2015 NODA TSD. DOE did not assume a priori that the concentric/
counter-flow PVC heat exchanger design would result in a certain 
efficiency increase compared to the submerged coil design, but rather 
found that these were the design paths for units with such rated 
efficiencies on the market. Upon further review of the models on the 
market, DOE has tentatively determined that consideration of two 
straight titanium tube coils in submerged water tanks as a design 
option for EL 1, as presented in the October 2015 NODA, does not 
represent a typical design for the lowest efficiency heat pump pool 
heater and, as discussed later in section IV.C.2.c of this document, 
this design option is more expensive than other designs that are 
similar to those used at the other ELs. As such, DOE has amended the 
design option for EL 1 to a heat pump with a heat exchanger consisting 
of a single twisted titanium tube coil in concentric counter-flow PVC 
pipe as this design better resembles the lowest efficiency heat pump 
pool heater on the market.
    Table IV.7 provides a description of the typical technological 
change at each efficiency level for electric pool heaters.

Table IV.7--Technology Description by Efficiency Level for Electric Pool
                                 Heaters
------------------------------------------------------------------------
            Efficiency level                        Technology
------------------------------------------------------------------------
EL 0...................................  Electric Resistance.
EL 1 \*\...............................  Heat Pump, twisted Titanium
                                          tube coil in concentric/
                                          counter flow PVC Pipe.
EL 2...................................  EL1 + increased evaporator
                                          surface area.
EL 3...................................  EL2 + increased evaporator
                                          surface area.
EL 4...................................  EL3 + increased evaporator
                                          surface area.
EL 5...................................  EL4 + condenser coil length +
                                          seasonal off switch + switch
                                          mode power supply.
------------------------------------------------------------------------
\*\ The EL 1 design option has been updated from that presented in the
  October 2015 NODA. The description in the October 2015 NODA was,
  ``Heat Pump, two straight Titanium tube coils in submerged water
  tanks.''

    Table IV.8 shows the efficiency levels DOE selected for the NOPR 
analysis for electric pool heaters based on application of the design 
options presented in Table IV.7.
BILLING CODE 6450-01-P

[[Page 22662]]

[GRAPHIC] [TIFF OMITTED] TP15AP22.003

    In the March 2015 RFI, DOE also requested information on the max-
tech efficiency levels for gas-fired pool heaters. 80 FR 15922, 15926. 
In response, Raypak stated that the max-tech efficiency level for gas-
fired pool heaters would be in the range of 94 to 96-percent thermal 
efficiency. Raypak stated that the selection of heat exchanger 
materials for gas-fired pool heaters restricts the max-tech efficiency 
from being higher because the materials used have to be resistant to 
the chemicals used in pools, particularly when the pool chemistry is 
not properly maintained. (Raypak, No. 4 at p. 3)
    DOE analyzed a max-tech efficiency level of 95-percent thermal 
efficiency in this NOPR analysis based on its review of the gas-fired 
pool heater market. At the time of the analysis, 95-percent thermal 
efficiency represented the highest level available on the market.
    Table IV.9 shows the efficiency levels DOE analyzed for this NOPR 
with respect to gas-fired pool heaters. DOE selected the thermal 
efficiency levels based on its review of the gas-fired pool heaters 
market.

[[Page 22663]]

[GRAPHIC] [TIFF OMITTED] TP15AP22.004

BILLING CODE 6450-01-C
    DOE seeks comment from interested parties regarding the efficiency 
levels selected for the NOPR analysis.
    Table IV.10 provides a description of the typical technological 
change(s) at each efficiency level for gas-fired pool heaters.

  Table IV.10--Technology Description by Efficiency Level for Gas-Fired
                              Pool Heaters
------------------------------------------------------------------------
            Efficiency level                        Technology
------------------------------------------------------------------------
EL 0...................................  Standing Pilot + Cu or CuNi
                                          Finned Tube + Atmospheric.
EL 1...................................  Electronic Ignition + Cu or
                                          CuNi Finned Tube +
                                          Atmospheric.
EL 2...................................  Electronic Ignition + Cu or
                                          CuNi Finned Tube + Blower
                                          Driven Gas/Air Mix.
EL 3...................................  Condensing + CuNi and Cu Finned
                                          Tube + seasonal off switch +
                                          switch mode power supply.
------------------------------------------------------------------------

    DOE seeks comment from interested parties regarding the typical 
technological changes associated with each efficiency level.
    See section VII.E for a list of issues on which DOE seeks comment.
2. Cost Analysis
    The cost analysis portion of the engineering analysis is conducted 
using one or a combination of cost approaches. The selection of cost 
approach depends on a suite of factors, including the availability and 
reliability of public information, characteristics of the regulated 
product, the availability and timeliness of purchasing the product on 
the market. The cost approaches are summarized as follows:
     Physical teardowns: Under this approach, DOE physically 
dismantles a commercially available product, component-by-component, to 
develop a detailed bill of materials for the product.
     Catalog teardowns: In lieu of physically deconstructing a 
product, DOE identifies each component using parts diagrams (available 
from manufacturer websites or appliance repair websites, for example) 
to develop the bill of materials for the product.
     Price surveys: If neither a physical nor catalog teardown 
is feasible (for example, for tightly integrated products such as 
fluorescent lamps, which are infeasible to disassemble and for which 
parts diagrams are unavailable) or cost-prohibitive and otherwise 
impractical (e.g. large commercial boilers), DOE conducts price surveys 
using publicly available pricing data published on major online 
retailer websites and/or by soliciting prices from distributors and 
other commercial channels.
    At the start of the engineering analysis, DOE identified the energy 
efficiency levels associated with consumer pool heaters on the market 
using data gathered in the market assessment. DOE also identified the 
technologies and features that are typically incorporated into products 
at the baseline level and at the various energy efficiency levels 
analyzed above the baseline. Next, DOE selected products for the 
physical teardown analysis having characteristics of typical products 
on the market at the representative capacity. DOE gathered information 
from performing a physical teardown analysis (see section IV.C.2.a of 
this document) to create detailed bill of materials (BOMs), which 
included all components and processes used to manufacture the products. 
DOE used the BOMs from the teardowns as inputs to calculate the MPC for 
products at various efficiency levels spanning the full range of 
efficiencies from the baseline to the maximum technology available. DOE 
reexamined and revised its cost assessment performed for the October 
2015 NODA analysis.
    During the development of the analysis for the NOPR, DOE held 
interviews with manufacturers to gain insight into the consumer pool 
heater industry, and to request feedback on the engineering analysis. 
DOE used the information gathered from these interviews, along with the 
information obtained through the teardown analysis and public comments, 
to refine its MPC estimates for this rulemaking. Next, DOE derived 
manufacturer markups using publicly-available consumer pool heater 
industry financial data in conjunction with manufacturers' feedback. 
The markups were used to convert the MPCs into manufacturer sales 
prices (MSPs). Further information on comments received and the 
analytical methodology is presented in the following subsections. For 
additional detail, see chapter 5 of the NOPR TSD.
a. Teardown Analysis
    To assemble BOMs and to calculate the manufacturing costs for the 
different components in consumer pool heaters, DOE disassembled 
multiple units into their base components and estimated the materials, 
processes, and labor required for the manufacture of each individual 
component, a process referred to as a ``physical teardown.''

[[Page 22664]]

Using the data gathered from the physical teardowns, DOE characterized 
each component according to its weight, dimensions, material, quantity, 
and the manufacturing processes used to fabricate and assemble it.
    DOE also used a supplementary method, called a ``virtual 
teardown,'' which examines published manufacturer catalogs and 
supplementary component data to estimate the major physical differences 
between a product that was physically disassembled and a similar 
product that was not. For supplementary virtual teardowns, DOE gathered 
product data such as dimensions, weight, and design features from 
publicly-available information, such as manufacturer catalogs.
    The teardown analysis allowed DOE to identify the technologies that 
manufacturers typically incorporate into their products, along with the 
efficiency levels associated with each technology or combination of 
technologies. The BOMs from the teardown analysis were then used as 
inputs to calculate the MPC for each product that was torn down. The 
MPC's resulting from the teardowns were used to develop an industry 
average MPC for each efficiency level of each product class analyzed.
    More information regarding details on the teardown analysis can be 
found in chapter 5 of the NOPR TSD.
b. Cost Estimation Method
    The costs of individual models are estimated using the content of 
the BOMs (i.e., materials, fabrication, labor, and all other aspects 
that make up a production facility) to generate the MPCs. For example, 
these MPCs include overhead and depreciation. DOE collected information 
on labor rates, tooling costs, raw material prices, and other factors 
as inputs into the cost estimates. For purchased parts, DOE estimates 
the purchase price based on volume-variable price quotations and 
detailed discussions with manufacturers and component suppliers. For 
fabricated parts, the prices of raw metal materials \27\ (i.e., tube, 
sheet metal) are estimated using the average of the most recent 5-year 
period. The cost of transforming the intermediate materials into 
finished parts was estimated based on current industry pricing at the 
time of analysis.\28\
---------------------------------------------------------------------------

    \27\ American Metals Market, available at www.amm.com/.
    \28\ U.S. Department of Labor, Bureau of Labor Statistics, 
Producer Price Indices, available at www.bls.gov/ppi/.
---------------------------------------------------------------------------

c. Manufacturing Production Costs
    DOE estimated the MPC at each efficiency level considered for each 
product class, from the baseline through the max-tech and then 
calculated the percentages attributable to each cost category (i.e., 
materials, labor, depreciation, and overhead). These percentages are 
used to validate the assumptions by comparing them to manufacturers' 
actual financial data published in annual reports, along with feedback 
obtained from manufacturers during interviews. DOE uses these 
production cost percentages in the MIA (see section IV.J of this 
document).
    DOE's analysis focused on a single representative capacity for each 
product class analyzed. DOE selected a representative output capacity 
of 110,000 Btu/h for electric pool heaters and a representative input 
capacity of 250,000 Btu/h for gas-fired pool heaters.\29\ DOE selected 
these representative capacities based on the number of available models 
on the market and by referencing a number of sources, including 
information collected for the market and technology assessment, as well 
as information obtained from product literature. DOE then sought 
feedback on the representative capacities during confidential 
manufacturer interviews.
---------------------------------------------------------------------------

    \29\ For gas-fired pool heaters, manufacturers are currently 
required to certify input capacity pursuant to 10 CFR 429.12. For 
electric heat pump pool heaters, manufacturers currently use output 
capacity in order to represent the capacity of a unit. DOE used a 
combination of the AHRI directory data (www.ahridirectory.org/) and 
product literature to obtain data regarding electric heat pump pool 
heater output capacity.
---------------------------------------------------------------------------

    AHRI stated that the MPC estimates for electric pool heaters 
presented in the October 2015 NODA analysis are significantly flawed. 
AHRI stated that the relationship of manufacturing cost to efficiency 
for heat pump pool heaters is relatively linear and proportional, 
similar to other consumer products. AHRI suggested that the design 
features assumed for EL 1 and EL 2 mischaracterize how those respective 
efficiency levels are achieved and provide an unrealistic estimate of 
MPC, i.e., a 40% improvement in the EL 1 efficiency cannot be achieved 
for only a $1 increase in MPC. (AHRI, No. 16 at p. 3-4)
    As discussed in section IV.C.1.c, the electric pool heaters 
selected for teardown and to represent each efficiency level were based 
on the published coefficients of performance of models currently on the 
market (as integrated thermal efficiency data were not yet available). 
DOE did not assume a priori that the concentric/counter-flow PVC heat 
exchanger design would result in a certain efficiency increase compared 
to the submerged coil design, but rather found that these were the 
design paths for units with such rated efficiencies on the market. 
Further, as demonstrated by DOE's cost-efficiency curves, although the 
design at EL 2 provides a large improvement in efficiency as compared 
to the design evaluated at EL 1 in the October 2015 NODA, DOE's 
estimate of the MPC based on its teardown analysis indicated that the 
cost to manufacture the product with a heat exchanger as designed at EL 
2 was not substantially more than that at EL 1. For the analysis 
conducted for this NOPR, as discussed in section IV.C.1.c, DOE has 
tentatively determined to change the design option for the electric 
pool heater EL 1 to be more similar to the design options at the other 
ELs (i.e., twisted Titanium tube coil in concentric/counter flow PVC 
Pipe).
    For this NOPR analysis, DOE revised the cost analysis assumptions 
it used for the October 2015 NODA analysis based on updated pricing 
information (for raw materials and purchased parts) and additional 
manufacturer feedback. This resulted in refined MPCs and production 
cost percentages.
    Table IV.11 presents DOE's estimates of the MPC's by efficiency 
level for electric pool heaters in the NOPR analysis. The integrated 
thermal efficiencies and MPCs listed in Table IV.11 are based on an 
output capacity of 110,000 Btu/h.

 Table IV.11--Manufacturing Production Cost for Electric Pool Heaters at
             Representative Output Capacity of 110,000 Btu/h
------------------------------------------------------------------------
                                           TEI (percent)
            Efficiency level                                MPC ($2020)
------------------------------------------------------------------------
EL 0....................................              99             893
EL 1....................................             387           1,093

[[Page 22665]]

 
EL 2....................................             483           1,144
EL 3....................................             534           1,188
EL 4....................................             551           1,220
EL 5....................................             595           1,304
------------------------------------------------------------------------

    In developing the MPCs for gas-fired pool heaters for this NOPR, 
DOE considered the heat exchanger material and whether a model would 
utilize a cupronickel or copper heat exchanger at a given efficiency 
level. DOE surveyed the market and found that the percentage of models 
at each efficiency level that currently utilize copper or cupronickel 
heat exchangers and assumed that, under an amended standard, the 
percentage would remain unchanged.\30\
---------------------------------------------------------------------------

    \30\ For example, assume that at EL 1, 60 percent of the market 
currently uses copper heat exchangers and 40 percent of the market 
currently uses cupronickel heat exchangers. Then, if EL 1 was chosen 
as the amended standard level, DOE assumes that 60 percent of the 
market would continue to use copper heat exchangers and 40 percent 
of the market would continue to use cupronickel heat exchangers.
---------------------------------------------------------------------------

    DOE requests comment on its assumption that the fraction of 
shipments which utilize cupronickel heat exchangers would not change as 
a result of amended standards.
    Table IV.12 presents DOE's estimates of the MPCs by efficiency 
level for gas-fired pool heaters in the NOPR analysis. The integrated 
thermal efficiencies and MPCs listed in Table IV.12 are based on an 
input capacity of 250,000 Btu/h.

Table IV.12--Manufacturing Production Cost for Gas-Fired Pool Heaters at
             Representative Input Capacity of 250,000 Btu/h
------------------------------------------------------------------------
                                           TEI (percent)
            Efficiency level                                MPC ($2020)
------------------------------------------------------------------------
EL 0....................................            61.1             659
EL 1....................................            81.3             665
EL 2....................................            83.3             827
EL 3....................................            94.8           1,157
------------------------------------------------------------------------

    Chapter 5 of the NOPR TSD presents additional detail regarding the 
development of DOE's estimates of the MPCs for consumer pool heaters.
d. Manufacturer Markups
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a non-production cost multiplier (the manufacturer 
markup) to the MPC. The resulting MSP is the price that DOE research 
suggests the manufacturer can sell a given unit into the marketplace 
under a standards scenario. To meet new or amended energy conservation 
standards, manufacturers typically redesign their baseline products. 
These design changes typically increase MPCs relative to those of 
previous baseline MPCs. Depending on the competitive environment for 
these particular products, some or all of the increased production 
costs may be passed from manufacturers to retailers and eventually to 
customers in the form of higher purchase prices. As production costs 
increase, manufacturers may also incur additional overhead (e.g., 
warranty costs).
    The manufacturer markup has an important bearing on profitability. 
A high markup under a standards scenario suggests manufacturers can 
readily pass along the increased variable costs and some of the capital 
and product conversion costs (the one-time expenditures) to consumers. 
A low markup suggests that manufacturers will have greater difficulty 
recovering their investments, product conversion costs, and/or 
incremental MPCs.
    DOE estimated manufacturer markups based on publicly available 
financial information for consumer pool heater manufacturers, and 
information obtained during manufacturer interviews, DOE assumed the 
non-production cost markup--which includes selling, general, and 
administrative (``SG&A'') expenses, research and development (``R&D'') 
expenses, interest, and profit--to be 1.33 for gas-fired pool heaters 
and 1.28 for electric pool heaters. See chapter 5 of the NOPR TSD for 
more details about the manufacturer markup calculation.
e. Manufacturer Interviews
    Throughout the rulemaking process, DOE has sought and continues to 
seek feedback and insight from interested parties that would improve 
the information used in its analyses. DOE interviewed manufacturers as 
a part of the NOPR manufacturer impact analysis (see section IV.J.3 of 
this document). During the interviews, DOE sought feedback on all 
aspects of its analyses for consumer pool heaters. For the engineering 
analysis, DOE discussed the analytical assumptions and estimates, cost 
analysis, and cost-efficiency curves with consumer pool heater 
manufacturers. DOE considered all the information manufacturers 
provided when refining the cost analysis and assumptions. DOE 
incorporated equipment and manufacturing process figures into the 
analysis as averages to avoid disclosing sensitive information about 
individual manufacturers' products or manufacturing processes. More 
details about the manufacturer interviews are contained in chapter 12 
of the NOPR TSD.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., wholesaler 
and distributors, pool contractors, pool retailers, pool builders) in 
the distribution chain and sales taxes to convert the MSP estimates 
derived in the engineering analysis to consumer prices, which are then 
used in the LCC and PBP analysis. At each step in the distribution 
channel, companies add markup to the price of the product to cover 
business costs and profit margin.

[[Page 22666]]

    For consumer pool heaters, the main parties in the distribution 
chain are: (1) Manufacturers; (2) wholesalers or distributors; (3) pool 
contractors; (4) pool retailers; (5) buying groups; \31\ and (6) pool 
builders. For each actor in the distribution chain except for 
manufacturers, DOE developed baseline and incremental markups. Baseline 
markups are applied to the price of products with baseline efficiency, 
while incremental markups are applied to the difference in price 
between baseline and higher-efficiency models (the incremental cost 
increase). The incremental markup is typically less than the baseline 
markup and is designed to maintain similar per-unit operating profit 
before and after new or amended standards.\32\
---------------------------------------------------------------------------

    \31\ Buying groups are intermediaries between the pool heater 
manufacturers and contractors. A buying group is a coalition of 
companies within a shared category who leverage their collective 
purchasing power to negotiate price reductions from manufacturers.
    \32\ Because the projected price of standards-compliant products 
is typically higher than the price of baseline products, using the 
same markup for the incremental cost and the baseline cost would 
result in higher per-unit operating profit. While such an outcome is 
possible, DOE maintains that in markets that are reasonably 
competitive it is unlikely that standards would lead to a 
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

    At each step in the distribution channel, companies add markup to 
the price of the product to cover business costs and profit margin. For 
the electric pool heater October 2015 NODA, DOE characterized two 
markets in which pool products pass from the manufacturer to 
residential and commercial consumers: \33\ (1) Replacement or new 
installation of consumer pool heater for existing swimming pool or spa; 
(2) installation of consumer pool heater in new swimming pool or spa. 
For this NOPR, DOE gathered data from several sources including 2020 
Pkdata report,\34\ POOLCORP's 2020 Form 10-K,\35\ PRNewswire,\36\ 
PoolPro Magazine,\37\ Aqua Magazine,\38\ and Pool and Spa News \39\ to 
determine the distribution channels and fraction of shipments going 
through each distribution channel. The distribution channels for 
replacement or new installation of a consumer pool heater for existing 
swimming pool or spa are characterized as follows: \40\
---------------------------------------------------------------------------

    \33\ DOE estimates that 6 percent of electric pool heaters and 
13 percent of gas pool heaters will be shipped to commercial 
applications in 2028. See section IV.E.1 of this document for 
further discussion.
    \34\ Pkdata, 2020 Residential and Commercial Swimming Pool, Hot 
Tub, and Pool Heater Customized Report for LBNL, October 15, 2020, 
available at: www.pkdata.com/datapointstrade.html#/ (last accessed 
April 15, 2021).
    \35\ POOLCORP, 2020 Form 10-K, available at: 
dd7pmep5szm19.cloudfront.net/603/0000945841-21-000022.pdf (last 
accessed April 15, 2021).
    \36\ PRNewswire, United Aqua Group, one of the nation's largest 
organizations dedicated to the professional pool construction, 
service and retail industry, announces that POOLCORP[supreg] is no 
longer the preferred distributor for its swimming pool products or 
building materials, May 15, 2018, available at: www.prnewswire.com/news-releases/united-aqua-group-one-of-the-nations-largest-organizations-dedicated-to-the-professional-pool-construction-service-and-retail-industry-announces-that-poolcorp-is-no-longer-the-preferred-distributor-for-its-swimming-pool-produ-300648220.html 
(last accessed April 15, 2021).
    \37\ PoolPro, Channel Choices, PoolPro Magazine, March 5, 2018, 
available at: poolpromag.com/channel-choices/ (last accessed April 
15, 2021).
    \38\ Herman, E., Distributors: The Middleman's Role, Aqua 
Magazine, December 2017, available at: aquamagazine.com/features/the-middleman-s-role.html (last accessed April 15, 2021).
    \39\ Green, L., Forward Thinking: A Look at Distributor Sector 
in Pool, Spa Industry Distributors adapt with the times, Pool and 
Spa News, March 27, 2015, available at: www.poolspanews.com/business/retail-management/forward-thinking-a-look-at-distributor-sector-in-pool-spa-industry_o (last accessed April 15, 2021).
    \40\ Based on 2020 Pkdata, in residential pools and spas, DOE 
assumes that the consumer pool heater goes through the wholesaler 45 
percent of the time, 10 percent of the time wholesaler to retailer, 
40 percent of the time directly through the pool retailer, and 5 
percent of the time through the buying group.

---------------------------------------------------------------------------
Manufacturer [rarr] Wholesaler [rarr] Pool Contractor [rarr] Consumer

Manufacturer [rarr] Wholesaler [rarr] Pool Retailer [rarr] Consumer

Manufacturer [rarr] Pool Retailer [rarr] Consumer

Manufacturer [rarr] Buying Group [rarr] Pool Contractor [rarr] Consumer

    The distribution channels for installation of consumer pool heaters 
in a new swimming pool or spa are characterized as follows: \41\
---------------------------------------------------------------------------

    \41\ Based on 2020 Pkdata, DOE estimated that about 40 percent 
of consumer pool heater installations in new pools are distributed 
through a wholesaler and about 60 percent are distributed through a 
buying group.

---------------------------------------------------------------------------
Manufacturer [rarr] Wholesaler [rarr] Pool Builder [rarr] Consumer

Manufacturer [rarr] Buying Group [rarr] Pool Builder [rarr] Consumer

    Lochinvar stated that the distribution channels for pool heaters 
sold for commercial applications are similar to those used in 
commercial packaged boiler and commercial water heater rulemakings. 
(Lochinvar, No. 2 at p. 2) Lochinvar did not provide specific fractions 
of shipments for each distribution channel. For the NOPR analysis, DOE 
estimated that half of consumer pool heaters installed in commercial 
applications would use similar distribution channels to commercial 
packaged boilers and commercial water heaters (Manufacturer [rarr] 
Wholesaler [rarr] Mechanical Contractor [rarr] Consumer for 
replacements and new owners; and Manufacturer [rarr] Wholesaler [rarr] 
Mechanical Contractor [rarr] General Contractor [rarr] Consumer for new 
swimming pool construction),\42\ while the remaining consumer pool 
heaters would have the distribution channels described previously.
---------------------------------------------------------------------------

    \42\ Based on 2020 Pkdata, which showed a much larger fraction 
of pool heaters being sold through distributors (about 70 percent) 
and directly to end users (about 20 percent) in commercial 
applications compared to pool heaters in residential applications.
---------------------------------------------------------------------------

    DOE requests comment on whether the distribution channels described 
above are appropriate for consumer pool heaters and are sufficient to 
describe the distribution markets. In addition, DOE seeks input on the 
percentage of products being distributed through the different 
distribution channels, and whether the share of products through each 
channel varies based on product class, capacity, or other features.
    To estimate average baseline and incremental markups, DOE relied on 
several sources, including: (1) Form 10-K from U.S. Securities and 
Exchange Commission (``SEC'') for Pool Corp (pool wholesaler and 
retailers); \43\ (2) form 10-K from U.S. SEC for the Home Depot, 
Lowe's, Wal-Mart, and Costco (for pool retailers); (3) U.S. Census 
Bureau 2017 Annual Retail Trade Report for miscellaneous store 
retailers (NAICS 453) (for direct pool retailers),\44\ (4) U.S. Census 
Bureau 2017 Economic Census data \45\ on the residential and commercial 
building construction industry (for pool builder, pool contractor, and 
general and plumbing/mechanical contractors for commercial 
applications); and (5) the Heating, Air Conditioning & Refrigeration 
Distributors International (``HARDI'') 2013 Profit Report \46\ (for 
wholesalers for

[[Page 22667]]

commercial applications). DOE assumes that the markups for buying group 
is half of the value of pool wholesaler markups derived from Pool 
Corp's form 10-K. In addition, DOE used the 2005 Air Conditioning 
Contractors of America's (``ACCA'') Financial Analysis on the Heating, 
Ventilation, Air-Conditioning, and Refrigeration (``HVACR'') 
contracting industry \47\ to disaggregate the mechanical contractor 
markups into replacement and new construction markets for consumer pool 
heaters used in commercial applications.
---------------------------------------------------------------------------

    \43\ U.S. Securities and Exchange Commission, SEC 10-K Reports 
(2016-2020), available at www.sec.gov/ (last accessed April 15, 
2021).
    \44\ U.S. Census Bureau, 2017 Annual Retail Trade Report, 
available at www.census.gov/programs-surveys/arts.html (last 
accessed April 15, 2021). Note that the 2017 Annual Retail Trade 
Report is the latest version of the report that includes detailed 
operating expenses data.
    \45\ U.S. Census Bureau, 2017 Economic Census Data. available at 
www.census.gov/programs-surveys/economic-census.html (last accessed 
April 15, 2021).
    \46\ Heating, Air Conditioning & Refrigeration Distributors 
International (``HARDI''), 2013 HARDI Profit Report, available at 
hardinet.org/ (last accessed April 15, 2021). Note that the 2013 
HARDI Profit Report is the latest version of the report.
    \47\ Air Conditioning Contractors of America (``ACCA''), 
Financial Analysis for the HVACR Contracting Industry (2005), 
available at www.acca.org/store#/storefront (last accessed April 15, 
2021). Note that the 2005 Financial Analysis for the HVACR 
Contracting Industry is the latest version of the report and is only 
used to disaggregate the mechanical contractor markups into 
replacement and new construction markets.
---------------------------------------------------------------------------

    In addition to the markups, DOE obtained state and local taxes from 
data provided by the Sales Tax Clearinghouse.\48\ These data represent 
weighted average taxes that include county and city rates. DOE derived 
shipment-weighted average tax values for each region considered in the 
analysis.
---------------------------------------------------------------------------

    \48\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along 
with Combined Average City and County Rates (Feb. 8, 2021), 
available at thestc.com/STrates.stm (last accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE requests comment on the data sources used to establish the 
markups for the parties involved with the distribution of covered 
products.
    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for consumer pool heaters.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of consumer pool heaters at different efficiencies 
in representative U.S. applications, and to assess the energy savings 
potential of increased consumer pool heater efficiency. The energy use 
analysis estimates the range of energy use of consumer pool heaters in 
the field (i.e., as they are actually used by consumers). The energy 
use analysis provides 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 or 
new standards.
1. Pool Heater Consumer Samples
    DOE created individual consumer samples for seven pool heater 
market types: (1) pool heaters in single family homes that serve a 
swimming pool only (pool type 1); (2) pool heaters in single family 
homes that serve both a swimming pool and spa (pool type 2); (3) pool 
heaters in single family homes that serve a spa only (pool type 3); 
\49\ (4) pool heaters in single-family community swimming pools or spas 
(pool type 4); (5) pool heaters in multi-family community swimming 
pools or spas (pool type 5); (6) pool heaters in indoor commercial 
swimming pools or spas (pool type 6); (7) pool heaters in outdoor 
commercial swimming pools or spas (pool type 7). DOE used the samples 
not only to determine pool heater annual energy consumption, but also 
as the basis for conducting the LCC and PBP analysis.
---------------------------------------------------------------------------

    \49\ For electric pool heater sample, DOE only considered a 
small fraction of large spas that require a pool heater large than 
11 kW. For this NOPR, the fraction of spas with an electric pool 
heater larger than 11 kW was determined based on 2020 Pkdata and 
DOE's shipments analysis.
---------------------------------------------------------------------------

    For the October 2015 NODA, DOE used EIA 2009 Residential Energy 
Consumption Survey (``RECS 2009'') to establish a sample of single 
family homes that use an electric pool heater in swimming pool or spa 
or both.\50\ For the NOPR, DOE used the EIA's 2015 Residential Energy 
Consumption Survey (``RECS 2015'') to establish a sample of single 
family homes that use an electric or gas-fired pool heater in a 
swimming pool or spa or both.\51\ RECS 2015 includes information such 
as the household or building owner demographics, fuel types used, 
months swimming pool used in the last year, energy consumption and 
expenditures, and other relevant data.
---------------------------------------------------------------------------

    \50\ U.S. Department of Energy-Energy Information 
Administration. 2009 RECS Survey Data, available at www.eia.gov/consumption/residential/data/2009/ (last accessed April 15, 2021).
    \51\ U.S. Department of Energy-Energy Information 
Administration. 2015 RECS Survey Data, available at www.eia.gov/consumption/residential/data/2015/ (last accessed April 15, 2021). 
RECS 2015 uses the term hot tub instead of spa. When a household has 
a pool heater and spa heater of the same fuel, RECS 2015 does not 
provide information about whether the pool heater is used for both. 
For the NOPR, DOE assumes that in this case, a single pool heater is 
used to heat both the pool and spa.
---------------------------------------------------------------------------

    For consumer pool heaters used in indoor swimming pools in 
commercial applications, DOE developed a sample using the 2012 
Commercial Building Energy Consumption Survey (``CBECS 2012'').\52\ 
CBECS 2012 does not provide data on community pools or outdoor swimming 
pools in commercial applications. To develop samples for consumer pool 
heaters in single or multi-family community pools and/or spas, DOE used 
a combination of RECS 2015, U.S. Census 2017 American Home Survey Data, 
and the 2020 Pkdata.\53\ To develop a sample for pool heaters in 
outdoor swimming pools in commercial applications, DOE used a 
combination of CBECS 2012 and the 2020 Pkdata.
---------------------------------------------------------------------------

    \52\ U.S. Department of Energy-Energy Information 
Administration. 2012 CBECS Survey Data, available at www.eia.gov/consumption/commercial/data/2012/ (last accessed April 15, 2021).
    \53\ Pkdata. 2020 Residential and Commercial Swimming Pool, Hot 
tub, and Pool Heater Customized Report for LBNL, available at 
www.pkdata.net/datapointstrade.html (last accessed April 15, 2021).
---------------------------------------------------------------------------

    Table IV.13 shows the estimated weights for the samples of electric 
pool heaters and gas pool heaters by the seven pool heater market 
types. See chapter 7 of the NOPR TSD for more details about the 
creation of the samples and the regional breakdowns.

         Table IV.13--Fraction of Electric Pool Heaters and Gas-Fired Pool Heaters by Pool Heater Market
----------------------------------------------------------------------------------------------------------------
                                                                                   Electric pool  Gas-fired pool
                Pool type ID                             Description                heaters (%)     heaters (%)
----------------------------------------------------------------------------------------------------------------
1..........................................  Single Family with Pool Heater                 58.4            32.5
                                              Serving Swimming Pool Only.
2..........................................  Single Family with Pool Heater                 28.3            28.7
                                              Serving Swimming Pool + Spa.
3..........................................  Single Family with Pool Heater                  7.1            25.7
                                              Serving Spa Only.
4..........................................  Community Pools or Spas (Single-                0.8             1.5
                                              Family).
5..........................................  Community Pools or Spas (Multi-                 2.8             5.1
                                              Family).
6..........................................  Commercial Indoor Pools and Spas...             1.0             3.9
7..........................................  Commercial Outdoor Pools and Spas..             1.5             2.6
----------------------------------------------------------------------------------------------------------------


[[Page 22668]]

    AHRI stated that although the RECS information is readily available 
and useful, the usage and installation circumstances of electric pool 
heaters may be such that a more detailed estimate of installations per 
state is needed to properly analyze an efficiency standard for electric 
pool heaters. AHRI stated that because climate affects the electricity 
use of electric pool heaters, any changes in the assumed geographical 
distribution of electric pool heaters would alter electricity use. 
(AHRI, No. 16 at p. 4) DOE contends that RECS provides a reasonable 
distribution of users of electric pool heaters, since it closely 
matches regional data for electric pool heaters from 2020 Pkdata. DOE 
acknowledges that there is some uncertainty related to the distribution 
of electric pool heaters and discusses its assumptions in more detail 
in appendix 7A of the NOPR TSD.
    EEI stated that because commercial pools, including community 
pools, commercial indoor spas or pools, and commercial outdoor swimming 
pools, are usually much larger in volume and operate for many more 
hours during the year than pools in residential applications, their 
inclusion in the analysis distorts the baseline energy usage and the 
impacts of energy efficiency improvements. EEI stated that because 
commercial swimming pool heaters are outside of the scope of this 
residential product rulemaking, any data or estimates associated with 
such units should be removed from the final analysis. (EEI, No. 21 at 
p. 5, 13)
    EPCA specifies pool heaters as a consumer product that is a covered 
product for the purpose of the Energy Conservation Program for Consumer 
Products Other Than Automobiles. (42 U.S.C. 6292(a)(11)) EPCA defines 
``consumer product,'' in part, as ``any article [. . .] of a type- (A) 
which in operation consumes, or is designed to consume, energy [. . .]; 
and (B) which, to any significant extent, is distributed in commerce 
for personal use or consumption by individuals; without regard to 
whether such article of such type is in fact distributed in commerce 
for personal use or consumption by an individual[.] (42 U.S.C. 6291(1)) 
As such, if a product meets the definition of ``pool heater,'' 
regardless of whether that unit it is installed in a residential or 
commercial application, that product is still subject to regulation as 
a consumer product. Because pool heaters are considered a consumer 
product under this definition, and because the definition of pool 
heaters does not include a capacity limit, DOE's authority to consider 
energy conservation standards for pool heaters includes consumer pool 
heaters used in commercial settings.
    To accurately estimate the costs and benefits of potential 
standards, DOE must consider all applications of the covered product, 
including commercial-sector usage of a consumer product. DOE limited 
consideration of pool heaters installed in commercial pools in its 
energy use analysis to pool heaters installed in commercial pools of 
similar size as pools in residential applications, because it has 
limited data on the number of pool heaters serving larger commercial 
pools and their energy use. For the NOPR, DOE revised its energy use 
estimates based on all available data, including recent data from the 
2020 Pkdata about pool heaters in commercial applications. DOE notes 
that the fraction of electric pool heaters used in commercial 
applications decreased from 10 percent in the October 2015 NODA to 6 
percent in the NOPR (see the section regarding residential and 
commercial applications in chapter 7 of the NOPR TSD).
    AHRI stated that it seems unreasonable that the cold and relatively 
sparsely populated Mountain Census division would have a higher 
fraction of electric pool heaters than the Pacific Census division, 
which includes highly populated and warm California. (AHRI, No. 16 at 
p. 4) The CA IOUs stated that in California the vast majority of pool 
heaters are gas-fired, and that they understand that electric pool 
heaters are used extensively elsewhere throughout the country. (CA 
IOUs, No. 5 at p. 5)
    In response, DOE notes that in RECS 2015, the Mountain Census 
division does consistently show a lower fraction of pool heaters than 
the Pacific Census division (see Table IV.14 for details), and these 
data are consistent with the comments from AHRI and the CA IOUs.

  Table IV.14--Fraction of Pool Heaters in Mountain Census Division and
                            Pacific Division
------------------------------------------------------------------------
                                                Percent of existing
                                               installations in U.S.
                                         -------------------------------
                 Region                      Mountain
                                              Census          Pacific
                                             division        division
                                             (percent)       (percent)
------------------------------------------------------------------------
All swimming pool heaters (gas-fired and              10              21
 electric)..............................
Electric swimming pool heaters..........               4              11
All spa and hot tub heaters (gas-fired                 8              26
 and electric)..........................
Electric spa and hot tub heaters........               9              23
------------------------------------------------------------------------
Source: RECS 2015

    DOE requests comment on the data sources and methodology used to 
establish pool heater consumer samples.
2. Energy Use Estimation
    For the October 2015 NODA, to estimate the annual energy 
consumption of consumer pool heaters at the considered efficiency 
levels, DOE first calculated the pool heater load for each sampled 
consumer based on assumptions regarding the size of a typical pool, 
ambient conditions for different locations, length of the swimming pool 
season, and whether the pool has a cover.\54\ For each household or 
building with a consumer pool heater, DOE matched the pool heating load 
to the sampled swimming pool based on household or building 
geographical location and an assumption of whether the pool is covered 
or not. DOE then used the pool heating load together with the consumer

[[Page 22669]]

pool heater output \55\ to determine the burner operating hours. The 
electricity or fuel consumption in active mode was calculated by 
multiplying the burner operating hours by the input capacity. For heat 
pump pool heaters, DOE accounted for the potential increase in pump 
electricity use due to longer operating hours of these products (see 
discussion below). For heat pump pool heaters, to account for 
variations of output capacity, input capacity, and COPs observed in the 
field, DOE determined these values based on the geographical location 
of the sampled household.
---------------------------------------------------------------------------

    \54\ For the October 2015 NODA (80 FR 65169), RECS 2009 
estimates of the annual energy consumption from the household's 
energy bills using conditional demand analysis does not provide 
separate estimates for electric pool heater energy use. Instead, 
RECS 2009 groups these pool heaters in the ``other devices and 
purposes not elsewhere classified.'' Furthermore, RECS 2009 does not 
provide any energy use data for community pools with pool heaters 
and CBECS 2012 does not provide separate energy use estimates for 
pool heaters in other commercial applications.
    \55\ For heat pump pool heaters, pool heater output capacity is 
adjusted based on average outdoor conditions, since the rated output 
is measured at outdoor ambient conditions that are often different 
from actual field conditions. The adjustment is done based on 
coefficient of performance (COP) from heat pump pool heater data at 
different ambient conditions.
---------------------------------------------------------------------------

    For the October 2015 NODA, DOE assumed that 32 percent of pools 
with consumer pool heaters use a cover and 68 percent of pools with 
consumer pool heaters do not use a cover based on comments from NRDC in 
a CEC pool pumps rulemaking.\56\ See chapter 7 of the October 2015 NODA 
TSD.
---------------------------------------------------------------------------

    \56\ NRDC's Response to CEC's Invitation to Participate in the 
Development of Appliance Energy Efficiency Measures 2013 Appliance 
Efficiency Pre-Rulemaking on Appliance Efficiency Regulations: 
Docket Number 12-AAER-2F--Residential Pool Pumps and Motors (May 
2013), available at efiling.energy.ca.gov/GetDocument.aspx?tn=70721&DocumentContentId=8266 (last accessed 
April 15, 2021).
---------------------------------------------------------------------------

    EEI stated that since at least 2001, residential and commercial 
swimming pool heaters installed with or in new buildings are required 
to have covers, readily accessible on-off switches, and time switches. 
EEI also stated that assuming no pool cover overstates the baseline 
energy usage by at least 5 times the actual energy usage. (EEI, No. 21 
at p. 6) For the October 2015 NODA, DOE did account for a fraction of 
installations with a pool cover. See chapter 7 of the October 2015 NODA 
TSD. DOE also notes that code requirements only affect pools built 
since these codes went into effect, and the timing of requirements for 
pools varies among the different States. Also, these building code 
requirements are focused on safety and do not necessarily require only 
pool covers. For example, Florida requirements can be met using fencing 
or alarms instead of pool covers.\57\ California requires that when a 
building permit is issued for the construction of a new swimming pool 
or spa or the remodeling of an existing swimming pool or spa at a 
private single-family home, the respective swimming pool or spa is 
required to have a minimum of two drowning prevention safety features, 
one of which may be a pool cover.\58\ Furthermore, there is a lack of 
statistics and data of the usage pattern of pool covers combined with 
pool heaters. For example, 2020 Pkdata shows that less than half of 
pool covers are installed primarily to reduce energy use, while the 
rest are primarily safety covers or only used to cover the pool during 
the winter season. In the absence of any other information, DOE 
maintained its assumptions on use of pool covers.
---------------------------------------------------------------------------

    \57\ State of Florida. Chapter 515. Residential Swimming Pool 
Safety Act, available at www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0515/0515.html 
(last accessed April 15, 2021).
    \58\ CA Health and Safety Code, section 115922, available at 
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=115922.&nodeTreePath=43.11.5.3&lawCode=HSC (last accessed April 15, 2021).
---------------------------------------------------------------------------

    For the NOPR, DOE revised its energy use analysis based on all 
available data including RECS 2015,\59\ CBECS 2012, a Consortium for 
Energy Efficiency (``CEE'') report,\60\ a Brookhaven National 
Laboratory report,\61\ and 2020 Pkdata. In particular, for consumer 
pool heaters in single family homes, DOE was able to use the energy use 
estimates provided in RECS 2015 to estimate the pool heater load for 
each sampled pool or spa. For consumer pool heaters in commercial 
buildings, DOE used the same energy use methodology as in the October 
2015 NODA. See chapter 7 of the NOPR TSD for more details.
---------------------------------------------------------------------------

    \59\ RECS 2015 provides separate estimates for electric spa 
heaters, natural gas pool heaters, and natural gas spa heaters in 
single family homes. However, RECS 2015 does not provide separate 
estimates for electric pool heater energy use and propane pool and 
spa heaters. Instead, RECS 2015 groups these pool heaters in the 
``other devices and purposes not elsewhere classified.''
    \60\ Consortium for Energy Efficiency (CEE), CEESM High 
Efficiency Residential Swimming Pool Initiative, January 2013, 
available at library.cee1.org/system/files/library/9986/CEE_Res_SwimmingPoolInitiative_01Jan2013_Corrected.pdf (last 
accessed April 15, 2021).
    \61\ Brookhaven National Laboratory (BNL), Performance Study of 
Swimming Pool Heaters, January 2009, available at www.bnl.gov/isd/documents/73878.pdf (last accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE requests comment on the overall methodology for determining 
consumer pool heater energy use.
a. Consumer Pool Heater Operating Hours
    For the October 2015 NODA, DOE estimated that electric pool heaters 
operate on average approximately 400 hours per year at the 
representative output capacity of 110 kBtu/h. See chapter 7 of the 
October 2015 NODA TSD.
    EEI asserted that the estimated operating hours appear to be 
overstated for most States or regions. (EEI, No. 21 at p. 6-8) For the 
October 2015 NODA, DOE's estimate of operating hours was based on a 
fixed output capacity of 110 kBtu/h for electric pool heaters. For this 
NOPR, DOE assigned a consumer pool heater size for each sampled pool or 
spa, so that the estimated operating hours vary by region and 
application. DOE estimated that electric resistance pool heaters 
operate on average approximately 260 hours per year and heat pump pool 
heaters operate on average approximately 360 hours per year. The 
decrease in consumer pool heater operating hours between the October 
2015 NODA and the NOPR is primarily due to updating the methodology for 
assignment of pool size, changes in the methodology for estimating pool 
heater load, and changes in sample, which includes a decrease in the 
estimate of consumer pool heaters in commercial applications from 10 
percent in the October 2015 NODA to 6 percent in the NOPR (for more 
details see chapter 7 of the NOPR TSD). DOE estimated that gas-fired 
pool heaters operate on average approximately 190 hours per year.
    EEI stated that for the South Atlantic region, DOE used the pool 
operating hours from Florida only (12 months of operation) and ignores 
the values from the other States that are estimated to operate for 5 
months or 7 months. EEI stated that a weighted average for the region 
would be much more appropriate. (EEI, No. 21 at p. 8) For the October 
2015 NODA, DOE's analysis for single-family pool heaters (which account 
for the majority of shipments) uses separate values for the number of 
months of operation for Florida compared to other States in the South 
Atlantic region. The analysis for pool heaters servicing community and 
commercial swimming pool is divided into Census divisions, and the 
South Atlantic values for the number of months are a shipment-weighted 
average between Florida and the different States in this region. For 
the NOPR, DOE's analysis for single-family pool heaters is based on the 
months the swimming pool is used, as reported in RECS 2015, in the last 
year for each individual household. For pool heaters servicing 
community and commercial pools, DOE kept its approach of using the 
shipment-weighted average between Florida and the other States in the 
South Atlantic region, as well as assigning a fraction of pools for 
year-round use.
    Raypak and AHRI stated that gas-fired pool heaters heat a pool 
rapidly and so do not need to operate when the pool

[[Page 22670]]

is not in use; in contrast, heat pump pool heaters generally take 
several days to heat a pool. (Raypak, No. 4 at p. 7; AHRI, No. 7 at p. 
9) DOE's analysis takes into account longer operating hours for heat 
pump pool heaters compared to gas-fired pool heaters and electric 
resistance pool heaters.
    For the October 2015 NODA, DOE assigned different swimming pool use 
hours depending on the region the consumer pool heater is installed in, 
based on DOE's Energy Saver website assumptions.\62\ See chapter 7 of 
the October 2015 NODA TSD. EEI stated that a study by the National 
Renewable Energy Laboratories (``NREL'') shows that in Florida, 
California, and Arizona (three of the top four States with the highest 
number of in-ground pools according to NRDC \63\), consumer pool 
heaters are used less than DOE's analysis would indicate. The report 
states that ``the majority of solar [pool heating] users actually use 
their pools from April through October, whereas a majority of non-users 
[of solar pool heating] only use their pools from May through 
September.'' \64\ EEI stated that although this information is somewhat 
dated, it clearly shows that even in the best climates, a very small 
percentage of residential pool owners use their pools (and consumer 
pool heaters) anywhere close to the values estimated by DOE. (EEI, No. 
21 at p. 8-9) In response, DOE contends that a study of users of solar 
pool heating (i.e., those who own a home with a swimming pool heated by 
a solar collector) is not representative of users of electric and gas-
fired pool heaters. Also, as stated in the NREL report, non-users of 
solar pool heaters include those who do not heat their pool at all and 
therefore the pool usage is not an appropriate comparison. For the 
NOPR, DOE used RECS 2015 data that include average number of pool and 
spa operating months for each of the single-family households with a 
pool and/or spa heater, as well as 2020 Pkdata that include average 
pool operating months by state for pool heaters in commercial pool 
applications.
---------------------------------------------------------------------------

    \62\ DOE Energy Saver, available at www.energy.gov/energysaver/heat-pump-swimming-pool-heaters (last accessed April 15, 2021).
    \63\ NRDC, NRDC's Response to CEC's Invitation to Participate in 
the Development of Appliance Energy Efficiency Measures 2013 
Appliance Efficiency Pre-Rulemaking on Appliance Efficiency 
Regulations: Docket Number 12-AAER-2F Residential Pool Pumps and 
Motors (May 2013), available at efiling.energy.ca.gov/GetDocument.aspx?tn=70721&DocumentContentId=8266 (last accessed 
April 15, 2021).
    \64\ Synapse Infusion Group, Inc., Report on Solar Pool Heating 
Quantitative Survey, August 1998-December 1998, April 1998, NREL/SR-
550-26485, available at www.nrel.gov/docs/fy99osti/26485.pdf (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    The CA IOUs stated that portable electric spas are typically heated 
year-round, while consumer pool heaters often are only used 
occasionally during the swimming months. (CA IOUs, No. 5 at p. 5; CA 
IOUs, No. 20 at p. 7) DOE's analysis for electric pool heaters is not 
currently analyzing portable electric spa heaters, which are typically 
at or below 11 kW. DOE's analysis accounts for differences in operation 
between consumer pool heaters used in swimming pools compared to spas 
by using RECS 2015 reported months of use. RECS 2015 data show that on 
average heated swimming pools are used 5.2 months per year, while spas 
are used on average 7.4 months per year.
    DOE requests comment on the data sources and methodology for 
determining consumer pool heater hours of operation as well as swimming 
pool and spa hours of operation.
b. Heat Pump Pool Heater Energy Use
    For both the October 2015 NODA and NOPR, DOE took into account 
variations in heat pump pool heaters regarding output capacity, input 
capacity, and COPs observed in the field based on the geographical 
location.
    Commenting on the March 2015 RFI, the CA IOUs stated that although 
heat pump pool heaters have diminished performance at temperatures 
below 55 [deg]F, most consumer pool heaters only operate during the 
swimming months, when ambient temperatures are often significantly 
higher than 55 [deg]F. They added that the outside air temperature 
constraint on heat pump technology has been successfully addressed in 
water heaters that utilize heat pump technology whenever possible, with 
electric resistance as a backup only when needed. (CA IOUs, No. 5 at p. 
5)
    DOE accounted for outdoor air temperature and pool season length in 
determining the energy use of heat pump pool heaters. In the October 
2015 NODA, DOE assigned an average COP value for each heat pump 
efficiency level based on climate region (Hot Humid, Warm, or Cold 
climate). For example, for EL 2 the weighted COPs by region are 5.2 for 
the Hot Humid region, 4.6 for the Warm region, and 4.0 for the Cold 
region. See chapter 7 of the October 2015 NODA TSD. For the NOPR, DOE 
refined its methodology to adjust the COP for heat pumps based on pool 
season length and monthly average temperatures for the different 
climate regions in the analysis. For example, for EL 2 the weighted 
COPs by region are 5.44 for the Hot Humid region, 5.20 for the Warm 
region, and 3.76 for the Cold region. DOE is not aware of any hybrid 
units in the market that utilize electric resistance as a heat pump 
pool heater backup but agrees with CA IOUs that this is a potential 
solution for a fraction of installations that might require operation 
at very low ambient temperatures or during a period of high demand. DOE 
is aware of a hybrid gas-fired/heat pump unit.\65\
---------------------------------------------------------------------------

    \65\ Pentair. UltraTemp ETi Hybrid Heater, available at 
www.pentair.com/en/products/pool-spa-equipment/pool-heaters/ultratemp-hybrid-heater.html (last accessed April 15, 2021).
---------------------------------------------------------------------------

    For the October 2015 NODA, DOE accounted for the potential increase 
in pool pump electricity use due to longer operating hours of heat pump 
pool heaters, since the pool pump used by the pool heater needs to 
operate while the pool heater heats the pool. DOE assumed that heat 
pumps would tend to run longer than an electric resistance pool heater 
with similar output capacity and would therefore require the pool pump 
to work longer. See chapter 7 of the October 2015 NODA TSD. ASAP and 
NRDC commented that typical daily pool pump operating hours are 
significantly higher than pool heater operating hours; therefore, the 
additional pool heater operating hours estimated for heat pump pool 
heaters would not necessarily translate directly to additional pool 
pump operating hours. (ASAP and NRDC, No. 19 at p. 3) Similarly, the CA 
IOUs stated that most pool heating is achieved during the normal daily 
filtration pumping cycle, minimizing the need for additional pumping 
energy to heat pools. The CA IOUs additionally stated as filtration 
pumping is increasingly met by energy efficient dual-speed, multi-
speed, and variable-speed pumps, which often run at lower flows for a 
longer number of hours, the need for increased pumping for pool heating 
is further reduced. (CA IOUs, No. 20 at p. 6) The CA IOUs, ASAP, and 
NRDC encouraged DOE to ensure that it is not overestimating the 
additional pool pump energy required for heat pump pool heaters. (ASAP 
and NRDC, No. 19 at p. 3; CA IOUs, No. 20 at p. 6)
    For the NOPR, DOE updated its analysis to take into account the 
coincidental heat pump pool heater and typical pool pump use, as well 
as the use of higher efficiency pumps. This revision decreased the 
impact of the heat pump pool heater on additional pool pump energy use 
by about half compared to the October 2015 NODA estimates.
    DOE requests comment on the methodology used for determining heat 
pump pool heater energy use.

[[Page 22671]]

c. Consumer Pool Heater Standby and Off Mode Energy Use
    Lochinvar estimated that, based on DOE's estimates of burner 
operating hours (``BOH'') and average pool operating hours (``POH''), 
the annual power consumption in standby mode and off mode will be 
between 0.1 percent and 1 percent of the total annual power consumption 
for all Lochinvar pool heaters. (Lochinvar, No. 2 at p. 2) DOE's 
estimate of annual power consumption in standby mode and off mode is 
consistent with Lochinvar's comment. Lochinvar stated that its gas-
fired pool heaters use spark ignition and have no fossil fuel 
consumption in either standby mode or off mode. (Lochinvar, No. 2 at p. 
1) Raypak stated that the typical fossil fuel energy use in standby 
mode and off mode is zero because gas-fired pool heaters only fire when 
there is a call for heat to maintain a setpoint temperature. Raypak 
also stated that standby and off-mode is limited to electricity 
consumption for all gas-fired, electric resistance, and electric heat 
pump pool heaters and that the magnitude of the electricity consumption 
may change slightly based on the input capacity of the unit. (Raypak, 
No. 4 at p. 2) DOE's understanding based on a review of the market and 
product literature is consistent with Raypak's comments about fossil 
fuel consumption in either standby or off mode for units not equipped 
with standing pilot ignition. DOE only accounted for standby or off 
mode fossil fuel consumption for gas-fired pool heaters equipped with 
standing pilot ignition. DOE's understanding based on a review of the 
market and product literature is also consistent with Raypak's comment 
that all pool heaters have standby and off mode electricity use. For 
all gas-fired pool heaters, regardless of ignition type, as well as for 
electric resistance and electric heat pump pool heaters, DOE's analysis 
accounts for standby and off mode electricity use.
    For the October 2015 NODA, DOE assumed that most consumers are 
unlikely to set their electric pool heaters to the off mode during the 
non-heating season. See chapter 7 of the October 2015 NODA TSD. AHRI 
disagreed with this assumption and stated that in climates with a long 
and cold non-heating season, many consumers will put their pool heater 
in the off mode as part of the process of closing their pool for the 
season. AHRI stated that in parts of the country where the non-heating 
season is either relatively short or relatively mild, some consumers 
will also put their pool heater in the off mode. AHRI stated that in 
parts of the country where there is a minimal non-heating season, 
consumers are unlikely to put the pool heater in the off mode. (AHRI, 
No. 16 at p. 5)
    Upon further consideration, including consideration of the comments 
received, for the NOPR, DOE revised its standby and off mode analysis 
to account for a large fraction of consumers that turn off their 
equipment during the non-pool heating season, especially in colder 
regions of the country. Chapter 7 of the NOPR TSD provides details on 
DOE's standby and off mode analysis for consumer pool heaters.
    DOE requests comment on the methodology used for determining 
standby and off mode energy use.
3. Energy Use Results
    For the October 2015 NODA, DOE estimated that the average electric 
pool heater load is 47.9 million Btu per year, which resulted in 
average energy use of 14,034 kWh per year for an electric resistance 
pool heater and 4,091 to 2,505 kWh per year for an electric heat pump 
pool heater, depending on the efficiency level. See chapter 7 of the 
October 2015 NODA TSD.
    EEI stated that according to RECS 2005, the average electricity use 
of a consumer pool heater was 3,512 kWh per year. EEI stated that RECS 
2005 also estimates that electric pool heaters use an average of 37.7 
million Btu/year, corresponding to 11,046 kWh per year. EEI stated that 
RECS 2001 data show an average annual energy use for electric pool 
heaters, spa heaters, and hot tubs of 2,300 kWh/year. (EEI, No. 21 at 
p. 3)
    The values presented by EEI do not represent pool heater 
electricity use, but instead represent the estimated electricity use 
for the domestic water heater. RECS data before 2015 did not report 
disaggregated pool heater energy use, but instead groups such energy 
use with other appliances (including pool pumps, furnace fans, 
freezers, dishwashers, lighting, etc.), while the domestic water 
heating energy use associated by the electric water heater is 
disaggregated.\66\ For households with an electric pool heater in RECS 
2009 this value (energy use with other appliances) is 16,953 kWh per 
year.\67\ The quoted value reported by EEI from RECS 2005 of 3,512 kWh 
represents the domestic hot water energy use by the electric water 
heater for households with both an electric water heater and a pool 
heater.\68\ Meanwhile the 37.7 million Btu/year figure in RECS 2005 
represents the domestic hot water energy use for any water heater used 
in households with an electric pool heater.\69\ Neither of these values 
include the electric pool heater energy use. The 2,300 kWh/year average 
annual energy use for electric pool heaters, spa heaters, and hot tubs 
from RECS 2001 \70\ does not represent RECS 2001 data, but instead 
references a 1997 report.\71\ It is important to note that this 2,300 
kWh/year represents all electric pool heaters, spa heaters, and hot 
tubs, most of which are small spa heaters and hot tubs with electric 
resistance heaters below 11 kW (which are outside of the scope of the 
proposed standards). Therefore, the 2,300 kWh is not necessarily 
inconsistent with DOE's current energy use estimates for electric pool 
heaters. For the NOPR, the estimated shipment-weighted average 
electricity consumption for electric pool heaters in residential 
applications in 2028 is 2,635 kWh.
---------------------------------------------------------------------------

    \66\ Previous to the RECS 2015, RECS only reported disaggregated 
conditional demand analysis electricity use estimates for space 
heating, space cooling, water heating, and refrigerator appliances.
    \67\ This value includes a mixture of households with electric 
resistance and heat pump pool heaters.
    \68\ U.S. Department of Energy-Energy Information 
Administration. 2005 Residential Energy Consumption Survey: Energy 
Consumption and Expenditures Tables. Table WH6. Average Consumption 
for Water Heating by Major Fuels Used, 2005 Physical Units per 
Household, Page 8, available at www.eia.gov/consumption/residential/data/2005/c&e/pdf/tablewh6.pdf (last accessed April 15, 2021).
    \69\ U.S. Department of Energy-Energy Information 
Administration. 2005 Residential Energy Consumption Survey: Energy 
Consumption and Expenditures Tables. Table WH7. Average Consumption 
for Water Heating by Major Fuels Used, 2005 Million British Thermal 
Units (Btu) per Household, Page 8, available at www.eia.gov/consumption/residential/data/2005/c&e/pdf/tablewh7.pdf (last 
accessed April 15, 2021).
    \70\ U.S. Department of Energy-Energy Information 
Administration. 2001 Residential Energy Consumption Survey: Energy 
Consumption and Expenditures Tables. Table 2. Residential 
Consumption of Electricity by End Use, 2001, available at 
www.eia.gov/consumption/residential/data/2001/index.php?view=consumption#Water (last accessed April 15, 2021).
    \71\ Wenzel, Tom, Jonathan G. Koomey, Gregory J. Rosenquist, 
Marla Sanchez, and James W. Hanford. Energy Data Sourcebook for the 
U.S. Residential Sector, September 1997, page 128, available at eta-publications.lbl.gov/sites/default/files/lbnl-40297.pdf (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    EEI also stated that pool pumps represent about 70 percent of 
energy used in swimming pools, consuming around 3,500 kWh per year, so 
electric pool heaters use about 29 percent of the residential swimming 
pool energy use in the US and Canada. EEI stated that using these data, 
an electric pool heater would use about 1,050 kWh per year. (EEI, No. 
21 at p. 4) In response, the study cited by EEI includes all swimming 
pools with and without a pool heater. Swimming pools with both a pool 
heater and pool pump tend to consume much more energy than the numbers 
cited by EEI.

[[Page 22672]]

    For this NOPR, DOE updated its energy use analysis to account for 
RECS 2015 and CBECS 2012 pool heater data. For residential 
applications, DOE estimated that on average electric resistance pool 
heater load is 22.9 million Btu per year, which resulted in average 
shipment-weighted energy use of 6,788 kWh per year, and on average 
electric heat pump pool heater load is 37.6 million Btu per year, which 
resulted in average shipment-weighted energy use of 2,315 kWh per year. 
For commercial applications,\72\ DOE estimated that on average electric 
resistance pool heater load is 129.0 million Btu per year, which 
resulted in average shipment-weighted energy use of 38,187 kWh per 
year, and on average electric heat pump pool heater load is 151.6 
million Btu per year, which resulted in average shipment-weighted 
energy use of 9,202 kWh per year.
---------------------------------------------------------------------------

    \72\ DOE estimated that commercial applications account for 6 
percent of electric pool heater shipments in 2028.
---------------------------------------------------------------------------

    For gas-fired pool heaters, DOE also based its analysis on RECS 
2015 data, CBECS 2012 data, and updated energy use methodology. For 
residential applications, DOE estimated that the consumer pool heater 
load is 28.9 million Btu per year, which resulted in average shipment-
weighted energy use of 35.0 million Btu per year. For commercial 
applications,\73\ DOE estimated that on average gas-fired pool heater 
load is 206.2 million Btu per year, which resulted in average shipment-
weighted energy use of 247.2 million Btu per year.
---------------------------------------------------------------------------

    \73\ DOE estimated that commercial applications account for 13 
percent of gas-fired pool heater shipments in 2028.
---------------------------------------------------------------------------

    See chapter 7 of the NOPR TSD for further details.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
consumer pool heaters. 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:
     The LCC is the total consumer expense of an appliance or 
product over the life of that product, consisting of total installed 
cost (manufacturer selling price, distribution chain markups, sales 
tax, and installation costs) plus operating costs (expenses for energy 
use, maintenance, and repair). To compute the operating costs, DOE 
discounts future operating costs to the time of purchase and sums them 
over the lifetime of the product.
     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 
at higher efficiency levels by the change in annual operating cost for 
the year that amended or new standards are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of consumer pool heaters in the 
absence of new or amended energy conservation standards. In contrast, 
the PBP for a given efficiency level is measured relative to the 
baseline product.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
consumers. As stated previously, DOE developed consumer samples 
primarily from the 2015 RECS and 2012 CBECS. For each sample consumer, 
DOE determined the energy consumption for the consumer pool heater and 
the appropriate energy price. By developing a representative sample of 
consumers, the analysis captured the variability in energy consumption 
and energy prices associated with the use of consumer pool heaters.
    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 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 consumer pool heater user 
samples. For this proposed rule, the Monte Carlo approach is 
implemented in MS Excel together with the Crystal Ball\TM\ add-on.\74\ 
The model calculated the LCC and PBP for products at each efficiency 
level for 10,000 consumer pool heater installations per simulation run. 
The analytical results include a distribution of 10,000 data points 
showing the range of LCC savings for a given efficiency level relative 
to the no-new-standards case efficiency distribution. In performing an 
iteration of the Monte Carlo simulation for a given consumer, product 
efficiency is chosen based on its probability. If the chosen product 
efficiency is greater than or equal to the efficiency of the standard 
level under consideration, the LCC and PBP calculation reveals that a 
consumer is not impacted by the standard level. By accounting for 
consumers who already purchase more-efficient products, DOE avoids 
overstating the potential benefits from increasing product efficiency.
---------------------------------------------------------------------------

    \74\ Crystal Ball\TM\ is commercially-available software tool to 
facilitate the creation of these types of models by generating 
probability distributions and summarizing results within Excel, 
available at www.oracle.com/middleware/technologies/crystalball.html 
(last accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE calculated the LCC and PBP for all consumers of pool heaters as 
if each were to purchase a new product in the expected year of required 
compliance with new or amended standards. Any amended standards would 
apply to consumer pool heaters manufactured 5 years after the date on 
which any new or amended standard is published. (42 U.S.C. 
6295(m)(4)(A)(ii)) For this analysis DOE assumed publication of a final 
rule, were standards to be amended, in 2023. Therefore, for purposes of 
its analysis, DOE used 2028 as the first year of compliance with any 
amended standards for consumer pool heaters.
    Table IV.15 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 NOPR TSD and its appendices.

[[Page 22673]]



Table IV.15--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 project product
                                          costs.
Installation Costs.....................  Baseline and incremental
                                          installation cost determined
                                          with data from 2021 RS Means.
Annual Energy Use......................  The total annual energy use
                                          multiplied by the hours per
                                          year. Average number of hours
                                          based on field data.
                                         Variability: Based on regional
                                          data and 2015 RECS and 2012
                                          CBECS.
Energy Prices..........................  Natural Gas: Based on EIA's
                                          Natural Gas Navigator data for
                                          2020.
                                         Propane: Based on EIA's SEDS
                                          for 2019.
                                         Electricity: Based on EIA's
                                          Form 861 data for 2020.
                                         Variability: Regional energy
                                          prices determined for 10
                                          regions for pool heaters in
                                          individual single-family homes
                                          and 9 census divisions for
                                          pool heaters in community and
                                          commercial pool heaters.
                                         Marginal prices used for both
                                          natural gas and electricity.
Energy Price Trends....................  Based on AEO2021 price
                                          projections.
Repair and Maintenance Costs...........  Based on 2021 RS Means data and
                                          other sources. Assumed
                                          variation in cost by
                                          efficiency.
Product Lifetime.......................  Average: 11.2 years for both
                                          electric and gas-fired pool
                                          heaters.
Discount Rates.........................  Residential: 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.
                                         Commercial: Calculated as the
                                          weighted average cost of
                                          capital for businesses
                                          purchasing pool heaters.
                                          Primary data source was
                                          Damodaran Online.
Compliance Date........................  2028.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described 
previously (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. Many 82-percent thermal efficiency (EL 0 and EL 1) 
gas-fired pool heaters without low-NOX burners are currently 
available that do not meet low-NOX criteria in California, 
Utah, and Texas.\75\ Thus, for the NOPR, DOE included the additional 
cost of a low-NOX burner to all gas-fired pool heaters 
installed in certain California,\76\ Utah,\77\ or Texas \78\ locations 
and applications. DOE assigned a fraction of installations outside 
these three regions the low-NOX burner cost adder since the 
models are so widespread.\79\
---------------------------------------------------------------------------

    \75\ Low-NOx gas-fired pool heaters account for 11 
percent of gas-fired pool heaters at EL 0 and 59 percent of pool 
heaters at EL 1.
    \76\ Low-NOx gas-fired pool heaters with a rated heat input 
capacity less than or equal to 2,000,000 Btu/h Hour are required in 
South Coast Air Quality Management District (``SCAQMD'') and San 
Joaquin Valley Air Pollution Control District (``SJAPCD''). SCAQMD 
Rule 1146.2, available at www.aqmd.gov/docs/default-source/rule-book/reg-xi/rule-1146-2.pdf; SJAPCD Rule 4308, available at 
www.valleyair.org/rules/currntrules/03-4308_CleanRule.pdf (last 
accessed April 15, 2021). Low NOX gas-fired pool heaters 
with a rated heat input capacity 400,001 to 2,000,000 Btu/h are 
required in Bay Area Air Quality Management District (``BAAQMD''). 
Regulation 9, available at www.baaqmd.gov/~/media/dotgov/files/
rules/reg-9-rule-6-nitrogen-oxides-emissions-from-natural-gasfired-
water-heaters/documents/rg0906.pdf?la=en (last accessed April 15, 
2021).
    \77\ Low-NOX gas-fired pool heaters with a rated heat 
input capacity less than 2,000,000 Btu/Hour. Utah Code 15A-6-102, 
available at le.utah.gov/xcode/Title15A/Chapter6/15A-6-S102.html?v=C15A-6-S102_2017050920170509 (last accessed April 15, 
2021).
    \78\ Low NOX gas-fired pool heater with a rated heat 
input capacity less than or equal to 2,000,000 Btu/h Hour are 
required (except for units installed in single-family residences, 
used exclusively to heat swimming pools and hot tubs). Texas 
Administrative Code, Control of Air Pollution from Nitrogen 
Compounds, available at texreg.sos.state.tx.us/public/
readtac$ext.ViewTAC?tac_view=5&ti=30&pt=1&ch=117&sch=E÷=3&rl=Y 
(last accessed April 15, 2021).
    \79\ Pires, K. It's A Low-NOX Life. AQUA. November 2008, 
available at aquamagazine.com/it-s-a-low-nox-life.html (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE requests comments on its assumption that gas-fired pool heaters 
installed in California, Utah, or Texas would have a low-NOX 
burner and the fraction of installations outside these three regions 
that would have a low-NOX burner.
    Commenting on the October 2015 NODA, EEI stated that publicly 
available information on websites shows price differentials between 
electric resistance pool heaters and heat pump pool heaters on the 
order of $2,000 or $3,000, at least two to three times more than DOE's 
estimates. (EEI, No. 21 at p. 11) DOE compared its estimated prices to 
available online retail prices for electric resistance pool heaters and 
heat pump pool heaters with a size close to 110 kBtu/h and found them 
to be consistent with DOE's analysis. DOE's derivation of product costs 
is discussed in more detail in sections IV.C.2 and IV.D of this 
document.
    In the October 2015 NODA, DOE developed separate product price 
projections for baseline electric resistance pool heaters and heat pump 
pool heaters. For baseline electric resistance pool heaters, DOE used 
the historical producer price index (``PPI'') data from the Bureau of 
Labor Statistics' (``BLS'') for ``heating equipment (except warm air 
furnace) manufacturing'' from 1980 to 2014 to determine a constant

[[Page 22674]]

price trend.\80\ Because heat pump pool heaters share similar 
technology with heat pumps used for space conditioning, DOE used 
historical PPI data for ``unitary air conditioners manufacturing'' 
spanning the period 1978-2014 to determine a decreasing price trend for 
these products.\81\ See chapter 8 of the October 2015 NODA TSD.
---------------------------------------------------------------------------

    \80\ Bureau of Labor Statistics. Heating equipment PPI series 
ID: PCU 333414333414, available at www.bls.gov/ppi/(last accessed 
April 15, 2021).
    \81\ Bureau of Labor Statistics. Unitary air conditioners 
manufacturing product series ID: PCU333415333415E, available at 
www.bls.gov/ppi/ (last accessed April 15, 2021).
---------------------------------------------------------------------------

    EEI stated that DOE provides no evidence for assuming that heat 
pump pool heater costs will decrease on a real basis, while electric 
resistance pool heater prices stay constant on a real basis. (EEI, No. 
21 at p. 11) AHRI and EEI stated that pool heaters are significantly 
different from the space heating and cooling equipment used to derive 
the product price trend used in the October 2015 NODA analysis. AHRI 
and EEI also stated that there are different economies of scope and 
scale, as electric pool heater shipments are in the tens of thousands 
per year, while space heating and cooling equipment have shipments of 
about six to seven million units per year. (AHRI, No. 16 at p. 5; EEI, 
No. 21 at p. 10) AHRI stated that there is no economy of scale 
available to the manufacturers of heat pump pool heaters. (AHRI, No. 16 
at p. 5) EEI also stated that over the past several years, the real 
price of unitary air conditioners has increased, and to project 
downward prices ignores this recent trend. EEI stated that DOE should 
only use data for pool heaters for price projections, and if not 
available, use the same price factor index projections for electric 
resistance pool heaters and heat pump pool heaters. (EEI, No. 21 at p. 
10)
    DOE acknowledges that use of a price trend for heat pumps may not 
accurately reflect the trend for heat pump pool heaters. For the NOPR, 
DOE used shipment-weighted wholesaler listed prices from 2003-2019 from 
the 2020 Pkdata report.\82\ This data was used to produce different 
decreasing price trends for electric resistance pool heaters, heat pump 
pool heaters, and gas-fired pool heaters. DOE performed a sensitivity 
analysis on price trend as detailed in appendix 8C of the NOPR TSD. 
Further details about the development of the price trends can be found 
in chapter 8 and appendix 8C of the NOPR TSD.
---------------------------------------------------------------------------

    \82\ Pkdata, 2020 Residential and Commercial Swimming Pool, Hot 
tub, and Pool Heater Customized Report for LBNL, October 15, 2020, 
available at: www.pkdata.com/datapointstrade.html#/ (last accessed 
April 15, 2021).
---------------------------------------------------------------------------

    DOE requests comments on its assumption and methodology for 
determining equipment price trends. DOE also requests data that would 
allow for use of different price trend projections for electric 
resistance and heat pump pool heaters.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE estimates all 
the installation costs associated with fitting a consumer pool heater 
in a new housing unit, as a replacement for an existing pool heater, or 
in an existing pool without a pool heater (new owners). This includes 
any additional costs, such as electric modifications that would be 
required to install equipment at various efficiency levels. For the 
October 2015 NODA, DOE used 2015 RS Means for the materials and labor 
cost data needed to estimate the installation costs for electric pool 
heaters.\83\ See chapter 8 and appendix 8C of the October 2015 NODA 
TSD. DOE accounted for regional differences in labor costs by using RS 
Means regional cost factors.
---------------------------------------------------------------------------

    \83\ RS Means Company, Inc., RS Means Residential Cost Data 2015 
(2015), available at www.rsmeans.com/ (last accessed April 15, 
2021).
---------------------------------------------------------------------------

    For the October 2015 NODA, DOE accounted for the increased cost of 
additional electrical requirements for new swimming pool and new owner 
installations. 80 FR 65169. For new electric pool heater owners 
(including owners of new swimming pools and owners of existing swimming 
pools), DOE assumed that an electric resistance pool heater would have 
higher electrical connection installation costs in comparison to the 
electrical requirements for a heat pump pool heater. For replacements 
in outdoor swimming pools, DOE assumed that the installation costs 
would be the same for all efficiency levels because the old consumer 
pool heater already has adequate electrical service for the new pool 
heater. For replacements in indoor installations, DOE assumed that they 
are all electrical resistance and that replacement with a heat pump 
pool heater would add a significant cost to run water piping and an 
electrical connection to outside the building, where the heat pump pool 
heater will be installed. See chapter 8 and appendix 8C of the October 
2015 NODA TSD.
    EEI stated that the difference in installation cost between 
efficiency levels for replacements of outdoor electric pool heaters is 
understated. EEI stated that based on information from 
poolheatpumps.com and worldwidepoolheaters.com, electric resistance 
pool heaters weigh between 40 and 50 pounds, while heat pump pool 
heaters weigh anywhere between 140 and 328 pounds (depending on the 
capacity and features). EEI stated that therefore, shipping and labor 
costs will be higher, as it is likely that a two-person crew will be 
needed to move and install the heat pump pool heater. It added that the 
existing electric resistance pool heater may be located in a space-
constrained area, and addressing the space constraints to install a 
heat pump unit will increase the installation cost dramatically in a 
number of cases (on the order of thousands of dollars). (EEI, No. 21 at 
p. 12) DOE's estimates for installing a consumer pool heater come from 
RS Means, which assumes a two-person crew. DOE also accounts for 
significant increased installation costs for heat pump pool heaters 
installed indoors. Further details about the development of the heat 
pump installation costs can be found in chapter 8 of the NOPR TSD.
    DOE seeks comment regarding the fraction of electric pool heater 
installations that are located in a space-constrained area that could 
increase the cost of installing a heat pump pool heater.
    The October 2015 NODA analysis accounted for installing the 
electrical connection new swimming pool installations with electric 
pool heaters. AHRI stated that DOE needs to account for installing 
utilities in new pool installations. (AHRI, No. 7 at p. 6) For the 
NOPR, DOE added the cost of new gas piping and electrical connection 
for new swimming pool installations with a natural gas or propane pool 
heater.
    For the NOPR, DOE updated the installation cost data using RS Means 
2021 \84\ (including labor costs) and included the costs for installing 
a gas-fired pool heater. For gas-fired pool heaters, the incremental 
installation cost for the condensing design includes the cost of the 
condensate drain piping that goes from the consumer pool heater to a P-
trap device \85\ located at the sewer line entrance. See chapter 8 of 
the NOPR TSD for more details.
---------------------------------------------------------------------------

    \84\ RS Means Company, Inc., RS Means Residential Cost Data 2021 
(2021), available at www.rsmeans.com/ (last accessed April 15, 
2021).
    \85\ A ``P-trap'' is required by many city codes. It helps to 
isolate the condensate from back-flowing into the pool water and 
prevents the sewer gas from back-flowing.
---------------------------------------------------------------------------

    DOE requests comments on its assumption, methodology, and sources

[[Page 22675]]

for determining installation costs for consumer pool heaters.
3. Annual Energy Consumption
    For each sampled installation, DOE determined the energy 
consumption for a consumer pool heater at different efficiency levels 
using the approach described previously in section IV.E of this 
document.
a. Rebound Effect
    Higher-efficiency consumer pool heaters reduce the operating costs 
for a consumer, which can lead to greater use of the consumer pool 
heater. A direct rebound effect occurs when a product that is made more 
efficient is used more intensively, such that the expected energy 
savings from the efficiency improvement may not fully materialize. At 
the same time, consumers benefit from increased utilization of products 
due to rebound. Overall consumer welfare (taking into account 
additional costs and benefits) is generally understood to increase from 
rebound. DOE did not find any data on the rebound effect that is 
specific to consumer pool heaters. In the April 2010 final rule, DOE 
estimated a rebound of 10 percent for pool heaters for the NIA but did 
not include rebound in the LCC analysis. 75 FR 20112, 20165. Given the 
uncertainty and lack of data specific to pool heaters, DOE does not 
include the rebound effect in the LCC analysis for this NOPR. DOE does 
include rebound in the NIA for a conservative estimate of national 
energy savings. DOE estimates a rebound effect of 10 percent for 
consumer pool heaters used in residential applications based on studies 
of other residential products and 0 percent for consumer pool heaters 
used in commercial applications. See section IV.H.2 for further details 
on how the rebound effect is applied in the NIA.
    AHRI stated that DOE should include the rebound effect in the LCC 
analysis. AHRI stated that although the increased use of the heated 
pool is real, it has no real monetary value. AHRI stated that the 
increase in a consumer's monthly energy bill due to the rebound effect 
is real. (AHRI, No. 16 at p. 6) DOE disagrees that the benefit of using 
a heated pool more often has no real monetary value. The value of any 
service can be inferred from what a user will pay for it. In the case 
of a rebound effect, the user indirectly pays for the increased use by 
foregoing savings on the utility bill. For the LCC analysis, DOE does 
not include the rebound effect due to a lack of data specific to pool 
heaters. DOE recognizes, however, that increased consumer pool heater 
usage associated with the rebound effect provides consumers with 
increased welfare (e.g., more pool usage or higher swimming pool water 
temperature). Economic theory suggests that, if it were able to 
monetize the welfare change to consumers due to the rebound effect, 
consumer welfare would increase.
    DOE requests comments on its approach for determining the rebound 
effect, including the magnitude of the rebound effect and data sources 
specific to pool heaters.
4. Energy Prices
    Because marginal electricity price more accurately captures the 
incremental savings associated with a change in energy use from higher 
efficiency, it provides a better representation of incremental change 
in consumer costs than average electricity prices. Therefore, DOE 
applied average electricity prices for the energy use of the product 
purchased in the no-new-standards case, and marginal electricity prices 
for the incremental change in energy use associated with the other 
efficiency levels considered.
    For the October 2015 NODA, DOE derived average and marginal 
residential marginal electricity prices for 30 geographic regions and 
commercial average and marginal electricity prices for 9 census 
divisions based on data from EIA's form EIA-861M (formerly EIA-
826).\86\ 80 FR 65169.
---------------------------------------------------------------------------

    \86\ U.S. Department of Energy-Energy Information 
Administration, Form EIA-861M (formerly EIA-826) Database Monthly 
Electric Utility Sales and Revenue Data (2013), available at 
www.eia.gov/electricity/data/eia861m/ (last accessed April 15, 
2021).
---------------------------------------------------------------------------

    EEI stated that if DOE analyzes commercial pools in this pool 
heater rulemaking, then the estimated residential energy prices must be 
decreased significantly to account for lower commercial electricity 
prices. (EEI, No. 21 at p. 13) In the October 2015 NODA and this NOPR, 
DOE used commercial energy prices for pool heaters in commercial 
applications and residential energy prices for pool heaters in 
residential applications.
    For the NOPR, DOE derived average monthly residential and 
commercial marginal electricity and natural gas prices for the various 
regions using 2020 data from EIA, \87\ \88\ and average monthly 
residential and commercial LPG prices for the various regions using 
2019 data from EIA.\89\ The methodology and data sources are described 
in detail in appendix 8E of the NOPR TSD.
---------------------------------------------------------------------------

    \87\ U.S. Department of Energy-Energy Information 
Administration, Form EIA-861M (formerly EIA-826) Database Monthly 
Electric Utility Sales and Revenue Data (1990-2020), available at 
www.eia.gov/electricity/data/eia861m/ (last accessed April 15, 
2021).
    \88\ U.S. Department of Energy-Energy Information 
Administration, Natural Gas Navigator (1990-2020), available at 
www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm (last accessed April 
15, 2021).
    \89\ U.S. Department of Energy-Energy Information 
Administration, 2019 State Energy Consumption, Price, and 
Expenditure Estimates (SEDS) (2019), available at www.eia.gov/state/seds/ (last accessed April 15, 2021).
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 
average regional energy prices by a projection of annual change in 
national-average residential or commercial energy price in the 
Reference case from AEO2021, which has an end year of 2050.\90\ To 
estimate price trends after 2050, DOE used simple extrapolations of the 
average annual growth rate in prices from 2045 to 2050 based on the 
methods used in the 2021 Life-Cycle Costing Manual for the Federal 
Energy Management Program (``FEMP'').\91\
---------------------------------------------------------------------------

    \90\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2021 with Projections to 2050, 
available at www.eia.gov/outlooks/aeo/ (last accessed April 15, 
2021).
    \91\ Lavappa, Priya D. and J. D. Kneifel. Energy Price Indices 
and Discount Factors for Life-Cycle Cost Analysis--2021 Annual 
Supplement to NIST Handbook 135. National Institute of Standards and 
Technology (NIST). NISTIR 85-3273-36, available at www.nist.gov/publications/energy-price-indices-and-discount-factors-life-cycle-cost-analysis-2021-annual (last accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE requests comments on its approach for developing gas, LPG, and 
electricity prices.
5. Repair and Maintenance 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 compared to baseline 
efficiency products.
    For the October 2015 NODA, DOE used 2015 RS Means for the materials 
and labor cost data needed to estimate the maintenance and repair costs 
for electric pool heaters.\92\ 80 FR 65169. In addition, DOE used 
information provided in comments, manufacturer literature, and expert 
consultants to calculate maintenance and repair costs, as well as the 
frequency of maintenance and repairs. DOE accounted for regional 
differences in labor costs by using RS Means regional cost factors.
---------------------------------------------------------------------------

    \92\ RS Means Company, Inc., RS Means Residential Cost Data 2015 
(2015), available at www.rsmeans.com/ (last accessed April 15, 
2021).
---------------------------------------------------------------------------

    DOE estimated that the repair cost for heat pump pool heaters is 
slightly greater than for electric resistance pool heaters due to the 
presence of more

[[Page 22676]]

complex components. DOE assumed that electric resistance pool heaters 
do not require maintenance. DOE assumed that a fraction of consumers 
maintain their heat pump pool heaters regularly, while the rest do not. 
DOE estimated the frequency of annual maintenance of heat pump pool 
heaters using data from RECS 2009 about how often air source heat pump 
(space heating and cooling) owners perform maintenance. DOE included 
the cost of preventative maintenance, such as cleaning the air filter 
and checking the evaporator and refrigeration system, in the 
maintenance cost of heat pump pool heaters.
    AHRI stated that the estimated annual maintenance and repair costs 
are too low. AHRI is not aware of 2015 RS Means Facilities Repair and 
Maintenance Data specific to the repair and maintenance of heat pump 
pool heaters. (AHRI, No. 16 at p. 6) DOE determined maintenance and 
repair costs based on RS Means data for products that are similar to 
heat pump pool heaters, such as air source space heating and cooling 
heat pumps and air conditioners. For the NOPR, DOE used 2021 RS Means 
for the materials and labor cost data needed to estimate the 
maintenance and repair costs for electric pool heaters.\93\ The 
methodology and data sources are described in detail in appendix 8F of 
the NOPR TSD.
---------------------------------------------------------------------------

    \93\ RS Means Company, Inc., RS Means Facilities Repair and 
Maintenance 2021 (2021), available at www.rsmeans.com/ (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    Raypak stated that the repair costs for gas-fired pool heaters vary 
as a function of efficiency. Raypak stated that the lowest-efficiency 
products have the lowest repair costs because they are generally 
atmospheric units that do not have blowers and the associated controls. 
Raypak stated that fan-assisted pool heaters have higher repair costs, 
and condensing gas-fired pool heaters have the highest repair costs 
because of the use of materials that are more resistant to both the 
pool chemicals on one side and corrosive condensate on the other side 
of the heat exchanger. (Raypak, No. 4 at p. 6) For the NOPR, DOE 
included additional repair costs for higher efficiency gas-fired pool 
heaters (including repair costs associated with electronic ignition, 
controls, and blowers for fan-assisted designs) based on 2021 RS Means 
data.
    Further detail regarding the maintenance and repair costs developed 
for consumer pool heaters can be found in chapter 8 of the NOPR TSD.
    DOE requests comments on its approach for calculating maintenance 
and repair costs.
6. Product Lifetime
    For the October 2015 NODA, DOE used consumer pool heater lifetime 
estimates from published literature and manufacturer input. The data 
allowed DOE to develop a survival function, which provides a 
distribution of lifetime ranging from 1 to 25 years with a mean value 
of 11 years. DOE assumes that the distribution of lifetimes accounts 
for the impact of the pool water quality on the life of the product, 
the level of maintenance of a consumer pool heater, and the fraction of 
consumers winterizing the consumer pool heater.
    AHRI stated that an average lifetime of 10 years should be applied 
consistently throughout the analysis. (AHRI, No. 16 at p. 6) For the 
October 2015 NODA, the 11.2-year average estimate used was primarily 
based on published literature and manufacturer input from the RFI. For 
the NOPR, DOE updated its lifetime methodology by using historical 
shipments data and pool heater stock data from RECS 1987-2015 and 2020 
Pkdata. The updated average lifetime is 11.2 years for both electric 
and gas-fired pool heaters. Appendix 8G of the NOPR TSD includes a 
sensitivity analysis of higher and lower lifetime estimates.
    DOE welcomes additional comments and data regarding lifetime 
estimates, particularly in relation to differences between electric 
resistance pool heaters, heat pump pool heaters, and gas-fired pool 
heaters.
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 consumer 
pool heaters based on consumer financing costs and the opportunity cost 
of consumer funds.
    DOE applies weighted average discount rates calculated from 
consumer debt and asset data, rather than marginal or implicit discount 
rates. DOE notes that the LCC does not analyze the appliance purchase 
decision, so the implicit discount rate is not relevant in this model. 
The LCC estimates net present value over the lifetime of the product, 
so the appropriate discount rate will reflect the general opportunity 
cost of household funds, taking this time scale into account. Given the 
long time horizon modeled in the LCC, the application of a marginal 
interest rate associated with an initial source of funds is inaccurate. 
Regardless of the method of purchase, consumers are expected to 
continue to rebalance their debt and asset holdings over the LCC 
analysis period, based on the restrictions consumers face in their debt 
payment requirements and the relative size of the interest rates 
available on debts and assets. DOE estimates the aggregate impact of 
this rebalancing using the historical distribution of debts and assets.
    To establish residential discount rates for the October 2015 NODA 
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. It 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 \94\ (``SCF'') for 1995, 1998, 2001, 2004, 2007, and 
2010. Using the SCF and other sources, DOE 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 type, was 4.0 percent.
---------------------------------------------------------------------------

    \94\ Board of Governors of the Federal Reserve System. Survey of 
Consumer Finances. 1995, 1998, 2001, 2004, 2007, and 2010, available 
at www.federalreserve.gov/econres/scfindex.htm (last accessed April 
15, 2021).
---------------------------------------------------------------------------

    AHRI stated that the true marginal discount rates for consumers are 
much more likely to cluster around 8-9 percent than around 3-5 percent. 
AHRI stated that only a minority of consumers will be able to use cash 
or other savings to pay for a consumer pool heater. AHRI stated that 
even then, cash is not a low/no cost source of funds because it must be 
replaced with high cost funds or deferred consumption to rebuild the 
liquidity cushion. AHRI stated that the marginal source of funds for 
most consumers is credit card debt (estimated by DOE to have a rate of 
14.2-15.0 percent). AHRI stated that according to the American Housing 
Survey, only 7 percent of respondents had home equity loans or lines of 
credit (the lowest cost of borrowing for most consumers). (AHRI, No. 16 
at p. 7)
    AHRI stated DOE applies weighted average discount rates calculated 
from consumer debt and asset data, rather than marginal or implicit 
discount rates, and as the LCC does not analyze the appliance purchase 
decision the implicit discount rate is not relevant in this model. For 
the NOPR, DOE maintained its existing approach to derive discount 
rates, but included data

[[Page 22677]]

from the 2013 SCF, 2016 SCF, and 2019 SCF, and updated several other 
data sources. The average rate in the NOPR analysis across all types of 
household debt and equity and income groups, weighted by the shares of 
each type, is 3.8 percent for electric pool heaters and 3.7 percent for 
gas-fired pool heaters.
    To establish commercial discount rates for the fraction of 
instances where businesses are using consumer pool heaters, DOE 
estimated the weighted-average cost of capital using data from 
Damodaran Online.\95\ The weighted-average cost of capital is commonly 
used to estimate the present value of cash flows to be derived from a 
typical company project or investment. Most companies use both debt and 
equity capital to fund investments, so their cost of capital is the 
weighted average of the cost to the firm of equity and debt financing. 
DOE estimated the cost of equity using the capital asset pricing model, 
which assumes that the cost of equity for a particular company is 
proportional to the systematic risk faced by that company. The average 
rate in the October 2015 NODA analysis across all commercial groups was 
4.0 percent for electric resistance pool heaters. For the NOPR 
analysis, the commercial discount rate average is 5.5 percent for 
electric pool heaters and 5.5 percent for gas-fired pool heaters.
---------------------------------------------------------------------------

    \95\ Damodaran Online, Data Page: Costs of Capital by Industry 
Sector, (2021), available at pages.stern.nyu.edu/~adamodar/ (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    See chapter 8 of the NOPR TSD for further details on the 
development of consumer discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy 
conservation standards).
    For the October 2015 NODA, to estimate the energy efficiency 
distribution of heat pump pool heaters in the compliance year, DOE used 
the 2015 AHRI Directory of the Certified Pool Heater models as a 
primary data source.\96\ The fraction of heat pump pool heaters was 
adjusted to take into account standards in Florida \97\ and California 
\98\ that require higher efficiency heat pump pool heaters. The region 
and market specific fraction of electric resistance pool heaters was 
determined for each region and consumer pool heater market. For 
example, DOE assumed that warmer areas of the country such as Florida, 
which are better suited for heat pump installations, have a lower 
fraction of electric resistance installations (pool type 1, 2, 4, 5, 
and 7; see section IV.E.1 of this document), while large spas (pool 
type 3) have a larger fraction of electric resistance installations and 
all indoor installations (pool type 6) were estimated to be electric 
resistance pool heaters.
---------------------------------------------------------------------------

    \96\ AHRI. Directory of the Certified Pool Heater models, 
available at www.ahridirectory.org/ (last accessed April 15, 2021).
    \97\ 2017 Florida Energy & Conservation Code Chapter 4 section 
R403.10.5 states: ``Heat pump pool heaters shall have a minimum COP 
of 4.0 when tested in accordance with AHRI 1160, Table 2, Standard 
Rating Conditions-Low Air Temperature.'' State of Florida. Energy & 
Conservation Code, Chapter 4, available at codes.iccsafe.org/content/FEC2017/chapter-4-re-residential-energy-efficiency?site_type=public (last accessed April 15, 2021).
    \98\ California Title 20 Section 1605.3 (g) (3) states: ``For 
heat pump pool heaters manufactured on or after March 1, 2003, the 
average of the coefficient of performance (COP) at Standard 
Temperature Rating and the coefficient of performance (COP) at Low 
Temperature Rating shall be not less than 3.5.'' California Energy 
Commission. California Code of Regulations: Title 20. Public 
Utilities and Energy, Division 2. State Energy Resources 
Conservation and Development Commission, Chapter 4. Energy 
Conservation, Article 4. Appliance Efficiency Regulations (Refs & 
Annos), 1605.3. State Standards for Non-Federally-Regulated 
Appliances available at govt.westlaw.com/calregs/Document/IEEDE2D64EF7B4F168C0E85379828A8C2?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default
) (last accessed April 15, 2021).
---------------------------------------------------------------------------

    Raypak stated that there are no data available on shipments by 
efficiency and that all heat pump pool heater models and all electric 
resistance pool heater models have approximately the same efficiency 
range. Only gas-fired pool heaters have a range of efficiencies. 
(Raypak, No. 4 at p. 6) AHRI stated that by 2022, some percentage of 
commercial indoor pools will be heated with heat pump pool heaters. 
(AHRI, No. 16 at p. 7) The CA IOUs understand that heat pump pool 
heaters comprise most of the electric pool heater market, given their 
significantly higher efficiency compared to electric resistance pool 
heaters. (CA IOUs, No. 5 at p. 5)
    For the NOPR, based on input from manufacturer interviews, DOE 
adjusted its fraction of electric resistance pool heaters in 2020, as 
shown in Table IV.16, by assuming a larger growth in heat pump pool 
heater shipments compared to electric resistance pool heater shipments 
and an overall lower total fraction of electric resistance pool heaters 
based on input from manufacturer interviews. DOE also updated the 
market shares of the different heat pump pool heater efficiency levels 
based on 2021 AHRI Directory of Certified Product Performance \99\ and 
CEC's 2021 Modernized Appliance Efficiency Database System (``MAEDbS'') 
\100\ for heat pump pool heaters models as well as manufacturer product 
literature. The fraction of heat pump pool heaters was also adjusted to 
take into account standards in Connecticut that require higher 
efficiency heat pump pool heaters,\101\ in addition to standards in 
California and Florida. To extrapolate from 2020 to 2028, DOE assumed 
different growth rates for the electric resistance and heat pump pool 
heater shipments. These assumptions resulted in a 7.8 percent overall 
market share for electric resistance pool heaters in 2028.
---------------------------------------------------------------------------

    \99\ AHRI. Directory of Certified Heat Pump Pool Heater Models. 
February 9, 2021, available at www.ahridirectory.org (last accessed 
April 15, 2021).
    \100\ CEC. Modernized Appliance Efficiency Database System. 
February 9, 2021, available at cacertappliances.energy.ca.gov/Pages/Search/AdvancedSearch.aspx (last accessed April 15, 2021).
    \101\ Connecticut's Regulations and Procedures for Establishing 
Energy Efficiency Standards for Certain Appliances and Products 
Section 16a-48-4(S)(4) states: ``Heat pump pool heaters shall have a 
coefficient of performance (COP) of not less than 3.5 at standard 
temperature rating and at low temperature rating.'' State of 
Connecticut. Title 16a--Planning and Energy Policy. 2015, available 
at eregulations.ct.gov/eRegsPortal/Browse/RCSA/Title_16aSubtitle_16a-48Section_16a-48-4/ (last accessed April 15, 
2021).

[[Page 22678]]



    Table IV.16--Market Share of Electric Resistance Pool Heaters by
             Consumer Pool Heater Market and Region in 2028
------------------------------------------------------------------------
                                   Electric resistance pool     Sample
 Consumer pool heater market type   heater market share (%)   weight of
           * and region           -------------------------- pool heater
                                       2020         2028      market (%)
------------------------------------------------------------------------
Pool Type = 1 and 2, 4, 5, 7 (in           1.9          1.6         40.0
 South Atlantic).................
Pool Type = 1 and 2, 4, 5, 7 (in           3.8          3.2         13.4
 California, Connecticut)........
Pool Type = 1 and 2, 4, 5, 7 (in           7.5          6.3         38.4
 Rest of Country)................
Pool Type = 3 (in South Atlantic)         18.8         15.8          1.0
Pool Type = 3 (in California,             37.5         31.7          1.7
 Connecticut)....................
Pool Type = 3 (in Rest of                 75.0         63.4          4.5
 Country)........................
Pool Type = 6....................         87.5         73.9          1.1
                                  --------------------------------------
    Overall Electric Resistance            9.2          7.8
     Market Share................
------------------------------------------------------------------------
* Consumer Pool Heater Market Types are described in Table IV.13.

    Raypak stated that the majority of the gas-fired pool heater market 
is and will continue to be at the minimum efficiency level (82-percent 
thermal efficiency) because of the high price of higher-efficiency 
models and the low number of annual operating hours. Raypak estimated 
that the market share for non-condensing gas-fired pool heaters is 98 
percent, while the market share for condensing units is 2 percent or 
less. Raypak believes that this market share trend will continue in the 
absence of a significant increase in the efficiency standards. (Raypak, 
No. 4 at p. 5, 7)
    For the NOPR, to estimate the energy efficiency distribution of 
gas-fired pool heaters for the compliance year, DOE used the DOE's 2021 
Compliance Certification Management System (``CCMS'') \102\ and CEC's 
2021 MAEDbS \103\ for gas-fired pool heaters models as well as 
manufacturer product literature. During manufacturer interviews, DOE 
received input that consumer pool heaters with standing pilot only 
represented about 4 percent of gas-fired pool heater shipments. In 
addition, DOE accounted for the ban on pilot lights in gas-fired pool 
heaters in California,\104\ Connecticut,\105\ Florida,\106\ and New 
York.\107\ DOE's NOPR estimates a higher fraction of gas-fired pool 
heaters will be above the baseline or condensing compared to Raypak's 
comment due to the number of models currently available. For example, 
DOE estimates that the EL 2 market share will be approximately 35 
percent and the condensing efficiency level (EL 3) will be 
approximately 7 percent.
---------------------------------------------------------------------------

    \102\ DOE. Compliance Certification Management System. February 
9, 2021, available at www.regulations.doe.gov/certification-data/ 
(last accessed April 15, 2021).
    \103\ CEC. Modernized Appliance Efficiency Database System. 
February 9, 2021, available at cacertappliances.energy.ca.gov/Pages/Search/AdvancedSearch.aspx (last accessed April 15, 2021).
    \104\ California Title 20 Section 1605.3(g)(1) states: ``Energy 
Design Standard for Natural Gas Pool Heaters. Natural gas pool 
heaters shall not be equipped with constant burning pilots.'' 
California Energy Commission. California Code of Regulations: Title 
20. Public Utilities and Energy, Division 2. State Energy Resources 
Conservation and Development Commission, Chapter 4. Energy 
Conservation, Article 4. Appliance Efficiency Regulations (Refs & 
Annos), 1605.3. State Standards for Non-Federally-Regulated 
Appliances available at govt.westlaw.com/calregs/Document/IEEDE2D64EF7B4F168C0E85379828A8C2?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default
) (last accessed April 15, 2021).
    \105\ Connecticut's Regulations and Procedures for Establishing 
Energy Efficiency Standards for Certain Appliances and Products 
Section 16a-48-4(S)(2) states: ``Natural gas pool heaters shall not 
be equipped with a constantly burning pilot light.'' State of 
Connecticut. Title 16a--Planning and Energy Policy. 2015, available 
at eregulations.ct.gov/eRegsPortal/Browse/RCSA/Title_16aSubtitle_16a-48Section_16a-48-4/ (last accessed April 15, 
2021).
    \106\ 2017 Florida Energy & Conservation Code Chapter 4 section 
R403.10.4 states: ``Pool heaters fired by natural or LP gas shall 
not have continuously burning pilot lights.'' State of Florida. 
Energy & Conservation Code, Chapter 4, available at 
codes.iccsafe.org/content/FEC2017/chapter-4-re-residential-energy-efficiency?site_type=public (last accessed September 2, 2021).
    \107\ 2020 Energy Conservation Construction Code of New York 
State Chapter 4 section R403.10.1 states: ``Gas-fired heaters shall 
not be equipped with continuously burning ignition pilots.'' State 
of New York, available at codes.iccsafe.org/content/NYSECC2020P1 
(last accessed September 2, 2021).
---------------------------------------------------------------------------

    The estimated market shares in the no-new-standards case for 
consumer pool heaters used for the NOPR are shown in Table IV.17 and 
Table IV.18. See chapter 8 of the NOPR TSD for further information on 
the derivation of the efficiency distributions.

  Table IV.17--Efficiency Distribution in the No-New-Standards Case for
                      Electric Pool Heaters in 2028
------------------------------------------------------------------------
                                                               National
              Efficiency level               Representative     market
                                                 TEI (%)      share (%)
------------------------------------------------------------------------
EL 0.......................................             99           7.8
EL 1.......................................            387          11.7
EL 2.......................................            483          59.1
EL 3.......................................            534           9.1
EL 4.......................................            551           9.1
EL 5.......................................            595           3.1
------------------------------------------------------------------------


  Table IV.18--Efficiency Distribution in the No-New-Standards Case for
                     Gas-Fired Pool Heaters in 2028
------------------------------------------------------------------------
                                                               National
              Efficiency level               Representative     market
                                                 TEI (%)      share (%)
------------------------------------------------------------------------
EL 0.......................................           61.1           4.9
EL 1.......................................           81.3          43.6
EL 2.......................................           83.3          45.3
EL 3.......................................           94.8           6.2
------------------------------------------------------------------------

    DOE welcomes additional comments and data regarding estimates for 
energy efficiency distribution for 2020 and future distribution in 
2028.
9. Payback Period Analysis
    The payback period 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. Payback 
periods are expressed in years.

[[Page 22679]]

Payback periods 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 previously, EPCA 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 calculating 
the energy savings in accordance with the applicable DOE test 
procedure, and multiplying those savings by the average energy price 
projection for the year in which compliance with the new and amended 
standards would be required.

G. Shipments Analysis

    DOE uses projections of annual product shipments to calculate the 
national impacts of potential or new amended energy conservation 
standards on energy use, net present value (``NPV''), and future 
manufacturer cash flows.\108\ 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.
---------------------------------------------------------------------------

    \108\ 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.
---------------------------------------------------------------------------

    For the October 2015 NODA, DOE estimated electric pool heater 
shipments by projecting shipments in three market segments: (1) 
Replacements; (2) new swimming pool owners; and (3) new owners with an 
existing swimming pool that did not previously have an electric pool 
heater,\109\ as follows:
---------------------------------------------------------------------------

    \109\ DOE assumed in the October 2015 NODA that new owners also 
account for potential switching between gas and electric pool heater 
products.
---------------------------------------------------------------------------

    (1) To project electric pool heater replacement shipments in the 
residential sector, DOE developed retirement functions for electric 
pool heaters from the lifetime estimates (see section IV.F.6 of this 
document) and applied them to the existing products in the stock. DOE 
estimated the existing stock of products using estimated historical 
shipments and survival function for electric pool heaters from the 
lifetime estimates. DOE took into account replacement rate of retired 
(failed) residential electric pool heaters, which DOE estimated to be 
70 percent (in other words 30 percent are not replaced).\110\
---------------------------------------------------------------------------

    \110\ In preparing the October 2015 NODA, DOE did not find 
historical shipments data for electric pool heaters, so DOE 
``backcasted'' the shipments model (i.e., applied the shipments 
model to years prior to 2015) to estimate historical shipments.
---------------------------------------------------------------------------

    (2) To project shipments to the new swimming pool market in the 
residential sector, DOE utilized projected new swimming pool (inground 
and above ground) installations and saturation rates. DOE estimated 
projected new swimming pool (inground and above ground) installations 
based on 2015 Pkdata and projected saturation rates based on saturation 
data from 2015 Pkdata and 1990-2009 RECS data.\111\
---------------------------------------------------------------------------

    \111\ Pkdata. 2015 Swimming Pool and Pool Heater Customized 
Report for LBNL, available at www.pkdata.com/datapointstrade.html#/ 
(last accessed April 15, 2021).
---------------------------------------------------------------------------

    (3) To project shipments to new owners in existing swimming pools 
that did not previously have an electric pool heater in the residential 
sector, DOE estimated that a small fraction of existing swimming pools 
(0.1 percent) would add an electric pool heater.\112\
---------------------------------------------------------------------------

    \112\ Number of existing swimming pools without an electric pool 
heater was based on 1990-2015 RECS data.
---------------------------------------------------------------------------

    In addition, in the October 2015 NODA to account for consumer pool 
heaters in commercial applications, DOE assumed that the market for 
electric pool heaters used in commercial swimming pools and spas 
(including community swimming pools and spas) accounted for about 10 
percent of the total electric pool heaters market over the analysis 
period.
    AHRI stated that the projected rate of growth in future shipments 
of electric pool heaters is significantly overestimated. AHRI also 
stated that the rate of growth in historical shipments of heat pump 
pool heaters does not support the rate of increase estimated by DOE. 
(AHRI, No. 16 at p. 7) EEI also questioned the dramatic increase in 
electric pool heater shipments from 2015 through 2040. (EEI, No. 21 at 
p. 13)
    For the NOPR, DOE updated its shipments estimates based on 
information from manufacturer interviews, 2016 Pkdata,\113\ 2020 
Pkdata,\114\ and RECS 2015 data, a revised regression methodology for 
determining projected new swimming pool shipments, and a modified 
approach for projecting electric pool heaters in standalone spas 
(without connecting to swimming pools) and in the commercial sector. As 
a result, DOE projected a lower average annual growth rate of electric 
pool heater shipments for the NOPR compared to the October 2015 NODA. 
In regard to heat pump pool heaters, DOE did not have access to the 
historical data mentioned by AHRI. See chapter 9 of the NOPR TSD for 
details.
---------------------------------------------------------------------------

    \113\ Pkdata. 2016 Residential and Commercial Swimming Pool, Hot 
tub, and Pool Heater Customized Report for LBNL, June 21, 2016, 
available at www.pkdata.com/datapointstrade.html#/ (last accessed 
April 15, 2021).
    \114\ Pkdata. 2020 Residential Swimming Pool, Hot tub, and Pool 
Heater Customized Report for LBNL, October 15, 2020, available at 
www.pkdata.com/datapointstrade.html#/ (last accessed April 15, 
2021).
---------------------------------------------------------------------------

    For the NOPR, DOE used a similar approach for projecting gas-fired 
pool heater shipments. There are limited historical gas-fired pool 
heater shipments data that were used to calibrate the shipments 
model.115 116 117 See chapter 9 of the NOPR TSD for details.
---------------------------------------------------------------------------

    \115\ U.S. Department of Energy-Office of Codes and Standards, 
Technical Support Document: Energy Efficiency Standards for Consumer 
Products: Room Air Conditioners, Water Heaters, Direct Heating 
Equipment, Mobile Home Furnaces, Kitchen Ranges and Ovens, Pool 
Heaters, Fluorescent Lamp Ballasts & Television Sets, 1993. 
Washington, DC Vol. 1 of 3. Report No. DOE/EE-0009.
    \116\ Association of Pool & Spa Professionals (APSP). 2003-2009 
Gas-fired Pool Heater Shipments Data (Comment #135 for 2010 Heating 
Products Final Rule), available at www.regulations.gov/document/EERE-2006-STD-0129-0135 (last accessed April 15, 2021).
    \117\ 2016 Pkdata provided estimated combined historical 
shipments for electric and gas-fired pool heaters used in commercial 
applications from 2010-2015.
---------------------------------------------------------------------------

    DOE requests comment on DOE's methodology and data sources used for 
projecting the future shipments of consumer pool heaters in the absence 
of amended energy conservation standards.
    Because the standards-case projections take into account the 
increase in purchase price and the decrease in operating costs caused 
by amended standards, projected shipments for a standards case 
typically deviate from those for the no-new-standards case. Because 
purchase price tends to have a larger impact than operating cost on 
appliance purchase decisions, standards-case projections

[[Page 22680]]

typically show a decrease in product shipments relative to the no-new-
standards case.
    EEI stated that if there is a dramatic increase in the efficiency 
standards for electric pool heaters, while the standards (and retail 
prices) for competing gas products do not change, it would be 
reasonable to project a much more dramatic impact on shipments of 
electric pool heaters than what is currently shown in the TSD. (EEI, 
No. 21 at p. 13) EEI stated that with a relative price elasticity of -
0.68, a 10-percent increase in price would result in a 6.8-percent 
decrease in shipments. EEI stated that given the estimated incremental 
total installed cost increases, shipments would be reduced (before any 
fuel switching) by 10.7 percent to 20.1 percent, which is much higher 
than the decrease in shipments DOE projected of 5 percent to 7.7 
percent. (EEI, No. 21 at p. 14)
    DOE's relative price elasticity incorporates the energy cost 
savings of a more-efficient product as well as the increase in 
installed cost. Because the energy cost savings of a heat pump water 
heater are very large compared to the baseline product, the impact of 
the higher installed cost is lessened. DOE maintained its approach to 
estimate the impact of any proposed standard on consumer pool heater 
shipments, but it also conducted a sensitivity analysis that assumes 
that the energy cost savings of higher efficiency design options are 
given less weight. Appendix 10C of the NOPR TSD describes this 
analysis.
    Raypak asserted that some consumers may repair existing pool 
heaters instead of purchasing new units. (Raypak, No. 4 at p. 7) The 
application of the relative price elasticity implicitly accounts for 
reduction in shipments for any reason, including extension of the 
lifetime by repairing existing pool heaters.
    EEI stated that if electric resistance heaters are removed from the 
market, it is very likely that a significant portion of consumers will 
shift to natural gas-, propane-, or oil-fired pool heaters due to lower 
first costs. EEI stated that DOE should account for fuel switching in 
this analysis unless the proposed increases in gas or oil pool heater 
standards increase the efficiency and/or costs as much as for electric 
pool heaters. (EEI, No. 21 at p. 14)
    DOE reasons that costs associated with switching from an electric 
pool heater to a gas-fired pool heater (such as extending the gas line, 
adding a propane tank, or accounting for venting) would tend to limit 
such switching.
    To estimate the impact on shipments of the price increase for the 
considered efficiency levels, DOE used a relative price elasticity 
approach. DOE welcomes stakeholder input on the effect of amended 
standards on future consumer pool heater shipments.
    DOE welcomes any additional information that would help to estimate 
the likely magnitude of fuel and equipment switching in response to the 
evaluated standards.

H. National Impact Analysis

    The NIA assesses the NES and the 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.\118\ 
(``Consumer'' in this context refers to consumers of the product being 
regulated.) DOE calculates the NES and NPV for the potential standard 
levels considered 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.\119\ For the present analysis, 
DOE projected the energy savings, operating cost savings, product 
costs, and NPV of consumer benefits over the lifetime of consumer pool 
heaters sold from 2028 through 2057.
---------------------------------------------------------------------------

    \118\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
    \119\ 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 or 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.
    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 NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR 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.
Modeled Compliance Date of Standard....  2028.
Efficiency Trends......................  No-new-standards case: Based on
                                          historical data.
                                         Standards cases: Roll-up in the
                                          compliance year and then DOE
                                          estimated growth in shipment-
                                          weighted efficiency in all the
                                          standards cases, except max-
                                          tech.
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 projection 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 Unit...  Annual values do not change
                                          with efficiency level.
Energy Price Trends....................  AEO2021 projections (to 2050)
                                          and extrapolation thereafter.
Energy Site-to-Primary and FFC           A time-series conversion factor
 Conversion.                              based on AEO2021 (to 2050) and
                                          extrapolation thereafter.
Discount Rate..........................  3 percent and 7 percent.

[[Page 22681]]

 
Present Year...........................  2021.
------------------------------------------------------------------------

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.F.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) and for each of the 
considered product classes for the first full year of anticipated 
compliance with an amended or new standard. The approach is further 
described in chapter 10 of the NOPR TSD.
    For the standards cases, DOE used a ``roll-up'' scenario to 
establish the shipment-weighted efficiency for the first full year that 
standards are assumed to become effective (2028). In this scenario, the 
market shares 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. In the standards cases, the efficiency after 
the compliance year increases at a rate similar to that of the no-new-
standards case.
    To develop no-new standards case efficiency trends after 2020, DOE 
assumed an annual decreasing trend of negative 2 percent in the market 
share for the minimum efficiency levels (EL 0) for both electric and 
gas-fired pool heaters. This resulted in a market share for EL 0 of 8 
percent in 2028 and 4 percent in 2057 for electric pool heaters and 4 
percent in 2028 and 2 percent in 2057 for gas-fired pool heaters.
2. National Energy Savings
    The NES analysis involves a comparison of national energy 
consumption of the considered products between each potential standards 
case (TSL) and the case with no new or amended energy conservation 
standards. DOE calculated the national energy consumption by 
multiplying the number of units (stock) of each product (by vintage or 
age) by the unit energy consumption (also by vintage). DOE calculated 
annual NES based on the difference in national energy consumption for 
the no-new-standards case and for each higher efficiency standard case. 
DOE estimated energy consumption and savings based on site energy and 
converted the electricity consumption and savings to primary energy 
(i.e., the energy consumed by power plants to generate site 
electricity) using annual conversion factors derived from AEO2021. 
Cumulative energy savings are the sum of the NES for each year over the 
timeframe of the analysis.
    Use of higher-efficiency products is occasionally associated with a 
direct rebound effect, which refers to an increase in utilization of 
the product due to the increase in efficiency. DOE did not find any 
data on the rebound effect specific to consumer pool heaters. DOE 
applied a rebound effect of 10 percent for consumer pool heaters used 
in residential applications based on studies of other residential 
products and 0 percent for consumer pool heaters used in commercial 
applications (see section IV.F.3.a for more details). The April 2010 
final rule also utilized a 10 percent rebound when calculating the NES. 
75 FR 20112, 20165. The calculated NES at each efficiency level is 
therefore reduced by 10 percent in residential applications. DOE does 
not include the rebound effect in the NPV analysis.
    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 full-fuel-cycle (``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 (Aug. 17, 2012). NEMS is a public 
domain, multi-sector, partial equilibrium model of the U.S. energy 
sector \120\ that EIA uses to prepare its Annual Energy Outlook. The 
FFC factors incorporate losses in production and delivery in the case 
of natural gas (including fugitive emissions) and additional energy 
used to produce and deliver the various fuels used by power plants. The 
approach used for deriving FFC measures of energy use and emissions is 
described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------

    \120\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581, Oct. 2009, 
available at www.eia.gov/forecasts/aeo/nems/overview/pdf/0581(2009).pdf (last accessed April 15, 2021).
---------------------------------------------------------------------------

    NPGA commented that the calculation of primary (source) energy 
savings is misleading and unnecessary given the use of FFC analysis. 
NPGA further stated that DOE's reliance on an additional energy 
consumption calculation conflicts with the purpose and function of FFC 
analysis. NPGA urged DOE to rely on the FFC analysis to calculate NES 
as the best estimation of energy consumption and as intended by the 
agency's formal policy adoption of FFC. (NPGA, No. 15 at p. 3)
    As indicated in section I and Table V.23 of this document, DOE 
primarily uses FFC energy savings when considering the energy savings 
from standards. DOE presents primary energy savings in some tables for 
information purposes.
    NPGA stated that there is no clear difference between the FFC 
analysis that measures energy consumption in ``extracting, processing, 
and transporting'' versus primary (source) energy that measures energy 
loss in transmission and distribution and in electricity generation.'' 
(NPGA, No. 15 at p. 3) The FFC includes primary energy as well as 
upstream energy, which refers to the extracting, processing, and 
transporting of the primary fuels, such as coal or natural gas that are 
used to generate electricity. In contrast, losses in transmission and 
distribution and in electricity generation refer to the losses in the 
conversion from the primary fuel to electricity and in distribution of 
electricity.

[[Page 22682]]

    EEI stated that the national average site-to-source conversion 
factors ignore the significant variation in electric generation by 
region. EEI also stated that the factors incorrectly assign a fossil 
fuel heat rate to renewable electric generation. (EEI, No. 21 at p. 15)
    DOE's approach uses end-use dependent site-to-primary energy 
conversion factors. The correlation between regional variations in end-
use energy consumption and regional variations in the mix of generation 
technologies is accounted for by this approach. Regarding renewable 
electric generation, DOE uses the same convention that EIA uses in 
national energy statistics. Renewable electric generation technologies 
transform the inputs of solar, wind, and hydro energy into electricity, 
but characterizing these inputs in terms of primary energy consumption 
is difficult and not very relevant for national energy accounting. The 
convention used by EIA reflects the likelihood that renewable 
electricity generation displaces conventional fossil fuel generation.
    EEI stated that the factors that convert site electricity use to 
primary energy use in the October 2015 NODA NIA spreadsheet increase 
slightly from 2035 to 2040 without explanation and with no improvement 
after 2040. EEI stated that the post-2035 increase does not comport 
with the expected fuel mix that will be generating electricity post-
2030. (EEI, No. 21 at pp. 14-15)
    The increase from 2035 to 2040 is consistent with the projections 
of the mix of electricity generation in AEO2015, which was used in the 
October 2015 NODA. Regarding the factors after 2040, the marginal 
conversion factors derived from projections in AEO2015 do not show a 
clear trend, so DOE refrained from projecting a change after 2040. For 
the NOPR, DOE used conversion factors based on AEO2021, which shows a 
generally flat trend from 2035 to 2050 for these factors. AEO2021 
provides trends up to 2050, after which DOE maintained the 2050 value.
    EEI expressed concern that DOE used an annual conversion factor for 
an appliance that operates primarily during the summer season in the 
majority of the country. EEI stated that if DOE is going to use 
annualized data, it should at least recognize in its analysis that 
summer usage often corresponds with the use of more solar electricity 
(central station and distributed). (EEI, No. 21 at pp. 15-16)
    DOE acknowledges that marginal site-to-source conversion factors in 
the summer may vary from annual factors; however, AEO does not provide 
information that would allow for derivation of such factors. DOE notes 
that the greater use of solar electricity in the summer does not 
necessarily mean that solar electricity would be disproportionately 
reduced at the margin if electricity demand declines.
    EEI stated that the site-to-source conversion factors do not 
account for the changes that are due to the Environmental Protection 
Agency's (``EPA'') Clean Power Plan (``CPP''). (EEI, No. 21 at p. 16) 
EEI also stated that any estimated upstream losses analysis regarding 
the production of electricity should properly account for new Federal 
regulations and increases in the use of lower carbon and renewable 
electric generation. (EEI, No. 21 at p. 16)
    On July 8, 2019, EPA published a final rule repealing the Clean 
Power Plan. 84 FR 32520. As stated previously, for this NOPR, DOE used 
projections from AEO2021. The AEO2021 reference case does not include 
the CPP but does account for recent Federal regulations. Because 
renewable electricity generation is assigned a fossil-fuel-equivalent 
site-to-primary factor, increases in the share of such generation would 
have little impact on the site-to-source conversion factors.
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 operating costs (energy costs and repair and maintenance 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 projection period.
    As discussed in section IV.F.1 of this document, DOE used 
historical shipment-weighted wholesaler prices to produce different 
decreasing price trends for electric resistance pool heaters, heat pump 
pool heaters, and gas-fired pool heaters. DOE's projection of product 
prices is described in appendix 10C of the NOPR TSD.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
projections on the consumer NPV for the considered TSLs for consumer 
pool heaters. In addition to the default price trend, DOE considered 
two product price sensitivity cases: (1) A low price--high declining 
trend case based on exponential fit to 2003 to 2014 wholesale price 
data from the 2020 Pkdata report \121\ for electric resistance pool 
heaters, heat pump pool heaters, and gas-fired pool heaters, and (2) a 
constant price trend. The derivation of these price trends and the 
results of these sensitivity cases are described in appendix 10C of the 
NOPR TSD.
---------------------------------------------------------------------------

    \121\ Pkdata, 2020 Residential and Commercial Swimming Pool, Hot 
tub, and Pool Heater Customized Report for LBNL, October 15, 2020, 
available at /www.pkdata.com/datapointstrade.html#/ (last accessed 
April 15, 2021).
---------------------------------------------------------------------------

    The operating cost savings are the sum of the differences in energy 
cost savings, maintenance, and repair costs, 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 calculated 2020 national average and marginal 
residential and commercial energy prices by the projection of annual 
national-average residential or commercial energy price changes from 
the Reference case from AEO2021, which has an end year of 2050.\122\ To 
estimate price trends after 2050, DOE used the average of annual growth 
rates in prices from 2045 through 2050.\123\ As part of the NIA, DOE 
also analyzed scenarios that used inputs from variants of the AEO2021 
Reference case that have lower and higher economic growth. Those cases 
have lower and higher energy price trends compared to the Reference 
case. NIA results based on these cases are presented in appendix 10D of 
the NOPR TSD.
---------------------------------------------------------------------------

    \122\ The regional 2020 average and marginal energy prices are 
converted to national averages using the regional weights calculated 
by the pool heater sample discussed in section IV.E.1. The census 
division price trends from AEO2021 are also converted to national 
average values using the pool heater sample weights.
    \123\ Lavappa, Priya D. and J.D. Kneifel. Energy Price Indices 
and Discount Factors for Life-Cycle Cost Analysis--2021 Annual 
Supplement to NIST Handbook 135. National Institute of Standards and 
Technology (NIST). NISTIR 85-3273-36, available at www.nist.gov/publications/energy-price-indices-and-discount-factors-life-cycle-cost-analysis-2021-annual (last accessed April 15, 2021).
---------------------------------------------------------------------------

    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPR, 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.\124\ The discount

[[Page 22683]]

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.
---------------------------------------------------------------------------

    \124\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E, available at 
www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf (last accessed April 15, 2021).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended energy 
conservation standards on consumers, DOE evaluates the impact on 
identifiable subgroups of consumers that may be disproportionately 
affected by a new or amended national standard. The purpose of a 
subgroup analysis is to determine the extent of any such 
disproportional impacts. 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 NOPR, DOE analyzed 
the impacts of the considered standard levels on senior-only households 
and small businesses.\125\ The analysis used subsets of the consumer 
pool heater sample composed of households or buildings that meet the 
criteria for the subgroup. DOE used the LCC and PBP spreadsheet model 
to estimate the impacts of the considered efficiency levels on these 
subgroups. Chapter 11 in the NOPR TSD describes the consumer subgroup 
analysis.
---------------------------------------------------------------------------

    \125\ DOE did not evaluate low-income consumer subgroup impacts 
for pool heaters because the sample size of the subgroups is too 
small for meaningful analysis.
---------------------------------------------------------------------------

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of new and 
amended energy conservation standards on manufacturers of consumer pool 
heaters 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 projected 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 new and 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 standards cases (i.e., TSLs). 
To capture the uncertainty relating to manufacturer pricing strategies 
following new and 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 a potential standard's impact on 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 NOPR TSD.
    DOE conducted the MIA for this proposed rulemaking in three phases. 
In Phase 1 of the MIA, DOE prepared a profile of the consumer pool 
heater manufacturing industry based on the market and technology 
assessment, preliminary manufacturer interviews, and publicly-available 
information. This included a top-down analysis of consumer pool heater 
manufacturers that DOE used to derive preliminary 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). DOE also used public sources of information to further 
calibrate its initial characterization of the consumer pool heater 
manufacturing industry, including company filings of form 10-K from the 
SEC,\126\ corporate annual reports, industry trade association product 
database from AHRI,\127\ the U.S. Census Bureau's Economic Census,\128\ 
and reports from Dun & Bradstreet.\129\
---------------------------------------------------------------------------

    \126\ See www.sec.gov/edgar.shtml.
    \127\ See www.ahridirectory.org/NewSearch?programId=36&searchTypeId=3.
    \128\ See www.census.gov/programs-surveys/asm/data.html.
    \129\ See www.dnb.com.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework industry cash-flow 
analysis to quantify the potential impacts of new and 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. 
In general, energy conservation standards can affect manufacturer cash 
flow in three distinct ways: (1) Creating a need for increased 
investment, (2) raising production costs per unit, and (3) altering 
revenue due to higher per-unit prices and changes in sales volumes.
    In addition, during Phase 2, DOE developed interview guides to 
distribute to manufacturers of consumer pool heaters in order to 
develop other key GRIM inputs, including product and capital conversion 
costs, and to gather additional information on the anticipated effects 
of energy conservation standards on revenues, direct employment, 
capital assets, industry competitiveness, and subgroup impacts.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with representative manufacturers. During these interviews, 
DOE discussed engineering, manufacturing, procurement, and financial 
topics to validate assumptions used in the GRIM and to identify key 
issues or concerns. See section IV.J.3 of this document for a 
description of the key issues raised by manufacturers during the 
interviews. As part of Phase 3, DOE also evaluated subgroups of 
manufacturers that may be disproportionately impacted by new and 
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 may include small business 
manufacturers, low-volume manufacturers, niche players, and/or 
manufacturers exhibiting a cost

[[Page 22684]]

structure that largely differs from the industry average. DOE 
identified one manufacturer subgroup for a separate impact analysis: 
Small business manufacturers. The small business subgroup is discussed 
in section VI.B, ``Review under the Regulatory Flexibility Act'' of 
this document, and in chapter 12 of the NOPR TSD.
2. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flow due to new 
and amended standards that result in a higher or lower industry value. 
The GRIM uses a standard, annual discounted cash-flow analysis that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs. The GRIM models changes in costs, 
distribution of shipments, investments, and manufacturer margins that 
could result from new and amended energy conservation standards. The 
GRIM spreadsheet uses the inputs to arrive at a series of annual cash 
flows, beginning in 2021 (the base year of the analysis) and continuing 
to 2057. DOE calculated INPVs by summing the stream of annual 
discounted cash flows during this period. For manufacturers of consumer 
pool heaters, DOE used a real discount rate of 7.4 percent, which was 
derived from industry financials and then modified according to 
feedback received during manufacturer interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of the new 
and amended energy conservation standards on consumer pool heater 
manufacturers. As discussed previously, DOE developed critical GRIM 
inputs using a number of sources, including publicly available data, 
results of the engineering analysis, and information gathered from 
industry stakeholders during the course of manufacturer interviews. The 
GRIM results are presented in section V.B.2. of this document. 
Additional details about the GRIM, the discount rate, and other 
financial parameters can be found in chapter 12 of the NOPR TSD.
a. Manufacturer Production Costs
    Manufacturing more efficient products is typically more expensive 
than manufacturing baseline products due to the use of more complex 
components, which are typically more costly than baseline components. 
The changes in the manufacturer production costs (``MPCs'') of covered 
products can affect the revenues, gross margins, and cash flow of the 
industry.
    In the MIA, DOE used the MPCs calculated in the engineering 
analysis, as described in section IV.C and in chapter 5 of the NOPR 
TSD. DOE used information from its teardown analysis, described in 
section IV.C.2 of this document to disaggregate the MPCs into material, 
labor, depreciation, and overhead costs. To calculate the MPCs for 
products above the baseline, DOE added incremental material, labor, 
depreciation, and overhead costs from the engineering cost-efficiency 
curves to the baseline MPCs. These cost breakdowns were validated with 
manufacturers during manufacturer interviews.
    For a complete description of the MPCs, see chapter 5 of the NOPR 
TSD.
b. Shipments Projections
    The GRIM estimates manufacturer revenues based on total unit 
shipment projections and the distribution of those shipments by 
efficiency level. Changes in sales volumes and efficiency mix over time 
can significantly affect manufacturer finances. For the no-new-
standards case, the GRIM uses the NIA's annual shipment projections 
derived from the shipment analysis from the reference year, 2021, to 
the end of the analysis period in 2057. For the standards case shipment 
projection, the GRIM uses the NIA standards case shipment projections. 
The NIA assumes elasticity in demand as explained in section IV.G and 
chapter 9 of the NOPR TSD. Therefore, the total number of shipments per 
year in the standards cases could be fewer than the total number of 
shipments per year in the no-new-standards case. DOE assumed that 
products that did not meet the analyzed standards in the no-new-
standards case in the compliance year and beyond, would become 
minimally compliant products in the standards cases. This is referred 
to as a ``roll up'' shipment scenario (i.e., new and amended energy 
conservation standards only impact models and shipments that do not 
meet the adopted standards).
    For a complete description of the shipments analysis, see chapter 9 
of the NOPR TSD.
c. Product and Capital Conversion Costs
    New and amended energy conservation standards could cause 
manufacturers to incur conversion costs to bring their production 
facilities and product designs into compliance. DOE evaluated the level 
of conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each product class. For 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, 
marketing, and other non-capitalized costs necessary to make product 
designs comply with new and amended energy conservation standards. 
Capital conversion costs are investments in property, plant, and 
equipment necessary to adapt or change existing production facilities 
such that new compliant product designs can be fabricated and 
assembled.
    To evaluate the level of capital conversion costs manufacturers 
would likely incur to comply with new and amended energy conservation 
standards, DOE used data gathered from manufacturer interviews as well 
as information derived from the product teardown analysis and 
engineering model. In developing its conversion cost estimates, DOE 
conservatively assumed manufacturers would redesign all noncompliant 
heat pump pool heater models and gas-fired pool heater models to comply 
with new and amended energy conservation standards. Manufacturers could 
choose to drop some models that do not meet the levels prescribed by 
new and amended standards. Therefore, total product and capital 
conversion costs may be lower than the estimates calculated as part of 
this analysis.
    Product conversion are calculated on a per model basis and are 
primarily driven by R&D costs. R&D costs include redesign, selection 
and purchasing of new components, and testing to demonstrate compliance 
with adopted energy conservation standards for those redesigned models. 
DOE assumed that manufacturers would discontinue all their electric 
resistance pool heater models for any standard level above baseline for 
electric pool heaters, because electric resistance pool heaters use 
different technologies and designs than heat pump pool heaters. 
Consequently, no redesign costs are assigned to the redesign of 
electric resistance pool heater models. For heat pump pool heaters, all 
design options include growing the size of the evaporator. DOE assumed 
that the per model redesign effort is the same irrespective of how much 
the size of the evaporator is increased and the per model redesign cost 
does not vary by the analyzed standard for electric pool heaters, 
however, the number of models that would be required to be redesigned 
would vary by the analyzed standard. DOE estimated a redesign effort of 
six

[[Page 22685]]

months of engineering time per model for electric heat pump pool 
heaters.
    For gas-fired pool heaters, DOE estimated that the redesign effort 
varies by efficiency level. The design option analyzed at EL 1 replaces 
the standing pilot with an electronic ignition system. This entails a 
component swap and requires the addition of a sparker. DOE estimates a 
total of two months of engineering time per model to redesign a model 
with a standing pilot to an electronic ignition. The design option 
analyzed at EL 2 incorporates a blower. Product conversion costs 
involve the selection, qualification, and safety testing of the blower. 
DOE estimated a redesign effort of 18 months of engineering time per 
model, or three fully utilized engineers for a period of six months. 
The design option analyzed at max-tech level incorporates condensing 
technology. This requires a significant amount of redesign to fine tune 
the gas-fired pool heater such that it can accommodate condensate. DOE 
estimated a redesign effort of 24 months of engineering per model, or 
four fully utilized engineers for a period of six months each.
    The product conversion costs presented in Table IV.20 also include 
costs of testing and demonstrating compliance that would result from 
new and amended standards. Since gas-fired pool heaters already must 
meet DOE energy conservation standards, only the models that are 
redesigned because of amended energy conservation standards would have 
to be retested to demonstrate compliance with the standards. In 
contrast, electric pool heaters are not currently required to be tested 
to demonstrate compliance with a DOE energy conservation standard. 
Therefore, for the analyzed TSLs that set standards for electric pool 
heaters, manufacturers would have to test all electric pool heater 
models to comply with potential standards.
    Capital conversion costs are estimated on a per manufacturer basis. 
DOE developed a list of manufacturers of gas-fired, heat pump, and 
electric resistance pool heaters using manufacturer websites and public 
databases such as AHRI \130\ and DOE's publicly available Compliance 
Certification Database.\131\ For gas-fired pool heaters capital 
conversion costs would be minimal at EL 1 and EL 2, which would likely 
not require the use of condensing technology to meet these efficiency 
levels. However, manufacturers would likely be required to use 
condensing technology to meet EL 3. This would require larger 
investments from manufacturers to necessitate major changes to tooling 
to make condensing heat exchangers as well as changes to injection 
molding machinery to accommodate larger cabinet sizes.
---------------------------------------------------------------------------

    \130\ See www.ahridirectory.org/ (last accessed April 15, 2021).
    \131\ See www.regulations.doe.gov/certification-data (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    In general, DOE assumes all conversion-related investments occur 
between the year of publication of the final rule and the year by which 
manufacturers must comply with the new and amended standards. The 
conversion cost figures used in the GRIM can be found in Table IV.20 
and in section V.B.2.a of this document. For additional information on 
the estimated capital and product conversion costs, see chapter 12 of 
the NOPR TSD.
[GRAPHIC] [TIFF OMITTED] TP15AP22.005

    DOE seeks additional information on industry capital and product 
conversion costs of compliance associated with the analyzed energy 
conservation standards for consumer pool heaters evaluated in this 
NOPR.
d. Stranded Assets
    In addition to capital and product conversion costs, new and 
amended energy conservation standards could create stranded assets 
(i.e., tooling and equipment that would have enjoyed longer use if the 
energy conservation standard had not made them obsolete). In the 
compliance year, manufacturers write down the remaining undepreciated 
book value of existing tooling and equipment rendered obsolete by new 
and amended energy conservation standards.
    DOE assumed that manufacturers discontinue all electric resistance 
pool heaters for any electric pool heater standard above baseline. 
Manufacturers of electric resistance pool heaters typically purchase 
components from vendors and assemble them in-house. These manufacturers 
do not own capital equipment or machinery and therefore stranded assets 
are limited for electric resistance pool heater manufacturers. DOE 
estimated stranded assets for the electric pool heater industry at $0.7 
million for any level above baseline. This includes welding machines 
and other tools used to assemble these products.
    Based on manufacturer interviews, manufacturers could strand assets 
for gas-fired pool heaters if standards were set at max-tech. 
Manufacturers stated that existing injection molding machines, fin 
presses, and fin dies could be orphaned. DOE estimated the industry 
stranded assets for gas-fired pool heaters to be $5.6 million if 
standards were set at max-tech.
    DOE requests comment on the estimated stranded assets for both 
electric resistance pool heaters and gas-fired pool heaters.
e. Manufacturer Markup Scenarios
    MSPs include direct manufacturing production costs (i.e., labor, 
materials, and overhead 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 non-production cost markups to the 
MPCs estimated in the engineering analysis for each product class and 
efficiency level, and then added the cost of shipping. Modifying these 
markups in the standards case yields different sets of impacts on 
manufacturers. For the MIA, DOE modeled two standards-case manufacturer 
markup scenarios to represent uncertainty regarding the potential 
impacts on prices and profitability for manufacturers following the 
implementation of new and amended energy conservation standards: (1) A 
preservation of gross

[[Page 22686]]

margin percentage markup scenario; and (2) a preservation of per-unit 
operating profit markup scenario. These scenarios lead to different 
manufacturer markup values that, when applied to the MPCs, result in 
varying revenue and cash flow impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' manufacturer 
markup across all efficiency levels. As production costs increase with 
efficiency, this scenario implies that the absolute dollar markup will 
increase as well. Based on publicly available financial information for 
consumer pool heater manufacturers, and information obtained during 
manufacturer interviews, DOE assumed the non-production cost 
manufacturer markup--which includes SG&A expenses, R&D expenses, 
interest, and profit--to be 1.33 for gas-fired pool heaters and 1.28 
for electric pool heaters. These manufacturer markups are consistent 
with the ones DOE assumed in the engineering analysis (see section IV.C 
of this document). Therefore, DOE assumes that this scenario represents 
the upper bound to industry profitability under energy conservation 
standards.
    Under the preservation of per-unit operating profit markup 
scenario, DOE modeled a scenario in which manufacturers are not able to 
increase per-unit operating profit in proportion to increases in MPCs. 
Under this scenario, as the MPCs increase, manufacturers are generally 
required to reduce the manufacturer markup to maintain a cost 
competitive offering in the market. Therefore, gross margin (as a 
percentage) shrinks in the standards cases. This manufacturer markup 
scenario represents the lower bound to industry profitability under new 
and amended energy conservation standards.
    A comparison of industry financial impacts under the two 
manufacturer markup scenarios is presented in section V.B.2.a of this 
document.
3. Manufacturer Interviews
    DOE conducted additional interviews with manufacturers following 
the October 2015 NODA as part of the NOPR analysis. In these 
interviews, DOE asked manufacturers to describe their major concerns 
with new and amended consumer pool heater energy conservation 
standards. Manufacturers identified three major areas of concern: (1) 
Use of integrated thermal efficiency metric for electric pool heaters; 
(2) cost and complexity of installing condensing gas-fired pool 
heaters; and (3) impact on profitability. Manufacturer interviews are 
conducted under non-disclosure agreements (``NDAs''), so DOE does not 
document these discussions in the same way that it does public comments 
in the comment summaries and DOE's responses throughout the rest of 
this document.
a. Use of Integrated Thermal Efficiency Metric for Electric Pool 
Heaters
    Manufacturers stated that the coefficient of performance is 
currently used by industry and consumers to evaluate the efficiency of 
electric heat pump pool heaters. This metric is accepted throughout the 
industry and is widely used in state regulations such as California, 
Connecticut, and Florida. Manufacturers commented that changing the 
metric to integrated thermal efficiency would be confusing to 
consumers, because it shows efficiencies over 100 percent. Furthermore, 
using integrated thermal efficiency would make the comparison between 
existing heat pumps with a coefficient of performance label, and heat 
pumps with an integrated thermal efficiency metric more difficult.
b. Cost and Complexity of Installing Condensing Gas-Fired Pool Heaters
    Manufacturers indicated that a condensing standard would require 
greater investment in R&D and capital equipment than a non-condensing 
standard and would also raise per-unit production costs, resulting in 
higher end-user purchase prices. They expressed concern that the 
combination of higher installation costs and retail prices for 
condensing pool heaters could deter consumers from purchasing new 
units, potentially impacting manufacturer revenues and reducing the 
prospective energy savings from new and amended standards.
c. Impacts on Profitability
    Manufacturers have indicated that it would be optimistic for DOE to 
assume that as MPCs increase in response to energy conservation 
standards, manufacturers would be able to maintain the same gross 
margin percentage markup. Manufacturers stated that consumer pool 
heaters are typically purchased on a first-cost basis and they 
indicated that they do not earn a premium on more efficient units. They 
indicated that consumer pool heaters are relatively low-margin 
offerings and consumers are typically more concerned with capacity and 
speed of heating than with efficiency and therefore look to purchase 
the least expensive consumer pool heater at the right capacity.

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 other gases 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion.
    The analysis of power sector emissions of CO2, 
NOX, SO2, and Hg uses marginal emissions factors 
that were derived from data in AEO2021, as described in section IV.M of 
this document. Details of the methodology are described in the 
appendices to chapters 13 and 15 of the TSD for this NOPR.
    Power sector emissions of CO2, CH4, and 
N2O are estimated using Emission Factors for Greenhouse Gas 
Inventories published by the EPA.\132\ The FFC upstream emissions are 
estimated based on the methodology described in chapter 15 of the NOPR 
TSD. The upstream emissions include both emissions from extraction, 
processing, and transportation of fuel, and ``fugitive'' emissions 
(direct leakage to the atmosphere) of CH4 and 
CO2.
---------------------------------------------------------------------------

    \132\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12, 
2021).
---------------------------------------------------------------------------

    The on-site operation of certain consumer pool heaters requires 
combustion of fossil fuels and results in emissions of CO2, 
NOX, SO2, CH4, and N2O at 
the sites where these products are used. DOE accounted for the 
reduction in these site emissions and the associated FFC upstream 
emissions due to potential standards. Site emissions of these gases 
were estimated using Emission Factors for Greenhouse Gas Inventories 
and emissions intensity factors from an EPA publication.\133\
---------------------------------------------------------------------------

    \133\ U.S. Environmental Protection Agency. External Combustion 
Sources. In Compilation of Air Pollutant Emission Factors. AP-42. 
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter 
1, available at www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per megawatt-hour (MWh) or million British thermal units (MMBtu) 
of site energy savings. Total emissions reductions are estimated using 
the energy savings calculated in the national impact analysis.

[[Page 22687]]

1. Air Quality Regulations Incorporated in DOE's Analysis
    DOE's no-new-standards case for the electric power sector reflects 
the AEO2021, which incorporates the projected impacts of existing air 
quality regulations on emissions. AEO2021 generally represents current 
legislation and environmental regulations, including recent government 
actions, that were in place at the time of preparation of AEO2021, 
including the emissions control programs discussed in the following 
paragraphs.\134\
---------------------------------------------------------------------------

    \134\ For further information, see the Assumptions to AEO2021 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed April 15, 2021).
---------------------------------------------------------------------------

    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 numerous States in the eastern half of the United States 
are also limited under the Cross-State Air Pollution Rule (``CSAPR''). 
76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce 
certain emissions, including annual SO2 emissions, and went 
into effect as of January 1, 2015.\135\ AEO2021 incorporates 
implementation of CSAPR, including the update to the CSAPR ozone season 
program emission budgets and target dates issued in 2016, 81 FR 74504 
(Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is 
enforced through the use of tradable emissions allowances. 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 another regulated EGU.
---------------------------------------------------------------------------

    \135\ CSAPR requires states to address annual emissions of 
SO2 and NOX, precursors to the formation of 
fine particulate matter (PM2.5) pollution, in order to 
address the interstate transport of pollution with respect to the 
1997 and 2006 PM2.5 National Ambient Air Quality 
Standards (``NAAQS''). CSAPR also requires certain states to address 
the ozone season (May-September) emissions of NOX, a 
precursor to the formation of ozone pollution, in order to address 
the interstate transport of ozone pollution with respect to the 1997 
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a 
supplemental rule that included an additional five states in the 
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) 
(Supplemental Rule).
---------------------------------------------------------------------------

    However, beginning in 2016, SO2 emissions began to fall 
as a result of the Mercury and Air Toxics Standards (``MATS'') for 
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final 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 are 
being reduced as a result of the control technologies installed on 
coal-fired power plants to comply with the MATS requirements for acid 
gas. To continue operating, coal power plants must have either flue gas 
desulfurization or dry sorbent injection systems installed. Both 
technologies, which are used to reduce acid gas emissions, also reduce 
SO2 emissions. Because of the emissions reductions under the 
MATS, 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 another 
regulated EGU. Therefore, energy conservation standards that decrease 
electricity generation would generally reduce SO2 emissions. 
DOE estimated SO2 emissions reduction using emissions 
factors based on AEO2021.
    CSAPR also established limits on NOX emissions for 
numerous States in the eastern half of the United States. Energy 
conservation standards would have little effect on NOX 
emissions in those States covered by CSAPR emissions limits if excess 
NOX emissions allowances resulting from the lower 
electricity demand could be used to permit offsetting increases in 
NOX emissions from other EGUs. In such case, NOX 
emissions would remain near the limit even if electricity generation 
goes down. A different case could possibly result, depending on the 
configuration of the power sector in the different regions and the need 
for allowances, such that NOX emissions might not remain at 
the limit in the case of lower electricity demand. In this case, energy 
conservation standards might reduce NOX emissions in covered 
States. Despite this possibility, DOE has chosen to be conservative in 
its analysis and has maintained the assumption that standards will not 
reduce NOX emissions in States covered by CSAPR. Energy 
conservation standards would be expected to reduce NOX 
emissions in the States not covered by CSAPR. DOE used AEO2021 data to 
derive NOX emissions factors for the group of States not 
covered by CSAPR.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would be expected to slightly reduce Hg emissions. DOE 
estimated mercury emissions reduction using emissions factors based on 
AEO2021, which incorporates the MATS.
    DOE welcomes any additional comments on the approach for conducting 
the emissions analysis for pool heaters.

L. Monetizing Emissions Impacts

    As part of the development of this proposed rule, for the purpose 
of complying with the requirements of Executive Order 12866, DOE 
considered the estimated monetary benefits from the reduced emissions 
of CO2, CH4, N2O, NOX, and 
SO2 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 projection period for each TSL. This section summarizes the basis 
for the values used for monetizing the emissions benefits and presents 
the values considered in this NOPR.
    On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction issued 
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of 
the Fifth Circuit's order, the preliminary injunction is no longer in 
effect, pending resolution of the federal government's appeal of that 
injunction or a further court order. Among other things, the 
preliminary injunction enjoined the defendants in that case from 
``adopting, employing, treating as binding, or relying upon'' the 
interim estimates of the social cost of greenhouse gases--which were 
issued by the Interagency Working Group on the Social Cost of 
Greenhouse Gases on February 26, 2021--to monetize the benefits of 
reducing greenhouse gas emissions. In the absence of further 
intervening court orders, DOE will revert to its approach prior to the 
injunction and present monetized benefits where appropriate and 
permissible under law. DOE requests comment on how to address the 
climate benefits and other non-monetized effects of the proposal.
1. Monetization of Greenhouse Gas Emissions
    For the purpose of complying with the requirements of Executive 
Order 12866, DOE estimates the monetized benefits of the reductions in 
emissions

[[Page 22688]]

of CO2, CH4, and N2O by using a 
measure of the social cost (``SC'') of each pollutant (e.g., SC-GHGs). 
These estimates represent the monetary value of the net harm to society 
associated with a marginal increase in emissions of these pollutants in 
a given year, or the benefit of avoiding that increase. These estimates 
are intended to include (but are not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, disruption of energy systems, risk 
of conflict, environmental migration, and the value of ecosystem 
services. DOE exercises its own judgment in presenting monetized 
climate benefits as recommended by applicable Executive Orders and 
guidance, and DOE would reach the same conclusion presented in this 
notice in the absence of the social cost of greenhouse gases, including 
the February 2021 Interim Estimates presented by the Interagency 
Working Group on the Social Cost of Greenhouse Gases.
    DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions (i.e., SC-GHGs) using the 
estimates presented in the Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990 published in February 2021 by the Interagency Working Group 
on the Social Cost of Greenhouse Gases (IWG) (IWG, 2021).\136\ The SC-
GHGs is the monetary value of the net harm to society associated with a 
marginal increase in emissions in a given year, or the benefit of 
avoiding that increase. In principle, SC-GHGs includes the value of all 
climate change impacts, including (but not limited to) changes in net 
agricultural productivity, human health effects, property damage from 
increased flood risk and natural disasters, disruption of energy 
systems, risk of conflict, environmental migration, and the value of 
ecosystem services. The SC-GHGs therefore, reflects the societal value 
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting 
benefit-cost analyses of policies that affect CO2, 
N2O and CH4 emissions. As a member of the IWG 
involved in the development of the February 2021 SC-GHG TSD), the DOE 
agrees that the interim SC-GHG estimates represent the most appropriate 
estimate of the SC-GHG until revised estimates have been developed 
reflecting the latest, peer-reviewed science.
---------------------------------------------------------------------------

    \136\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. Available at: www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 
(last accessed March 17, 2021).
---------------------------------------------------------------------------

    The SC-GHGs estimates presented here were developed over many 
years, using transparent process, peer-reviewed methodologies, the best 
science available at the time of that process, and with input from the 
public. Specifically, in 2009, an interagency working group (IWG) that 
included the DOE and other executive branch agencies and offices was 
established to ensure that agencies were using the best available 
science and to promote consistency in the social cost of carbon (SC-
CO2) values used across agencies. The IWG published SC-
CO2 estimates in 2010 that were developed from an ensemble 
of three widely cited integrated assessment models (IAMs) that estimate 
global climate damages using highly aggregated representations of 
climate processes and the global economy combined into a single 
modeling framework. The three IAMs were run using a common set of input 
assumptions in each model for future population, economic, and 
CO2 emissions growth, as well as equilibrium climate 
sensitivity (ECS)--a measure of the globally averaged temperature 
response to increased atmospheric CO2 concentrations. These 
estimates were updated in 2013 based on new versions of each IAM. In 
August 2016 the IWG published estimates of the social cost of methane 
(SC-CH4) and nitrous oxide (SC-N2O) using 
methodologies that are consistent with the methodology underlying the 
SC-CO2 estimates. The modeling approach that extends the IWG 
SC-CO2 methodology to non-CO2 GHGs has undergone 
multiple stages of peer review. The SC-CH4 and SC-
N2O estimates were developed by Marten et al. (2015) and 
underwent a standard double-blind peer review process prior to journal 
publication. In 2015, as part of the response to public comments 
received to a 2013 solicitation for comments on the SC-CO2 
estimates, the IWG announced a National Academies of Sciences, 
Engineering, and Medicine review of the SC-CO2 estimates to 
offer advice on how to approach future updates to ensure that the 
estimates continue to reflect the best available science and 
methodologies. In January 2017, the National Academies released their 
final report, Valuing Climate Damages: Updating Estimation of the 
Social Cost of Carbon Dioxide, and recommended specific criteria for 
future updates to the SC-CO2 estimates, a modeling framework 
to satisfy the specified criteria, and both near-term updates and 
longer-term research needs pertaining to various components of the 
estimation process (National Academies, 2017). Shortly thereafter, in 
March 2017, President Trump issued Executive Order 13783, which 
disbanded the IWG, withdrew the previous TSDs, and directed agencies to 
ensure SC-CO2 estimates used in regulatory analyses are 
consistent with the guidance contained in OMB's Circular A-4, 
``including with respect to the consideration of domestic versus 
international impacts and the consideration of appropriate discount 
rates'' (E.O. 13783, Section 5(c)).
    On January 20, 2021, President Biden issued Executive Order 13990, 
which re-established the IWG and directed it to ensure that the U.S. 
Government's estimates of the social cost of carbon and other 
greenhouse gases reflect the best available science and the 
recommendations of the National Academies (2017). The IWG was tasked 
with first reviewing the SC-GHG estimates currently used in Federal 
analyses and publishing interim estimates within 30 days of the E.O. 
that reflect the full impact of GHG emissions, including by taking 
global damages into account. The interim SC-GHG estimates published in 
February 2021, specifically the SC-CH4 estimates, are used 
here to estimate the climate benefits for this proposed rulemaking. The 
E.O. instructs the IWG to undertake a fuller update of the SC-GHG 
estimates by January 2022 that takes into consideration the advice of 
the National Academies (2017) and other recent scientific literature.
    The February 2021 SC-GHG TSD provides a complete discussion of the 
IWG's initial review conducted under E.O. 13990. In particular, the IWG 
found that the SC-GHG estimates used under E.O. 13783 fail to reflect 
the full impact of GHG emissions in multiple ways. First, the IWG found 
that a global perspective is essential for SC-GHG estimates because it 
fully captures climate impacts that affect the United States and which 
have been omitted from prior U.S.-specific estimates due to 
methodological constraints. Examples of omitted effects include direct 
effects on U.S. citizens, assets, and investments located abroad, 
supply chains, and tourism, and spillover pathways such as economic and 
political destabilization and global migration. In addition, assessing 
the benefits of U.S. GHG mitigation activities requires consideration 
of how those actions may affect mitigation activities by other

[[Page 22689]]

countries, as those international mitigation actions will provide a 
benefit to U.S. citizens and residents by mitigating climate impacts 
that affect U.S. citizens and residents. If the United States does not 
consider impacts on other countries, it is difficult to convince other 
countries to consider the impacts of their emissions on the United 
States. As a member of the IWG involved in the development of the 
February 2021 SC-GHG TSD, DOE agrees with this assessment and, 
therefore, in this proposed rule DOE centers attention on a global 
measure of SC-GHG. This approach is the same as that taken in DOE 
regulatory analyses from 2012 through 2016. Prior to that, in 2008 DOE 
presented Social Cost of Carbon (SCC) estimates based on values the 
Intergovernmental Panel on Climate Change (IPCC) identified in 
literature at that time. As noted in the February 2021 SC-GHG TSD, the 
IWG will continue to review developments in the literature, including 
more robust methodologies for estimating a U.S.-specific SC-GHG value, 
and explore ways to better inform the public of the full range of 
carbon impacts. As a member of the IWG, DOE will continue to follow 
developments in the literature pertaining to this issue.
    Second, the IWG found that the use of the social rate of return on 
capital (7 percent under current OMB Circular A-4 guidance) to discount 
the future benefits of reducing GHG emissions inappropriately 
underestimates the impacts of climate change for the purposes of 
estimating the SC-GHG. Consistent with the findings of the National 
Academies (2017) and the economic literature, the IWG continued to 
conclude that the consumption rate of interest is the theoretically 
appropriate discount rate in an intergenerational context (IWG 2010, 
2013, 2016a, 2016b), and recommended that discount rate uncertainty and 
relevant aspects of intergenerational ethical considerations be 
accounted for in selecting future discount rates. As a member of the 
IWG involved in the development of the February 2021 SC-GHG TSD, DOE 
agrees with this assessment and will continue to follow developments in 
the literature pertaining to this issue.
    While the IWG works to assess how best to incorporate the latest, 
peer reviewed science to develop an updated set of SC-GHG estimates, it 
set the interim estimates to be the most recent estimates developed by 
the IWG prior to the group being disbanded in 2017. The estimates rely 
on the same models and harmonized inputs and are calculated using a 
range of discount rates. As explained in the February 2021 SC-GHG TSD, 
the IWG has recommended that agencies revert to the same set of four 
values drawn from the SC-GHG distributions based on three discount 
rates as were used in regulatory analyses between 2010 and 2016 and 
subject to public comment. For each discount rate, the IWG combined the 
distributions across models and socioeconomic emissions scenarios 
(applying equal weight to each) and then selected a set of four values 
recommended for use in benefit-cost analyses: An average value 
resulting from the model runs for each of three discount rates (2.5 
percent, 3 percent, and 5 percent), plus a fourth value, selected as 
the 95th percentile of estimates based on a 3 percent discount rate. 
The fourth value was included to provide information on potentially 
higher-than-expected economic impacts from climate change. As explained 
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects 
the immediate need to have an operational SC-GHG for use in regulatory 
benefit-cost analyses and other applications that was developed using a 
transparent process, peer-reviewed methodologies, and the science 
available at the time of that process. Those estimates were subject to 
public comment in the context of dozens of proposed rulemakings as well 
as in a dedicated public comment period in 2013.
    DOE's derivations of the SC-GHG (i.e., SC-CO2, SC-
N2O, and SC-CH4) values used for this NOPR are 
discussed in the following sections, and the results of DOE's analyses 
estimating the benefits of the reductions in emissions of these 
pollutants are presented in section V.B.6. of this document.
a. Social Cost of Carbon
    The SC-CO2 values used for this NOPR were generated 
using the values presented in the 2021 update from the IWG's February 
2021 TSD. Table IV.21 shows the updated sets of SC-CO2 
estimates from the latest interagency update in 5-year increments from 
2020 to 2050. The full set of annual values used is presented in 
appendix 14A of the NOPR TSD. For purposes of capturing the 
uncertainties involved in regulatory impact analysis, DOE has 
determined it is appropriate to include all four sets of SC-
CO2 values, as recommended by the IWG.\137\
---------------------------------------------------------------------------

    \137\ For example, the February 2021 TSD discusses how the 
understanding of discounting approaches suggests that discount rates 
appropriate for intergenerational analysis in the context of climate 
change may be lower than 3 percent.

                    Table IV.21--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
                                           [2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                      Year                                                                           3% (95th
                                                   5% (average)    3% (average)   2.5% (average)    percentile)
----------------------------------------------------------------------------------------------------------------
2020............................................              14              51              76             152
2025............................................              17              56              83             169
2030............................................              19              62              89             187
2035............................................              22              67              96             206
2040............................................              25              73             103             225
2045............................................              28              79             110             242
2050............................................              32              85             116             260
----------------------------------------------------------------------------------------------------------------

    In calculating the potential global benefits resulting from reduced 
CO2 emissions, DOE used the values from the 2021 interagency 
report, adjusted to 2020$ using the implicit price deflator for gross 
domestic product (GDP) from the Bureau of Economic Analysis. For each 
of the four sets of SC-CO2 cases specified, the values for 
emissions in 2020 were $14, $51, $76, and $152 per metric ton avoided 
(values expressed in 2020$). DOE derived values from 2051 to 2070 based 
on estimates published by

[[Page 22690]]

EPA.\138\ These estimates are based on methods, assumptions, and 
parameters identical to the 2020-2050 estimates published by the IWG. 
DOE derived values after 2070 based on the trend in 2060-2070 in each 
of the four cases in the IWG update.
---------------------------------------------------------------------------

    \138\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: https://www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 
13, 2022).
---------------------------------------------------------------------------

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 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 SC-
CO2 values in each case. See chapter 13 for the annual 
emissions reduction. See appendix 14A for the annual SC-CO2 
values.
b. Social Cost of Methane and Nitrous Oxide
    The SC-CH4 and SC-N2O values used for this 
NOPR were generated using the values presented in the 2021 update from 
the IWG.\139\ Table IV.22 shows the updated sets of SC-CH4 
and SC-N2O estimates from the latest interagency update in 
5-year increments from 2020 to 2050. The full set of annual values used 
is presented in appendix 14A of the NOPR TSD. To capture the 
uncertainties involved in regulatory impact analysis, DOE has 
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG.
---------------------------------------------------------------------------

    \139\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. Available at: www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 
(last accessed March 17, 2021).

                                                      Table IV.22--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
                                                                                     [2020$ per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                SC-CH4 discount rate and statistic                              SC-N2O discount rate and statistic
                                                                 -------------------------------------------------------------------------------------------------------------------------------
                              Year                                                                                   3% (95th                                                        3% (95th
                                                                   5% (average)    3% (average)   2.5% (average)    percentile)    5% (average)    3% (average)   2.5% (average)    percentile)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................             670            1500            2000            3900            5800           18000           27000           48000
2025............................................................             800            1700            2200            4500            6800           21000           30000           54000
2030............................................................             940            2000            2500            5200            7800           23000           33000           60000
2035............................................................            1100            2200            2800            6000            9000           25000           36000           67000
2040............................................................            1300            2500            3100            6700           10000           28000           39000           74000
2045............................................................            1500            2800            3500            7500           12000           30000           42000           81000
2050............................................................            1700            3100            3800            8200           13000           33000           45000           88000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the cases using the specific discount 
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case. See chapter 13 for the annual 
emissions reduction. See appendix 14A for the annual SC-CH4 
and SC-N2O values.
2. Monetization of Other Air Pollutants
    DOE estimated the monetized value of NOX and 
SO2 emissions reductions from electricity generation using 
benefit per ton estimates based on air quality modeling and 
concentration-response functions conducted for the Clean Power Plan 
final rule. 84 FR 32520. DOE used EPA's reported values for 
NOX (as PM2.5) and SO2 for 2020, 2025, 
and 2030 calculated with discount rates of 3 percent and 7 percent, and 
EPA's values for ozone season NOX, which do not involve 
discounting since the impacts are in the same year as emissions. DOE 
derived values specific to the sector for pool heaters using a method 
described in appendix 14A of the NOPR TSD. For this analysis DOE used 
linear interpolation to define values for the years between 2020 and 
2025 and between 2025 and 2030; for years beyond 2030 the values are 
held constant.
    DOE estimated the monetized value of NOX and 
SO2 emissions reductions from gas pool heaters using benefit 
per ton estimates from the EPA's ``Technical Support Document 
Estimating the Benefit per Ton of Reducing PM2.5 Precursors 
from 17 Sectors'' (``EPA TSD'').\140\ Although none of the sectors 
refers specifically to residential and commercial buildings, and by 
association pool heaters, the sector called ``area sources'' would be a 
reasonable proxy for residential and commercial buildings. ``Area 
sources'' represents all emission sources for which states do not have 
exact (point) locations in their emissions inventories. Because exact 
locations would tend to be associated with larger sources, ``area 
sources'' would be fairly representative of small dispersed sources 
like homes and businesses. The EPA TSD provides high and low estimates 
for 2016, 2020, 2025, and 2030 at 3- and 7-percent discount rates. DOE 
primarily relied on the low estimates to be conservative.
---------------------------------------------------------------------------

    \140\ U.S. Environmental Protection Agency. Technical Support 
Document: Estimating the Benefit per Ton of Reducing 
PM2.5 Precursors from 17 Sectors, available at: 
www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-17-sectors (last accessed August 11, 2021).
---------------------------------------------------------------------------

    DOE multiplied the site emissions reduction (in 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 for the final rule. 
Additional details on the monetization of NOX and 
SO2 emissions reductions are included in chapter 14 of the 
NOPR TSD.

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 AEO2021. 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. For 
the current analysis, impacts are quantified by comparing the levels of

[[Page 22691]]

electricity sector generation, installed capacity, fuel consumption and 
emissions in the AEO2021 Reference case and various side cases. Details 
of the methodology are provided in the appendices to chapters 13 and 15 
of the NOPR 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 potential new or 
amended energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed 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 consumers on 
energy, (2) reduced spending on new energy supply by the utility 
industry, (3) increased consumer spending on the products to which the 
new standards apply and other goods and services, 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''). 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.\141\ 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.
---------------------------------------------------------------------------

    \141\ U.S. Department of Commerce--Bureau of Economic Analysis. 
Regional Multipliers: A User Handbook for the Regional Input-Output 
Modeling System (RIMS II). 1997. U.S. Government Printing Office: 
Washington, DC. Available at www.bea.gov/resources/methodologies/RIMSII-user-guide (last accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 4 
(``ImSET'').\142\ 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.
---------------------------------------------------------------------------

    \142\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model 
Description and User Guide. 2015. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-24563. Available at www.pnnl.gov/main/publications/external/technical_reports/PNNL-24563.pdf (last 
accessed April 15, 2021).
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and that 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 used ImSET only to generate results 
for near-term timeframes (2028-2033), where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the NOPR 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 
consumer pool heaters. It addresses the TSLs examined by DOE, the 
projected impacts of each of these levels if adopted as energy 
conservation standards for consumer pool heaters, and the standards 
levels that DOE is proposing to adopt in this NOPR. Additional details 
regarding DOE's analyses are contained in the NOPR TSD supporting this 
document.

A. Trial Standard Levels

    In general, DOE typically evaluates potential amended standards for 
products and equipment by grouping individual efficiency levels for 
each class into TSLs. Use of TSLs allows DOE to identify and consider 
manufacturer cost interactions between the equipment classes, to the 
extent that there are such interactions, and market cross elasticity 
from consumer purchasing decisions that may change when different 
standard levels are set. DOE analyzed the benefits and burdens of six 
TSLs for consumer pool heaters. DOE presents the results for the TSLs 
in this document, while the results for all efficiency levels that DOE 
analyzed are in the NOPR TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
at the representative capacity (input for gas-fired, output for 
electric) that DOE has identified for potential amended energy 
conservation standards for consumer pool heaters. TSL 6 represents the 
max-tech energy efficiency for both electric and gas-fired pool heaters 
and represents the maximum energy savings possible given the specific 
efficiency levels analyzed by DOE (see section III.C.2 of this NOPR). 
TSL 5 represents efficiency levels below max-tech for both electric and 
gas-fired pool heaters and represents the maximum energy savings 
excluding max-tech efficiency levels. A greater fraction of gas-fired 
pool heater consumers experience a net cost compared to electric pool 
heater consumers at TSL 5. Therefore, TSL 4 is constructed with the 
same efficiency level for electric pool heaters (i.e., EL 4) but the 
next highest efficiency level for gas-fired pool heaters (i.e., EL 1). 
Finally, because EL 1 is the lowest analyzed efficiency level above 
baseline, TSLs 3, 2, and 1 are also constructed with EL 1 for gas-fired 
pool heaters as opposed to analyzing a no-new-standards case for this 
product class. TSLs 3, 2, and 1 consist of the

[[Page 22692]]

remaining efficiency levels for electric pool heaters.

                                     Table V.1--Trial Standard Levels for Consumer Pool Heaters by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                      Product class                      -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Efficiency Level and RepresentativeTE
                                                         -----------------------------------------------------------------------------------------------
Electric Pool Heaters...................................        1 (387%)        2 (483%)        3 (534%)        4 (551%)        4 (551%)        5 (595%)
Gas-fired Pool Heaters..................................       1 (81.3%)       1 (81.3%)       1 (81.3%)       1 (81.3%)       2 (83.3%)       3 (94.8%)
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on consumer pool heater consumers 
by looking at the effects that potential new or amended standards at 
each TSL would have on the LCC and PBP. DOE also examined the impacts 
of potential standards on selected consumer subgroups. These analyses 
are discussed in the following sections.
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 NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.5 show the LCC and PBP results for the 
TSLs 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, 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 the baseline product 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.

                                            Table V.2--Average LCC and PBP Results for Electric Pool Heaters
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2020$
                                     Representative TEI  ---------------------------------------------------------------- Simple payback      Average
                TSL                          (%)                           First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.................................  387.................           3,974             502           4,610           8,584             0.6            11.2
2.................................  483.................           4,063             419           3,868           7,932             0.6            11.2
3.................................  534.................           4,140             389           3,601           7,741             0.7            11.2
4,5...............................  551.................           4,196             380           3,521           7,716             0.7            11.2
6.................................  595 (Max Tech)......           4,342             363           3,374           7,716             0.8            11.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.3--Average LCC Savings Relative to the No-New-Standards Case for Electric Pool Heaters
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                            Representative TEI (%)         Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2020$         cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................  387.............................           7,995             0.4
2.............................................  483.............................           3,695             0.9
3.............................................  534.............................           1,123            11.0
4,5...........................................  551.............................           1,029            20.9
6.............................................  595 (Max Tech)..................             929            37.8
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


[[Page 22693]]


                                            Table V.4--Average LCC and PBP Results for Gas-Fired Pool Heaters
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2020$)
                                     Representative TEI  ---------------------------------------------------------------- Simple payback      Average
                TSL                          (%)                           First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2,3,4...........................  81.3................           2,881             884           8,374          11,255             0.1            11.2
5.................................  83.3................           3,059             871           8,261          11,320             1.5            11.2
6.................................  94.8 (Max Tech).....           3,749             798           7,603          11,352             4.4            11.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 No-New-Standards Case for Gas-Fired Pool Heaters
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                            Representative TEI (%)         Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                      (2020$)        cost (%)
----------------------------------------------------------------------------------------------------------------
1,2,3,4.......................................  81.3............................           1,085             0.0
5.............................................  83.3............................              43            31.9
6.............................................  94.8 (Max Tech).................            (15)            70.1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Parentheses indicate negative (-) values.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on senior-only households and small businesses. Table 
V.6 and Table V.7 compare the average LCC savings and PBP at each 
efficiency level for the consumer subgroup, along with the average LCC 
savings for the entire consumer sample for electric pool heaters and 
gas-fired pool heaters, respectively. In most cases, the average LCC 
savings and PBP for senior-only households and small businesses at the 
considered efficiency levels are substantially different from the 
average for all households, since all households includes consumer pool 
heaters in homes and commercial applications. Chapter 11 of the NOPR 
TSD presents the complete LCC and PBP results for the subgroup.

                    Table V.6--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households for Electric Pool Heaters
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2020$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Senior-only                                     Senior-only
                                                            households    Small business  All households    households    Small business  All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................           2,758          24,716           7,995             1.1             0.3             0.6
2.......................................................           1,165          25,600           3,695             1.2             0.3             0.6
3.......................................................             302          16,750           1,123             1.3             0.3             0.7
4,5.....................................................             251          16,295           1,029             1.4             0.4             0.7
6.......................................................             140          15,383             929             1.6             0.4             0.8
--------------------------------------------------------------------------------------------------------------------------------------------------------


                    Table V.7--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households for Gas-Fired Pool Heaters
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2020$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Senior-only                                     Senior-only
                                                            households    Small business  All households    households    Small business  All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2,3,4.................................................           1,122             384           1,085             0.1             0.3             0.1
5.......................................................            (22)             126              43             1.6             2.6             1.5
6.......................................................           (464)             800            (15)             6.0             3.0             4.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

c. Rebuttable Presumption Payback
    As discussed in section III.E.2, EPCA establishes 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 payback period for each of the considered TSLs, DOE used 
discrete

[[Page 22694]]

values, and, as required by EPCA, based the energy use calculation on 
the DOE test procedure for consumer pool heaters. In contrast, the PBPs 
presented in section V.B.1.a of this document were calculated using 
distributions that reflect the range of energy use in the field.
    Table V.8 presents the rebuttable-presumption payback periods for 
the considered TSLs for consumer pool heaters. These results show that, 
in most cases, the projected payback period will be three years or less 
with respect to each TSL examined. While DOE examined the rebuttable-
presumption criterion, it 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), that considers the full range of impacts to 
the consumer, manufacturer, Nation, and environment. The results of 
that analysis serve as the basis for DOE to definitively evaluate the 
economic justification for a potential standard level, thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification.

        Table V.8--Rebuttable-Presumption Payback Periods (years)
------------------------------------------------------------------------
                                           Electric pool  Gas-fired pool
                   TSL                        heaters         heaters
------------------------------------------------------------------------
1.......................................            2.41            0.11
2.......................................            2.52            0.11
3.......................................            2.68            0.11
4.......................................            2.83            0.11
5.......................................            2.83            1.72
6.......................................            3.20            5.87
------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new and amended 
energy conservation standards on manufacturers of consumer pool 
heaters. The following section describes the expected impacts on 
manufacturers at each considered TSL. Chapter 12 of the NOPR TSD 
explains the analysis in further detail.
a. Industry Cash Flow Analysis Results
    In this section, DOE provides GRIM results from the analysis, which 
examines changes in the industry that would result from a standard. The 
following tables illustrate the estimated financial impacts 
(represented by changes in INPV) of potential new and amended energy 
conservation standards on manufacturers of consumer pool heaters, as 
well as the conversion costs that DOE estimates manufacturers of 
consumer pool heaters would incur at each TSL.
    As discussed in section IV.J.2.e of this document, DOE modeled two 
manufacturer markup scenarios to evaluate a range of cash flow impacts 
on the consumer pool heater industry: (1) The preservation of gross 
margin percentage markup scenario and (2) the preservation of operating 
profit. DOE considered the preservation of gross margin percentage 
scenario by applying a ``gross margin percentage'' markup for each 
product class across all efficiency levels. As MPCs increase with 
efficiency, this scenario implies that the absolute dollar markup will 
increase. DOE assumed a manufacturer markup of 1.33 for gas-fired pool 
heaters and 1.28 for electric pool heaters. This manufacturer markup is 
consistent with the one DOE assumed in the engineering analysis and the 
no-new-standards case of the GRIM. Because this scenario assumes that a 
manufacturer's absolute dollar markup would increase as MPCs increase 
in the standards cases, it represents the upper-bound to industry 
profitability under potential new and amended energy conservation 
standards.
    The preservation of operating profit scenario reflects 
manufacturers' concerns about their inability to maintain margins as 
MPCs increase to reach more-stringent efficiency levels. In this 
scenario, while manufacturers make the necessary investments required 
to convert their facilities to produce compliant products, operating 
profit does not change in absolute dollars and decreases as a 
percentage of revenue.
    Each of the modeled manufacturer markup scenarios 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 difference 
in industry value between the no-new-standards case and each standards 
case resulting from the sum of discounted cash-flows from 2021 through 
2057. To provide perspective on the short-run cash-flow impact, DOE 
includes in the discussion of results a comparison of free cash flow 
between the no-new-standards case and the standards case at each TSL in 
the year before new and amended standards are required.
    Table V.9 and Table V.10 show the MIA results for both product 
classes at each TSL using the manufacturer markup scenarios previously 
described.

                                    Table V.9--Manufacturer Impact Analysis for Consumer Pool Heaters Under the Preservation of Gross Margin Markup Scenario
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      Trial standard level *
                                                              Units                   No-new-    -----------------------------------------------------------------------------------------------
                                                                                  standards case         1               2               3               4               5               6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  2020$ millions..................           188.7           186.5           184.2           171.8           171.1           174.2           187.3
Change in INPV................................  2020$ millions..................  ..............           (2.2)           (4.4)          (16.9)          (17.5)          (14.4)           (1.4)
                                                %...............................  ..............           (1.2)           (2.3)           (9.0)           (9.3)           (7.7)           (0.7)
Product Conversion Costs......................  2020$ millions..................  ..............             2.7             6.1            22.9            24.1            32.6            41.5
Capital Conversion Costs......................  2020$ millions..................  ..............  ..............             0.6             5.3             5.3             6.2            17.5
Total Investment Requires **..................  2020$ millions..................  ..............             2.7             6.6            28.3            29.4            38.8            59.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number. Numbers may not sum exactly due to rounding.


[[Page 22695]]


                                  Table V.10--Manufacturer Impact Analysis for Consumer Pool Heaters Under the Preservation of Operating Profit Markup Scenario
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      No-new-                                         Trial standard level *
                                                              Units                  standards   -----------------------------------------------------------------------------------------------
                                                                                       case              1               2               3               4               5               6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  2020$ millions..................           188.7           186.1           183.6           170.3           169.0           161.0           135.5
Change in INPV................................  2020$ millions..................  ..............           (2.5)           (5.0)          (18.3)          (19.6)          (27.7)          (53.2)
                                                %...............................  ..............           (1.3)           (2.7)           (9.7)          (10.4)          (14.7)          (28.2)
Product Conversion Costs......................  2020$ millions..................  ..............             2.7             6.1            22.9            24.1            32.6            41.5
Capital Conversion Costs......................  2020$ millions..................  ..............  ..............             0.6             5.3             5.3             6.2            17.5
Total Investment Requires.....................  2020$ millions..................  ..............             2.7             6.6            28.3            29.4            38.8            59.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number. Numbers may not sum exactly due to rounding.

    At TSL 1, DOE estimates that impacts on INPV will range from -$2.5 
million to -$2.2 million, or a change in INPV of -1.3 to -1.2 percent. 
At TSL 1, industry free cash-flow is $13.4 million, which is a decrease 
of approximately $0.9 million compared to the no-new-standards case 
value of $14.3 million in 2027, the year leading up to the proposed 
standards.
    TSL 1 would set the energy conservation standard for both gas-fired 
consumer pool heaters and electric consumer pool heaters at EL 1. DOE 
estimates that 96 percent of gas-fired pool heater shipments and 93 
percent of electric pool heater shipments already meet or exceed the 
efficiency levels analyzed at TSL 1. Gas-fired pool heater 
manufacturers would likely need to redesign any models with a standing 
pilot light. DOE assumed this would require approximately two months of 
engineering time per model, which would cost manufacturers 
approximately $0.5 million. Electric heat pump pool heater 
manufacturers would incur approximately $2.2 million in product 
conversion costs primarily to test all compliant electric pool heater 
models to demonstrate compliance with standards at TSL 1. DOE estimates 
pool heater manufacturers will incur minimal to no capital conversion 
costs at TSL 1.
    Furthermore, no electric resistance pool heaters meet or exceed the 
electric pool heater efficiency level analyzed at TSL 1 or above. DOE 
estimates manufacturers will not incur conversion costs for electric 
resistance pool heaters, because of the expectation that these consumer 
pool heater products will be discontinued, as described in section 
IV.J.2.c of this document.
    At TSL 1, the shipment-weighted average MPC for all consumer pool 
heaters increases by 0.5 percent relative to the no-new-standards case 
shipment-weighted average MPC for all consumer pool heaters in 2028. In 
the preservation of gross margin markup scenario, manufacturers are 
able to fully pass on this slight cost increase to consumers. The 
slight increase in shipment-weighted average MPC for consumer pool 
heaters is slightly outweighed by the $2.7 million in conversion costs, 
causing a slightly negative change in INPV at TSL 1 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, 
manufacturers earn the same per-unit operating profit as would be 
earned in the no-new-standards case, but manufacturers do not earn 
additional profit from their investments. In this scenario, the 0.5 
percent shipment-weighted average MPC increase results in a reduction 
in the manufacturer markup after the analyzed compliance year. This 
reduction in the manufacturer markup and the $2.7 million in conversion 
costs incurred by manufacturers cause a slightly negative change in 
INPV at TSL 1 under the preservation of operating profit markup 
scenario.
    At TSL 2, DOE estimates that impacts on INPV will range from -$5.0 
million to -$4.4 million, or a change in INPV of -2.7 percent to -2.3 
percent. At TSL 2, industry free cash-flow is $11.9 million, which is a 
decrease of approximately $2.4 million compared to the no-new-standards 
case value of $14.3 million in 2027, the year leading up to the 
proposed standards.
    DOE estimates that 96 percent of gas-fired pool heater shipments 
and 79 percent of electric pool heater shipments already meet or exceed 
the efficiency levels analyzed at TSL 2. To bring non-compliant 
electric heat pump pool heaters into compliance and to test all 
electric heat pump pool heaters to demonstrate compliance with 
standards at TSL 2, electric heat pump pool heater manufacturers would 
incur approximately $5.5 million in product conversion costs and $0.6 
million in capital conversion costs at TSL 2.
    At TSL 2, the shipment-weighted average MPC for all consumer pool 
heaters increases by 0.9 percent relative to the no-new-standards case 
shipment-weighted average MPC for all consumer pool heaters in 2028. In 
the preservation of gross margin markup scenario, the slight increase 
in shipment-weighted average MPC for consumer pool heaters is slightly 
outweighed by the $6.6 million in conversion costs, causing a slightly 
negative change in INPV at TSL 2 under the preservation of gross margin 
markup scenario.
    Under the preservation of operating profit markup scenario, the 0.9 
percent shipment-weighted average MPC increase results in a reduction 
in the manufacturer markup after the analyzed compliance year. This 
reduction in the manufacturer markup and the $6.6 million in conversion 
costs incurred by manufacturers cause a slightly negative change in 
INPV at TSL 2 under the preservation of operating profit markup 
scenario.
    At TSL 3, DOE estimates that impacts on INPV will range from -$18.3 
million

[[Page 22696]]

to -$16.9 million, or a change in INPV of -9.7 percent to -9.0 percent. 
At TSL 3, industry free cash-flow is $3.8 million, which is a decrease 
of approximately $10.6 million compared to the no-new-standards case 
value of $14.3 million in 2027, the year leading up to the proposed 
standards.
    DOE estimates that 96 percent of gas-fired pool heater shipments 
and 19 percent of electric pool heater shipments already meet or exceed 
the efficiency levels analyzed at TSL 3. To bring non-compliant 
electric heat pump pool heaters into compliance and to test all 
electric heat pump pool heaters to demonstrate compliance with 
standards at TSL 3, electric heat pump pool heater manufacturers would 
incur approximately $22.4 million in product conversion costs and $5.3 
million in capital conversion costs at TSL 3.
    At TSL 3, the shipment-weighted average MPC for all consumer pool 
heaters increases by 2.1 percent relative to the no-new-standards case 
shipment-weighted average MPC for all consumer pool heaters in 2028. In 
the preservation of gross margin markup scenario, the increase in 
shipment-weighted average MPC for consumer pool heaters is outweighed 
by the $28.3 million in conversion costs, causing a moderately negative 
change in INPV at TSL 3 under the preservation of gross margin markup 
scenario.
    Under the preservation of operating profit markup scenario, the 2.1 
percent shipment-weighted average MPC increase results in a reduction 
in the manufacturer markup after the analyzed compliance year. This 
reduction in the manufacturer markup and the $28.3 million in 
conversion costs incurred by manufacturers cause a moderately negative 
change in INPV at TSL 3 under the preservation of operating profit 
markup scenario.
    At TSL 4, DOE estimates that impacts on INPV will range from -$19.6 
million to -$17.5 million, or a change in INPV of -10.4 percent to -9.3 
percent. At TSL 4, industry free cash-flow is $3.4 million, which is a 
decrease of approximately $11.0 million compared to the no-new-
standards case value of $14.3 million in 2027, the year leading up to 
the proposed standards.
    DOE estimates that 96 percent of gas-fired pool heaters and 10 
percent of electric pool heaters meet or exceed the efficiency levels 
analyzed at TSL 4. To bring non-compliant products into compliance, 
consumer pool heater manufacturers would incur approximately $24.1 
million in product conversion costs for redesign and testing. DOE 
estimates manufacturers will incur approximately $5.3 million in 
capital conversion costs associated with TSL 4 to make changes to 
existing machinery and tooling.
    At TSL 4, the shipment-weighted average MPC for all consumer pool 
heaters increases by 3.1 percent relative to the no-new-standards case 
shipment-weighted average MPC for all consumer pool heaters in 2028. In 
the preservation of gross margin markup scenario, the increase in 
shipment-weighted average MPC for consumer pool heaters is outweighed 
by the $29.4 million in conversion costs, causing a moderately negative 
change in INPV at TSL 4 under the preservation of gross margin markup 
scenario.
    Under the preservation of operating profit markup scenario, the 3.1 
percent shipment-weighted average MPC increase results in a reduction 
in the manufacturer markup after the analyzed compliance year. This 
reduction in the manufacturer markup and the $29.4 million in 
conversion costs incurred by manufacturers causing a moderately 
negative change in INPV at TSL 4 under the preservation of operating 
profit markup scenario.
    At TSL 5, DOE estimates that impacts on INPV will range from -$27.7 
million to -$14.4 million, or a change in INPV of -14.7 percent to -7.7 
percent. At TSL 5, industry free cash-flow is slightly negative (less 
then -$0.1 million), which is a decrease of approximately $14.4 million 
compared to the no-new-standards case value of $14.3 million in 2027, 
the year leading up to the proposed standards.
    DOE estimates that 45 percent of gas-fired pool heaters and 10 
percent of electric pool heaters meet or exceed the efficiency levels 
analyzed at TSL 5. To bring non-compliant products into compliance, 
consumer pool heater manufacturers would incur approximately $32.6 
million in product conversion costs for redesign and testing. DOE 
estimates manufacturers will incur approximately $6.2 million in 
capital conversion costs associated with TSL 5 to make changes to 
existing machinery and tooling. The design options analyzed at TSL 5 
incorporate a blower for gas-fired pool heaters.
    At TSL 5, the shipment-weighted average MPC for all consumer pool 
heaters increases by 10.2 percent relative to the no-new-standards case 
shipment-weighted average MPC for all consumer pool heaters in 2028. In 
the preservation of gross margin markup scenario, the increase in 
shipment-weighted average MPC for consumer pool heaters is outweighed 
by the $38.8 million in conversion costs, causing a moderately negative 
change in INPV at TSL 5 under the preservation of gross margin markup 
scenario.
    Under the preservation of operating profit markup scenario, the 
10.2 percent shipment-weighted average MPC increase results in a 
reduction in the manufacturer markup after the analyzed compliance 
year. This reduction in manufacturer markup and the $38.8 million in 
conversion costs incurred by manufacturers cause a moderately negative 
change in INPV at TSL 5 under the preservation of operating profit 
markup scenario.
    At TSL 6, DOE estimates that impacts on INPV will range from $53.2 
million to -$1.4 million, or a change in INPV of -28.2 percent to -0.7 
percent. At TSL 6, industry free cash-flow is -$8.3 million, which is a 
decrease of approximately $22.6 million compared to the no-new-
standards case value of $14.3 million in 2027, the year leading up to 
the proposed standards.
    DOE estimates 9 percent of gas-fired pool heaters and less than 1 
percent of electric pool heaters meet the efficiency levels analyzed at 
TSL 6. To bring non-compliant products into compliance, consumer pool 
heater manufacturers would incur approximately $41.5 million in product 
conversion costs for redesign and testing. DOE estimates manufacturers 
will incur approximately $17.5 million in capital conversion costs 
associated with TSL 6 to make changes to existing machinery and 
tooling. The design options at TSL 6 analyzed the implementation of 
condensing technology for gas-fired pool heaters, which requires a 
significant redesign effort and capital investment.
    At TSL 6, the shipment-weighted average MPC for all consumer pool 
heaters significantly increases by 37.0 percent relative to the no-new-
standards case shipment-weighted average MPC for all consumer pool 
heaters in 2028. In the preservation of gross margin markup scenario, 
the large increase in shipment-weighted average MPC for consumer pool 
heaters is still outweighed by the $59.0 million in conversion costs, 
causing a slightly negative change in INPV at TSL 6 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, the 
37.0 percent shipment-weighted average MPC increase results in a 
significant reduction in the manufacturer markup after the analyzed 
compliance year. This large reduction in manufacturer markup and the 
significant $59.0 million in conversion costs incurred by manufacturers 
cause a significantly negative change in INPV at TSL 6 under

[[Page 22697]]

the preservation of operating profit markup scenario.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of new and amended 
energy conservation standards on direct employment in the consumer pool 
heater industry, DOE used the GRIM to estimate the number of direct 
production employees and non-production employees in the no-new-
standards case, and the standards cases at each TSL.
    Production employees are those who are directly involved in 
fabricating and assembling products within an original equipment 
manufacturer facility. Workers performing services that are closely 
associated with production operations, such as materials handling tasks 
using forklifts, are included as production labor, as well as line 
supervisors.
    DOE used the GRIM to calculate the number of production employees 
from labor expenditures. DOE used statistical data from the U.S. Census 
Bureau's 2019 Annual Survey of Manufacturers (``ASM'') and the results 
of the engineering analysis to calculate industry-wide labor 
expenditures. Labor expenditures related to product manufacturing 
depend on the labor intensity of the product, the sales volume, and an 
assumption that wages remain fixed in real terms over time. 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.
    Non-production employees account for those workers that are not 
directly engaged in the manufacturing of the covered product. This 
could include sales, human resources, engineering, and management. DOE 
estimated non-production employment levels by multiplying the number of 
consumer pool heater production workers by a scaling factor. The 
scaling factor is calculated by taking the ratio of the total number of 
employees, and the total production workers associated with the 
industry NAICS code 333414, which covers heating equipment (except warm 
air furnaces) manufacturing.
    Using the GRIM, DOE estimates that there would be 857 domestic 
production workers, and 495 non-production workers for consumer pool 
heaters in 2028 in the absence of new and amended energy conservation 
standards. Table V.11 shows the range of the impacts of energy 
conservation standards on U.S. production on consumer pool heaters.

                                  Table V.11--Total Number of Domestic Consumer Pool Heater Production Workers in 2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 No-new-                                Trial standard level
                                                                standards  -----------------------------------------------------------------------------
                                                                   case          1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2028..........................          857          853          853          853          850          852        1,064
Domestic Non-Production Workers in 2028......................          495          492          492          492          491          492          614
Total Direct Employment in 2028..............................        1,352        1,345        1,345        1,345        1,341        1,344        1,678
Potential Changes in Total Direct Employment in 2028.........  ...........     (30)-(7)     (30)-(7)     (30)-(7)    (30)-(11)     (30)-(8)    (356)-326
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The direct employment impacts shown in Table V.11 represent the 
potential changes in direct employment that could result following the 
compliance date for the consumer pool heaters in this proposal. 
Employment could increase or decrease due to the labor content of the 
various products being manufactured domestically or if manufacturers 
decided to move production facilities abroad because of the new and 
amended standards. At one end of the range, DOE assumes that all 
manufacturers continue to manufacture the same scope of the products 
domestically after new and amended standards. However, since the labor 
content of consumer pool heaters varies by efficiency level, this can 
either result in an increase or decrease in domestic employment, even 
if all domestic product remains in the U.S.\143\ The other end of the 
range assumes that some domestic manufacturing either is eliminated or 
moves abroad due to the analyzed new and amended standards. DOE assumes 
that for electric pool heaters, only the electric resistance pool 
heater employees would be impacted at all TSLs analyzed. DOE estimates 
there would be approximately 30 domestic production and non-production 
employees manufacturing electric resistance pool heaters in 2028. 
Therefore, DOE assumes that for all TSLs analyzed, there would be a 
reduction in 30 domestic employees due to electric resistance pool 
heaters no longer being manufactured domestically. For gas pool 
heaters, DOE assumes there would not be any impact to domestic 
production until TSL 6, max-tech. At this TSL, DOE assumes that up to 
half of all domestic gas pool heater production could move abroad due 
to the new and amended standards at TSL 6. DOE estimated there would be 
approximately 651 domestic production workers manufacturing gas-fired 
pool heaters in 2028. Therefore, DOE estimates that if standards were 
set at TSL 6, max-tech, there could be a loss of up to 356 domestic 
employees responsible for manufacturing consumer pool heaters.\144\ 
Additional detail on the analysis of direct employment can be found in 
chapter 12 of the NOPR TSD.
---------------------------------------------------------------------------

    \143\ TSL 6 is estimated to have an increase in domestic 
employment, while TSL 1 through TSL 5, are estimated to have a 
reduction in domestic employment, assuming all production remains in 
the U.S.
    \144\ 326 domestic production employees manufacturing consumer 
gas-fired pool heaters and 30 domestic production and non-production 
employees manufacturing consumer electric resistance pool heaters.
---------------------------------------------------------------------------

c. Impacts on Manufacturing Capacity
    DOE did not identify any significant capacity constraints for the 
design options being evaluated for this NOPR. The design options 
evaluated for this NOPR are available as products that are on the 
market currently, with models meeting all the efficiency levels 
analyzed as part of this analysis. The materials used to manufacture 
models at all efficiency levels are widely available on the market. As 
a result, DOE does not anticipate that the industry will likely 
experience any capacity constraints directly resulting from energy 
conservation standards at any of the TSLs considered.
d. Impacts on Subgroups of Manufacturers
    As discussed in section IV.J.1 of this document, using average cost

[[Page 22698]]

assumptions to develop an industry cash-flow estimate may not be 
adequate for assessing differential impacts among manufacturer 
subgroups. Small manufacturers, niche manufacturers, and manufacturers 
exhibiting a cost structure substantially different from the industry 
average could be affected disproportionately. DOE used the results of 
the industry characterization to group manufacturers exhibiting similar 
characteristics. Consequently, DOE identified small business 
manufacturers as a subgroup for a separate impact analysis.
    For the small business subgroup analysis, DOE applied the small 
business size standards published by the Small Business Administration 
(``SBA'') to determine whether a company is considered a small 
business. The size standards are codified at 13 CFR part 121. To be 
categorized as a small business under NAICS code 333414, ``heating 
equipment (except warm air furnaces) manufacturing,'' a consumer pool 
heater manufacturer and its affiliates may employ a maximum of 500 
employees. The 500-employee threshold includes all employees in a 
business's parent company and any other subsidiaries. Based on this 
classification, DOE identified six potential manufacturers that could 
qualify as domestic small businesses.
    All six small businesses manufacture electric pool heaters and none 
of them manufacture gas-fired pool heaters. Therefore, only new 
standards set for electric pool heaters would impact any of the small 
businesses. Five of the six small businesses exclusively manufacture 
electric heat pump pool heaters, while the other small business 
exclusively manufacturers electric resistance pool heaters.
    The small business subgroup analysis is discussed in more detail in 
chapter 12 of the NOPR TSD. DOE examines the potential impacts on small 
business manufacturers in section VI.B of this NOPR.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the product-specific 
regulatory actions of other Federal agencies that affect the 
manufacturers of a covered product or equipment. While any one 
regulation may not impose a significant burden on manufacturers, the 
combined effects of several existing or impending regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden. In addition to energy 
conservation standards, other regulations can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can strain profits and lead companies to abandon 
product lines or markets with lower expected future returns than 
competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    Some consumer pool heater manufacturers also make other products or 
equipment that could be subject to energy conservation standards set by 
DOE. DOE looks at regulations that could affect consumer pool heater 
manufacturers that will take effect three years before or after the 
estimated 2028 compliance date. Therefore, this cumulative regulatory 
burden analysis focuses on DOE regulations taking place between 2025 
and 2031. DOE was not able to identify any potential energy 
conservation standard or test procedure for other products or equipment 
manufactured by consumer pool heater manufacturer that are scheduled to 
require compliance between 2025 and 2031.
    DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of consumer pool heaters associated 
with multiple DOE standards or product-specific regulatory actions of 
other Federal agencies.
3. National Impact Analysis
    This section presents DOE's estimates of the NES and the NPV of 
consumer benefits that would result from each of the TSLs considered as 
potential amended standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential new or 
amended standards for consumer pool heaters, DOE compared their energy 
consumption under the no-new-standards case to their anticipated energy 
consumption under each TSL. The savings are measured over the entire 
lifetime of products purchased in the 30-year period that begins in the 
year of anticipated compliance with amended standards (2028-2057). 
Table V.12 presents DOE's projections of the national energy savings 
for each TSL considered for consumer pool heaters. The savings were 
calculated using the approach described in section IV.H of this 
document.

                             Table V.12--Cumulative National Energy Savings for Consumer Pool Heaters; 30 Years of Shipments
                                                                       [2028-2057]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Trial standard level (quads *)
          Energy  savings               Product class    -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Site energy.......................  Electric Pool                   0.08            0.10            0.13            0.14            0.14            0.16
                                     Heaters.
                                    Gas-fired Pool                  0.02            0.02            0.02            0.02            0.09            0.80
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.11            0.12            0.15            0.16            0.23            0.96
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy....................  Electric Pool                   0.22            0.27            0.35            0.38            0.38            0.43
                                     Heaters.
                                    Gas-fired Pool                  0.02            0.02            0.02            0.02            0.09            0.80
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.25            0.30            0.38            0.40            0.47            1.23
--------------------------------------------------------------------------------------------------------------------------------------------------------
FFC energy........................  Electric Pool                   0.23            0.28            0.37            0.39            0.39            0.45
                                     Heaters.
                                    Gas-fired Pool                  0.02            0.02            0.02            0.02            0.10            0.88
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.26            0.31            0.39            0.42            0.49            1.33
--------------------------------------------------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Note numbers may not add to totals, due to rounding.


[[Page 22699]]

    OMB Circular A-4 \145\ 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 proposed 
rulemaking, DOE undertook a sensitivity analysis using 9 years, 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.\146\ The review timeframe established in EPCA 
is generally not synchronized with the product lifetime, product 
manufacturing cycles, or other factors specific to consumer pool 
heaters. 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.13 of this document. The 
impacts are counted over the lifetime of consumer pool heaters 
purchased in 2028-2057.
---------------------------------------------------------------------------

    \145\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. Available at: 
www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf (last accessed April 15, 2021).
    \146\ Section 325(m) of EPCA requires DOE to review its 
standards at least once every 6 years, and requires, for certain 
products, a 3-year period after any new standard is promulgated 
before compliance is required, except that in no case may any new 
standards be required within 6 years of the compliance date of the 
previous standards. While adding a 6-year review to the 3-year 
compliance period adds up to 9 years, DOE notes that it may 
undertake reviews at any time within the 6 year period and that the 
3-year compliance date may yield to the 6-year backstop. A 9-year 
analysis period may not be appropriate given the variability that 
occurs in the timing of standards reviews and the fact that for some 
products, the compliance period is 5 years rather than 3 years.

                             Table V.13--Cumulative National Energy Savings for Consumer Pool Heaters; 9 Years of Shipments
                                                                       [2028-2036]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Trial standard level (quads *)
          Energy  savings               Product class    -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Site energy.......................  Electric Pool                   0.03            0.03            0.04            0.04            0.04            0.05
                                     Heaters.
                                    Gas-fired Pool                  0.01            0.01            0.01            0.01            0.03            0.22
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.03            0.04            0.05            0.05            0.07            0.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy....................  Electric Pool                   0.07            0.09            0.11            0.11            0.11            0.13
                                     Heaters.
                                    Gas-fired Pool                  0.01            0.01            0.01            0.01            0.03            0.22
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.08            0.09            0.11            0.12            0.14            0.35
--------------------------------------------------------------------------------------------------------------------------------------------------------
FFC energy........................  Electric Pool                   0.07            0.09            0.11            0.12            0.12            0.13
                                     Heaters.
                                    Gas-fired Pool                  0.01            0.01            0.01            0.01            0.03            0.24
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.08            0.10            0.12            0.13            0.15            0.37
--------------------------------------------------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Note numbers may not add to totals, due to rounding.

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 TSLs considered for consumer pool 
heaters. In accordance with OMB's guidelines on regulatory 
analysis,\147\ DOE calculated NPV using both a 7-percent and a 3-
percent real discount rate. Table V.14 shows the consumer NPV results 
with impacts counted over the lifetime of products purchased in 2028-
2057.
---------------------------------------------------------------------------

    \147\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. Available at: 
www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf (last accessed April 15, 2021).

                     Table V.14--Cumulative Net Present Value of Consumer Benefits for Consumer Pool Heaters; 30 Years of Shipments
                                                                       [2028-2057]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level (billion 2020$)
           Discount rate                Product class    -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 percent.........................  Electric Pool                   0.64            0.77            0.94            0.96            0.96            0.95
                                     Heaters.
                                    Gas-fired Pool                  0.08            0.08            0.08            0.08          (0.01)          (0.18)
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.72            0.85            1.02            1.04            0.95            0.77
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent.........................  Electric Pool                   1.49            1.81            2.25            2.32            2.32            2.36
                                     Heaters.
                                    Gas-fired Pool                  0.18            0.18            0.18            0.18            0.07            0.37
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            1.67            1.99            2.43            2.50            2.39            2.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Note numbers may not add to totals, due to rounding.


[[Page 22700]]

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.15. The impacts are counted over the 
lifetime of products purchased in 2028-2057. 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.15--Cumulative Net Present Value of Consumer Benefits for Consumer Pool Heaters; 9 Years of Shipments
                                                                       [2028-2036]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level (billion 2020$)
           Discount rate                Product class    -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 percent.........................  Electric Pool                   0.35            0.42            0.50            0.51            0.51            0.51
                                     Heaters.
                                    Gas-fired Pool                  0.04            0.04            0.04            0.04          (0.01)          (0.13)
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.40            0.46            0.54            0.56            0.51            0.37
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent.........................  Electric Pool                   0.64            0.76            0.92            0.94            0.94            0.95
                                     Heaters.
                                    Gas-fired Pool                  0.08            0.08            0.08            0.08            0.02            0.04
                                     Heaters.
                                                         -----------------------------------------------------------------------------------------------
                                     Total..............            0.71            0.83            0.99            1.02            0.96            0.99
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Note numbers may not add to totals, due to rounding.

    The above results reflect the use of a default trend to estimate 
the change in price for consumer pool heaters over the analysis period 
(see section IV.H.3 of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with a larger price decline from 
the reference case and one scenario with a constant price. The results 
of these alternative cases are presented in appendix 10C of the NOPR 
TSD. In the high-price-decline case, the NPV of consumer benefits is 
higher than in the default case. In the constant-price case, the NPV of 
consumer benefits is lower than in the default case.
c. Indirect Impacts on Employment
    It is estimated that that new or amended energy conservation 
standards for consumer pool heaters would reduce energy expenditures 
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. 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 
(2028-2033), where these uncertainties are reduced.
    The results suggest that the proposed standards would be 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 NOPR TSD presents detailed 
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    As discussed in section IV.C.1.b of this document, DOE has 
tentatively concluded that the standards proposed in this NOPR would 
not lessen the utility or performance of the consumer pool heaters 
under consideration in this rulemaking. Manufacturers of these products 
currently offer units that meet or exceed the proposed standards.
5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As discussed in section III.E.1.e 
of this document, the Attorney General determines the impact, if any, 
of any lessening of competition likely to result from a proposed 
standard, and transmits such determination in writing to the Secretary, 
together with an analysis of the nature and extent of such impact. To 
assist the Attorney General in making this determination, DOE has 
provided DOJ with copies of this NOPR and the accompanying TSD for 
review. DOE will consider DOJ's comments on the proposed rule in 
determining whether to proceed to a final rule. DOE will publish and 
respond to DOJ's comments in that document. DOE invites comment from 
the public regarding the competitive impacts that are likely to result 
from this proposed rule. In addition, stakeholders may also provide 
comments separately to DOJ regarding these potential impacts. See the 
ADDRESSES section for information on how to send comments to DOJ.
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. Chapter 15 in the NOPR TSD 
presents the estimated impacts on electricity generating capacity, 
relative to the no-new-standards case, for the TSLs that DOE considered 
in this proposed rulemaking.
    Energy conservation resulting from potential new and amended energy 
conservation standards for consumer pool heaters is expected to yield 
environmental benefits in the form of reduced emissions of certain air 
pollutants and greenhouse gases. Table V.16 provides DOE's estimate of 
cumulative emissions reductions expected to result from the TSLs 
considered in this rulemaking. The emissions were calculated using the 
multipliers discussed in section IV.K. of this document. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the NOPR TSD.

[[Page 22701]]



                                Table V.16--Cumulative Emissions Reduction for Consumer Pool Heaters Shipped in 2028-2057
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Site and Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             8.5            10.1            12.7            13.6            17.2            56.4
SO2 (thousand tons).....................................             3.2            4.00             5.1             5.5             5.4             6.8
NOX (thousand tons).....................................             8.4             9.1            10.2            10.5            67.0            74.1
Hg (tons)...............................................            0.02            0.02            0.03            0.03            0.03            0.04
CH4 (thousand tons).....................................             0.6             0.7             0.9             1.0             1.0             2.0
N2O (thousand tons).....................................            0.08            0.10            0.13            0.14            0.14            0.24
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             0.7             0.8             1.0             1.1             1.5             6.2
SO2 (thousand tons).....................................            0.04            0.05            0.06            0.07            0.07            0.10
NOX (thousand tons).....................................            10.5            12.3            15.2            16.2            23.2            95.0
Hg (tons)...............................................            0.00            0.00            0.00            0.00            0.00            0.00
CH4 (thousand tons).....................................              71              83             103             109             160             681
N2O (thousand tons).....................................            0.00            0.00            0.00            0.01            0.01            0.01
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             9.2            11.0            13.8            14.7            18.8            62.7
SO2 (thousand tons).....................................             3.2             4.0             5.2             5.6             5.5             6.9
NOX (thousand tons).....................................              19              21              25              27              90             169
Hg (tons)...............................................            0.02            0.02            0.03            0.03            0.03            0.04
CH4 (thousand tons).....................................              72              84             104             110             161             683
N2O (thousand tons).....................................            0.08            0.10            0.13            0.14            0.15            0.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note numbers may not add to totals, due to rounding.

    As part of the analysis for this proposed rulemaking, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 that DOE estimated for each of the considered TSLs for 
consumer pool heaters. Section IV.L of this document discusses the SC-
CO2 values that DOE used. Table V.17 presents the value of 
CO2 emissions reduction at each TSL.

       Table V.17--Present Value of CO2 Emissions Reduction for Consumer Pool Heaters Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                     SC-CO2 case discount rate and statistics (million 2020$)
                                                 ---------------------------------------------------------------
                       TSL                                                                           3% (95th
                                                   5% (average)    3% (average)   2.5% (average)    percentile)
----------------------------------------------------------------------------------------------------------------
1...............................................              79             347             545           1,053
2...............................................              94             413             649           1,253
3...............................................             117             517             813           1,569
4...............................................             125             552             868           1,675
5...............................................             158             701           1,103           2,126
6...............................................             521           2,319           3,656           7,030
----------------------------------------------------------------------------------------------------------------

    As discussed in section IV.L.1.b of this document, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
methane and N2O that DOE estimated for each of the 
considered TSLs for consumer pool heaters. Table V.18 presents the 
value of the CH4 emissions reduction at each TSL, and Table 
V.19 presents the value of the N2O emissions reduction at 
each TSL.

     Table V.18--Present Value of Methane Emissions Reduction for Consumer Pool Heaters Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                     SC-CH4 case discount rate and statistics (million 2020$)
                                                 ---------------------------------------------------------------
                       TSL                                                                           3% (95th
                                                   5% (average)    3% (average)   2.5% (average)    percentile)
----------------------------------------------------------------------------------------------------------------
1...............................................              28              86             120             226
2...............................................              33             100             141             265
3...............................................              40             124             174             326
4...............................................              42             131             185             347

[[Page 22702]]

 
5...............................................              62             192             270             506
6...............................................             258             807           1,139           2,130
----------------------------------------------------------------------------------------------------------------


  Table V.19--Present Value of Nitrous Oxide Emissions Reduction for Consumer Pool Heaters Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                     SC-N2O case discount rate and statistics (million 2020$)
                                                 ---------------------------------------------------------------
                       TSL                                                                           3% (95th
                                                   5% (average)    3% (average)   2.5% (average)    percentile)
----------------------------------------------------------------------------------------------------------------
1...............................................            0.27            1.11            1.74            2.96
2...............................................            0.33            1.35            2.13            3.62
3...............................................            0.42            1.74            2.74            4.65
4...............................................            0.45            1.87            2.94            5.00
5...............................................            0.47            1.94            3.05            5.19
6...............................................            0.82            3.39            5.35            9.09
----------------------------------------------------------------------------------------------------------------

    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 GHG emissions in this rulemaking is subject to change. That 
said, because of omitted damages, DOE agrees with the IWG that these 
estimates most likely underestimate the climate benefits of greenhouse 
gas reductions. 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. DOE notes that the proposed 
standards would be economically justified even without inclusion of 
monetized benefits of reduced GHG emissions.
    DOE also estimated the monetary value of the economic benefits 
associated with SO2 emissions reductions anticipated to 
result from the considered TSLs for consumer pool heaters. The dollar-
per-ton values that DOE used are discussed in section IV.L of this 
document. Table V.20 presents the present value for SO2 
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates.

Table V.20--Present Social Value of SO2 Emissions Reduction for Consumer
                    Pool Heaters Shipped in 2028-2057
------------------------------------------------------------------------
                                            7% Discount     3% Discount
                   TSL                     rate (million   rate (million
                                              2020$)          2020$)
------------------------------------------------------------------------
1.......................................              28              72
2.......................................              35              88
3.......................................              44             114
4.......................................              47             123
5.......................................              47             120
6.......................................              58             152
------------------------------------------------------------------------

    DOE also estimated the monetary value of the economic benefits 
associated with NOX emissions reductions anticipated to 
result from the considered TSLs for consumer pool heaters. The dollar-
per-ton values that DOE used are discussed in section IV.L of this 
document. Table V.21 presents the present value for NOX 
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates.

Table V.21--Present Social Value of NOX Emissions Reduction for Consumer
                    Pool Heaters Shipped in 2028-2057
------------------------------------------------------------------------
                                            7% Discount     3% Discount
                   TSL                     rate (million   rate (million
                                              2020$)          2020$)
------------------------------------------------------------------------
1.......................................              39              93
2.......................................              45             109
3.......................................              55             133
4.......................................              59             142
5.......................................              82             202
6.......................................             324             819
------------------------------------------------------------------------

    The benefits of reduced CO2, CH4, and N2O emissions are 
collectively referred to as climate benefits. The benefits of reduced 
SO2 and NOX emissions are collectively referred 
to as health benefits. For the time series of estimated monetary values 
of reduced emissions, see chapter 14 of the NOPR TSD.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider 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
    Table V.22 presents the NPV values that result from adding the 
monetized estimates of the potential economic, climate, and health 
benefits resulting from reduced GHG, SO2, and NOX 
emissions to the NPV of consumer benefits calculated for each TSL 
considered in this rulemaking. The consumer benefits are domestic U.S. 
monetary savings that occur as a result

[[Page 22703]]

of purchasing the covered pool heaters and are measured for the 
lifetime of products shipped in 2028-2057. The climate benefits 
associated with reduced GHG emissions resulting from the adopted 
standards are global benefits and are also calculated based on the 
lifetime of pool heaters shipped in 2028-2057. The climate benefits 
associated with four SC-GHG estimates are shown. DOE does not have a 
single central SC-GHG point estimate and it emphasizes the importance 
and value of considering the benefits calculated using all four SC-GHG 
estimates.

                   Table V.22--NPV of Consumer Benefits Combined With Monetized Climate and Health Benefits From Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Category                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5           TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        3% discount rate for NPV of Consumer and Health Benefits (billion 2020$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% d.r., Average SC-GHG case............................             1.9             2.3             2.8             2.9             2.9             4.5
3% d.r., Average SC-GHG case............................             2.3             2.7             3.3             3.5             3.6             6.8
2.5% d.r., Average SC-GHG case..........................             2.5             3.0             3.7             3.8             4.1             8.5
3% d.r., 95th percentile SC-GHG case....................             3.1             3.7             4.6             4.8             5.3            12.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        7% discount rate for NPV of Consumer and Health Benefits (billion 2020$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% d.r., Average SC-GHG case............................             0.9             1.1             1.3             1.3             1.3             1.9
3% d.r., Average SC-GHG case............................             1.2             1.4             1.8             1.8             2.0             4.3
2.5% d.r., Average SC-GHG case..........................             1.5             1.7             2.1             2.2             2.5             6.0
3% d.r., 95th percentile SC-GHG case....................             2.1             2.5             3.0             3.2             3.7            10.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The national operating cost savings are domestic U.S. monetary 
savings that occur as a result of purchasing the covered products and 
are measured for the lifetime of products shipped in 2028-2057. The 
benefits associated with reduced GHG emissions achieved as a result of 
the adopted standards are also calculated based on the lifetime of 
consumer pool heaters shipped in 2028-2057.

C. Conclusion

    When considering new or amended energy conservation standards, the 
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))
    For this NOPR, DOE considered the impacts of new and amended 
standards for consumer pool heaters 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. DOE refers to this process as the ``walk-
down'' analysis.
    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, 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 standard 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 NOPR 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.\148\
---------------------------------------------------------------------------

    \148\ P.C. Reiss and M.W. White. Household Electricity Demand, 
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883. 
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------

    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

[[Page 22704]]

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.\149\ 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.
---------------------------------------------------------------------------

    \149\ Sanstad, A. H. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory. Available at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed April 
15, 2021).
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Consumer Pool Heater 
Standards
    Table V.23 and Table V.24 summarize the quantitative impacts 
estimated for each TSL for consumer pool heaters. The national impacts 
are measured over the lifetime of consumer pool heaters purchased in 
the 30-year period that begins in the anticipated year of compliance 
with amended standards (2028-2057). The energy savings, emissions 
reductions, and value of emissions reductions refer to full-fuel-cycle 
results. DOE exercises its own judgment in presenting monetized climate 
benefits as recommended in applicable Executive Orders and DOE would 
reach the same conclusion presented in this notice in the absence of 
the social cost of greenhouse gases, including the February 2021 
Interim Estimates presented by the Interagency Working Group on the 
Social Cost of Greenhouse Gases. The efficiency levels contained in 
each TSL are described in section V.A of this document.

                               Table V.23--Summary of Analytical Results for Consumer Pool Heaters TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Category                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5           TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quads...................................................            0.26            0.31            0.39            0.42            0.49            1.33
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Cumulative FFC Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................               9              11              14              15              19              63
SO2 (thousand tons).....................................             3.2             4.0             5.2             5.6             5.5             6.9
NOX (thousand tons).....................................              19              21              25              27              90             169
Hg (tons)...............................................            0.02            0.02            0.03            0.03            0.03            0.04
CH4 (thousand tons).....................................              72              84             104             110             161             683
N2O (thousand tons).....................................            0.08            0.10            0.13            0.14            0.15            0.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     Present Value of Monetized Benefits and Costs (3% discount rate, billion 2020$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            1.73            2.10            2.68            2.87            3.20            7.16
Climate Benefits *......................................            0.43            0.51            0.64            0.69            0.89            3.13
Health Benefits **......................................            0.16            0.20            0.25            0.26            0.32            0.97
Total Benefits [dagger].................................            2.33            2.81            3.57            3.82            4.42           11.26
Consumer Incremental Product Costs [Dagger].............            0.07            0.11            0.25            0.37            0.81            4.43
Consumer Net Benefits...................................            1.67            1.99            2.43            2.50            2.39            2.73
Total Net Benefits......................................            2.27            2.70            3.32            3.45            3.61            6.83
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Present Value of Monetized Benefits and Costs (7% discount rate, billions 2020$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            0.75            0.90            1.15            1.23            1.36            2.98
Climate Benefits *......................................            0.43            0.51            0.64            0.69            0.89            3.13
Health Benefits *.......................................            0.07            0.08            0.10            0.11            0.13            0.38
Total Benefits [dagger].................................            1.25            1.50            1.89            2.02            2.38            6.49
Consumer Incremental Product Costs [Dagger].............            0.03            0.06            0.13            0.19            0.40            2.21
Consumer Net Benefits...................................            0.72            0.85            1.02            1.04            0.95            0.77
Total Net Benefits......................................            1.22            1.44            1.76            1.83            1.98            4.28
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer pool heaters shipped in 2028-2057. These results include benefits to consumers
  which accrue after 2057 from the products shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide (SC-N2O)
  (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate), as shown in Table V.17 through
  Table V.19. Together these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this table, the climate
  benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate. See section. IV.L of this document for more details.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing PM2.5 and (for NOX) ozone precursor
  health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions.
  The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total and net benefits for both the 3-percent
  and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the Department does not have a single central SC-GHG
  point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table V.22 for net
  benefits using all four SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D.
  La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of the federal government's
  appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of greenhouse gases--which were issued by the
  Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions.
  In the absence of further intervening court orders, DOE will revert to its approach prior to the injunction and present monetized benefits where
  appropriate and permissible under law.

[[Page 22705]]

 
[Dagger] Costs include incremental equipment costs as well as installation costs.


                       Table V.24--Summary of Analytical Results for Consumer Pool Heaters TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Category                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5           TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (million 2020$) (No-new-standards case INPV     186.1-186.5     183.6-184.2     170.3-171.8     169.0-171.1     161.0-174.2     135.5-187.3
 = 188.7)...............................................
Industry NPV (% change).................................     (1.3)-(1.2)     (2.7)-(2.3)     (9.7)-(9.0)    (10.4)-(9.3)    (14.7)-(7.7)    (28.2)-(0.7)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2020$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric Pool Heaters...................................           7,995           3,695           1,123           1,029           1,029             929
Gas-fired Pool Heaters..................................           1,085           1,085           1,085           1,085              43            (15)
Shipment-Weighted Average *.............................           7,995           3,695           1,123           1,121             677             465
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric Pool Heaters...................................             0.6             0.6             0.7             0.7             0.7             0.8
Gas-fired Pool Heaters..................................             0.1             0.1             0.1             0.1             1.5             4.4
Shipment-Weighted Average *.............................             0.6             0.6             0.7             0.3             1.3             3.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Percent of Consumers that Experience a Net Cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric Pool Heaters...................................             0.4             0.9            11.0            20.9            20.9            37.8
Gas-fired Pool Heaters..................................             0.0             0.0             0.0             0.0            31.9            70.1
Shipment-Weighted Average *.............................             0.1             0.3             3.3             3.3            28.6            60.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Weighted by shares of each product class in total projected shipments in 2028.

    DOE first considered TSL 6, which represents the max-tech 
efficiency levels. TSL 6 would save an estimated 1.33 quads of energy, 
an amount DOE considers significant. Under TSL 6, the NPV of consumer 
benefit would be $0.77 billion using a discount rate of 7 percent, and 
$2.73 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 6 are 63 Mt of 
CO2, 6.9 thousand tons of SO2, 169 thousand tons 
of NOX, 0.04 tons of Hg, 683 thousand tons of 
CH4, and 0.26 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 6 is $3.13 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 6 is $0.38 billion using a 7-percent discount rate and $0.97 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total monetized NPV at TSL 6 
is $4.28 billion. Using a 3-percent discount rate for all benefits and 
costs, the estimated total monetized NPV at TSL 6 is $6.83 billion. The 
estimated total monetized NPV is provided for additional information, 
however DOE gives considerable weight to the NPV of consumer benefits 
and the percentage of consumers experiencing a net cost when 
determining whether a proposed standard level is economically 
justified.
    At TSL 6, the average LCC impact is a savings of $929 for electric 
pool heaters and an average LCC loss of $15 for gas-fired pool heaters. 
The simple payback period is 0.8 years for electric pool heaters and 
4.4 years for gas-fired pool heaters. The fraction of consumers 
experiencing a net LCC cost is 37.8 percent for electric pool heaters 
and 70.1 percent for gas-fired pool heaters.
    At TSL 6, the projected change in INPV ranges from a decrease of 
$53.2 million to a decrease of $1.4 million, which corresponds to 
decreases of 28.2 percent and 0.7 percent, respectively. DOE estimates 
that industry must invest $59.0 million to comply with standards set at 
TSL 6. DOE estimates that approximately nine percent of gas-fired pool 
heater shipments and less than one percent of electric pool heater 
shipments would meet the efficiency levels analyzed at TSL 6. There are 
18 pool heater manufacturers that manufacture electric pool heaters 
covered by this rulemaking. Only one of the 18 electric pool heater 
manufacturers offers electric pool heater models that meet the 
efficiency level required at TSL 6 for electric pool heaters. All other 
electric pool heater manufacturers do not offer any models that would 
meet the efficiency level required at TSL 6 for electric pool heaters 
covered by this rulemaking. If these manufacturers decide to leave the 
electric pool heater market, there would be only one manufacturer of 
electric pool heaters, which could raise concerns related to anti-
competitive market forces. There are four pool heater manufacturers 
that manufacture gas-fired pool heaters covered by this rulemaking. 
Only one of the four gas-fired pool heater manufacturers offers gas-
fired pool heater models that meet the efficiency level required at TSL 
6 for gas-fired pool heaters. All other gas-fired pool heater 
manufacturers do not offer any models that would meet the efficiency 
level required at TSL 6 for gas-fired pool heaters covered by this 
rulemaking. At TSL 6, most manufacturers would be required to redesign 
every pool heater model covered by this rulemaking. It is unclear if 
most manufacturers would have the engineering capacity to complete the 
necessary redesigns within the 5-year compliance period. If 
manufacturers require more than 5 years to redesign all their covered 
pool heater models, they will likely prioritize redesigns based on 
sales volume. There is risk that some pool heater models will become 
either temporarily or permanently unavailable after the compliance 
date.
    The Secretary tentatively concludes that at TSL 6 for consumer pool 
heaters,

[[Page 22706]]

the benefits of energy savings, positive NPV of consumer benefits, 
emission reductions, and the estimated monetary value of the climate 
and health benefits would be outweighed by the economic burden on many 
consumers, and the impacts on manufacturers, including the large 
conversion costs, profit margin impacts that could result in a large 
reduction in INPV, and the lack of manufacturers currently offering 
products meeting the efficiency levels required at this TSL, including 
most small businesses. A majority of gas-fired pool heater consumers 
(70.1 percent) would experience a net cost and the average LCC savings 
would be negative. The potential reduction in INPV could be as high as 
28.2 percent. Additionally, only one pool heater manufacturer offers 
models that meet the efficiency level required at TSL 6 for electric 
pool heaters covered by this rulemaking and only one pool heater 
manufacturer offers models that meet the efficiency level required at 
TSL 6 for gas-fired pool heaters covered by this rulemaking. Due to 
limited amount of engineering resources each manufacturer has, it is 
unclear if most manufacturers will be able to redesign their entire 
product offerings of pool heaters covered by this rulemaking in the 5-
year compliance period. Lastly, only one small business offers pool 
heater models that meet the efficiency levels required at TSL 6. No 
other small businesses offer any pool heater models that meet the 
efficiency levels required at TSL 6. Consequently, the Secretary has 
tentatively concluded that TSL 6 is not economically justified.
    DOE then considered TSL 5, which represents efficiency level 4 for 
electric pool heaters and efficiency level 2 for gas-fired pool 
heaters. TSL 5 would save an estimated 0.49 quads of energy, an amount 
DOE considers significant. Under TSL 5, the NPV of consumer benefit 
would be $0.95 billion using a discount rate of 7 percent, and $2.39 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 19 Mt of 
CO2, 5.5 thousand tons of SO2, 90 thousand tons 
of NOX, 0.03 tons of Hg, 161 thousand tons of 
CH4, and 0.15 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 5 is $0.89 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $0.13 billion using a 7-percent discount rate and $0.32 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total monetized NPV at TSL 5 
is $1.98 billion. Using a 3-percent discount rate for all benefits and 
costs, the estimated total monetized NPV at TSL 5 is $3.61 billion. The 
estimated total NPV is provided for additional information, however DOE 
gives considerable weight to the NPV of consumer benefits and the 
percentage of consumers experiencing a net cost when determining 
whether a proposed standard level is economically justified.
    At TSL 5, the average LCC impact is a savings of $1,029 for 
electric pool heaters and $43 for gas-fired pool heaters. The simple 
payback period is 0.7 years for electric pool heaters and 1.5 years for 
gas-fired pool heaters. The fraction of consumers experiencing a net 
LCC cost is 20.9 percent for electric pool heaters and 31.9 percent for 
gas-fired pool heaters.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$27.7 million to a decrease of $14.4 million, which correspond to 
decreases of 14.7 percent and 7.7 percent, respectively. DOE estimates 
that industry must invest $38.8 million to comply with standards set at 
TSL 5. DOE estimates that approximately 45 percent of gas-fired pool 
heater shipments and ten percent of electric pool heater shipments 
would meet the efficiency levels analyzed at TSL 5. All gas-fired pool 
heater manufacturers and eight of the 18 electric pool heater 
manufacturers offer products that meet or exceed the efficiency levels 
required at TSL 5.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at a standard set 
at TSL 5 for consumer pool heaters would be economically justified. At 
this TSL, the average LCC savings for both electric and gas-fired pool 
heater consumers is positive. An estimated 20.9 percent of electric 
pool heater consumers and 31.9 percent of gas-fired pool heater 
consumers experience a net cost. The FFC national energy savings are 
significant and the NPV of consumer benefits is positive using both a 
3-percent and 7-percent discount rate. Notably, the benefits to 
consumers vastly outweigh the cost to manufacturers. At TSL 5, the NPV 
of consumer benefits, even measured at the more conservative discount 
rate of 7 percent is over 34 times higher than the maximum estimated 
manufacturers' loss in INPV. The positive LCC savings--a different way 
of quantifying consumer benefits--reinforces this conclusion. The 
standard levels at TSL 5 are economically justified even without 
weighing the estimated monetary value of emissions reductions. When 
those monetized climate benefits from GHG emissions reductions and 
health benefits from SO2 and NOX emissions 
reductions are included--representing $0.89 billion in climate benefits 
(associated with the average SC-GHG at a 3-percent discount rate) and 
$0.32 billion (using a 3-percent discount rate) or $0.13 billion (using 
a 7-percent discount rate) in health benefits--the rationale becomes 
stronger still.
    As stated, DOE conducts a ``walk-down'' analysis to determine the 
TSL that represents the maximum improvement in energy efficiency that 
is technologically feasible and economically justified as required 
under EPCA. The walk-down is not a comparative analysis, as a 
comparative analysis would result in the maximization of net benefits 
instead of energy savings that are technologically feasible and 
economically justified and would be contrary to the statute. 86 FR 
70892, 70908. Although DOE has not conducted a comparative analysis to 
select the proposed energy conservation standards, DOE notes that as 
compared to TSL 6, TSL 5 has higher average LCC savings, smaller 
percentages of consumer experiencing a net cost, a lower maximum 
decrease in INPV, and lower manufacturer conversion costs.
    Accordingly, the Secretary has tentatively concluded that TSL 5 
would offer the maximum improvement in efficiency that is 
technologically feasible and economically justified and would result in 
the significant conservation of energy. Although results are presented 
here in terms of TSLs, DOE analyzes and evaluates all possible ELs for 
each product class in its analysis. For both gas-fired pool heaters and 
electric pool heaters, TSL 5 is comprised of the highest efficiency 
level below max-tech. For gas-fired pool heaters, the max-tech 
efficiency level results in negative average LCC savings and a large 
percentage of consumers that experience a net LCC cost, in addition to 
significant manufacturer impacts. For electric pool heaters the max-
tech efficiency level can only be achieved by a single manufacturer, 
resulting in large expected conversion costs and significant reductions 
in INPV. The ELs one level below max-tech, representing the proposed 
standard levels, result in positive LCC savings for both classes, 
significantly reduce the number of consumers experiencing a net cost, 
and reduce the decrease in INPV and conversion costs to the point where 
DOE has tentatively concluded they are

[[Page 22707]]

economically justified, as discussed for TSL 5 in the preceding 
paragraphs.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for consumer pool heaters at 
TSL 5. The proposed amended energy conservation standards for pool 
heaters, which are expressed as TEI, are shown in Table 
V.25.
[GRAPHIC] [TIFF OMITTED] TP15AP22.006

2. Annualized Benefits and Costs of the Proposed Standards
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2020$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs, and (2) the annualized 
monetary value of the benefits of GHGs, SO2, and 
NOX emission reductions.
    Table V.26 shows the annualized values for consumer pool heaters 
under TSL 5, expressed in 2020$. The results under the primary estimate 
are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated cost of the standards 
proposed in this rule is $49.0 million per year in increased equipment 
costs, while the estimated annual benefits are $164 million in reduced 
equipment operating costs, $54.5 million in climate benefits, and $15.6 
million in monetized health benefits. In this case, the net monetized 
benefit would amount to $185 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards is $49.3 million per year in 
increased equipment costs, while the estimated annual benefits are $195 
million in reduced operating costs, $54.5 million in climate benefits, 
and $19.6 million in monetized health benefits. In this case, the net 
monetized benefit would amount to $220 million per year.

 Table V.26--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for Consumer Pool
                                                     Heaters
                                                     [TSL 5]
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2020$/year
                                                                 -----------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                        3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           194.9           179.0           212.8
Climate Benefits *..............................................            54.5            52.4            56.6
Health Benefits **..............................................            19.6            18.9            20.4
Total Benefits [dagger].........................................             269             250             290
Consumer Incremental Product Costs [Dagger].....................            49.3            51.4            49.4
Net Benefits....................................................             220             199             240
                                        7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           164.2           152.7           177.7
Climate Benefits *..............................................            54.5            52.4            56.6
Health Benefits **..............................................            15.6            15.0            16.1
Total Benefits [dagger].........................................             234             220             250
Consumer Incremental Product Costs [Dagger].....................            49.0            50.7            49.2
Net Benefits....................................................             185             169             201
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer pool heaters shipped in 2028-2057.
  These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.

[[Page 22708]]

 
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate). Together these represent the global social cost of greenhouse
  gases (SC-GHG). For presentational purposes of this table, the climate benefits associated with the average SC-
  GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
  GHG estimates. See section. IV.L of this document for more details.
* Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  PM2.5 and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented
  at real discount rates of 3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's emergency motion for
  stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-
  1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary injunction is no longer in
  effect, pending resolution of the federal government's appeal of that injunction or a further court order.
  Among other things, the preliminary injunction enjoined the defendants in that case from ``adopting,
  employing, treating as binding, or relying upon'' the interim estimates of the social cost of greenhouse
  gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February
  26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the absence of further intervening
  court orders, DOE will revert to its approach prior to the injunction and present monetized benefits where
  appropriate and permissible under law.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order (``E.O.'')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 proposed standards set forth in 
this NOPR 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 and equipment that are not captured by the 
users of such products. 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.
    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. A summary of the 
potential costs and benefits of the regulatory action is presented in 
Table VI.1.

  Table VI.1--Annualized Benefits, Costs, and Net Benefits of Proposed
                                Standards
------------------------------------------------------------------------
                                                Million 2020$/year
                                         -------------------------------
                Category                    3% Discount     7% Discount
                                               rate            rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........           194.9           164.2
Climate Benefits *......................            54.5            54.5
Health Benefits **......................            19.6            15.6
Total Benefits [dagger].................             269             234
Costs [Dagger]..........................            49.3            49.0
Net Benefits............................             220             185
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  consumer pool heaters shipped in 2028-2057. These results include
  benefits to consumers which accrue after 2057 from the products
  shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate). Together
  these represent the global social cost of greenhouse gases (SC-GHG).
  For presentational purposes of this table, the climate benefits
  associated with the average SC-GHG at a 3 percent discount rate are
  shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering
  the benefits calculated using all four SC-GHG estimates.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing PM2.5 and (for NOX) ozone
  precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in
  direct PM2.5 emissions. The health benefits are presented at real
  discount rates of 3 and 7 percent.

[[Page 22709]]

 
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No.
  22-30087) granted the federal government's emergency motion for stay
  pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
  of the Fifth Circuit's order, the preliminary injunction is no longer
  in effect, pending resolution of the federal government's appeal of
  that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and present monetized benefits where appropriate and
  permissible under law.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    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 E.O. 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 are summarized in 
this preamble and further detail can be found in the technical support 
document for this rulemaking.
    DOE has also reviewed this proposed regulation pursuant to E.O. 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). E.O. 
13563 is supplemental to and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
E.O. 12866. To the extent permitted by law, agencies are required by 
E.O. 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 E.O. 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, 
this NOPR 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 an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment, unless 
the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 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 website: www.energy.gov/gc/office-general-counsel. DOE 
reviewed this proposed rule under the provisions of the Regulatory 
Flexibility Act and the policies and procedures published on February 
19, 2003. DOE has prepared the following IRFA for the products that are 
the subject of this rulemaking.
    For manufacturers of consumer pool heaters, the SBA has set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. 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/document/support--table-size-standards. Manufacturing of 
consumer pool heaters is classified under NAICS 333414, ``heating 
equipment (except warm air furnaces) manufacturing.'' The SBA sets a 
threshold of 500 employees or fewer for an entity to be considered as a 
small business for this category.
1. Description of Reasons Why Action Is Being Considered
    DOE has undertaken this rulemaking pursuant to 42 U.S.C. 
6295(e)(4)(B), which requires DOE to conduct a second round of amended 
standards rulemaking for consumer pool heaters. The Energy Policy and 
Conservation Act, as amended (EPCA), also requires that not later than 
six years after issuance of any final rule establishing or amending a 
standard, DOE must publish either a notice of the 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)(1)) This rulemaking is in accordance with 
DOE's obligations under EPCA.
2. Objectives of, and Legal Basis for, Rule
    As discussed previously in section II, Title III, Part B of EPCA, 
sets forth a variety of provisions designed to improve energy 
efficiency and established the Energy Conservation Program for Consumer 
Products Other Than Automobiles, a program covering most major 
household appliances and certain industrial and commercial equipment. 
The National Appliance Energy Conservation Act of 1987 (NAECA), Public 
Law 100-12, amended EPCA to establish energy conservation standards for 
residential pool heaters and set requirements to conduct two

[[Page 22710]]

cycles of rulemaking to determine whether these standards should be 
amended. (42 U.S.C. 6295(e)(2) and (4)) The first of these two 
rulemakings, which amended standards for gas-fired pool heaters, 
concluded with the promulgation of a final rule on April 16, 2010. 75 
FR 20112. (Codified at 10 CFR 430.32(k)). This rulemaking satisfies the 
statutory requirements under EPCA to conduct a second round of review 
of the pool heaters standard. (42 U.S.C. 6295(e)(4)(B)) This proposed 
rulemaking is also in accordance the six-year review required under 42 
U.S.C. 6295(m)(1).
3. Description on Estimated Number of Small Entities Regulated
    For manufacturers of consumer pool heaters, the SBA has set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. DOE used the SBA's small 
business size standards to determine whether any small entities would 
be subject to the requirements of this proposed rule. See 13 CFR part 
121. The size standards are listed by NAICS code and industry 
description and are available at www.sba.gov/document/support--table-size-standards.
    Manufacturing of consumer pool heaters is classified under NAICS 
code 333414, ``heating equipment (except warm air furnaces) 
manufacturing.'' The SBA sets a threshold of 500 employees or fewer for 
an entity to be considered as a small business for this category.
    DOE reviewed the potential standard levels considered in this NOPR 
under the provisions of the Regulatory Flexibility Act and the 
procedures and policies published on February 19, 2003. During its 
market survey, DOE used publicly available information to identify 
potential small manufacturers. DOE's research involved industry trade 
association membership directories (e.g., AHRI), information from 
previous rulemakings, individual company websites, and market research 
tools (e.g., D&B Hoover's reports) to create a list of companies that 
manufacture consumer pool heaters. DOE also asked stakeholders and 
industry representatives if they were aware of any additional small 
manufacturers during manufacturer interviews. DOE reviewed publicly 
available data and contacted various companies on its complete list of 
manufacturers to determine whether they met the SBA's definition of a 
small business manufacturer. DOE screened out companies that do not 
offer products impacted by this rulemaking, do not meet the definition 
of a ``small business,'' or are foreign owned and operated.
    DOE identified 21 companies manufacturing consumer pool heaters 
covered by this rulemaking. Of these manufacturers, DOE identified six 
as domestic small businesses. All six domestic small businesses only 
manufacture electric pool heaters. DOE did not identify any domestic 
small businesses that manufacture gas-fired pool heaters.
    DOE was able to reach and discuss potential standards with two of 
the six small businesses. Additionally, DOE requested information about 
small businesses and potential impacts on small businesses while 
interviewing large manufacturers.
    Gas-fired pool heaters account for most of the consumer pool heater 
market, with approximately 70 percent of all consumer pool heater units 
shipped annually. Within the electric pool heater market, over 90 
percent of shipments are heat pump pool heaters and only a small 
fraction of the shipments are electric resistance pool heaters. (See 
chapter 9 of the NOPR TSD for more information on the shipments 
analysis conducted for this rulemaking.) Although the electric pool 
heater market is smaller than the gas-fired pool heater market, it is 
also more fragmented. Whereas DOE identified five manufacturers of gas-
fired pool heaters, DOE identified 20 manufacturers of electric pool 
heaters (four of the companies make both gas-fired and electric pool 
heaters).
    Four major players dominate the market for electric pool heaters, 
three are large manufacturers and one is a small business. The rest of 
the market is served by a combination of large and small businesses 
with market shares estimated to be in the single digits. Of the six 
small businesses identified, five only manufacture electric heat pump 
pool heaters and one only manufactures electric resistance pool 
heaters.
4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    As stated previously, DOE identified six small manufacturers of 
electric pool heaters and no small manufacturers of gas-fired pool 
heaters. Accordingly, this analysis of small business impacts focuses 
exclusively on the electric pool heater industry. Within the electric 
pool heater industry, this analysis focuses only on products impacted 
by this rulemaking (i.e., electric heat pump pool heaters and electric 
resistance pool heaters with capacities greater than 11 kW, as 
discussed in section III.A of this document).
    This NOPR proposes minimum energy conservation standards for 
electric pool heaters at efficiency levels above those achieved by 
electric resistance pool heaters. Given that the designs of electric 
heat pump pool heaters and electric resistance pool heaters use 
different types of technology, DOE assumes manufacturers of electric 
resistance pool heaters with capacities greater than 11 kW would 
discontinue those product lines rather than redesign them as electric 
heat pump pool heaters. As a result, expected impacts on manufacturers 
vary based on the type of electric pool heaters they manufacture.
    As described in section IV.J.2.c of this document, there are two 
types of conversion costs that small businesses could incur due to the 
proposed standards for electric pool heaters: Product conversion costs 
and capital conversion costs. Product conversion costs are investments 
in R&D, testing, marketing, and other non-capitalized costs necessary 
to make product designs comply with new and amended energy conservation 
standards. Capital conversion costs are investments in property, plant, 
and equipment necessary to adapt or change existing production 
facilities such that new compliant product designs can be fabricated 
and assembled. Manufacturers would only need to make these investments 
if they have products that do not meet the adopted energy conservation 
standards. Testing costs are costs manufacturers must make to test 
their electric pool heaters in accordance with DOE's test procedure to 
demonstrate compliance with adopted energy conservation standards. 
Manufacturers must do this for all compliant electric pool heaters that 
are in the scope of this rulemaking.
    DOE estimates there are three small businesses that do not have any 
electric heat pump pool heater models that would meet the proposed 
standards. DOE applied the conversion cost methodology described in 
section IV.J.2.c of this document to calculate small business product 
and capital conversion costs. To calculate product conversion costs DOE 
estimated it would take six months of engineering time to redesign a 
single electric heat pump pool heater model to meet the proposed 
standards. DOE estimates that there are approximately 101 electric heat 
pump pool heaters manufactured by small businesses that may need to be 
redesigned to comply with the proposed energy conservation standards 
for electric pool heaters, if adopted. To calculate capital conversion 
costs DOE estimates that most small businesses

[[Page 22711]]

would need to make minor investments in tooling to accommodate electric 
heat pump pool heater models with a larger evaporator. Small business 
conversion costs are presented in Table VI.2. of this document.
    The five small businesses that manufacture electric heat pump pool 
heaters would incur testing costs to demonstrate compliance of electric 
pool heaters with adopted energy conservation standards in accordance 
with DOE's test procedure. Electric pool heaters are currently not 
subject to DOE energy conservation standards. This NOPR proposes to 
establish new energy conservation standards for electric pool heaters. 
Manufacturers, including small businesses, would have to test all 
electric pool heaters that are subject to this rulemaking after the 
compliance date. DOE estimates that small businesses manufacture 
approximately 131 electric heat pump pool models that would be included 
in the scope of this rulemaking. All 118 electric heat pump pool heater 
models would need to be tested after the compliance date. DOE estimates 
a per model testing cost for these electric heat pump pool heater 
models. Small business conversion and testing costs are presented in 
Table VI.2.

                    Table VI.2--Small Business Costs
------------------------------------------------------------------------
                                                       Average cost per
                                    Small business      small business
                                    costs (2020$)           (2020$)
------------------------------------------------------------------------
Product Conversion Costs.......  6.34 million.......  1.27 million
Capital Conversion Costs.......  0.23 million.......  0.05 million
Testing Costs for Compliance...  0.66 million.......  0.13 million
Total Small Business Costs.....  7.23 million.......  1.45 million
------------------------------------------------------------------------

    DOE estimates the average small business would incur approximately 
$1.45 million per small business. DOE assumes that all consumer pool 
heater manufacturers would spread these costs over the five-year 
compliance timeframe, as standards are expected to require compliance 
approximately five years after the publication of a Final Rule. 
Therefore, DOE assumes that the average consumer pool heater small 
business would incur on average $290,000 annually in the five years 
leading up to the compliance date for consumer pool heaters. Using 
publicly available data, DOE estimated the average annual revenue of 
the five small businesses that manufacturer electric heat pump pool 
heaters to be $4.89 million. Table VI.3 compares these average small 
business costs to average annual revenue of small businesses.
    Additionally, these manufacturers could choose to discontinue their 
least efficient models and ramp up production of existing, compliant 
models rather than redesign each of their noncompliant models. 
Therefore, actual conversion costs could be lower than estimates 
developed under the conservative assumption that manufacturers would 
redesign all noncompliant models.

                       Table VI.3--Average Small Business Costs Compared to Annual Revenue
----------------------------------------------------------------------------------------------------------------
                                                                   Compliance                       Compliance
                                  Estimated                        costs as a                       costs as a
            Units                 compliance     Annual revenue    percent of       5 Years of     percent of 5
                                costs (2020$)       (2020$)      annual revenue  revenue (2020$)     years of
                                                                       (%)                          revenue (%)
----------------------------------------------------------------------------------------------------------------
Average Small Business.......  1.45 million...  4.89 million...            29.5  24.47 million..             5.9
----------------------------------------------------------------------------------------------------------------

    Lastly, for the one small business that manufactures only electric 
resistance pool heaters, based on public company literature, this small 
business manufactures 72 electric resistance pool heaters with 
capacities greater than 11 kW. This small business also manufactures 
electric resistance pool heaters with capacities less than or equal to 
11 kW and a small selection of other heating products that would still 
be allowed to be sold, even if this proposal is adopted in a final 
rule. If the proposed standards were adopted, this manufacturer's 
business and competitive position in the electric pool heater market 
(for electric resistance pool heaters with capacities greater than 11 
kW) would be negatively impacted, since the proposed standards result 
in a minimum efficiency level that is not feasible for electric 
resistance pool heaters to achieve. This small business does not offer 
any compliant consumer pool heater products that could serve as a 
replacement product for the non-compliant electric resistance pool 
heaters. However, this small business would still be able to sell 
electric resistance pool heaters with capacities less than or equal to 
11 kW and would still be able to export electric resistance pool 
heaters with capacities greater than 11 kW to other countries, 
including into Canada.
    DOE requests comment on its findings that there are six domestic 
small businesses that manufacture consumer pool heaters and its 
estimate of the potential impacts on these small businesses.
5. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the proposed rule being considered today.
6. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's proposed rule, represented by 
TSL 5. In reviewing alternatives to the proposed rule, DOE examined 
energy conservation standards set at lower efficiency levels. While TSL 
1, TSL 2, and TSL 3 would reduce the impacts on small business 
manufacturers, it would come at the expense of a reduction in energy 
savings and, for some TSLs, a reduction in NPV benefits to

[[Page 22712]]

consumers.\150\ TSL 1 achieves 47 percent lower energy savings and 24 
percent less NPV benefits discounted at 7 percent to consumers compared 
to the energy savings and NPV benefits at TSL 5. TSL 2 achieves 37 
percent lower energy savings and 11 percent less NPV benefits 
discounted at 7 percent to consumers compared to the energy savings and 
NPV benefits at TSL 5. TSL 3 achieves 20 percent lower energy savings 
compared to the energy savings at TSL 5.
---------------------------------------------------------------------------

    \150\ TSL 4 would have an identical impact on electric pool 
heater manufacturers as TSL 5 since the standards for electric pool 
heaters are identical at TSL 4 and TSL 5. Both TSL 4 and TSL 5 
require the same EL for electric pool heaters, EL 4. All small 
businesses only manufacture electric pool heaters. No small 
businesses manufacture gas-fired pool heaters. Therefore, the 
impacts on small businesses are identical at TSL 4 and TSL 5.
---------------------------------------------------------------------------

    DOE tentatively concludes that establishing standards at TSL 5 
balances the benefits of the energy savings with the potential burdens 
placed on consumer pool heater manufacturers, including small business 
manufacturers. Accordingly, DOE does not propose one of the other TSLs 
considered in the analysis, or the other policy alternatives examined 
as part of the regulatory impact analysis and included in chapter 17 of 
the NOPR TSD.
    Additional compliance flexibilities may be available through other 
means. 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. (42 U.S.C. 6295(t)). Additionally, 
manufacturers subject to DOE's energy efficiency standards may apply to 
DOE's Office of Hearings and Appeals for exception relief under certain 
circumstances. Manufacturers should refer to 10 CFR part 430, subpart 
E, and 10 CFR part 1003 for additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of consumer pool heaters currently subject to energy 
conservation standards 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 consumer pool heaters, 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 consumer pool 
heaters. 76 FR 12422 (Mar. 7, 2011); 80 FR 5099 (Jan. 30, 2015). 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 35 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.
    DOE is proposing to amend energy conservation standards for gas-
fired consumer pool heaters and proposing to establish energy 
conservation standards for electric consumer pool heaters. DOE is not 
proposing to amend the existing reporting requirements or establish new 
DOE reporting requirements. Were DOE to establish amended and new 
energy conservation standards as proposed in this NOPR, DOE would 
consider associated reporting and certification requirements in a 
future rulemaking. Therefore, DOE has tentatively concluded that 
amended energy conservation standards for gas-fired consumer pool 
heaters and new energy conservation standards for electric consumer 
pool heaters would not impose additional costs for manufacturers 
related to reporting and certification.
    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

    DOE is analyzing this proposed regulation in accordance with the 
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for rulemakings that establish energy 
conservation standards for consumer products or industrial equipment. 
10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this 
rulemaking qualifies for categorical exclusion B5.1 because it is a 
rulemaking that establishes energy conservation standards for consumer 
products or industrial equipment, none of the exceptions identified in 
categorical exclusion B5.1(b) apply, no extraordinary circumstances 
exist that require further environmental analysis, and it otherwise 
meets the requirements for application of a categorical exclusion. See 
10 CFR 1021.410. DOE will complete its NEPA review before issuing the 
final rule.

E. Review Under Executive Order 13132

    E.O. 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 proposed rule and has 
tentatively determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of this proposed 
rule. States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) 
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 E.O. 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 E.O. 12988 specifically requires that executive

[[Page 22713]]

agencies make every reasonable effort to ensure that the regulation: 
(1) Clearly specifies the preemptive effect, if any, (2) clearly 
specifies any effect on existing Federal law or regulation, (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction, (4) specifies the retroactive 
effect, if any, (5) adequately defines key terms, and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met, or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this proposed rule meets the 
relevant standards of E.O. 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, section 201 (codified at 2 U.S.C. 
1531). For a proposed regulatory action likely to result in a rule that 
may cause the expenditure by State, local, and Tribal governments, in 
the aggregate, or by the private sector of $100 million or more in any 
one year (adjusted 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 proposed 
``significant intergovernmental mandate,'' and requires an agency plan 
for giving notice and opportunity for timely input to potentially 
affected small governments before establishing any requirements that 
might significantly or uniquely affect 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 www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    This proposed rule does not contain a Federal intergovernmental 
mandate, nor is it expected to require expenditures of $100 million or 
more in any one year by the private sector. As a result, the analytical 
requirements of UMRA do not apply.

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 proposed 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 E.O. 12630, ``Governmental Actions and Interference 
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15, 
1988), DOE has determined that this proposed rule, if finalized, 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). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this NOPR 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

    E.O. 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 proposed significant energy 
action. A ``significant 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 proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
proposes new and amended energy conservation standards for consumer 
pool heaters, is not a significant energy action because the proposed 
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 proposed rule.

L. Information Quality

    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.'' 70 FR 2664, 2667.
    In response to OMB's Bulletin, DOE conducted formal peer reviews of 
the energy conservation standards development process and the analyses 
that are typically used and has prepared a report describing that peer 
review.\151\ Generation of this report involved a rigorous, formal, and 
documented

[[Page 22714]]

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. DOE has 
determined that the peer-reviewed analytical process continues to 
reflect current practice, and the Department followed that process for 
developing energy conservation standards in the case of the present 
proposed rulemaking.
---------------------------------------------------------------------------

    \151\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0.
---------------------------------------------------------------------------

M. Description of Materials Incorporated by Reference

    In this NOPR, DOE proposes to maintain the following material 
previously approved for incorporation by reference in appendix P: The 
test standard published by American Society of Heating, Refrigerating 
and Air-Conditioning Engineers, Inc., titled ``Method of Testing and 
Rating Pool Heaters'', approved February 2, 2011, ASHRAE 146; and the 
test standard published by American National Standards Institute, 
titled ``Standard for Gas-Fired Pool Heaters'', approved December 13. 
2005. ANSI Z21.56.
    ASHRAE 146 is an industry standard for testing and rating pool 
heaters. Appendix P references ASHRAE 146 to establish the active mode 
equilibrium condition for fossil fuel-fired pool heaters and the active 
mode test method, measurements, and calculations for electric 
resistance and electric heat pump pool heaters. The proposed amendments 
to appendix P include additional references to ASHRAE 146 to clarify 
the calculations of average annual electrical energy consumption and 
for electric pool heaters, output capacity. Copies of ASHRAE 146 can be 
obtained from American Society of Heating, Refrigerating and Air-
Conditioning Engineers, Inc., Publication Sales, 1791 Tullie Circle NE, 
Atlanta, GA 30329, 800-527-4723 or 404-636-8400, or go to 
www.ashrae.org.
    ANSI Z21.56 is an industry standard for testing gas-fired pool 
heaters. Appendix P references ANSI Z21.56 to establish the active mode 
test method, test conditions, measurements, and calculations for fossil 
fuel-fired pool heaters. The proposed amendments to appendix P include 
additional references to ANSI Z21.56 to clarify the calculations of 
input capacity and active electrical power for fossil fuel-fired pool 
heaters. Copies of ANSI Z21.56 can be obtained from, American National 
Standards Institute, 25 W. 43rd Street, 4th Floor, New York, NY 10036, 
212-642-4900, or go to www.ansi.org.

VII. Public Participation

A. Participation in the Webinar

    The time and date of the webinar meeting are listed in the DATES 
section at the beginning of this document. Webinar registration 
information, participant instructions, and information about the 
capabilities available to webinar participants will be published on 
DOE's website: www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=44&action=viewcurrent. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has an interest in the topics addressed in this 
NOPR, or who is representative of a group or class of persons that has 
an interest in these issues, may request an opportunity to make an oral 
presentation at the webinar. Such persons may submit requests to speak 
by email to: [email protected]. Persons who wish 
to speak should include with their request a computer file in 
WordPerfect, Microsoft Word, PDF, or text (ASCII) file format that 
briefly describes the nature of their interest in this rulemaking and 
the topics they wish to discuss. Such persons should also provide a 
daytime telephone number where they can be reached.
    Persons requesting to speak should briefly describe the nature of 
their interest in this proposed rulemaking and provide a telephone 
number for contact. DOE requests persons selected to make an oral 
presentation to submit an advance copy of their statements at least two 
weeks before the webinar. At its discretion, DOE may permit persons who 
cannot supply an advance copy of their statement to participate, if 
those persons have made advance alternative arrangements with the 
Building Technologies Office. As necessary, requests to give an oral 
presentation should ask for such alternative arrangements.

C. Conduct of the Webinar

    DOE will designate a DOE official to preside at the webinar and may 
also use a professional facilitator to aid discussion. The meeting will 
not be a judicial or evidentiary-type public hearing, but DOE will 
conduct it in accordance with section 336 of EPCA (42 U.S.C. 6306). A 
court reporter will be present to record the proceedings and prepare a 
transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the webinar. There shall not be discussion of proprietary information, 
costs or prices, market share, or other commercial matters regulated by 
U.S. anti-trust laws. After the webinar and until the end of the 
comment period, interested parties may submit further comments on the 
proceedings and any aspect of the rulemaking.
    The webinar will be conducted in an informal, conference style. DOE 
will present summaries of comments received before the webinar, allow 
time for prepared general statements by participants, and encourage all 
interested parties to share their views on issues affecting this 
proposed rulemaking. Each participant will be allowed to make a general 
statement (within time limits determined by DOE), before the discussion 
of specific topics. DOE will permit, as time permits, other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly. Participants should 
be prepared to answer questions by DOE and by other participants 
concerning these issues. DOE representatives may also ask questions of 
participants concerning other matters relevant to this proposed 
rulemaking. The official conducting the webinar will accept additional 
comments or questions from those attending, as time permits. The 
presiding official will announce any further procedural rules or 
modification of the above procedures that may be needed for the proper 
conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this NOPR. In addition, any person may buy a copy of the transcript 
from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule no later than the date provided in the DATES section at 
the beginning of this proposed rule. Interested parties may submit 
comments, data, and other information using any of the methods 
described in the ADDRESSES section at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your

[[Page 22715]]

contact information will not be publicly viewable except for your first 
and last names, organization name (if any), and submitter 
representative name (if any). If your comment is not processed properly 
because of technical difficulties, DOE will use this information to 
contact you. If DOE cannot read your comment due to technical 
difficulties and cannot contact you for clarification, DOE may not be 
able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (``CBI'')). Comments submitted 
through www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email. Comments and documents submitted via 
email also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. No telefacsimiles (``faxes'') 
will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: One copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    (1) DOE requests comment on the proposal to add to its enforcement 
provisions to use a 2 percent threshold on the certified 
value of input capacity or active electrical power (as applicable) when 
determining the applicable energy conservation standard for the basic 
model.
    (2) DOE requests comment on its assumption that electric pool 
heaters that have both heating and cooling capabilities do not suffer 
diminished efficiency performance in heating mode.
    (3) DOE requests comment on the product classes analyzed for this 
rulemaking.
    (4) DOE requests comment on the proposed definitions for electric 
pool heater, electric spa heater, gas-fired pool heater, oil-fired pool 
heater, and portable electric spa.
    (5) DOE requests comment on its proposed definition for output 
capacity, as well as its proposed calculations for determining the 
output capacity of electric pool heaters.
    (6) DOE requests comment on the efficiency improvement expected 
from replacing a PSC fan motor with a BPM fan motor in heat pump pool 
heater.
    (7) DOE seeks comment from interested parties regarding the 
efficiency levels selected for the NOPR analysis.
    (8) DOE seeks comment from interested parties regarding the typical 
technological changes associated with each efficiency level.
    (9) DOE requests comment on its assumption that the fraction of 
shipments which utilize cupronickel heat exchangers would not change as 
a result of amended standards.
    (10) DOE requests comment on whether the distribution channels 
described above are appropriate for consumer pool heaters and are 
sufficient to describe the distribution markets. In addition, DOE seeks 
input on the percentage of products being distributed through the 
different distribution channels, and whether the share of products 
through each channel varies based on product class, capacity, or other 
features.
    (11) DOE requests comment on the data sources used to establish the 
markups for the parties involved with the distribution of covered 
products.
    (12) DOE requests comment on the data sources and methodology used 
to establish pool heater consumer samples.
    (13) DOE requests comment on the overall methodology for 
determining consumer pool heater energy use.
    (14) DOE requests comment on the data sources and methodology for 
determining consumer pool heater hours of operation as well as swimming 
pool and spa hours of operation.
    (15) DOE requests comment on the methodology used for determining 
heat pump pool heater energy use.
    (16) DOE requests comment on the methodology used for determining 
standby and off mode energy use.
    (17) DOE requests comments on its assumption that gas-fired pool 
heaters installed in California, Utah, or Texas would have a low-
NOX burner and the fraction of installations outside these 
three regions that would have a low-NOX burner.
    (18) DOE requests comments on its assumption and methodology for

[[Page 22716]]

determining equipment price trends. DOE also requests data that would 
allow for use of different price trend projections for electric 
resistance and heat pump pool heaters.
    (19) DOE seeks comment regarding the fraction of electric pool 
heater installations that are located in a space-constrained area that 
could increase the cost of installing a heat pump pool heater.
    (20) DOE requests comments on its assumption, methodology, and 
sources for determining installation costs for consumer pool heaters.
    (21) DOE requests comments on its approach for determining the 
rebound effect.
    (22) DOE requests comments on its approach for developing gas, LPG, 
and electricity prices.
    (23) DOE requests comments on its approach for calculating 
maintenance and repair costs.
    (24) DOE welcomes additional comments and data regarding lifetime 
estimates, particularly in relation to differences between electric 
resistance pool heaters, heat pump pool heaters, and gas-fired pool 
heaters.
    (25) DOE welcomes additional comments and data regarding estimates 
for energy efficiency distribution for 2020 and future distribution in 
2028.
    (26) DOE requests comment on DOE's methodology and data sources 
used for projecting the future shipments of consumer pool heaters in 
the absence of amended energy conservation standards.
    (27) To estimate the impact on shipments of the price increase for 
the considered efficiency levels, DOE used a relative price elasticity 
approach. DOE welcomes stakeholder input on the effect of amended 
standards on future consumer pool heater shipments.
    (28) DOE seeks additional information on industry capital and 
product conversion costs of compliance associated with the analyzed 
energy conservation standards for consumer pool heaters evaluated in 
this NOPR.
    (29) DOE requests comment on the estimated stranded assets for both 
electric resistance pool heaters and gas-fired pool heaters.
    (30) DOE welcomes any additional comments on the approach for 
conducting the emissions analysis for pool heaters.
    (31) DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of consumer pool heaters associated 
with multiple DOE standards or product-specific regulatory actions of 
other Federal agencies.
    (32) DOE requests comment on its findings that there are six 
domestic small businesses that manufacture consumer pool heaters and 
its estimate of the potential impacts on these small businesses.
    Additionally, DOE welcomes comments on other issues relevant to the 
conduct of this rulemaking that may not specifically be identified in 
this document.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking.

List of Subjects

10 CFR Part 429

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

10 CFR Part 430

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

Signing Authority

    This document of the Department of Energy was signed on March 28, 
2022, by Kelly J. Speakes-Backman, Principal Deputy Assistant Secretary 
for Energy Efficiency and Renewable Energy, pursuant to delegated 
authority from the Secretary of Energy. That document with the original 
signature and date is maintained by DOE. For administrative purposes 
only, and in compliance with requirements of the Office of the Federal 
Register, the undersigned DOE Federal Register Liaison Officer has been 
authorized to sign and submit the document in electronic format for 
publication, as an official document of the Department of Energy. This 
administrative process in no way alters the legal effect of this 
document upon publication in the Federal Register.

    Signed in Washington, DC, on March 31, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 10 
CFR parts 429 and 430 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; 28 U.S.C. 2461 note.

0
2. Section 429.134 is amended by adding paragraph (s) to read as 
follows:


Sec.  429.134  Product-specific enforcement provisions.

* * * * *
    (s) Pool heaters. Beginning on [DATE 5 YEARS AFTER PUBLICATION OF 
FINAL RULE]:
    (1) Verification of input capacity for gas-fired pool heaters. The 
input capacity of each tested unit will be measured pursuant to the 
test requirements of Sec.  430.23(p). The results of the measurement(s) 
will be compared to the represented value of input capacity certified 
by the manufacturer for the basic model. The certified input capacity 
will be considered valid only if the measurement(s) (either the 
measured input capacity for a single unit sample or the average of the 
measured input capacity for a multiple unit sample) is within two 
percent of the certified input capacity.
    (i) If the representative value of input capacity is found to be 
valid, the certified input capacity will serve as the basis for 
determination of the applicable standard and the mean measured input 
capacity will be used as the basis for calculation of the integrated 
thermal efficiency standard for the basic model.
    (ii) If the representative value of input capacity is not within 
two percent of the certified input capacity, DOE will first attempt to 
increase or decrease the gas pressure within the range specified in 
manufacturer's installation and operation manual shipped with the gas-
fired pool heater being tested to achieve the certified input capacity 
(within two percent). If the input capacity is still not within two 
percent of the certified input capacity, DOE will attempt to modify the 
gas inlet orifice. If the input capacity still is not within two 
percent of the certified input capacity, the mean measured input 
capacity (either for a single unit sample or the average for a multiple 
unit sample) determined from the tested units will serve as the basis 
for calculation of the integrated thermal efficiency standard for the 
basic model.
    (2) Verification of active electrical power for pool heaters. The 
active electrical power of each tested unit will be measured pursuant 
to the test

[[Page 22717]]

requirements of Sec.  430.23. The results of the measurement(s) will be 
compared to the represented value of active electrical power city 
certified by the manufacturer for the basic model. The certified active 
electrical power will be considered valid only if the measurement(s) 
(either the measured active electrical power for a single unit sample 
or the average of the measured active electrical power for a multiple 
unit sample) is within two percent of the certified active electrical 
power.
    (i) If the representative value of active electrical power is found 
to be valid, the certified active electrical power will serve as the 
basis for determination of the applicable standard and the mean 
measured active electrical power will be used as the basis for 
calculation of the integrated thermal efficiency standard for the basic 
model.
    (ii) If the representative value of input capacity is not within 
two percent of the certified input capacity, the mean measured active 
electrical power (either for a single unit sample or the average for a 
multiple unit sample) determined from the tested units will serve as 
the basis for calculation of the integrated thermal efficiency standard 
for the basic model.

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
3. 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
4. Section 430.2 is amended by adding in alphabetical order definitions 
for ``Electric pool heater'', ``Electric spa heater'', ``Gas-fired pool 
heater'', ``Oil-fired pool heater'', and ``Portable electric spa'' to 
read as follows:


Sec.  430.2  Definitions.

* * * * *
    Electric pool heater means a pool heater other than an electric spa 
heater that uses electricity as its primary energy source.
    Electric spa heater means a pool heater that--
    (1) Uses electricity as its primary energy source;
    (2) Has an output capacity (as measured according to appendix P to 
subpart B of part 430) of 11 kW or less; and
    (3) Is designed to be installed within a portable electric spa.
* * * * *
    Gas-fired pool heater means a pool heater that uses gas as its 
primary energy source.
* * * * *
    Oil-fired pool heater means a pool heater that uses oil as its 
primary energy source.
* * * * *
    Portable electric spa means a self-contained, factory-built spa or 
hot tub in which all control, water heating and water circulating 
equipment is an integral part of the product. Self-contained spas may 
be permanently wired or cord connected.
* * * * *
0
5. Appendix P of subpart B of part 430 is amended by:
0
a. Revising the introductory note.
0
b. Revising sections 1., 5.2, and 5.3; and
0
c. Adding sections 5.5, 5.5.1, and 5.5.2;
    The revisions and additions read as follows:

Appendix P to Subpart B of Part 430--Uniform Test Method for Measuring 
the Energy Consumption of Pool Heaters

    Note: On and after [Date 180 days after publication of final 
rule], any representations made with respect to the energy use or 
efficiency of all pool heaters must be made in accordance with the 
results of testing pursuant to this appendix. Until [Date 180 Days 
After Publication of Final Rule], manufacturers must test gas-fired 
pool heaters in accordance with this appendix, or appendix P as it 
appeared at 10 CFR part 430, subpart B revised as of January 1, 
2021. Prior to [Date 180 days after publication of final rule], if a 
manufacturer makes representations of standby mode and off mode 
energy consumption, then testing must also include the provisions of 
this appendix, or appendix P as it appeared at 10 CFR part 430, 
subpart B revised as of January 1, 2021, related to standby mode and 
off mode energy consumption.
1. Definitions
    Active electrical power means the maximum electrical power 
consumption in active mode for an electric pool heater.
    Active mode means the condition during the pool heating season in 
which the pool heater is connected to the power source, and the main 
burner, electric resistance element, or heat pump is activated to heat 
pool water.
    Coefficient of performance (COP), as applied to heat pump pool 
heaters, means the ratio of heat output in kW to the total power input 
in kW.
    Electric heat pump pool heater means an appliance designed for 
heating nonpotable water and employing a compressor, water-cooled 
condenser, and outdoor air coil.
    Electric resistance pool heater means an appliance designed for 
heating nonpotable water and employing electric resistance heating 
elements.
    Fossil fuel-fired pool heater means an appliance designed for 
heating nonpotable water and employing gas or oil burners.
    Hybrid pool heater means an appliance designed for heating 
nonpotable water and employing both a heat pump (compressor, water-
cooled condenser, and outdoor air coil) and a fossil fueled burner as 
heating sources.
    Input capacity means the maximum fuel input rate for a fossil fuel-
fired pool heater.
    Off mode means the condition during the pool non-heating season in 
which the pool heater is connected to the power source, and neither the 
main burner, nor the electric resistance elements, nor the heat pump is 
activated, and the seasonal off switch, if present, is in the ``off'' 
position.
    Output capacity for an electric pool or spa heater means the 
maximum rate at which energy is transferred to the water.
    Seasonal off switch means a switch that results in different energy 
consumption in off mode as compared to standby mode.
    Standby mode means the condition during the pool heating season in 
which the pool heater is connected to the power source, and neither the 
main burner, nor the electric resistance elements, nor the heat pump is 
activated.
* * * * *
    5.2 Average annual fossil fuel energy for pool heaters. For 
electric resistance and electric heat pump pool heaters, the average 
annual fuel energy for pool heaters, EF = 0.
    For fossil fuel-fired pool heaters, the average annual fuel energy 
for pool heaters, EF, is defined as:

EF = BOH QIN + (POH-BOH) QPR + (8760-
POH) Qoff,R

where:

BOH = average number of burner operating hours = 104 h,
POH = average number of pool operating hours = 4,464 h,
QIN = input capacity, in Btu/h, calculated as the 
quantity CF x Q x H in the equation for thermal efficiency in 
Section 2.10.1 of ANSI Z21.56 (incorporated by reference; see Sec.  
430.3) and divided by 0.5 h (For electric resistance and electric 
heat pump pool heaters, QIN = 0.),
QPR = average energy consumption rate of continuously 
operating pilot light, if employed, = (QP/1 h),
QP = energy consumption of continuously operating pilot 
light, if employed, as measured in section 4.2 of this appendix, in 
Btu,
8760 = number of hours in one year,
Qoff,R = average off mode fossil fuel energy consumption 
rate = Qoff/(1 h), and
Qoff = off mode energy consumption as defined in section 
4.3 of this appendix.


[[Page 22718]]


    5.3 Average annual electrical energy consumption for pool heaters. 
The average annual electrical energy consumption for pool heaters, 
EAE, is expressed in Btu and defined as:

(1) EAE = EAE,active + EAE,standby,off
(2) EAE,active = BOH * PE
(3) EAE,standby,off = (POH-BOH) PW,SB(Btu/h) + 
(8760-POH) PW,OFF(Btu/h)

where:

EAE,active = electrical consumption in the active mode,
EAE,standby,off = auxiliary electrical consumption in the 
standby mode and off mode,
PE = active electrical power, calculated as:
= 2Ec, for fossil fuel-fired heaters tested according to 
SSection 2.10.1 of ANSI Z21.56 and for electric 
resistance pool heaters, in Btu/h,
= 3.412 PEaux,rated, for fossil fuel-fired heaters tested 
according to Section 2.10.2 of ANSI Z21.56, in Btu/h,
= Ec,HP * (60/tHP), for electric heat pump 
pool heaters, in Btu/h.
Ec = electrical consumption in Btu per 30 min. This 
includes the electrical consumption (converted to Btus) of the pool 
heater and, if present, a recirculating pump during the 30-minute 
thermal efficiency test. The 30-minute thermal efficiency test is 
defined in section 2.10.1 of ANSI Z21.56 for fossil fuel-fired pool 
heaters and Section 9.1.4 of ASHRAE 146 (incorporated by reference; 
see Sec.  430.3) for electric resistance pool heaters.
2 = conversion factor to convert unit from per 30 min. to per h.
PEaux,rated = nameplate rating of auxiliary electrical 
equipment of heater, in Watts Ec,HP = electrical 
consumption of the electric heat pump pool heater (converted to 
equivalent unit of Btu), including the electrical energy to the 
recirculating pump if used, during the thermal efficiency test, as 
defined in Section 9.1 of ASHRAE 146, in Btu. tHP = 
elapsed time of data recording during the thermal efficiency test on 
electric heat pump pool heater, as defined in Section 9.1 of ASHRAE 
146, in minutes.
BOH = as defined in section 5.2 of this appendix,
POH = as defined in section 5.2 of this appendix,
PW,SB(Btu/h) = electrical energy consumption rate during 
standby mode expressed in Btu/h = 3.412 PW,SB, Btu/h,
PW,SB = as defined in section 4.2 of this appendix,
PW,OFF(Btu/h) = electrical energy consumption rate during 
off mode expressed in Btu/h = 3.412 PW,OFF, Btu/h, and
PW,OFF = as defined in section 4.3 of this appendix.
* * * * *
    5.5 Output capacity for electric pool heaters.
    5.5.1 Calculate the output capacity of an electric heat pump pool 
heater as:

QOUT,HP = k * W * (Tohp-Tihp) * (60/
tHP)

where k is the specific heat of water, W is the mass of water 
collected during the test, Tohp is the average outlet 
water temperature during the standard rating test, Tihp 
is the average inlet water temperature during the standard rating 
test, all as defined in Section 11.2 of ASHRAE 146, and 
tHP is the elapsed time in minutes of data recording 
during the thermal efficiency test on electric heat pump pool 
heater, as defined in Section 9.1 of ASHRAE 146.
    5.5.2 Calculate the output capacity of an electric resistance pool 
heater as:

QOUT,ER = k * W * (Tmo-Tmi) * (60/30)

where k is the specific heat of water, W is the mass of water 
collected during the test, Tmo is the average outlet 
water temperature recorded during the primary test, and 
Tmi is the average inlet water temperature record during 
the primary test, all as defined in Section 11.1 of ASHRAE 146, and 
60/30 is the conversion factor to convert unit from per 30 minutes 
to per hour.
0
6. Section 430.32 is amended by revising paragraph (k) to read as 
follows:


Sec.  430.32  Energy and water conservation standards and their 
compliance dates.

* * * * *
    (k) Pool heaters. (1) Gas-fired pool heaters manufactured on and 
after April 16, 2013 and before [DATE 5 YEARS AFTER PUBLICATION OF 
FINAL RULE], shall have a thermal efficiency not less than 82%.
    (2) Gas-fired pool heaters and electric pool heaters manufactured 
on and after [DATE 5 YEARS AFTER PUBLICATION OF FINAL RULE], shall have 
an integrated thermal efficiency not less than the following:
[GRAPHIC] [TIFF OMITTED] TP15AP22.007

* * * * *
[FR Doc. 2022-07145 Filed 4-14-22; 8:45 am]
BILLING CODE 6450-01-P