[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Proposed Rules]
[Pages 83426-83463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25869]



[[Page 83425]]

Vol. 88

Wednesday,

No. 228

November 29, 2023

Part II





Department of Energy





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10 CFR Part 430





Energy Conservation Program: Energy Conservation Standards for Oil, 
Electric, and Weatherized Gas Consumer Furnaces; Proposed Rule

  Federal Register / Vol. 88 , No. 228 / Wednesday, November 29, 2023 / 
Proposed Rules  

[[Page 83426]]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2021-BT-STD-0031]
RIN 1904-AF19


Energy Conservation Program: Energy Conservation Standards for 
Oil, Electric, and Weatherized Gas Consumer Furnaces

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

ACTION: Notification of proposed determination and request for comment.

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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 non-
weatherized oil-fired furnaces (``NWOFs''), mobile home oil-fired 
furnaces (``MHOFs''), weatherized gas furnaces (``WGFs''), weatherized 
oil-fired furnaces (``WOFs''), and electric furnaces (``EFs''). EPCA 
also requires the U.S. Department of Energy (``DOE'') to periodically 
review its existing standards to determine whether more-stringent, 
amended standards would be technologically feasible and economically 
justified, and would result in significant energy savings. In this 
notification of proposed determination (``NOPD''), DOE has initially 
determined that amended energy conservation standards for EFs, NWOFs, 
MHOFs, WOFs, and WGFs do not need to be amended. DOE requests comment 
on this proposed determination and the associated analyses and results.

DATES: 
    Meeting: DOE will hold a public meeting webinar upon request. 
Please request a public meeting webinar no later than December 13, 
2023. See section VI, ``Public Participation,'' for webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants.
    Comments: Written comments and information are requested and will 
be accepted on or before January 29, 2024.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at www.regulations.gov under docket 
number EERE-2021-BT-STD-0031. Follow the instructions for submitting 
comments.
    Alternatively, interested persons may submit comments, identified 
by docket number EERE-2021-BT-STD-0031 and/or RIN 1904-AF19, by any of 
the following methods:
    Email: [email protected]. Include the docket 
number EERE-2021-BT-STD-0031 and/or RIN 1904-AF19 in the subject line 
of the message.
    Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: 
(202) 287-1445. If possible, please submit all items on a compact disc 
(``CD''), in which case it is not necessary to include printed copies.
    Hand Delivery/Courier: Appliance and Equipment Standards Program, 
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant 
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. 
If possible, please submit all items on a CD, in which case it is not 
necessary to include printed copies.
    No telefacsimiles (``faxes'') will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section VII of this document (Public Participation).
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at www.regulations.gov. 
All documents in the docket are listed in the www.regulations.gov 
index. However, not all documents listed in the index may be publicly 
available, such as information that is exempt from public disclosure.
    The docket web page can be found at www.regulations.gov/docket/EERE-2021-BT-STD-0031. The docket web page contains instructions on how 
to access all documents, including public comments, in the docket. See 
section VII, ``Public Participation,'' for further information on how 
to submit comments through www.regulations.gov.

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].
    Mr. Eric Stas, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-5827. Email: [email protected].
    For further information on how to submit a comment or review other 
public comments and the docket 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 Determination
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemakings for Consumer Furnaces
    C. Deviation From Appendix A
III. General Discussion and Rationale
    A. General Comments
    1. Comments Supporting Amended Standards
    2. Comments Opposing Amended Standards
    3. Standby Mode and Off Mode
    B. Scope of Coverage and Product Classes
    C. Test Procedure
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Cost-Effectiveness
    F. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    G. Additional Considerations
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage
    a. Electric Furnaces
    b. Weatherized Oil-Fired Furnaces
    c. Fuel-Fired Heat Pumps
    2. Technology Options
    3. Screening Analysis
    a. Screened-Out Technologies
    b. Remaining Technologies
    4. Product Classes
    B. Engineering Analysis
    1. Efficiency Analysis
    a. Baseline Efficiency
    b. Intermediate Efficiency Levels
    c. Maximum Technology (``Max-Tech'') Efficiency Levels
    d. Summary of Efficiency Levels Analyzed
    2. Cost Analysis
    a. Teardown Analysis
    b. Cost Estimation Method
    3. Cost-Efficiency Results
    C. Markups Analysis
    D. Energy Use Analysis
    E. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Product Lifetime
    7. Discount Rates

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    8. Energy Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    F. Shipments Analysis
    G. National Impact Analysis
    1. Product Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
V. Analytical Results and Conclusions
    A. Economic Impacts on Individual Consumers
    B. National Impact Analysis
    1. Significance of Energy Savings
    2. Net Present Value of Consumer Costs and Benefits
    C. Proposed Determination
    1. Technological Feasibility
    2. Cost-Effectiveness
    3. Significant Conservation of Energy
    4. Further Considerations
    5. Summary
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866, 13563, and 14094
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Participation in the Public Meeting Webinar
    B. Submission of Comments
    C. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Determination

    The Energy Policy and Conservation Act, Public Law 94-163, as 
amended (``EPCA''),\1\ among other things, authorizes DOE to regulate 
the energy efficiency of a number of consumer products and certain 
industrial equipment. (42 U.S.C. 6291-6317, as codified) Title III, 
Part B of EPCA \2\ established the Energy Conservation Program for 
Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These 
products include oil, electric, and weatherized gas consumer furnaces, 
the subject of this NOPD. (42 U.S.C. 6292(a)(5))
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    \1\ 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), which reflect the last statutory amendments that impact 
Parts A and A-1 of EPCA.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
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    Pursuant to EPCA, DOE is required to review the existing energy 
conservation standards for covered consumer products, at a minimum, 
every six years after issuance of any final rule establishing or 
amending a standard (42 U.S.C. 6295(m)(1)). DOE is conducting this 
review of the energy conservation standards for oil, electric, and 
weatherized gas consumer furnaces under EPCA's six-year-lookback 
authority. (Id.) Pursuant to that statutory provision, DOE must publish 
either a notification of determination that standards for the product 
do not need to be amended, or a notice of proposed rulemaking 
(``NOPR'') including new proposed energy conservation standards 
(proceeding to a final rule, as appropriate). (Id.) For the reasons 
explained in the paragraphs that follow and elsewhere in this document, 
DOE has tentatively determined it appropriate to issue this NOPD for 
the consumer furnaces subject to this rulemaking.
    For this proposed determination, DOE analyzed oil, electric, and 
weatherized gas consumer furnaces subject to energy conservation 
standards specified in 10 CFR 430.32(e)(1).
    DOE first analyzed the technological feasibility of more energy-
efficient oil, electric, and weatherized gas furnaces and determined 
that amended standards for electric furnaces are not technologically 
feasible. For those oil and weatherized gas furnaces for which DOE 
determined higher standards to be technologically feasible, DOE 
evaluated whether higher standards would be cost-effective by 
conducting life-cycle cost (``LCC'') and payback period (``PBP'') 
analyses. In addition, DOE estimated energy savings that would result 
from potential energy conservation standards by conducting a national 
impacts analysis (``NIA''), in which it estimated the net present value 
(``NPV'') of the total costs and benefits experienced by consumers.
    Based on the results of the analyses, including the consideration 
of impacts on manufacturers and product availability as summarized in 
section V of this document, DOE has tentatively determined that current 
standards for oil, electric, and weatherized gas furnaces do not need 
to be amended.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed determination, as well as some of the 
historical background relevant to the establishment of energy 
conservation standards for oil, electric, and weatherized gas furnaces.

A. Authority

    Among other things, EPCA, Public Law 94-163 (42 U.S.C. 6291-6317, 
as codified) 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 furnaces, the subject of this document. (42 U.S.C. 6292(a)(5)) 
EPCA prescribed the initial energy conservation standards for these 
products (42 U.S.C. 6295(f)(1)-(2)), and directs DOE to conduct future 
rulemakings to determine whether to amend these standards. (42 U.S.C. 
6295(f)(4) and 42 U.S.C. 6295(m)(1))
    The energy conservation program 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).
    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 furnaces appear at title 10 of the 
Code of Federal Regulations (``CFR'') part 430, subpart B, appendix N.
    Federal energy conservation 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 in limited

[[Page 83428]]

circumstances for particular state laws or regulations, in accordance 
with the procedures and other provisions set forth under EPCA. (42 
U.S.C. 6297(d))
    Pursuant to the amendments to EPCA 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 oil, electric, 
and weatherized gas furnaces address standby mode and off mode energy 
use. DOE's energy conservation standards address standby mode and off 
mode energy use only for non-weatherized oil-fired furnaces (including 
mobile home furnaces) and electric furnaces. 10 CFR 430.32(e)(1)(iii). 
In this analysis, DOE considers such energy use in its determination of 
whether energy conservation standards need to be amended.
    EPCA also requires that DOE must periodically review its already 
established energy conservation standards for a covered product no 
later than six years from the issuance of a final rule establishing or 
amending a standard for a covered product. (42 U.S.C. 6295(m)) This 
six-year-lookback provision requires that DOE publish either a notice 
of determination that standards do not need to be amended or a NOPR, 
including new proposed standards (proceeding to a final rule, as 
appropriate). (42 U.S.C. 6295(m)(1)) EPCA further provides that, not 
later than 3 years after the issuance of a final determination not to 
amend standards, DOE must publish either a notification 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)(3)(B)) 
DOE must make the analysis on which a determination is based publicly 
available and provide an opportunity for written comment. (42 U.S.C. 
6295(m)(2))
    A determination that amended standards are not needed must be based 
on consideration of whether amended standards will result in 
significant conservation of energy, are technologically feasible, and 
are cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C. 6295(n)(2)) 
Additionally, any new or amended energy conservation standard 
prescribed by the Secretary for any type (or class) of covered product 
shall be designed to achieve the maximum improvement in energy 
efficiency which the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) Among the factors 
DOE considers in evaluating whether a proposed standard level is 
economically justified includes whether the proposed standard at that 
level is cost-effective, as defined under 42 U.S.C. 
6295(o)(2)(B)(i)(II). Under 42 U.S.C. 6295(o)(2)(B)(i)(II), an 
evaluation of cost-effectiveness requires DOE to consider 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. (42 U.S.C. 6295(n)(2) and 42 
U.S.C. 6295(o)(2)(B)(i)(II)) DOE is publishing this NOPD in 
satisfaction of the six-year-lookback review requirement in EPCA.

B. Background

1. Current Standards
    DOE most recently completed a review of its consumer furnace 
standards in a direct final rule (``DFR'') published in the Federal 
Register on June 27, 2011 (``June 2011 DFR''), through which DOE 
amended the existing energy conservation standards for non-weatherized 
gas furnaces (``NWGFs''), mobile home gas furnaces (``MHGFs''), 
weatherized gas furnaces (``WGFs''), NWOF, MHOFs, and weatherized oil 
furnaces (``WOFs'').\3\ 76 FR 37408. The June 2011 DFR amended the 
existing energy conservation standards for NWGFs, MHGFs, and NWOFs 
(which are specified in terms of annual fuel utilization efficiency 
``AFUE''), and amended the compliance date (but left the existing 
standards in place) for WGFs. The June 2011 DFR also established 
electrical standby mode and off mode standards for NWGFs, MHGFs, NWOFs, 
MHOFs, and electric furnaces. As a result of a settlement agreement 
approved by the Court of Appeals for the D.C. Circuit, the standards 
established by the June 2011 DFR for NWGFs and MHGFs did not go into 
effect.\4\ However, the court order left in place the standards for 
WGFs, NWOFs, MHOFs, WOFs, and electric furnaces, which are the subject 
of this NOPD.
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    \3\ This rulemaking was undertaken pursuant to the voluntary 
remand in State of New York, et al. v. Department of Energy, et al., 
08-311-ag(L); 08-312-ag(con) (2d Cir. Filed Jan. 17, 2008).
    \4\ DOE confirmed the standards and compliance dates promulgated 
in the June 2011 DFR in a notice of effective date and compliance 
dates published in the Federal Register on October 31, 2011 
(``October 2011 notice''). 76 FR 67037. After publication of the 
October 2011 notice, the American Public Gas Association (``APGA'') 
sued DOE to invalidate the rule as it pertained to NWGFs and MHGFs. 
Petition for Review, American Public Gas Association, et al. v. 
Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 
2011). On April 24, 2014, the Court granted a motion that approved a 
settlement agreement that was reached between DOE, APGA, and the 
various intervenors in the case, in which DOE agreed to a remand of 
the non-weatherized gas furnace and mobile home gas furnace portions 
of the June 2011 DFR in order to conduct further notice-and-comment 
rulemaking. Accordingly, the Court's order vacated the June 2011 DFR 
in part (i.e., those portions relating to non-weatherized gas 
furnaces and mobile home gas furnaces) and remanded to the agency 
for further rulemaking. NWGFs and MHGFs are being addressed in a 
separate rulemaking proceeding (see Docket No. EERE-2014-BT-STD-
0031).
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    The AFUE standards currently applicable to all consumer furnaces, 
including the product classes for which DOE is conducting analyses in 
this NOPD, are set forth in DOE's regulations at 10 CFR 
430.32(e)(1)(ii). Table II.1 presents the currently applicable 
standards for oil, electric, and weatherized gas furnaces and the date 
on which compliance with each such standard was required.

[[Page 83429]]



               Table II.1--Federal AFUE Standards for Oil, Electric, and Weatherized Gas Furnaces
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                  Product class                   AFUE (percent)                  Compliance date
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Non-weatherized oil-fired furnaces (not                       83  May 1, 2013.
 including mobile home furnaces).
Mobile home oil-fired furnaces..................              75  September 1, 1990.
Weatherized gas furnaces........................              81  January 1, 2015.
Weatherized oil-fired furnaces..................              78  January 1, 1992.
Electric furnaces...............................              78  January 1, 1992.
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              Table II.2--Federal Standby Mode and Off Mode Standards for Oil and Electric Furnaces
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                                                   Maximum       Maximum off
                                                standby mode        mode
                                                 electrical      electrical
                Product class                       power           power               Compliance date
                                                consumption,    consumption,
                                                PW,SB (watts)  PW,OFF (watts)
 
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Non-weatherized oil-fired furnaces (including              11              11  May 1, 2013.
 mobile home furnaces).
Electric furnaces............................              10              10  May 1, 2013.
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2. History of Standards Rulemakings for Consumer Furnaces
    Amendments to EPCA in the National Appliance Energy Conservation 
Act of 1987 (``NAECA''; Pub. L. 100-12) established EPCA's original 
energy conservation standards for furnaces, consisting of the minimum 
AFUE levels for mobile home furnaces and for all other furnaces except 
``small'' gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) The original 
standards established a minimum AFUE of 75 percent for mobile home 
furnaces and 78 percent for all other furnaces. Pursuant to authority 
conferred under 42 U.S.C. 6295(f)(1)(B), DOE subsequently adopted a 
mandatory minimum AFUE level for ``small'' furnaces through a final 
rule published in the Federal Register on November 17, 1989 (``the 
November 1989 Final Rule''). 54 FR 47916. The standards established by 
NAECA and the November 1989 Final Rule for ``small'' gas furnaces are 
still in effect for MHOFs, WOFs, and EFs.
    Pursuant to EPCA, DOE was required to conduct two rounds of 
rulemaking to consider amended energy conservation standards for all 
consumer furnaces, and an additional round of rulemaking for mobile 
home furnaces. (42 U.S.C. 6295(f)(4)(A), (B), and (C)) In satisfaction 
of the first round of amended standards rulemaking under 42 U.S.C. 
6295(f)(4)(B), on November 19, 2007, DOE published in the Federal 
Register a final rule (``November 2007 Final Rule'') that revised the 
standards for most furnaces but left them in place for two product 
classes (i.e., MHOFs and WOFs).\5\ The standards amended in the 
November 2007 Final Rule were to apply to furnaces manufactured or 
imported on and after November 19, 2015. 72 FR 65136 (Nov. 19, 2007). 
The energy conservation standards in the November 2007 Final Rule 
consist of a minimum AFUE level for each of the six classes of 
furnaces. Id. at 72 FR 65169. Based on the market analysis for the 
November 2007 Final Rule and the standards established under that rule, 
the November 2007 Final Rule eliminated the distinction between 
furnaces based on their certified input capacity, (i.e., the standards 
applicable to ``small'' furnaces were established at the same level and 
as part of their appropriate class of furnace generally). Id.
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    \5\ The November 2007 Final Rule adopted amended standards for 
``oil-fired furnaces'' generally. However, on July 28, 2008, DOE 
published a technical amendment final rule in the Federal Register 
that clarified that the amended standards adopted in the November 
2007 Final Rule for oil-fired furnaces did not apply to mobile home 
oil-fired furnaces and weatherized oil-fired furnaces; rather they 
were only applicable for non-weatherized oil-fired furnaces. 73 FR 
43611, 43613 (July 28, 2008).
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    Following DOE's adoption of the November 2007 Final Rule, several 
parties jointly sued DOE in the United States Court of Appeals for the 
Second Circuit (``Second Circuit'') to invalidate the rule. Petition 
for Review, State of New York, et al. v. Department of Energy, et al., 
Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008). The 
petitioners asserted that the standards for furnaces promulgated in the 
November 2007 Final Rule did not reflect the ``maximum improvement in 
energy efficiency'' that ``is technologically feasible and economically 
justified'' under 42 U.S.C. 6295(o)(2)(A). On April 16, 2009, DOE filed 
with the Court a motion for voluntary remand that the petitioners did 
not oppose. The motion did not state that the November 2007 Final Rule 
would be vacated, but it indicated that DOE would revisit its initial 
conclusions outlined in the November 2007 Final Rule in a subsequent 
rulemaking action. DOE also agreed that the final rule in that 
subsequent rulemaking action would address both regional standards for 
furnaces and the effects of alternate standards on natural gas prices. 
The Second Circuit granted DOE's motion on April 21, 2009. DOE notes 
that the Second Circuit's order did not vacate the energy conservation 
standards set forth in the November 2007 Final Rule, and during the 
remand, the standards went into effect as originally scheduled.
    On June 27, 2011, DOE published a direct final rule (``DFR'') in 
the Federal Register (``June 2011 DFR'') revising the energy 
conservation standards for residential furnaces pursuant to the 
voluntary remand in State of New York, et al. v. Department of Energy, 
et al. 76 FR 37408. In the June 2011 DFR, DOE considered the amendment 
of the same six product classes considered in the November 2007 Final 
Rule analysis plus electric furnaces. As discussed previously, the June 
2011 DFR amended the existing AFUE energy conservation standards for 
NWGFs, MHGFs, and NWOFs and amended the compliance date (but left the 
existing standards in place) for WGFs. The June 2011 DFR also 
established electrical standby mode and off mode energy conservation 
standards for NWGFs, MHGFs, NWOFs, MHOFs, and EFs. DOE confirmed the 
standards and compliance dates promulgated in the June 2011 DFR in a 
notice of effective date and compliance

[[Page 83430]]

dates published in the Federal Register on October 31, 2011 (``October 
2011 Notice''). 76 FR 67037. The November 2007 Final Rule and the June 
2011 DFR represented the first and the second rounds, respectively, of 
the two rulemakings required under 42 U.S.C. 6295(f)(4)(B)-(C) to 
consider amending the energy conservation standards for consumer 
furnaces.
    The June 2011 DFR and October 2011 Notice of effective date and 
compliance dates amended, in relevant part, the AFUE energy 
conservation standards and compliance dates for three product classes 
of consumer furnaces (i.e., NWGFs, MHGFs, and NWOFs).\6\ The existing 
AFUE standards were left in place for three classes of consumer 
furnaces (i.e., WOFs, MHOFs, and EFs). For WGFs, the existing standard 
was left in place, but the compliance date was amended. Electrical 
standby mode and off mode energy consumption standards were established 
for non-weatherized gas and oil-fired furnaces (including mobile home 
furnaces) and EFs. Compliance with the energy conservation standards 
promulgated in the June 2011 DFR was to be required on May 1, 2013, for 
non-weatherized gas furnaces, mobile home gas furnaces, and non-
weatherized oil furnaces, and on January 1, 2015, for weatherized 
furnaces. 76 FR 37408, 37547-37548 (June 27, 2011); 76 FR 67037, 67051 
(Oct. 31, 2011). The amended energy conservation standards and 
compliance dates in the June 2011 DFR superseded those standards and 
compliance dates promulgated by the November 2007 Final Rule for NWGFs, 
MHGFs, and NWOFs. Similarly, the amended compliance date for WGFs in 
the June 2011 DFR superseded the compliance date in the November 2007 
Final Rule.
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    \6\ For NWGFs and MHGFs, the standards were amended to a level 
of 80-percent AFUE nationally with a more-stringent 90-percent AFUE 
requirement in the Northern Region. For NWOF furnaces, the standard 
was amended to 83-percent AFUE nationally. 76 FR 37408, 37410 (June 
27, 2011).
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    Following DOE's adoption of the June 2011 DFR, the American Public 
Gas Association (``APGA'') filed a petition for review with the United 
States Court of Appeals for the District of Columbia Circuit (``D.C. 
Circuit'') to invalidate the DOE rule as it pertained to NWGFs and 
MHGFs. Petition for Review, American Public Gas Association, et al. v. 
Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23, 
2011). The parties to the litigation engaged in settlement 
negotiations, which ultimately led to filing of an unopposed motion on 
March 11, 2014, seeking to vacate DOE's rule in part and to remand to 
the agency for further rulemaking.
    On April 24, 2014, the Court granted the motion and ordered that 
the standards established for NWGFs and MHGFs be vacated and remanded 
to DOE for further rulemaking. As a result, the standards established 
by the June 2011 DFR for NWGFs and MHGFs did not go into effect, and, 
thus, required compliance with the standards established in the 
November 2007 Final Rule for these products began on November 19, 2015. 
As stated previously, the AFUE standards for WOFs, MHOFs, and EFs were 
unchanged, and as such, the original standards for those product 
classes remain in effect. Further, the amended standard for NWOFs was 
not subject to the Court order and went into effect as specified in the 
June 2011 DFR. The AFUE standards currently applicable to all 
residential furnaces,\7\ including the five product classes for which 
DOE is analyzing amended standards in this NOPD, are set forth in DOE's 
regulations at 10 CFR 430.32(e)(1)(ii) and (iii).
---------------------------------------------------------------------------

    \7\ DOE divides consumer furnaces into seven classes for the 
purpose of setting energy conservation standards: (1) NWGFs, (2) 
MHGFs, (3) WGFs, (4) NWOFs, (5) MHOFs, (6) WOFs, and (7) electric 
furnaces. 10 CFR 430.32(e)(1)(ii). As noted previously, DOE has been 
analyzing amended standards for NWGFs and MHGFs as part of a 
separate, ongoing rulemaking (see Docket No. EERE-2014-BT-STD-0031).
---------------------------------------------------------------------------

    On January 28, 2022, DOE published in the Federal Register a 
request for information (``January 2022 RFI'') to initiate a review to 
determine whether any new or amended standards would satisfy the 
relevant requirements of EPCA for a new or amended energy conservation 
standard for oil, electric, and weatherized gas consumer furnaces. 87 
FR 4513. On November 29, 2022, DOE published in the Federal Register a 
notice of availability of a preliminary technical support document 
(``TSD'') (``the November 2022 Preliminary Analysis'') that presented 
initial technical analyses in the following areas: (1) market and 
technology; (2) screening; (3) engineering; (4) markups to determine 
product price; (5) energy use; (6) life-cycle cost (``LCC'') and 
payback period (``PBP''); and (7) national impacts. 87 FR 73259. DOE 
held a public meeting webinar on December 19, 2022 in order to receive 
public input and information related to the November 2022 Preliminary 
Analysis for the subject furnaces.
    DOE received comments in response to the November 2022 Preliminary 
Analysis from the interested parties listed in Table II.3.

                         Table II.3--November 2022 Preliminary Analysis Public Comments
----------------------------------------------------------------------------------------------------------------
                                                                      Comment No. in
              Commenter(s)                  Reference in this NOPD      the docket          Commenter type
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, &              AHRI......................              23  Manufacturer Trade
 Refrigeration Institute.                                                              Association.
American Gas Association................  AGA.......................            * 28  Utility Trade Association.
American Gas Association, American        Joint Commenters..........              24  Utilities and Utility
 Public Gas Association, National                                                      Trade Associations.
 Propane Gas Association, Spire Inc.,
 Spire Missouri Inc.
Appliance Standards Awareness Project,    Joint Advocates...........              22  Efficiency Advocacy
 American Council for an Energy-                                                       Organizations.
 Efficiency Economy, Consumer Federation
 of America, Natural Resources Defense
 Council.
Johnson Controls International..........  JCI.......................              25  Manufacturer.
Lennox International....................  Lennox....................              26  Manufacturer.
New York State Energy Research and        NYSERDA...................              19  State Agency.
 Development Authority.
Northwest Energy Efficiency Alliance....  NEEA......................              21  Efficiency Advocacy
                                                                                       Organization.
----------------------------------------------------------------------------------------------------------------
* Comment No. 28 corresponds to the transcript for the webinar held on December 19, 2022. These commenters made
  oral comments during the public meeting that are summarized and discussed in this document.


[[Page 83431]]

    Any oral comments provided during the webinar that are not 
substantively the same as those presented in written comments are 
summarized and cited separately. throughout this NOPD. A parenthetical 
reference at the end of a comment quotation or paraphrase provides the 
location of the item in the public record.\8\
---------------------------------------------------------------------------

    \8\ The parenthetical reference provides a reference for 
information located in the docket. (Docket No. EERE-2021-BT-STD-
0031, 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 and NOPR stages for an 
energy conservation standards rulemaking.
    Section 6(a)(2) of the Process Rule states that if DOE determines 
it is appropriate to proceed with a rulemaking, for the preliminary 
stages of a rulemaking to issue or amend an energy conservation 
standard, DOE will undertake a framework document and preliminary 
analysis, or an advance notice of proposed rulemaking. While DOE 
published a preliminary analysis for this rulemaking (see 87 FR 73529 
(Nov. 29, 2022)), DOE did not publish a framework document in 
conjunction with the preliminary analysis. DOE notes, however, that 
chapter 2 of the preliminary technical support document that 
accompanied the preliminary analysis--titled Analytical Framework, 
Comments from Interested Parties, and DOE Responses--describes the 
general analytical framework that DOE uses in evaluating and developing 
potential amended energy conservation standards.\9\ Further, DOE 
provided an overview of the analysis it would use to evaluate new or 
amended energy conservation standards in the January 2022 RFI (see 87 
FR 4513 (Jan. 28, 2022)). As such, publication of a separate Framework 
Document would be largely redundant of previously published documents.
---------------------------------------------------------------------------

    \9\ The preliminary technical support document is available at 
www.regulations.gov/document/EERE-2021-BT-STD-0031-0011.
---------------------------------------------------------------------------

III. General Discussion and Rationale

    DOE developed this proposed determination after a review of the 
market for the subject furnaces, including product listings in the DOE 
Compliance Certification Database (``CCD'') database.\10\ DOE also 
considered comments, data, and information from interested parties that 
represent a variety of interests. This NOPD addresses issues raised by 
these commenters.
---------------------------------------------------------------------------

    \10\ U.S. Department of Energy Compliance Certification 
Database. (Available at: www.regulations.doe.gov/certification-data/
) (Last accessed Sept. 1, 2023).
---------------------------------------------------------------------------

A. General Comments

1. Comments Supporting Amended Standards
    In response to the November 2022 Preliminary Analysis, several 
commenters expressed their support of amended energy conservation 
standards for oil, electric, and weatherized gas consumer furnaces.
    The Joint Advocates stated that DOE's preliminary analysis 
demonstrates that condensing-level standards for NWOFs are 
technologically feasible and could result in significant consumer 
savings. The Joint Advocates further commented that fuel regulations in 
many northern States have helped to reduce the sulfur content in 
heating oil, adding that this results in condensing NWOFs becoming 
technologically feasible and commercially available. (Joint Advocates, 
No. 22 at p. 1) The Joint Advocates pointed out that Adams 
Manufacturing commented on the January 2022 RFI in support of a 95-
percent AFUE standard for NWOFs.\11\ (Joint Advocates, No. 22 at p. 2)
---------------------------------------------------------------------------

    \11\ The comment from Adams Manufacturing, Co. in response to 
the January 2022 RFI can be found at: www.regulations.gov/comment/EERE-2021-BT-STD-0031-0010.
---------------------------------------------------------------------------

    NYSERDA stated support for DOE increasing the furnace standards, 
particularly for oil furnaces and for standby and off modes. NYSERDA 
argued that there are cost-effective and beneficial energy and 
associated greenhouse gas savings available through improvements to 
electric, weatherized gas, and particularly oil furnaces. (NYSERDA, No. 
19 at p. 1)
    As part of the rulemaking process, DOE carefully considers the 
benefits and burdens of amended energy conservation standards to 
determine whether such standards are the maximum standard levels that 
are technologically feasible and economically justified and would 
conserve a significant amount of energy, as required by EPCA (see 42 
U.S.C. 6295(o)(2)-(3)). Section IV of this document outlines DOE's 
approach to analyzing various potential amended energy conservation 
standard levels, and section V of this document provides the results of 
those analyses, as well as a detailed explanation of DOE's weighing of 
the benefits and burdens. Based upon its analysis and consideration of 
the relevant statutory criteria, DOE is proposing not to amend the 
existing standards for oil, electric, and weatherized gas furnaces at 
this time. The rationale for DOE's proposed determination is discussed 
in detail in section V of this document.
2. Comments Opposing Amended Standards
    In response to the November 2022 Preliminary Analysis, several 
commenters expressed opposition to amended energy conservation 
standards for oil, electric, and weatherized gas consumer furnaces.
    The Joint Commenters stated that they are guided by the 
congressional mandate that appliance efficiency standards should not 
impose unjustified costs on consumers or deprive consumers of gas 
products that are suitable for their needs. The Joint Commenters stated 
that such standards are not authorized by statute and would be harmful 
to fuel gas providers and the consumers they serve. (Joint Commenters, 
No. 24 at p. 2) AHRI commented that DOE should adopt a no-new-standards 
determination for mobile home oil-fired and non-weatherized oil-fired 
furnaces, given the burden placed on manufacturers to meet more-
stringent standards that will provide insubstantial energy savings. 
(AHRI, No. 23 at pp. 3-4)
    AHRI also commented that DOE should adopt a no-new-standards 
determination for weatherized gas-fired furnaces. The commenter argued 
that DOE should adopt the same determination for consumer weatherized 
gas furnaces as was done for commercial warm air furnaces, given that 
they are technologically similar. AHRI and Lennox commented that a move 
to an AFUE greater than 90 percent for weatherized gas furnaces is 
unjustified, adding that EL 1 showed a 9.1-year payback period and 45.8 
percent of consumers experiencing a net cost. (AHRI, No. 23 at p. 3; 
Lennox, No. 26 at p. 2)
    Lennox urged DOE to consider the cumulative regulatory burden of 
all ongoing rulemakings on furnace manufacturers. (Lennox, No. 26 at p. 
9) The commenter also stated that weatherized gas, non-weatherized oil, 
and electric furnaces are niche products and total less than 10 percent 
of the consumer furnace market. More specifically, Lennox stated that 
weatherized gas furnaces comprise approximately 7 percent of the 
market, and non-weatherized oil and electric furnaces each account for 
less than 1 percent of the market. (Lennox, No. 26 at p. 1) Lennox 
acknowledged that

[[Page 83432]]

technologies exist that could advance the efficiency of gas and oil 
furnaces included in the preliminary TSD. However, Lennox stated that 
consumer cost and utility issues render more-stringent standards 
unjustified for the subject oil and gas furnaces. In particular, for 
weatherized gas products, Lennox recommended that DOE find that a no-
new-standards determination is warranted for these product categories. 
(Id. at p. 6)
    Lennox stated that the market adoption of condensing weatherized 
furnaces has been minimal. Lennox estimated that condensing weatherized 
furnaces are at less than 0.12 percent of the weatherized gas market 
and that there is no indication of growth in the market. Therefore, 
Lennox surmised that condensing efficiency levels would not be 
appropriate for DOE to consider as a basis for a national efficiency 
standard for weatherized gas furnaces and that DOE should not seek to 
mandate WGF condensing technology. (Lennox, No. 26 at p. 7)
    Lennox stated that many consumers have been adversely impacted by 
the ongoing COVID pandemic and high inflation, particularly consumers 
who might already be struggling to afford new furnace equipment. 
Accordingly, Lennox argued that DOE increasing furnace equipment costs 
with new efficiency standards is not economically justified at this 
juncture. (Lennox, No. 26 at p. 2)
    In response, as discussed in section II.A of this document, DOE 
must periodically review its already established energy conservation 
standards for consumer furnaces no later than six years from the 
issuance of a final rule establishing or amending a standard for 
consumer furnaces. This six-year-lookback provision requires that DOE 
publish either a determination that standards do not need to be amended 
or a NOPR, including new proposed standards (proceeding to a final 
rule, as appropriate). (42 U.S.C. 6295(m)(1)) As part of the rulemaking 
process, DOE carefully considers the benefits and burdens of amended 
standards to determine whether the amended standards are the maximum 
standard levels that are technologically feasible and economically 
justified and would conserve a significant amount of energy, as 
required by EPCA (see 42 U.S.C. 6295(o)(2)-(3)). Section IV of this 
document outlines DOE's approach to analyzing various potential amended 
standard levels, and section V of this document provides the results of 
those analyses. Section V also provides a detailed explanation of DOE's 
weighing of the benefits and burdens and the rationale for proposing 
not to amend standards for oil, electric, and weatherized gas furnaces 
at this time. Regarding DOE's consideration of cumulative regulatory 
burden, DOE is not proposing to amend the energy conservation standards 
for oil, electric, and weatherized gas furnaces, so, therefore, the 
Department does not expect this rulemaking to contribute to the 
cumulative regulatory burden of manufactures.
3. Standby Mode and Off Mode
    As discussed in section II.A of this document, EPCA requires any 
final rule for new or amended energy conservation standards promulgated 
after July 1, 2010 to address standby mode and off mode energy use. (42 
U.S.C. 6295(gg)(3))
    ``Standby mode'' and ``off mode'' energy use are defined in the DOE 
test procedure for residential furnaces and boilers (i.e., ``Uniform 
Test Method for Measuring the Energy Consumption of Consumer Furnaces 
Other Than Boilers,'' 10 CFR part 430, subpart B, appendix N; 
``appendix N''). In that test procedure, DOE defines ``standby mode'' 
as any mode in which the furnace is connected to a mains power source 
and offers one or more of the following space heating functions that 
may persist: (a) To facilitate the activation of other modes (including 
activation or deactivation of active mode) by remote switch (including 
thermostat or remote control), internal or external sensors, and/or 
timer; and (b) Continuous functions, including information or status 
displays or sensor based functions. 10 CFR part 430, subpart B, 
appendix N, section 2. ``Off mode'' for consumer furnaces is defined as 
a mode in which the furnace is connected to a mains power source and is 
not providing any active mode or standby mode function, and where the 
mode may persist for an indefinite time. The existence of an off switch 
in off position (a disconnected circuit) is included within the 
classification of off mode. 10 CFR part 430, subpart B, appendix N, 
section 2. An ``off switch'' is defined as the switch on the furnace 
that, when activated, results in a measurable change in energy 
consumption between the standby and off modes. 10 CFR part 430, subpart 
B, appendix N, section 2. Currently, the standby mode and off mode 
energy conservation standards for NWOFs and EFs are outlined in 10 CFR 
430.32 (e)(1)(iii) and are shown in Table II.2 of this document. 
Compliance with the Federal standards for standby mode and off mode 
electricity consumption for NWOFs, MHOFs, and EFs, as measured by 
standby power consumption in watts (``PW,SB'') and off mode 
power consumption in watts (``PW,OFF''), was required on May 
1, 2013.
    In the November 2022 Preliminary Analysis, DOE analyzed amended 
standby/off mode standards for NWOFs, MHOFs and EFs. DOE did not 
consider amended standby mode and off mode standards for WGFs and WOFs, 
because DOE has previously concluded in a direct final rule published 
in the Federal Register on June 27, 2011 that these products are 
packaged with either an air conditioner or heat pump and that the 
standards for those products, specified in terms of power consumption 
in watts and Seasonal Energy Efficiency Ratio (``SEER''), already 
account for the standby mode and off mode energy consumption for these 
classes of furnaces. 76 FR 37408, 37433. Based on market analysis 
conducted for the November 2022 Preliminary Analysis, DOE tentatively 
concludes that WGFs and WOFs continue to be packaged with an air 
conditioner or heat pump.
    In the analysis for the November 2022 Preliminary Analysis, DOE 
established the baseline for NWOFs, MHOFs, and EFs as the current 
Federal standby mode and off mode standards (see Table II.2). DOE also 
defined and identified baseline components as those that consumed the 
most electricity during standby mode and off mode operation. For 
intermediate efficiency levels, DOE utilized a design-option approach 
to identify design options that could be applied to the baseline design 
to reduce standby mode and off mode energy consumption. Above the 
baseline efficiency level, DOE implemented design options in the order 
of incremental energy savings relative to baseline until all available 
design options were employed (i.e., at a max-tech level). DOE 
identified two design options between the baseline and max-tech design 
that were used as the basis for intermediate standby mode and off mode 
design options. Specifically, DOE replaced the linear transformer found 
in models at the baseline with a low-loss transformer (``LL-LTX'') for 
the first intermediate efficiency level and replaced the linear power 
supply found in baseline models with a switching mode power supply 
(``SMPS'') for the second intermediate efficiency level.
    The max-tech standby mode and off mode efficiency level in the 
November 2022 Preliminary Analysis was based on a combination of the 
two design options that were analyzed for the intermediate efficiency 
levels. To reach max-tech, DOE analyzed using an LL-LTX in combination 
with an SMPS to reach the

[[Page 83433]]

minimum standby mode or off mode power consumption (without eliminating 
other consumer- or performance-related electronic features). For this 
design option, a transformer is only needed to step down the voltage 
for the thermostat because the SMPS is able to step down the voltage 
for the other components of the furnace. As such, a smaller, lower-cost 
LL-LTX is used at the max-tech level, as compared to the LL-LTX used at 
EL 1 (i.e., the first intermediate efficiency level).
    In response to the November 2022 Preliminary Analysis, Lennox 
commented that it is not aware of new or improved technology options 
regarding standby mode and off mode energy use beyond those previously 
identified that significantly impact the range of efficiencies for the 
product covered in this rulemaking. (Lennox, No. 26 at p. 4) However, 
Lennox also pointed out that consumers, utilities, third-party 
aggregators, and regulators through programs such as EPA ENERGY STAR 
are looking to further deploy features that enable installation 
verification, ongoing monitoring, diagnostics, and prognostic features 
that can save significantly more energy than de minimis standby power 
limits achieve. (Id.)
    AHRI and Lennox stated that the following functions and components 
utilize the furnace's power supply in the on, standby, and off modes: 
indoor and outdoor air conditioner (``AC'')/heat pump (``HP'') Motors 
(``ECM''); AC/HP outdoor control board; heat pump defrost control; 
indoor and outdoor electronic expansion valve; heat pump reversing 
valve; zoning systems; UV germicidal light; humidifier; communicating 
controls that aid in proper commissioning, system performance 
monitoring and reporting, identification of faults, and consumer 
interface; temperature sensors; air pressure sensors; refrigerant 
pressure sensors; gas pressure sensors; and proprietary diagnostic-
prognostic sensors. (AHRI, No. 23, at p. 2; Lennox, No. 26 at p. 5) 
Lennox further added that thermostats utilize the furnace's power 
supply in the on, standby, and off modes. (Lennox, No. 26 at p. 5) AHRI 
added that integrated furnace controls, gas valves, and combustion air 
inducers utilize the furnace power in on, standby, and off modes. 
(AHRI, No. 23, at p. 2) AHRI and Lennox commented that additional 
safety-related sensors are being considered for furnaces that could 
further render more-stringent standby power limits impractical, 
including refrigerant leak detection mitigation sensors and CO sensors. 
(Lennox, No. 26 at p. 5; AHRI, No. 23, at p. 2) Lennox also added 
CO2 sensors to the list of potential future diagnostic 
features and stated that this list is likely to grow over time. 
(Lennox, No. 26 at p. 5)
    Lennox commented that increased stringency in standards for standby 
power levels would inhibit other innovations that save energy and 
benefit consumers. Lennox further stated that increased stringency 
would also inhibit implementation of additional safety features. 
(Lennox, No. 26 at p. 2) In addition, Lennox stated that the energy 
savings for standby mode and off mode standards for all of the products 
considered in this rulemaking do not meet the DOE criteria of 
significant energy savings. (Id.) AHRI commented that DOE should 
consider the standby mode and off mode requirements of higher 
technology features when evaluating the standby mode and off mode 
efficiency levels. (AHRI, No. 23 at p. 3) AHRI and Lennox commented 
that overly stringent standby mode and off mode standards would inhibit 
the integration of smart communicating controls, installation and 
diagnostic features, and zoning that can enable much larger energy 
savings than the minor savings achieved by the standby power limit 
itself. Lennox stated that these advanced features have entered the 
market for fully featured communicating products and require more 
standby mode and off mode energy than the baseline products. (Lennox, 
No. 26 at p. 4; AHRI, No. 23 at p. 3)
    Lennox and AHRI agreed that standby mode and off mode power 
consumption for WGFs that are part of a single-package air conditioner 
or heat pump are captured in the PW,OFF and SEER metrics for 
these products. (Lennox, No. 26 at p. 3; AHRI, No. 23 at p. 4) Lennox 
stated that the current DOE metrics capture the standby energy 
regardless of the mode of operation. (Lennox, No. 26 at p. 3) Lennox 
commented that it is not aware of seasonal differences in standby mode 
and off mode energy consumption. Further, Lennox commented that a 
condensing standard for WGF may force additional factory- or field-
installed components to prevent freezing (i.e., heat tape or other) of 
the condensate system, which may increase standby energy consumption in 
heating mode. (Lennox, No. 26 at p. 3)
    AHRI commented that an 8.5 W maximum standard for standby mode and 
off mode power does not allow for the addition of the aforementioned 
communication, diagnostic, and safety features. (AHRI, No. 23 at p. 2) 
AHRI recommended that DOE re-evaluate the necessary power draw for 
communication and safety-related features and the max-tech level based 
upon the use of a 20 VA LL-LTX transformer and SMPS to meet these 
utilities. (Id. at p. 3) AHRI commented that a 20 VA transformer cannot 
supply the needs of all interconnected controls for all types of 
systems. AHRI added that if the transformer cannot power the necessary 
internal functions, then DOE must reconsider the proposed 8.5-watt 
standby power limit and whether the 11-watt baseline is sufficient. 
AHRI further commented that if DOE must go higher than 11 watts, DOE 
may need to make allowance in future test procedures so that the 
effects of safety and other control measures do not count against the 
proposed 11-watt limit. (Id.)
    AHRI commented that an incorrectly set minimum standard will drive 
connected products such as thermostats, WIFI controls, etc. to use add-
on power supplies and cause an additional economic burden on consumers, 
asserting that this would defeat the purpose of the proposed maximum 
watts limit. AHRI commented that there are already auxiliary power 
supplies on the market for thermostats and other devices. (Id. at p. 3)
    NYSERDA commented that the technology options for standby mode that 
rely on switching mode power supply with a low-loss linear transformer 
have been considered by DOE for several years and are anticipated to be 
transferable across furnace types, including the oil and electric 
furnaces addressed in this rulemaking. NYSERDA explained that as 
switch-mode power supply and low-loss linear transformers become the 
standard for much of the furnace market, it becomes more feasible for 
those technologies to apply to oil and electric furnaces as well. 
(NYSERDA, No. 19 at p. 2)
    NYSERDA recommended that DOE propose the max-tech levels for 
standby mode and off mode at the NOPR stage. NYSERDA explained that, as 
this rulemaking is finalized, the broader furnace manufacturing 
industry is anticipated to evolve toward technology for standby mode 
that relies on switching mode power supply with a low-loss linear 
transformer. (NYSERDA, No. 19 at p. 2)
    After considering this feedback, DOE understands that typical and 
baseline levels of power consumption of consumer furnaces in standby 
mode or off mode are likely to increase in the future as manufacturers 
continue to build increasingly complex controls into consumer furnaces, 
and that many of the likely changes are related to features such as 
safety sensors or to other improvements in functionality that

[[Page 83434]]

would provide utility for the consumer. Based on these comments, DOE 
has found that there is some degree of uncertainty that exists with 
respect to the appropriateness of the standby mode/off mode efficiency 
levels analyzed in the November 2022 Preliminary Analysis--particularly 
for products that are in development but also possibly in some products 
already on the market. There is also uncertainty related to the 
potential impacts that standby mode and off mode power consumption 
standards could have on overall system energy consumption and consumer 
utility. Consequently, DOE has determined that it lacks the necessary 
information to amend the standby mode and off mode standards at this 
time. Particularly, since some of the functionalities at issue could 
have significant safety or energy-savings benefits, DOE does not wish 
to stymie such developments through well-intentioned but ultimately 
counterproductive standby mode/off mode standards. Instead, DOE needs 
to have a better understanding of the legitimate power consumption 
needs of the subject furnaces when operating in standby mode and off 
mode. Although DOE remains cognizant of the relevant requirements of 42 
U.S.C. 6295(gg)(3), DOE has concluded that it does not currently have 
the requisite evidence to support amended standby mode and off mode 
standards under the applicable statutory criteria in EPCA. Therefore, 
DOE is not proposing to amend the standby mode/off mode power standards 
for NWOFs, MHOFs, and EFs this time, but instead, DOE will continue to 
investigate these issues and may consider such standards in a future 
rulemaking.

B. Scope of Coverage and Product Classes

    This proposed determination covers certain product classes of 
consumer furnaces (i.e., ones for oil, electric, and weatherized gas 
furnaces). A consumer ``furnace'' is defined as a product which 
utilizes only single-phase electric current, or single-phase electric 
current or DC current in conjunction with natural gas, propane, or home 
heating oil, and which--
    (A) Is designed to be the principal heating source for the living 
space of a residence;
    (B) Is not contained within the same cabinet with a central air 
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
    (C) Is an electric central furnace, electric boiler, forced-air 
central furnace, gravity central furnace, or low-pressure steam or hot 
water boiler; and
    (D) Has a heat input rate of less than 300,000 Btu per hour for 
electric boilers and low-pressure steam or hot water boilers and less 
than 225,000 Btu per hour for forced-air central furnaces, gravity 
central furnaces, and electric central furnaces.

10 CFR 430.2. The scope of coverage is discussed in further detail in 
section IV.A.1 of this document.

    When evaluating and establishing/amending energy conservation 
standards, DOE divides covered products into product classes by the 
type of energy used or by capacity or other performance-related 
features that justify differing standards. In making a determination 
whether a performance-related feature justifies a different standard, 
DOE must consider such factors as the utility of the feature to the 
consumer and other factors DOE determines are appropriate. (42 U.S.C. 
6295(q)) The product classes for this proposed determination are 
discussed in further detail in section IV.A.4 of this document.

C. 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 
quantify the efficiency of their product and as the basis for 
certifying to DOE that their product complies with energy conservation 
standards and when making representations to the public regarding the 
energy use or efficiency of the product. (42 U.S.C. 6295(s) and 42 
U.S.C. 6293(c)) Similarly, DOE must use these test procedures to 
determine whether the product complies with standards adopted pursuant 
to EPCA. (42 U.S.C. 6295(s)) DOE's current energy conservation 
standards for consumer furnaces are expressed in terms of AFUE for all 
furnace product classes (i.e., active mode) and, for NWOFs, MHOFs, and 
electric furnace product classes, also in terms of PW,SB and 
PW,OFF (i.e., standby mode and off mode). (See 10 CFR 
430.32(e)(1))
    The test procedure for determining AFUE, PW,SB, and 
PW,OFF is established at 10 CFR part 430, subpart B, 
appendix N. AFUE is an annualized fuel efficiency metric that accounts 
for fossil fuel consumption in active, standby, and off modes. 
PW,SB and PW,OFF are measurements of the standby 
mode and off mode electrical power consumption, respectively, in watts. 
The test procedure for consumer furnaces was last amended by a final 
rule published in the Federal Register on January 15, 2016 (``January 
2016 TP Final Rule''). 81 FR 2628.\12\
---------------------------------------------------------------------------

    \12\ On March 13, 2023, DOE published in the Federal Register a 
test procedure final rule for consumer boilers, which are a type of 
furnace under EPCA (see 42 U.S.C. 6291(23)) but are not included 
within the scope of this rulemaking (see section IV.A.1 of this 
document). 88 FR 15510. This test procedure final rule separated the 
test method for consumer boilers from the test method for other 
types of furnaces and moved the boilers test method to a new 
appendix EE to 10 CFR part 430, subpart B. Accordingly, it amended 
appendix N so as to remove provisions applicable only to boilers, 
but it did not materially change the test method for the oil, 
electric, and weatherized gas furnaces that are the subject of this 
rulemaking.
---------------------------------------------------------------------------

    The revisions to the consumer furnaces test procedure in the 
January 2016 TP Final Rule included:
     Clarification of the electrical power term ``PE'';
     Adoption of a smoke stick test for determining use of 
minimum default draft factors;
     Allowance for the measurement of condensate under steady-
state conditions;
     Reference to manufacturer's installation and operation 
manual and clarifications for when that manual does not specify test 
set-up;
     Specification of duct-work requirements for units that are 
installed without a return duct;
     Specification of testing requirements for units with 
multi-position configurations; and
     Revision of the requirements regarding AFUE reporting 
precision.
81 FR 2628, 2629-2630 (Jan. 15, 2016).
    The changes in the January 2016 TP Final Rule were mandatory for 
representations of furnace efficiency made on or after July 13, 2016. 
As such, the most current version of the test procedure (published in 
January 2016) has now been in place for several years.

D. 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 determination. As the first step in such an analysis, 
DOE develops a list of technology options for consideration in 
consultation with manufacturers, design engineers, and other interested 
parties. DOE then determines which of those means for improving 
efficiency are technologically feasible. DOE considers technologies 
incorporated in commercially-available products or in working 
prototypes to be

[[Page 83435]]

technologically feasible. 10 CFR part 430, subpart C, appendix A, 
sections 6(b)(3)(i) and 7(b)(1).
    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. 10 
CFR part 430, subpart C, appendix A, sections 6(b)(3)(ii)-(v) and 
7(b)(2)-(5). Section IV.A.3 of this document discusses the results of 
the screening analysis for oil, electric, and weatherized gas furnaces, 
particularly the design options DOE considered, those it screened out, 
and those that are the basis for the potential standards considered in 
this proposed determination.
2. Maximum Technologically Feasible Levels
    As when DOE proposes to adopt a new or amended standard for a type 
or class of covered product, in this NOPD analysis, DOE must determine 
the maximum improvement in energy efficiency or maximum reduction in 
energy use that is technologically feasible for the product under 
consideration. (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 oil, electric, and 
weatherized gas furnaces, 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 analysis are described 
in section IV.B.1.c of this proposed determination.

E. Cost-Effectiveness

    In making a determination of whether amended energy conservation 
standards are needed, EPCA requires DOE to consider the cost-
effectiveness of amended standards in the context of the savings in 
operating costs throughout the estimated average life of the covered 
product 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(m)(1)(A); 42 U.S.C. 
6295(n)(2)(C); 42 U.S.C. 6295(o)(2)(B)(i)(II))
    In determining cost-effectiveness of potential amended standards 
for oil, electric, and weatherized gas furnaces, DOE conducted LCC and 
PBP analyses that estimate the costs and benefits to users from those 
potential standards. To further inform DOE's consideration of the cost-
effectiveness of potential amended standards, DOE considered the NPV of 
total costs and benefits estimated as part of the NIA. 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. The results of this analysis are discussed in section V.C.2 of 
this NOPD.

F. Energy Savings

1. Determination of Savings
    For each efficiency level (``EL'') evaluated, DOE projected 
anticipated energy savings from application of the EL to the oil, 
electric, and weatherized gas furnace purchased in the 30-year period 
that begins in the assumed year of compliance with the potential 
standards (2030-2059). The savings are measured over the entire 
lifetime of the oil, electric, and weatherized gas furnaces purchased 
in the previous 30-year period. DOE quantified the energy savings 
attributable to each EL as the difference in energy consumption between 
each standards case and the no-new-standards case. The no-new-standards 
case represents a projection of energy consumption that reflects how 
the market for a product would likely evolve in the absence of amended 
energy conservation standards. DOE used its NIA spreadsheet model to 
estimate national energy savings (``NES'') from potential amended or 
new standards for oil, electric, and weatherized gas furnaces. The NIA 
spreadsheet model (described in section IV.G 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 NES in terms of primary energy savings, which 
is the savings in the energy that is used to generate and transmit the 
site electricity. 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.\13\ 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.G of this document.
---------------------------------------------------------------------------

    \13\ The FFC metric is discussed in DOE's statement of policy 
and notice of policy amendment. 76 FR 51281 (August 18, 2011), as 
amended at 77 FR 49701 (August 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    In determining whether amended standards are needed, DOE must 
consider whether such standards will result in significant conservation 
of energy. (42 U.S.C. 6295(m)(1)(A)) 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.\14\ For example, 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. Accordingly, DOE evaluates the significance of energy 
savings on a case-by-case basis. The significance of energy savings is 
further discussed in section V.B.1 of this NOPD.
---------------------------------------------------------------------------

    \14\ The numeric threshold for determining the significance of 
energy savings established in a final rule published in the Federal 
Register on February 14, 2020 (85 FR 8626, 8670-8672) was 
subsequently rescinded through a final rule published in the Federal 
Register on December 13, 2021 (86 FR 70892, 70901-70906).
---------------------------------------------------------------------------

G. Additional Considerations

    Pursuant to EPCA, absent DOE publishing a notification of 
determination that energy conservation standards for the subject 
furnaces do not need to be amended, DOE must issue a NOPR that includes 
new proposed standards. (42 U.S.C. 6295(m)(1)(B)) The new proposed 
standards in any such NOPR must be based on the criteria established 
under 42 U.S.C. 6295(o) and follow the procedures established under 42 
U.S.C. 6295(p). (42 U.S.C. 6295(m)(1)(B)) The criteria in 42 U.S.C. 
6295(o) require that standards be designed to achieve the maximum 
improvement in energy efficiency, which the Secretary determines is 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A)) 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, and by 
considering, to the greatest extent practicable, the following seven 
statutory factors:
    (1) The economic impact of the standard on manufacturers and

[[Page 83436]]

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 for, or maintenance expenses of 
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 considers relevant.
    (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
proposed determination with regard to oil, electric, and weatherized 
gas furnaces. Separate subsections address each component of DOE's 
analyses. DOE used several analytical tools to estimate the impact of 
potential energy conservation standards. The first tool is a 
spreadsheet that calculates the LCC savings and PBP of potential energy 
conservation standards. The NIA uses a second spreadsheet set that 
provides shipments projections and calculates NES and net present value 
of total consumer costs and savings expected to result from potential 
energy conservation standards. These spreadsheet tools are available on 
the website: www.regulations.gov/docket/EERE-2021-BT-STD-0031.
    The Joint Commenters stressed the importance of implementing the 
recommendations of the recent National Academies of Sciences, 
Engineering, and Medicine (``NAS'') report into all appliance 
rulemakings. Specifically, the Joint Commenters highlighted three 
recommendations from the report that they argued should be implemented 
in rulemakings impacting WGFs: (1) DOE should pay greater attention to 
the justification for the standards, adding that DOE should attempt to 
find significant failures of private markets or irrational behavior by 
consumers in the no-new-standards case to conclude that the standards 
are economically justified; (2) DOE should place greater emphasis on 
providing an argument for the plausibility and magnitude of any market 
failure related to the energy efficiency gap in DOE's analysis; and (3) 
DOE should give greater attention to a broader set of potential market 
failures on the supply side, further commenting that this would include 
not just how standards might reduce the number of competing firms but 
also how they might impact price discrimination, technological 
diffusion, and collusion. The Joint Commenters suggested DOE should 
address these recommendations before analyzing whether new efficiency 
standards are warranted. (Joint Commenters, No. 24 at pp. 2-3)
    In response, DOE is addressing the recommendations of the NAS 
report in a separate rulemaking in parallel with other ongoing 
rulemakings, including this oil, electric, and weatherized gas furnace 
NOPD. As discussed in section V.C of this document, DOE is tentatively 
proposing that standards do not need to be amended, and the Department 
has made this tentative determination consistent with EPCA's 
requirements, including evaluation of economic justification of 
standards, and applicable Executive orders.

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 proposed determination include: (1) a determination 
of the scope 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 furnaces. The key 
findings of DOE's market assessment are summarized in the following 
sections.
1. Scope of Coverage
    In this analysis, DOE relied on the definition of a furnace in 10 
CFR 430.2, which defines a consumer ``furnace'' as a product which 
utilizes only single-phase electric current, or single-phase electric 
current or DC current in conjunction with natural gas, propane, or home 
heating oil, and which--
    (A) Is designed to be the principal heating source for the living 
space of a residence;
    (B) Is not contained within the same cabinet with a central air 
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
    (C) Is an electric central furnace, electric boiler, forced-air 
central furnace, gravity central furnace, or low-pressure steam or hot 
water boiler; and
    (D) Has a heat input rate of less than 300,000 Btu per hour for 
electric boilers and low-pressure steam or hot water boilers and less 
than 225,000 Btu per hour for forced-air central furnaces, gravity 
central furnaces, and electric central furnaces.
    Any product meeting the definition of a ``furnace'' is included in 
DOE's scope of coverage. In the analysis for this NOPD, DOE focused 
only on oil, electric, and weatherized gas furnaces. Non-weatherized 
gas furnaces and mobile home gas furnaces are considered in a separate 
rulemaking.\15\
---------------------------------------------------------------------------

    \15\ See Docket No. EERE-2014-BT-STD-0031 which can be accessed 
at www.regulations.gov.
---------------------------------------------------------------------------

a. Electric Furnaces
    A basic electric furnace comprises an electric resistance heating 
element and blower assembly. (Additionally, there are products that 
include electrically-powered heat pumps, but these are separately 
covered products not addressed here.) The electric resistance heating 
elements of electric furnaces are highly efficient, and the efficiency 
of these units already approaches 100 percent. DOE is unaware of any 
technology options that can improve the efficiency of electric 
furnaces, so DOE has tentatively determined that more-stringent 
standards for electric furnaces would not be technologically feasible. 
Therefore, DOE anticipates that the energy savings potential from 
amended standards for EFs would be minimal. Consequently, DOE did not 
consider amended AFUE standards for electric furnaces in the current 
analysis.
b. Weatherized Oil-Fired Furnaces
    DOE is not aware of any WOFs on the market, and, therefore, DOE did 
not analyze amended standards for that product class. DOE has 
tentatively determined that because there are no WOFs on the market, 
there would be no potential energy savings from amended standards.
c. Fuel-Fired Heat Pumps
    NEEA commented that DOE should consider fuel-fired heat pumps 
within the broader WGF product category by updating the definition of 
``central forced-air furnace'' in the Code of Federal Regulations. 
(NEEA, No. 21 at p. 1) NEEA argued that fuel-fired heat

[[Page 83437]]

pumps with a heat input rate of less than 225,000 Btu per hour meet all 
the criteria in the EPCA definition for a residential ``furnace'' with 
the exception that the terms, ``electric central furnace, electric 
boiler, forced-air central furnace, gravity central furnace, or low-
pressure steam or hot water boiler'' do not currently cover fuel-fired 
heat pumps. NEEA commented that DOE has the authority to change those 
definitions and stated that redefining ``forced-air central furnace'' 
would allow fuel-fired heat pumps to be regulated under the energy 
conservation standards for oil, electric, and weatherized gas consumer 
furnaces. (Id. at p. 2) Specifically, NEEA suggested that DOE should 
change the definition of ``forced air central furnace'' to a gas or oil 
burning furnace designed to supply heat through a system of ducts with 
air as the heating medium. The combustion of gas or oil generates heat 
that is either transferred to the air within a casing by conduction 
through heat exchange surfaces or utilized to run a refrigeration cycle 
that transfers heat to the air and is circulated through the duct 
system by means of a fan or blower. NEEA commented that this definition 
covers the two main fuel-fired heat pump technologies: fuel-fired 
absorption heat pumps and engine-driven heat pumps. (Id.) NEEA also 
commented that weatherized fuel-fired heat pumps should be considered 
as another technology option within the WGF product category. NEEA 
requested that DOE consider all possible technology options for gas-
fired furnaces to be on an even playing field. (Id. at p. 3)
    NEEA argued that fuel-fired heat pumps are designed to replace 
existing furnaces and boilers without the need to update existing 
infrastructure and to provide flexibility for decarbonized fuels. 
However, NEEA stated that fuel-fired heat pumps are not direct 
replacements for heat pumps, since the primary fuel sources are 
different. (NEEA, No. 21 at p. 3) NEEA commented that a 2020 case study 
\16\ of a pre-commercial residential fuel-fired heat pump prepared for 
DOE showed that the system can achieve over 140-percent AFUE, and field 
demonstrations show 36-43 percent fuel savings compared to a condensing 
furnace and 46-50 percent fuel savings compared to a non-condensing 
furnace. (Id.) NEEA further commented that the 2020 case study showed 
that there is significant potential in the residential market for a 
reasonably priced, gas-fired absorption heat pump product. (Id.)
---------------------------------------------------------------------------

    \16\ The case study, titled ``Pre-Commercial Scale-Up of a Gas-
Fired Absorption Heat Pump'' is available at www.osti.gov/biblio/1726247 (Last accessed June 14, 2023).
---------------------------------------------------------------------------

    NEEA encouraged DOE to consider the building energy simulation and 
comparison to field-derived results for fuel-fired heat pumps, 
published by Purdue University in 2021.\17\ NEEA commented that this 
report demonstrates that fuel-fired heat pumps provided the lowest 
operating cost and highest carbon emissions savings compared to 
furnaces, boilers, electric heat pumps, and various water heating 
options. NEEA commented that fuel-fired heat pumps provide the same 
primary heating function as conventional fuel-to-air furnaces with the 
potential for significant energy savings. (Id.)
---------------------------------------------------------------------------

    \17\ The Purdue report, titled ``Pathways to Decarbonization of 
Residential Heating,'' is available at docs.lib.purdue.edu/ihpbc/354/ (Last accessed June 14, 2023).
---------------------------------------------------------------------------

    In response to the comments by NEEA, DOE notes that fuel-fired heat 
pumps do not meet the current definition of ``furnace,'' as they do not 
meet criteria (C) in the definition outlined in section IV.A of this 
document. As such, they were not considered in the scope of this 
analysis. Further, the current test procedure for consumer furnaces, as 
outlined in appendix N, does not include provisions for testing fuel-
fired heat pumps. Therefore, DOE is not considering amending the 
consumer ``furnace'' definition to include these products at this time. 
However, DOE will continue to investigate fuel-fired heat pumps and may 
evaluate test procedure provisions for related to fuel-fired heat pumps 
in a future rulemaking.
2. Technology Options
    DOE has identified the following components as technology options 
that have the potential to improve the AFUE rating of oil and 
weatherized gas furnaces:

 Condensing secondary heat exchanger
 Heat exchanger improvements
    [cir] Increased heat exchanger surface area
    [cir] Heat exchanger surface features
    [cir] Heat exchanger baffles and turbulators
 Two-stage and modulating combustion
 Pulse combustion
 Premix burners
 Burner derating
 Insulation improvements
    [cir] Increased jacket insulations
    [cir] Advanced forms of insulation
 Off-cycle dampers
    [cir] Electromechanical flue damper
    [cir] Electromechanical burner inlet damper
 Direct venting
 Concentric venting
 Low-pressure, air-atomized oil burner
 High-static oil burner
 Delayed-action oil pump solendoid valve

    These technology options are described in more detail of chapter 3 
of the November 2022 Preliminary Analysis TSD.\18\ As discussed in 
section IV.A.1.a of this document, DOE did not identify any technology 
options that would improve the AFUE of electric furnaces.
---------------------------------------------------------------------------

    \18\ For this NOPD, DOE will not publish a Technical Support 
Document (TSD) because no amended standard is proposed. The 
methodology for the analyses conducted for the NOPD is largely the 
same as in the Preliminary Analysis, and, thus, DOE references the 
Preliminary Analysis TSD throughout this document.
---------------------------------------------------------------------------

    In response to the November 2022 Preliminary Analysis, AHRI, 
Lennox, and JCI commented that WGF accounts for a relatively small 
share of the overall furnace market (~7 percent). (AHRI, No. 23 at p. 
5; Lennox, No. 26 at p. 1; JCI, No. 25 at p. 2) \19\ AHRI and JCI 
stated that the maximum feasible AFUE for WGF is 81 percent. (AHRI, No. 
23 at p. 5; JCI, No. 25 at p. 2)
---------------------------------------------------------------------------

    \19\ JCI's comments stated that WGFs are 7 percent of the WGF 
market, but DOE interprets this comment to mean that WGFs are 7 
percent of the overall furnace market.
---------------------------------------------------------------------------

    JCI commented that further improvements in systems efficiency of 
WGFs would require the product class use of condensing technology. JCI 
commented that this change in the product offering is not practical 
and, based on observed market share, not justified due to system design 
and application constraints. (JCI, No. 25 at p. 2) JCI argued that the 
practical application of condensing WGFs creates condensation in the 
heat exchangers within the unit, which is not readily drained. JCI 
added that the retained condensate will freeze in the off cycle, 
preventing further operation of the furnace. (Id.)
    Lennox stated that applicable furnace technology has not 
significantly improved to overcome barriers to deploying higher-
efficiency noncondensing and condensing technologies that would justify 
more-stringent AFUE standards for WGFs. (Lennox, No. 26 at p. 4)
    In response to comments regarding condensing WGFs, DOE notes that 
it has identified WGFs available on the market that use condensing 
technology to achieve AFUE ratings up to 95 percent. Because these 
types of products are available on the market, DOE finds them to be 
technologically feasible and

[[Page 83438]]

considers condensing secondary heat exchangers to be an appropriate 
technology option to analyze for these products. Additionally, in 
response to JCI, when evaluating the cost of implementing technologies 
such as condensing heat exchangers, DOE aims to include the additional 
costs of other components that may be associated with installing a unit 
with such technology, such as a condensate pump and drain hoses. The 
analyses of these costs are discussed in subsequent sections of this 
document (e.g., the LCC and PBP analyses and the NIA (see sections IV.E 
and IV.G of this document, respectively)).
    During the public meeting webinar, AGA requested clarification on 
how vent dampers were applied in the analysis for weatherized gas 
furnaces and noted that the test procedure would not give credit for a 
vent damper on an outdoor weatherized gas furnace. (AGA, Public Meeting 
Transcript, No. 28 at pp. 20-22) In response, dampers were not 
considered for WGFs and are not part of the design pathway for 
improving AFUE for those products. (See section IV.B.1.d of this 
document for the efficiency levels and associated technology options 
for WGFs.) DOE notes that Tables ES.3.2, ES.3.3, ES.3.19, and 7.4.1 in 
the November 2022 Preliminary Analysis TSD indicated that vent dampers 
were included for NWOFs and MHOFs; however, this was a typographical 
error. DOE clarifies that vent dampers also were not part of the design 
pathway considered for improving AFUE of NWOFs and MHOFs for the 
preliminary analysis (nor are they for this NOPD analysis).
    In chapter 3 of the November 2022 Preliminary Analysis TSD, DOE 
also considered three technology options that could potentially reduce 
the standby mode and off mode energy consumption of NWOFs, MHOFs, and 
EFs. However, for the reasons explained in section III.A.3 of this 
document, DOE has tentatively determined that it cannot establish 
standby mode and off mode standards that meet the criteria of EPCA at 
this time, so such technologies and standards are not considered 
further.
3. 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 commercially-viable, existing 
prototypes will not be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production of a technology in commercial products 
and reliable installation and servicing of the technology 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. If a technology is determined to 
have a significant adverse impact on the utility of the product to 
subgroups of consumers, or 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) Safety of technologies. 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 technology has 
proprietary protection and represents a unique pathway to achieving a 
given efficiency level, it 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.
a. Screened-Out Technologies
    DOE eliminated the technologies listed in Table IV.1 from further 
consideration as options to improve the AFUE (as measured by the DOE 
test procedure) of NWOFs, MHOFs, and WGFs. The reasons for exclusion 
associated with each technology are marked with an X. Additional 
details about the reasons for exclusion are discussed in this section.

                                                          Table IV.1--Screened-Out Technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Reasons for exclusion
                                                                      ----------------------------------------------------------------------------------
                                                                                        Practicability
       Excluded technology options             Applicable product                             to        Adverse impacts  Adverse impacts      Unique-
                                                   class(es)            Technological    manufacture,      on product      on health or       pathway
                                                                         feasibility     install, and       utility           safety        proprietary
                                                                                            service                                         technology
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pulse combustion........................  WGF........................  ...............  ..............  ...............               X   ..............
Burner derating.........................  WGF, NWOF, MHOF............  ...............  ..............               X   ...............  ..............
Low-pressure, air-atomized oil burner...  NWOF, MHOF.................               X   ..............  ...............  ...............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

Pulse Combustion
    Pulse combustion burners operate on self-sustaining resonating 
pressure waves that alternately rarefy the combustion chamber (drawing 
a fresh fuel-air mixture into the chamber) and pressurize it (causing 
ignition by compression heating of the mixture to its flash point). 
Pulse combustion systems are capable of direct venting without the 
assistance of mechanical draft. Because the pulse combustion process is 
very efficient, pulse combustion is generally used in condensing 
appliances.
    In contrast to natural draft and induced draft furnaces, pulse 
combustion furnaces generate positive pressure in the heat exchanger. 
Although these products are generally safe, this could create a 
potential safety problem if the heat exchanger breeches, because 
combustion products can contaminate the circulation air stream.
    Pulse combustion gas furnaces were available in the United States 
for more than two decades. However, they were withdrawn from the market 
within the past 20 years because manufacturers found that competing 
technologies, such as condensing secondary heat exchangers, cost 
significantly less to

[[Page 83439]]

manufacture and operate. In light of the ability of furnace 
manufacturers to cost-effectively achieve high efficiencies without the 
use of pulse combustion, the technology's risks do not outweigh its 
benefits for consumer furnace applications. Accordingly, DOE did not 
further analyze this technology option as part of this NOPD.
Burner Derating
    Decreasing the burner size to increase the ratio of heat transfer 
area to fuel input, or burner derating, can increase the AFUE rating of 
furnaces. However, because heat output rate is directly related to 
burner size, derating also reduces the amount of heated air available 
to the consumer. This reduction in heat output adversely affects the 
utility to consumers. Therefore, DOE did not consider this technology 
option.
Low-Pressure, Air-Atomized Oil Burner
    To overcome the low input limitations of conventional oil burners, 
Brookhaven National Laboratory developed a low-pressure, air-atomized 
oil burner that can operate at firing rates as low as 0.25 gallons of 
oil per hour (10 kW). In addition, it can operate with low levels of 
excess combustion air (less than 10 percent) for lean-burning, ultra-
clean combustion. A lower level of excess air generally improves AFUE 
rating. This burner design is also capable of firing fuel at a high or 
low input rate, which is manually actuated by a switch, allowing the 
burner to closely match the smaller heating loads of well-insulated 
modern homes.
    While tests performed at the Brookhaven National Laboratory seem to 
have successfully demonstrated enhanced oil boiler AFUE performance per 
the DOE test procedure for furnaces and boilers, the prototype was 
never tested on a furnace. Therefore, the technological feasibility of 
the burner prototype for incorporation into a residential oil-fired 
furnace remains unknown, so DOE does not consider low-pressure, air-
atomized oil burners to be a viable technology for efficiency 
improvement at this time.
b. Remaining Technologies
    After reviewing each technology, DOE did not screen out the 
following technology options and considers them as design options in 
the engineering analysis:

 Condensing secondary heat exchanger
 Heat exchanger improvements
    [cir] Increased heat exchanger surface area
    [cir] Heat exchanger surface features
    [cir] Heat exchanger baffles and turbulators
 Two-stage and modulating combustion
 Premix burners
 Insulation improvements
    [cir] Increased jacket insulations
    [cir] Advanced forms of insulation
 Off-cycle dampers
    [cir] Electromechanical flue damper
    [cir] Electromechanical burner inlet damper
 Direct venting
 Concentric venting
     High-static oil burner
 Delayed-action oil pump solendoid valve

    DOE determined that these technology options are technologically 
feasible because they are being used or have previously been used in 
commercially-available products or working prototypes. DOE also finds 
that all of the remaining technology options meet the other screening 
criteria (i.e., practicable to manufacture/install/service, do not 
result in adverse impacts on consumer utility, product availability, 
health, or safety, and do not utilize unique-pathway proprietary 
technologies).
    In response to the November 2022 Preliminary Analysis, Lennox 
commented that DOE has adequately captured most of the technology 
options and screened appropriately for gas and oil products. (Lennox, 
No. 26 at p. 4) However, Lennox stated that the alternatives for 
insulation improvement generally have not been demonstrated in furnace 
applications and may not be suitable for use in high-temperature 
applications near combustion surfaces. The commenter stated that 
insulation used in furnace applications must meet temperature, flame 
spread, and smoke requirements per the applicable safety standards, and 
that toxicity and off-gassing must also be considered. Lennox argued 
that just because an insulation material has better insulating 
characteristics does not mean that it is suitable for high-temperature 
furnace applications. (Lennox, No. 26 at p. 6)
    In response, DOE notes that insulation improvements may be achieved 
with thicker layers of existing insulation materials as opposed to 
necessarily requiring new insulating materials. Therefore, DOE is not 
screening out insulation improvements in this NOPD. Additionally, as 
outlined in section IV.B.1 of this document, insulation improvements 
are not required to meet any of the efficiency levels analyzed in this 
NOPD.
4. Product Classes
    In general, when evaluating and establishing energy conservation 
standards for a type (or class) of covered product, DOE divides the 
covered product into classes by: (1) the type of energy used; (2) the 
capacity of the product, or (3) any other performance-related feature 
which other products within such type (or class) do not have that 
affects energy efficiency and justifies different standard levels, 
considering factors such as consumer utility and any other factors the 
Secretary deems appropriate. (42 U.S.C. 6295(q))
    In this case, DOE divides furnaces into seven product classes based 
on fuel type (gas, oil, or electric), whether the furnace is 
weatherized or not, and whether the furnace is designed for use only in 
mobile homes or not. The current product classes for furnaces are (1) 
non-weatherized gas furnaces, (2) mobile home gas furnaces, (3) non-
weatherized oil-fired furnaces, (4) mobile home oil-fired furnaces, (5) 
weatherized gas furnaces, (6) weatherized oil-fired furnaces, and (7) 
electric furnaces. 10 CFR 430.32(e)(1)(ii). As noted previously, non-
weatherized gas furnaces and mobile home gas furnaces are being 
addressed in a separate rulemaking process.\20\ Therefore, the product 
classes that DOE considered for this NOPD are NWOFs, MHOFs, WGFs, WOFs, 
and EFs. However, for the reasons discussed in sections IV.A.1.a and 
IV.A.1.b of this document, potential amended energy conservation 
standards were not analyzed for EFs or WOFs.
---------------------------------------------------------------------------

    \20\ See Docket No. EERE-2014-BT-STD-0031.
---------------------------------------------------------------------------

    In summary, DOE assessed potential amended energy conservation 
standards in terms of AFUE for the NWOF, MHOF, and WGF product classes 
in this NOPD. Again, for the reasons discussed in section III.A.3 of 
this document, DOE did not analyze new or amended standby mode/off mode 
power standards for any product classes this time.

B. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of NWOFs, MHOFs, and WGFs. 
There are two elements to consider in the engineering analysis: (1) the 
selection of efficiency levels to analyze (i.e., the ``efficiency 
analysis'') and (2) 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 eliminated by the screening 
analysis. For each product class, DOE estimates

[[Page 83440]]

the baseline cost, as well as the incremental cost for the product at 
efficiency levels above the baseline efficiency. 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 interpolate to define ``gap fill'' 
levels (i.e., 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).
    For the current analysis, DOE generally employed an efficiency-
level approach.
a. Baseline Efficiency
    For each product class, DOE generally selects a baseline model as a 
reference point for each class, and measures anticipated changes to the 
product resulting from potential energy conservation standards against 
the baseline model. 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.
    A basic consumer gas furnace comprises a hot surface or direct 
spark ignition system, tubular in-shot burners, noncondensing heat 
exchanger, blower assembly (including motor and forward-swept fan 
blade), mechanical draft combustion fan assembly, and automatic 
controls. A basic consumer oil-fired furnace comprises an interrupted 
spark ignition system, power burner, noncondensing heat exchanger, and 
blower assembly. Details and descriptions of each of these components 
can be found in chapter 3 of the November 2022 Preliminary Analysis 
TSD.
    The identification of baseline units requires establishing the 
baseline efficiency level. In cases where there is an existing 
standard, DOE typically defines baseline units as units with 
efficiencies equal to the current Federal energy conservation 
standards. However, for MHOFs, DOE did not identify any currently 
available units at the minimum standard level (75-percent AFUE), and, 
therefore, DOE analyzed 80-percent AFUE as the baseline level for 
MHOFs, as it was the lowest efficiency available on the market. The 
baseline AFUE levels analyzed for the subject NWOFs, MHOFs, and WGFs, 
as measured by AFUE, along with the typical characteristics of a 
baseline unit, are shown in Table IV.2.

                Table IV.2--Baseline AFUE Levels Analyzed
------------------------------------------------------------------------
                                  Baseline AFUE
         Product class              level (%)    Typical characteristics
------------------------------------------------------------------------
NWOF...........................              83  --Single-stage burner.
                                                 --Electronic ignition.
                                                 --Aluminized-steel heat
                                                  exchanger.
                                                 --Indoor blower fan
                                                  including PSC motor *
                                                  and forward-curved
                                                  blower impeller blade.
MHOF...........................              80  --Single-stage burner.
                                                 --Electronic ignition.
                                                 --Aluminized-steel heat
                                                  exchanger.
                                                 --Indoor blower fan
                                                  including PSC motor *
                                                  and forward-curved
                                                  blower impeller blade.
                                                 --Direct venting
                                                  system.
                                                 --Built-in evaporator
                                                  coil cabinet.
WGF............................              81  --Draft inducer.
                                                 --Single-stage burner.
                                                 --Electronic ignition.
                                                 --Aluminized-steel
                                                  tubular heat
                                                  exchanger.
                                                 --Indoor blower fan
                                                  including BPM * motor
                                                  and forward-curved
                                                  blower impeller blade.
------------------------------------------------------------------------
* Residential furnace fans incorporated into NWOFs, MHOFs, and WGFs
  manufactured on and after July 3, 2019 must meet fan energy rating
  (``FER'') standards specified in 10 CFR 430.32(y). The blower fan
  motor (among other factors) can affect FER. Brushless permanent magnet
  (``BPM'') motors have become the predominant motor type at the
  baseline AFUE levels for WGFs, and permanent split capacitor (``PSC'')
  motors, which are less efficient than BPM motors, are common for NWOFs
  and MHOFs.

    Typically, baseline units are representative of the minimum 
technology and lowest-cost product that manufacturers can produce. 
Accordingly, in the teardown analysis, DOE examined a variety of 
baseline units that incorporate the various baseline design options for 
furnace components.
b. Intermediate Efficiency Levels
    DOE also analyzed intermediate efficiency levels for NWOFs and 
MHOFs. However, for WGFs, DOE has

[[Page 83441]]

not found any models on the market between the baseline (81-percent 
AFUE) and max-tech level (95-percent AFUE) and has, therefore, not 
analyzed any intermediate efficiency levels for this product class. The 
intermediate efficiency levels analyzed for NWOFs are 85-percent and 
87-percent AFUE, and the intermediate efficiency levels analyzed for 
MHOFs are 83-percent and 85-percent AFUE. To improve efficiency from 
the baseline to these intermediate efficiency levels, manufacturers 
generally increase the surface area of the heat exchanger, which 
increases the heat transfer area and, thus, allows manufacturers to 
achieve higher efficiencies. The intermediate efficiency levels 
analyzed are representative of common efficiency levels available on 
the market. DOE reviewed its own Compliance Certification Database 
(``CCD''), as well as AHRI's product certification directories,\21\ 
California Energy Commission's (``CEC's'') database,\22\ manufacturer 
catalogs, and other publicly-available literature to inform its 
selection of intermediate efficiency levels.
---------------------------------------------------------------------------

    \21\ AHRI's Directory of Certified Product Performance 
(Available at: www.ahridirectory.org/Search/SearchHome) (Last 
accessed Sept. 1, 2023).
    \22\ California Energy Commission's MAEDbs (Available at: 
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx) (Last 
accessed Sept. 1, 2023).
---------------------------------------------------------------------------

    In response to the November 2022 Preliminary Analysis, NYSERDA 
encouraged DOE to consider an additional efficiency level (EL) between 
87-percent and 96-percent AFUE for oil-fired furnaces. NYSERDA stated 
it anticipates that an AFUE above 90 percent may maximize savings for 
consumers. NYSERDA added that based on its review of the preliminary 
TSD material, the DOE Compliance Certification Management System, and 
AHRI's database, NYSERDA has seen availability of oil furnaces above 
DOE's proposed EL 2. (NYSERDA, No. 19 at p. 2)
    The Joint Advocates similarly encouraged DOE to evaluate an 
intermediate condensing EL for NWOFs. The Joint Advocates commented 
that they strongly support DOE's decision to include a max-tech EL at 
96-percent AFUE and that DOE should also consider an EL between EL 2 
(i.e., 87-percent AFUE) and EL 3 (i.e., 96-percent AFUE). The Joint 
Advocates further commented that the CCD shows condensing models 
suggesting that an intermediate EL with condensing technology is 
feasible for condensing NWOFs. (Joint Advocates, No. 22 at pp. 2-3)
    As discussed previously, DOE's choice of intermediate efficiency 
levels was informed by publicly-available databases and manufacturer 
literature, and the chosen efficiency levels were intended to be 
representative of common efficiency levels available on the market. In 
contrast, as discussed in section III.D.2 of this document, DOE is 
statutorily obligated to analyze the efficiency level that corresponds 
to the maximum improvement in energy efficiency or maximum reduction in 
energy use that is technologically feasible for each product class. (42 
U.S.C. 6295(p)(1)) However, because there are very few condensing-level 
NWOFs on the market, efficiency levels between 87-percent and 96-
percent AFUE would not be representative of typical efficiency levels. 
Therefore, DOE is not analyzing an EL between 87-percent and 96-percent 
AFUE for NWOFs in this NOPD.
c. Maximum Technology (``Max-Tech'') Efficiency Levels
    As part of DOE's analysis, the maximum available efficiency level 
is the highest efficiency unit currently available on the market. DOE 
also defines a ``max-tech'' efficiency level to represent the maximum 
possible efficiency for a given product.
    DOE conducted an analysis of the market and a technology assessment 
and researched current product offerings to determine the max-tech 
efficiency levels. The max-tech level identified in each product class 
corresponds to the highest-AFUE furnace available on the market, which 
DOE tentatively concludes corresponds to the maximum technologically 
feasible levels at this time. For NWOFs, DOE identified a design that 
achieves a max-tech efficiency level of 96-percent AFUE. For MHOFs, the 
maximum efficiency level that DOE identified was 87-percent AFUE. For 
WGFs, DOE identified a max-tech efficiency level design that achieves 
95-percent AFUE. For WGFs and NWOFs, the max-tech efficiency level is 
currently achieved by use of a condensing secondary heat exchanger. A 
constant-airflow BPM indoor blower motor was also implemented as the 
motor design option for the max-tech efficiency level for NWOFs because 
the only NWOF model on the market available at this level includes a 
constant-airflow BPM motor, and it is unclear if this level is 
achievable without a constant-airflow fan. For MHOFs, the max-tech 
efficiency level is currently achieved by use of a heat exchanger with 
increased surface area.
    Lennox stated that the DOE weatherized gas furnace standard of 81-
percent AFUE is at the maximum practical level that is economically 
justified and provides reliable performance. (Lennox, No. 26 at p. 6) 
Lennox stated that, as the AFUE of weatherized gas furnace products is 
increased, heat exchanger and flue temperatures are reduced, which 
increases the risk of condensing operation and corrosion to the heat 
exchanger. (Id.) Lennox stated that while condensing weatherized gas 
furnaces are feasible, they require secondary heat exchangers that 
increase static pressure in the airstream and pressure drop within the 
heat exchanger. Further, Lennox stated that the additional resistance 
must be overcome with increased electrical power at all operating 
conditions, including cooling and ventilation mode. (Id. at pp. 6-7) 
Lennox stated that the measures to prevent freezing of condensate in 
weatherized gas furnaces and condensate disposal add cost and consume 
additional energy. (Id. at p. 7) Lennox commented that these methods 
include maintaining the temperature of the condensate system above 
freezing by either conditioning the condensate system using electric 
heat tape or routing the condensate disposal system through conditioned 
space. The commenter stated that the use of heat tape consumes 
additional energy. Lennox stated that routing the condensate disposal 
system through conditioned space is not technically feasible or 
economically viable for a weatherized product that is contained 
outdoors. (Id.) Lennox further commented that another method to prevent 
freezing in weatherized gas furnaces is to install a pit or trench 
condensate drainage system that extends below the frostline and also 
neutralizes the acidic condensate created during combustion. Lennox 
stated that the frost line in the United States varies greatly by 
region from 5'' in Georgia to 80'' in Minnesota. Lennox stated that the 
method of installing a pit or trench condensate drainage system that 
extends below the frostline and neutralizes the acidic condensate 
created during condensing combustion may work in some mild climates at 
a reasonable cost but would be expensive to install and maintain in 
colder climates. (Id.)
    In response, the Department notes the fact that condensing 
weatherized gas furnaces currently exist on the market demonstrates 
that they are technologically feasible. DOE accounts for costs that may 
be associated with the installation of condensing systems, including 
additional costs of heat tape

[[Page 83442]]

and/or a condensate pump suitable to meet the need of an unconditioned 
space, which is discussed further in section IV.E of this document. The 
financial feasibility of higher efficiency levels is discussed further 
in section V of this document.
    JCI commented it is unaware of any condensing MHOFs commercially 
available today. (JCI, No. 25 at p. 2) AHRI also commented that it is 
unaware of any commercially-available condensing MHOFs. (AHRI, No. 23 
at p. 5) AHRI commented that the feasibility of moving to a condensing 
heat exchanger for MHOFs is low. AHRI added that there are challenges 
with maintaining airflow options and footprint size to allow for an 
easy replacement. (Id.)
    In response, DOE agrees that there are currently no condensing 
MHOFs on the market, and the Department has not considered an 
efficiency level for MHOFs that requires a condensing heat exchanger as 
there are no data to indicate that it would be feasible for use in 
MHOFs.
d. Summary of Efficiency Levels Analyzed
    DOE presents AFUE efficiency levels analyzed along with the 
technologies that are expected to be used to increase energy efficiency 
above the baseline efficiency level for NWOFs, MHOFs, and WGFs in Table 
IV.3, Table IV.4 and Table IV.5, respectively.

    Table IV.3--AFUE Efficiency Levels and Technologies Used at Each
                Efficiency Level Above Baseline for NWOFs
------------------------------------------------------------------------
                                                      Description of
        Efficiency level            AFUE (%)      technologies typically
                                                       incorporated
------------------------------------------------------------------------
0--Baseline....................              83  See Table IV.2 for
                                                  baseline features.
1..............................              85  Baseline EL + Increased
                                                  heat exchanger area.
2..............................              87  EL 1 + Increased heat
                                                  exchanger area.
3--Max-tech....................              96  EL 2 + Addition of
                                                  condensing secondary
                                                  heat exchanger (and
                                                  associated components,
                                                  sensors, etc.) +
                                                  Constant-airflow BPM
                                                  motor.
------------------------------------------------------------------------


    Table IV.4--AFUE Efficiency Levels and Technologies Used at Each
                Efficiency Level Above Baseline for MHOFs
------------------------------------------------------------------------
                                                      Description of
        Efficiency level            AFUE (%)      technologies typically
                                                       incorporated
------------------------------------------------------------------------
0--Baseline....................              80  See Table IV.2 for
                                                  baseline features.
1..............................              83  Baseline EL + Increased
                                                  heat exchanger area.
2..............................              85  EL 1 + Increased heat
                                                  exchanger area.
3--Max-tech....................              87  EL 2 + Increased heat
                                                  exchanger area.
------------------------------------------------------------------------


    Table IV.5--AFUE Efficiency Levels and Technologies Used at Each
                Efficiency Level Above Baseline for WGFs
------------------------------------------------------------------------
                                                      Description of
               EL                   AFUE (%)      technologies typically
                                                       incorporated
------------------------------------------------------------------------
0--Baseline....................              81  See Table IV.2 for
                                                  baseline features.
1--Max-tech....................              95  Baseline EL + Addition
                                                  of condensing
                                                  secondary heat
                                                  exchanger (and
                                                  associated components,
                                                  sensors, etc.).
------------------------------------------------------------------------

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, and the availability and timeliness of purchasing the product 
on the market. The cost approaches are summarized as follows:
    [ballot] 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.
    [ballot] 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.
    [ballot] Price surveys: If neither a physical nor catalog teardown 
is feasible (e.g., for tightly integrated products such as fluorescent 
lamps, which are infeasible to disassemble and for which parts diagrams 
are unavailable), cost-prohibitive, or 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.
    In the present case, DOE conducted the analysis using a combination 
of physical and catalog teardowns. DOE estimated the manufacturer 
production cost (``MPC'') associated with each efficiency level to 
characterize the cost-efficiency relationship of improving consumer 
furnace performance, in terms of AFUE.
    The units selected for the teardown analysis spanned a range of 
manufacturers and efficiencies for commercially-available products that 
are the subject of this rulemaking. Products were selected that have 
characteristics of typical products on the market at a representative 
input capacity. WGFs selected for physical teardown generally had input 
capacities of approximately 80 thousand British thermal units per hour 
(``kBtu/h''), while oil units selected for physical teardown generally 
had input capacities of approximately 105 kBtu/h. These capacities were 
determined to be a

[[Page 83443]]

representative input capacity for WGFs and for NWOFs and MHOFs, 
respectively, based on information gathered as part of the market and 
technology assessment (see section IV.A of this document), as well as 
discussions with manufacturers. Where needed, catalog teardowns were 
also conducted to supplement the physical teardowns. DOE estimated the 
manufacturing cost for each furnace selected for teardown by 
disassembling the furnace and developing a bill of materials (``BOM''). 
The resulting BOM provides the basis for the MPC estimates for products 
at various efficiency levels spanning the full range of efficiencies 
from the baseline to max-tech.
    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 manufacturer selling price (``MSP'') 
is the price at which the manufacturer distributes a unit into 
commerce. DOE developed an average manufacturer markup by examining the 
annual Securities and Exchange Commission (``SEC'') 10-K reports filed 
by publicly-traded manufacturers primarily engaged in heating, 
ventilation, and air conditioning (``HVAC'') manufacturing whose 
combined product range includes oil and weatherized gas furnaces. The 
manufacturer markup estimates are consistent with the manufacturer 
markups developed for a final rule for furnace fan energy conservation 
standards published in the Federal Register on July 3, 2014. 79 FR 
38130. Specifically, DOE estimates the industry average manufacturer 
markup to be 1.35 for NWOFs, 1.29 for MHOFs, and 1.27 for WGFs.
a. Teardown Analysis
    For the teardown analysis, DOE used a total of 31 teardowns of 
consumer furnaces as the basis for calculating industry MPCs. The units 
DOE selected for teardown are manufactured in considerable volume, are 
commonly available, and have features that DOE believes are 
representative of the most common characteristics (i.e., input 
capacity, configuration, and heat exchanger type) of each product 
class. As discussed previously, most physical teardown units had input 
capacities of approximately 80 kBtu/h for WGFs or 105 kBtu/h for NWOFs 
and MHOFs, which DOE considers to be representative of those furnace 
product classes. To the extent possible, all major efficiency levels 
and technologies were captured in the selection of models for the 
teardown analysis. WGF and NWOF teardowns were considered separately.
    Due to the similarity observed in NWOF and MHOF designs available 
in the market, DOE tentatively concluded that the costs associated with 
increasing the energy efficiency of MHOFs are equivalent to the costs 
for NWOFs. A MHOF teardown was used to examine key differences between 
NWOFs and MHOFs and confirmed that the MPCs of MHOFs could be estimated 
based on the NWOF teardowns. Therefore, DOE based MPC estimates for 
MHOFs at each efficiency level analyzed largely on teardowns of NWOFs 
at that efficiency level.
    Whenever possible, DOE examined multiple models from a given 
manufacturer that capture different design options and used them as 
direct points of comparison. The teardown selections also minimized the 
incorporation of non-efficiency-related premium features, which 
otherwise could inflate the incremental manufacturing cost of achieving 
higher efficiency levels.
    DOE examined products with a variety of indoor blower motor 
technologies and combustion systems (i.e., single-stage, two-stage, or 
modulating). DOE also examined products with PSC, constant-torque BPM, 
and constant-airflow BPM indoor blower motors. As further discussed in 
section IV.B.2.b of this document, cost adders were developed for these 
technologies and applied in the downstream analyses to estimate the 
manufacturing cost of going from one technology to another with higher 
efficiency (e.g., using a constant-airflow BPM instead of a constant-
torque BPM, or two-stage combustion instead of single-stage 
combustion).
b. Cost Estimation Method
    DOE assigned costs of labor, materials, and overhead to each part, 
whether purchased or produced in-house. DOE then aggregated single-part 
costs into major assemblies (e.g., packaging, cabinet assembly, heat 
exchanger, burner system/gas train, exhaust subassembly, fan system, 
controls) and summarized these costs in a spreadsheet BOM. DOE repeated 
this same process for every physical and catalog teardown in the 
engineering analysis.
    Analytical inputs related to manufacturer practices and cost 
structure play an important role in estimating the final cost of a 
product. DOE used inputs regarding the manufacturing process parameters 
(e.g., equipment use, labor rates, tooling depreciation, and cost of 
purchased raw materials) to determine the value for each furnace 
component. DOE collected information on labor rates, tooling costs, raw 
material prices, and other factors to use as inputs into the cost 
estimates. DOE determined values for these parameters using internal 
expertise and confidential information available to its contractors, 
some of which was obtained via confidential interviews with 
manufacturers. For purchased parts, DOE estimates the purchase price 
based on volume-variable price quotations and detailed discussions with 
manufacturers and component suppliers. DOE then summed the values of 
the furnace components into assembly costs and, finally, the total MPC 
for the entire furnace.
    The MPC includes material, labor, and depreciation costs, as well 
as the overhead costs associated with the manufacturing facility. 
Material costs include both raw materials and purchased-part costs. 
Labor costs include fabrication, assembly, and indirect and overhead 
(burdened) labor rates. Depreciation costs include production equipment 
depreciation, tooling depreciation, and building depreciation. The 
overhead costs associated with the manufacturing facility include 
indirect process costs, utilities, equipment and building maintenance, 
and reworking defective parts/units.
    DOE determined the costs of raw materials based on manufacturer 
interviews, quotes from suppliers, and secondary research. Past results 
are updated periodically and/or inflated to present-day prices using 
indices from resources such as MEPS Intl.,\23\ PolymerUpdate,\24\ the 
U.S. Geologic Survey (``USGS''),\25\ and the Bureau of Labor Statistics 
(``BLS'').\26\ Metal raw material prices, such as stainless steel and 
other sheet metals, are estimated on the basis of five-year averages to 
smooth out spikes in demand. Other ``raw'' materials such as plastic 
resins, insulation materials, etc. are estimated on a current-market 
basis. For non-metal raw material prices, DOE used prices based on 
current market data (as of December 2022), rather than a 5-year 
average, because non-metal raw materials have not experienced the same

[[Page 83444]]

level of price volatility in recent years as metal raw materials.
---------------------------------------------------------------------------

    \23\ For more information on MEPS Intl, please visit: 
www.meps.co.uk/ (Last accessed Sept. 5, 2023).
    \24\ For more information on PolymerUpdate, please visit: 
www.polymerupdate.com (Last accessed Sept. 5, 2023).
    \25\ For more information on the USGS metal price statistics, 
please visit www.usgs.gov/centers/nmic/commodity-statistics-and-information (Last accessed Sept. 5, 2023).
    \26\ For more information on the BLS producer price indices, 
please visit: www.bls.gov/ppi/ (Last accessed Sept. 5, 2023).
---------------------------------------------------------------------------

    DOE characterized parts based on whether manufacturers fabricated 
them in-house or purchased them from outside suppliers. For fabricated 
parts, DOE estimated the price of intermediate materials (e.g., tube, 
sheet metal) and the cost of forming them into finished parts. For 
purchased parts, DOE estimated the purchase prices paid to the original 
equipment manufacturers (``OEMs'') of these parts, based on discussions 
with manufacturers during confidential interviews. Whenever possible, 
DOE obtained price quotes directly from the component suppliers used by 
furnace manufacturers whose products were examined in the engineering 
analysis. DOE determined that the components in Table IV.6 are 
generally purchased from outside suppliers.

                Table IV.6--Purchased Furnace Components
------------------------------------------------------------------------
             Assembly                     Purchased sub-assemblies
------------------------------------------------------------------------
Burner/Exhaust...................  Gas valve.
                                   Spark igniter.
                                   Draft inducer assembly.
Blower...........................  Indoor blower fan blade.
                                   Indoor blower fan motor.
Controls.........................  Control boards.
                                   Capacitors, transformers, contactors,
                                    switches, etc.
------------------------------------------------------------------------

    Certain factory parameters, such as fabrication rates, labor rates, 
and wages, also affect the cost of each unit produced. DOE factory 
parameter assumptions were based on internal expertise and manufacturer 
feedback. Table IV.7 lists the factory parameter assumptions used in 
the analysis. For the engineering analysis, these factory parameters, 
including production volume, are the same at every efficiency level. 
The production volume used at each efficiency level corresponds with 
the average production volume, per manufacturer, if 100 percent of all 
units manufactured were at that efficiency level. This production 
volume was estimated based on historical shipments. These assumptions 
are generalized to represent typical production and are not intended to 
model a specific factory.

                                    Table IV.7--Factory Parameter Assumptions
----------------------------------------------------------------------------------------------------------------
                Parameter                        Oil furnace  estimate                   WGF estimate
----------------------------------------------------------------------------------------------------------------
Actual Annual Production Volume (units/   5,000 units/year..................  500,000 units/year.
 year).
Purchased Parts Volume..................  5,000 units/year..................  100,000 units/year.
Workdays Per Year (days)................  250...............................  250.
Assembly Shifts Per Day (shifts)........  1.................................  2.
Fabrication Shifts Per Day (shifts).....  2.................................  2.
Fabrication Labor Wages ($/h)...........  16................................  16.
Assembly Labor Wages ($/h)..............  16................................  16.
Length of Shift (hrs)...................  8.................................  8.
Average Equipment Installation Cost (%    10%...............................  10%.
 of purchase price).
Fringe Benefits Ratio...................  50%...............................  50%.
Indirect to Direct Labor Ratio..........  33%...............................  33%.
Average Scrap Recovery Value............  30%...............................  30%.
Worker Downtime.........................  10%...............................  10%.
Burdened Assembly Labor Wage ($/h)......  24................................  24.
Burdened Fabrication Labor Wage ($/h)...  24................................  24.
Supervisor Span (workers/supervisor)....  25/1..............................  25/1.
Supervisor Wage Premium (over             30%...............................  30%.
 fabrication and assembly wage).
----------------------------------------------------------------------------------------------------------------

Indoor Blower Motor Costs
    As discussed in section IV.B.1.a of this document, the baseline 
design for WGFs includes a BPM motor. DOE research suggests that the 
predominant BPM indoor blower motors sold on the market today are 
either a constant-torque (``CT-BPM'') or a constant-airflow (``CA-
BPM'') design. Both types of motors rely on electronic variable-speed 
motor systems that are typically mounted in an external chassis to the 
back of the motor. CA-BPM motors utilize feedback control to adjust 
torque based on ESP in order to maintain a desired airflow. This 
differentiates them from CT-BPM motors, which will maintain torque and 
likely decrease airflow output in environments with high ESPs. CT-BPMs 
are capable of achieving airflows similar to CA-BPMs but are generally 
less expensive. Therefore, DOE considered the baseline design to 
include a CT-BPM motor for the WGF product class and determined the 
incremental cost of a CA-BPM motor.
    DOE's review of the market showed that PSC motors are still being 
used in some NWOFs and MHOFs, so the final MPC results are presented 
based on a PSC motor at the baseline through 87-percent AFUE. To 
account for the variety of motor technologies available on the market, 
DOE determined the incremental cost associated with use of various 
types of more-efficient BPM fan motors as compared to baseline PSC 
motors for NWOFs and MHOFs. Additionally, for NWOFs, a constant-airflow 
BPM indoor blower motor was implemented as the motor design option for 
the max-tech efficiency level because the only NWOF model on the market 
available at this level includes a constant-airflow BPM motor, and it 
is unclear if this level is achievable without a constant-airflow fan. 
For the NWOF efficiency levels below max-tech and for all MHOF 
efficiency levels, DOE calculated the additional cost to switch from a 
PSC blower motor to either a constant-torque or a constant-airflow BPM 
motor. As discussed in Chapter 8 of the November 2022 Preliminary 
Analysis TSD, these costs are applied in the LCC and PBP analyses to 
determine the MPC of a furnace with each motor technology in order to 
better represent typical costs to consumers for NWOFs and MHOFs. 
Constant-airflow BPM blower motors are sometimes used as a utility-
enhancing feature on units below the max-tech efficiency level. The 
adders are outlined in Table IV.8.

[[Page 83445]]



                                  Table IV.8--Cost Adders for BPM Blower Motors
----------------------------------------------------------------------------------------------------------------
                                                                                    Incremental     Incremental
                                                                  Input capacity   cost increase   cost increase
                          Product class                              (kBtu/h)       for BPM-CT      for BPM-CA
                                                                                      (2022$)         (2022$)
----------------------------------------------------------------------------------------------------------------
NWOF, MHOF......................................................             105          $30.65          $80.48
WGF.............................................................              80           37.94           59.92
----------------------------------------------------------------------------------------------------------------

Multistage Furnaces
    The market for WGFs contains a significant number of two-stage 
furnaces that are rated at the same efficiency as single-stage 
furnaces. DOE believes consumers sometimes choose to purchase two-stage 
products for the additional thermal comfort offered by furnaces with 
multiple stages of heating output. DOE determined that oil units with 
multi-staging were rare and, thus, not representative of the market, so 
adders were not developed for the NWOF and MHOF product classes. Where 
applicable, the additional cost to change to a two-stage furnace 
includes the added cost of a two-stage gas valve, a two-speed inducer 
assembly, an additional pressure switch, and additional controls and 
wiring. The additional cost to change to a modulating furnace includes 
the added cost of a modulating gas valve, an inducer assembly, an 
upgraded pressure switch, and additional controls and wiring. The 
incremental costs to implement multi-staging in WGFs are outlined in 
Table IV.9.

           Table IV.9--Multi-Staging Incremental Cost Increase
------------------------------------------------------------------------
                                                        Incremental cost
                                                          increase for
                        Adder                            multi-staging
                                                            (2022$)
------------------------------------------------------------------------
Two-Stage............................................             $21.07
Modulating...........................................              75.36
------------------------------------------------------------------------

Low-NOX and Ultralow-NOX Furnaces
    Some furnaces are marketed as ``low-NOX,'' which 
indicates that their NOX emissions are less than 40 
nanograms of NOX per joule of useful heat energy (``ng/J''). 
Certain local jurisdictions require natural gas furnaces to comply with 
NOX emissions restrictions as low as 14 ng/J,\27\ which is 
referred to as ``ultralow-NOX.'' A common method of reducing 
furnace NOX emissions is to slightly delay the natural gas 
combustion process, which in turn produces a cooler flame and results 
in suppressed formation of NOX.\28\ DOE has observed during 
its teardown analysis that to achieve low-NOX operation, 
manufacturers implement low-NOX baffles. For ultralow-
NOX operation, DOE used NWGF teardowns to approximate the 
cost to implement this technology option in WGFs, as DOE understands 
that the methodology would be the same for both product classes. 
Through these teardowns of NWGFs, DOE has observed that in order to 
achieve ultralow-NOX operation, the in-shot burners 
typically used in residential furnaces were replaced with a mesh premix 
burner. In addition, the model used a variable-speed BPM inducer fan 
motor. DOE identified an ultralow-NOX WGF on the market and 
compared the burner construction for the torn-down NWGF and the 
ultralow-NOX WGF. DOE found that the approach used for 
achieving ultralow-NOX in WGFs is similar to that used in 
NWGFs. DOE also determined that oil units with ultralow-NOX 
operation were rare and, thus, not representative of the market, so 
adders were not developed for the NWOF and MHOF product classes.
---------------------------------------------------------------------------

    \27\ Rule 1111 of the South Coast Air Quality Management 
District (``SCAQMD'') of southern California currently requires that 
all NWGF and MHGF not exceed a 14 ng/J restriction on NOX 
emissions. For more information on Rule 1111, see www.aqmd.gov/docs/default-source/rule-book/reg-xi/rule-1111.pdf?sfvrsn=4 (Last 
accessed Sept. 5, 2023).
    \28\ U.S. Environmental Protection Agency. Natural Gas 
Combustion (Available at: www3.epa.gov/ttnchie1/ap42/ch01/final/c01s04.pdf) (Last accessed June 28, 2023).
---------------------------------------------------------------------------

    Using raw material price data, teardown data from NWGFs, and 
manufacturing expertise DOE estimated the manufacturing cost difference 
between standard NOX burners and low-NOX and 
ultralow-NOX burners. For low-NOX, MPC cost 
values were developed for the implementation of low-NOX 
baffles in WGFs at the representative input capacity of 80 kBtu/h. For 
ultralow-NOX, MPC values were developed for the 
implementation of a mesh premix burner and variable-speed BPM inducer 
fan (along with other related components necessary). The resulting MPC 
estimates to achieve low-NOX and ultralow-NOX 
operation are shown in Table IV.10.
    In the LCC and PBP analysis (see section IV.E of this document), 
DOE estimated the fractions of furnaces that are installed in 
jurisdictions that require low-NOX or ultralow-
NOX compliance and applied these cost adders to those 
fractions of furnace installations accordingly. The application of 
these adders is discussed in more detail in Chapter 8 of the November 
2022 Preliminary Analysis TSD.

     Table IV.10--Additional MPCs for Low-NOX and Ultralow-NOX WGFs
------------------------------------------------------------------------
                          Adder                            Value (2022$)
------------------------------------------------------------------------
Low-NOX.................................................           $3.10
Ultralow-NOX............................................          113.68
------------------------------------------------------------------------

Shipping Costs
    Freight is not a manufacturing cost, but because it is a 
substantial cost incurred by the manufacturer, DOE accounts for 
shipping costs separately from other costs. DOE calculated shipping 
costs based on a typical 53-foot straight-frame trailer with a storage 
volume of 4,240 cubic feet.
    DOE first calculated the cost per cubic foot of space on a trailer 
based on a cost of $3,643 per shipping load and the standard dimensions 
of a 53-foot trailer. This cost was determined based on a combination 
of full truck load (``FTL'') freight quotations, manufacturer feedback, 
and BLS producer price indices for the ``fuels and related products and 
power'' grouping.\29\ Then, DOE examined the average sizes of products 
in each product class at each efficiency and capacity combination 
analyzed. DOE estimated the shipping costs by multiplying the product 
volume by the cost per cubic foot of space on the trailer. Furnace 
dimensions typically do not change as a result of increases in 
efficiency, and accordingly, DOE's shipping costs show no change across 
efficiency levels. In determining volumetric shipping costs, DOE also 
used manufacturer feedback regarding product mix on each trailer, 
packing efficiency, and methods and equipment used to load the trailers 
to revise the shipping costs. Table IV.11 shows the

[[Page 83446]]

shipping costs for the products analyzed in this rulemaking.
---------------------------------------------------------------------------

    \29\ U.S. Department of Labor, Bureau of Labor Statistics, 
Producer Price Indices (Available at: data.bls.gov/timeseries/WPU057303?data_tool=XGtable) (Last accessed Feb. 17, 2022).

                  Table IV.11--Shipping Costs Per Unit
------------------------------------------------------------------------
                                         Representative      Per-unit
             Product class               capacity (kBtu/   shipping cost
                                               h)             (2022$)
------------------------------------------------------------------------
WGF...................................                80           55.69
NWOF..................................               105           19.92
MHOF..................................               105           19.92
------------------------------------------------------------------------

3. Cost-Efficiency Results
    Using the MPCs for individual teardowns and adders described in 
section IV.B.2.b of this document, DOE develops aggregated MPCs for 
each product class. The final results of the AFUE engineering analysis 
are the MPCs for WGFs, NWOFs, and MHOFs at each efficiency level. The 
cost-efficiency results are shown in tabular form in Table IV.12 
through Table IV.14 as efficiency versus MPC and MSP. These results 
include the furnace fan and combustion system staging incorporated into 
most furnace designs.

  Table IV.12--Cost-Efficiency Data for WGFs With a Constant-Torque BPM
              Indoor Blower Motor and a Single-Stage Burner
------------------------------------------------------------------------
                     AFUE                       MPC (2022$)  MSP (2022$)
------------------------------------------------------------------------
81............................................    $1,412.32    $1,793.65
95............................................     1,505.40     1,911.85
------------------------------------------------------------------------


  Table IV.13--Cost-Efficiency Data for NWOFs With a PSC Indoor Blower
                     Motor and a Single-Stage Burner
------------------------------------------------------------------------
                     AFUE                       MPC (2022$)  MSP (2022$)
------------------------------------------------------------------------
83............................................      $700.73      $945.98
85............................................       730.94       986.77
87............................................       761.16     1,027.57
96............................................     1,334.85     1,802.05
------------------------------------------------------------------------


  Table IV.14--Cost-Efficiency Data for MHOFs With a PSC Indoor Blower
                     Motor and a Single-Stage Burner
------------------------------------------------------------------------
                     AFUE                       MPC (2022$)  MSP (2022$)
------------------------------------------------------------------------
80............................................      $664.47      $857.16
83............................................       709.79       915.63
85............................................       740.01       954.61
87............................................       770.23       993.59
------------------------------------------------------------------------

C. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) 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 
mark up the price of the product to cover business costs and profit 
margin. Before developing markups, DOE defines key market participants 
and identifies distribution channels.
    For the subject consumer furnaces, the main parties in the 
distribution chains are: (1) manufacturers; (2) wholesalers or 
distributors; (3) retailers; (4) mechanical contractors; (5) builders; 
(6) manufactured home manufacturers, and (7) manufactured home dealers/
retailers. For this NOPD, DOE maintained the same approach as in the 
preliminary analysis. DOE characterized two distribution channel market 
segments to describe how NWOFs, MHOFs, and WGFs pass from the 
manufacturer to residential and commercial consumers: \30\ (1) 
replacements and new owners \31\ and (2) new construction.
---------------------------------------------------------------------------

    \30\ DOE estimates that five percent of WGFs and three percent 
of NWOFs are installed in commercial buildings.
    \31\ New owners are new furnace installations in buildings that 
did not previously have a NWOF, MHOF, or WGF, or existing owners 
that are installing an additional consumer furnace. These primarily 
consist of households that add or switch to these furnaces during a 
major remodel.
---------------------------------------------------------------------------

    In replacement and new owner market, the primary distribution 
channel for NWOFs, MHOFs, and WGFs is characterized as follow:

Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr] 
Consumer

    DOE estimates that the above distribution channel applies to a 
majority of the shipment of the subject consumer furnaces.\32\ However, 
the retail distribution channel (including internet sales) has grown 
significantly in the last five years (previously it was negligible), 
and some consumers purchase the appliance directly and then have 
contractors install it. Accordingly, DOE considered the following 
additional distribution channels: \33\
---------------------------------------------------------------------------

    \32\ In the residential sector, DOE estimates that this 
distribution channel is applicable to 90 percent of the shipments 
for NWOFs and MHOFs, and 80 percent for WGFs; in commercial sector, 
it is applied to 75 percent of NWOF and 70 percent of WGF 
distributions.
    \33\ In the residential sector, DOE estimates that these two 
distribution channels combined are applicable to 5 percent of the 
shipments for NWOFs and MHOFs, and 15 percent for WGFs (in mobile 
home applications, 10 percent of the WGFs distributed to mobile 
homes is assumed to go through these channels); in the commercial 
sector, they are applied to 10 percent of NWOF and 15 percent of WGF 
distributions.

Manufacturer [rarr] Retailer [rarr] Consumer
Manufacturer [rarr] Retailer [rarr] Mechanical Contractor [rarr] 
Consumer

    For mobile home applications, there is another distribution channel 
considered on top of the aforementioned, where the MHOF or WGF is 
purchased via a mobile home specialty retailer or dealer: \34\
---------------------------------------------------------------------------

    \34\ DOE estimates that 5 percent of MHOFs and 10 percent of 
WGFs that go to mobile homes are distributed through this channel.

Manufacturer [rarr] Mobile Home Specialty Retailer/Dealer [rarr] 
---------------------------------------------------------------------------
Consumer

    In the new construction market, DOE identified three primary 
distribution channels that involve builders, or manufactured home 
builders when considering mobile home applications:

Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr] 
Builder [rarr] Consumer
Manufacturer [rarr] Wholesaler [rarr] Builder [rarr] Consumer
Manufacturer [rarr] Mobile Home Manufacturer [rarr] Mobile Home Dealer 
[rarr] Consumer

    For both the replacements and new owners and the new construction 
markets, DOE additionally considered the national accounts or direct-
from-manufacturer distribution channel, where the manufacturer through 
a wholesaler sells directly to consumers.\35\
---------------------------------------------------------------------------

    \35\ The national accounts channel where the buyer is the same 
as the consumer is mostly applicable to NWOFs and WGFs installed in 
small to mid-size commercial buildings, where on-site contractors 
purchase equipment directly from wholesalers at lower prices due to 
the large volume of equipment purchased, and perform the 
installation themselves. DOE's analysis assumes that approximately 5 
and 15 percent of NWOFs and WGFs installed in the residential and 
commercial sector, respectively, use national accounts distribution 
channel for replacements. For new construction, DOE assumes 10 
percent of the subject furnaces installed in residential sector and 
20 percent installed in commercial are distributed through national 
accounts.


[[Page 83447]]


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

Manufacturer [rarr] Wholesaler (National Account) [rarr] Buyer [rarr] 
Consumer

    DOE developed baseline and incremental markups for each participant 
in the distribution chain to ultimately determine the consumer purchase 
cost. 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.\36\
---------------------------------------------------------------------------

    \36\ 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.
---------------------------------------------------------------------------

    Lennox stated that the application of lower incremental markups for 
increased consumer furnace standard levels considered in the TSD should 
be reviewed. Lennox stated that a significantly discounted incremental 
markup for high EL levels from baseline markup is not logical or 
aligned with business practices. (Lennox, No. 26 at p. 8) Lennox added 
that the assumption of reduced incremental markups for higher 
efficiency standards is contrary to normal industry practice and the 
expectations of its shareholders. (Lennox, No. 26 at p. 8)
    In response, DOE's incremental markup approach assumes that an 
increase in profitability, which is implied by keeping a fixed markup 
when the product price goes up, is unlikely to be viable over time in 
reasonably competitive markets. DOE recognizes that actors in the 
distribution chains are likely to seek to maintain the same markup on 
appliances in response to changes in manufacturer sales prices after an 
amendment to energy conservation standards. However, DOE believes that 
retail pricing is likely to adjust over time as those actors are forced 
to readjust their markups to reach a medium-term equilibrium in which 
per-unit profit is relatively unchanged before and after standards are 
implemented.
    DOE acknowledges that markup practices in response to amended 
standards are complex and vary with business conditions. However, DOE's 
analysis necessarily only considers changes in appliance offerings that 
occur in response to amended standards. DOE continues to maintain that 
its assumption that standards do not facilitate a sustainable increase 
in profitability is reasonable. Chapter 6 of the November 2022 
Preliminary Analysis TSD provides details on DOE's development of 
markups for oil and weatherized gas furnaces.\37\
---------------------------------------------------------------------------

    \37\ In this NOPD, DOE is referencing the November 2022 
Preliminary TSD for general methodology; note that some inputs have 
been updated for this NOPD.
---------------------------------------------------------------------------

D. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of oil and weatherized gas furnaces at different 
efficiencies in representative U.S. residential buildings, commercial 
buildings, and residential mobile homes, and to assess the energy 
savings potential of increased oil and weatherized gas furnace 
efficiency. The energy use analysis estimates the range of energy use 
of oil and weatherized gas furnaces 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 
potential energy savings and the savings in consumer operating costs 
that could result from adoption of amended or new standards.
    DOE estimated the annual energy consumption of oil and weatherized 
gas consumer furnaces at specific energy efficiency levels across a 
range of climate zones, building characteristics, and space heating 
needs. The annual energy consumption includes the natural gas, liquid 
petroleum gas (``LPG''), oil, and electricity, as applicable, used by 
the furnace.
    To determine the field energy use of the subject furnaces, DOE 
developed a building sample based on the Energy Information 
Administration's (``EIA'') 2015 Residential Energy Consumption Survey 
(``RECS 2015'') \38\ and 2012 Commercial Building Energy Consumption 
Survey (``CBECS 2012'').39 40 DOE used RECS 2015-reported or 
CBECS 2012-reported heating energy consumption (based on the existing 
heating system) to calculate the heating load of each household or 
building. The heating load represents the amount of heating required to 
keep a housing unit or building comfortable throughout an average year. 
DOE assigned the energy efficiency of existing systems based on the 
design of the distribution systems, a historical distribution of energy 
efficiencies for NWOFs, MHOFs, and WGFs, and data about the age of the 
existing furnace. The estimation of heating loads also required 
calculating the electricity consumption of the blower, because heat 
from the operation of the blower contributes to space heating. In 
addition, DOE made adjustments based on historical weather data, 
projections of building shell efficiency, and building square footage, 
as well as for homes that had secondary heating equipment that used the 
same fuel as the furnace. To complete the analysis, DOE calculated the 
anticipated energy consumption of alternative (more energy-efficient) 
products if they were to replace existing systems in each housing unit 
or commercial building.
---------------------------------------------------------------------------

    \38\ Energy Information Administration (EIA), 2015 Residential 
Energy Consumption Survey (RECS). (Available at: www.eia.gov/consumption/residential/) (Last accessed August 1, 2023).
    \39\ Energy Information Administration (EIA), 2012 Commercial 
Buildings Energy Consumption Survey (CBECS). (Available at: 
www.eia.gov/consumption/commercial/) (Last accessed August 1, 2023).
    \40\ At the time DOE performed the analyses underlying this 
proposed determination, the RECS 2015 and CBECS 2012 were the latest 
available full data releases.
---------------------------------------------------------------------------

    DOE also included the electricity use of auxiliary equipment, such 
as condensate pumps and heat tape, which are sometimes installed with 
higher-efficiency products. The electricity consumption of the 
auxiliary equipment (``ElecUseAux'') is added to the total 
electricity consumption.
    Chapter 7 of the November 2022 Preliminary Analysis TSD provides 
details on DOE's energy use analysis for oil and weatherized gas 
furnaces.
    AHRI commented that standard heat tape has an average energy 
consumption of 9 W/ft, adding that this additional load would increase 
energy use and is not accounted for in DOE's energy use analysis for 
these products. AHRI stated that there are additional challenges 
surrounding prevention of freezing condensate for WGF units, and 
although AHRI suggested that electric strip heating could be used to 
overcome this problem, such solution would add electrical losses. 
(AHRI, No. 23 at p. 5)
    In response, DOE accounted for heat tape use in cases when a WGF is 
installed in an outdoor environment that could face freezing 
conditions. DOE assumed that such installations would occur in 
locations facing freezing conditions based on the outdoor heating

[[Page 83448]]

design temperature (or the 99th percentile). For the WGF sample, which 
is largely in warmer parts of the country, DOE estimated that about 5 
percent of those installations would require heat tape, and DOE assumed 
that a larger fraction (around 50 percent) would deal with freeze 
protection through other methods, such as running the condensate lines 
through the ground or inside the WGF unit and into the building. For 
the energy use analysis, DOE used on average 45 watts (or 9 W/ft times 
5 feet) for the energy consumption of installations requiring heat 
tape. For another 5 percent of installations, DOE accounted for the use 
of a condensate pump with an average energy consumption of 60 watts. 
DOE notes that any additional installation costs would not change DOE's 
tentative decision not to amend standards for the subject products.

E. 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 
oil and weatherized gas furnaces. 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:
    [ballot] Life-Cycle Cost (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.
    [ballot] Payback Period (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 oil and weatherized gas furnaces 
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 
housing units and, where appropriate, commercial buildings. As stated 
previously, DOE developed household and commercial building samples 
from RECS 2015 and CBECS 2012. For each sample household or commercial 
building, DOE determined the energy consumption for the oil and 
weatherized gas furnaces and the appropriate energy price. By 
developing a representative sample of households and commercial 
buildings, the analysis captured the variability in energy consumption 
and energy prices associated with the use of oil and weatherized gas 
furnaces.
    Inputs to the LCC calculation include the installed cost to the 
consumer, operating expenses, the lifetime of the product, and the 
discount rate that applies to projected expenses. 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 (where appropriate)--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. Inputs to the 
payback period calculation include the installed cost to the consumer 
and first year operating expenses. DOE created distributions of values 
for installation cost, repair and maintenance, product lifetime, and 
discount rates 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 oil, electric, and 
weatherized gas furnace user samples. For this determination, the Monte 
Carlo approach is implemented in MS Excel together with the Crystal 
BallTM add-on.\41\ The model calculated the LCC and PBP for 
products at each efficiency level for 10,000 furnace installations in 
housing units or commercial buildings 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 are projected to purchase more-efficient furnaces than 
the baseline furnace in the simulation, DOE avoids overstating the 
potential benefits from increasing product efficiency.
---------------------------------------------------------------------------

    \41\ Crystal BallTM is a 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 August1, 2023).
---------------------------------------------------------------------------

    DOE calculated the LCC and PBP for all consumers of oil and 
weatherized gas furnaces as if each were to purchase a new product in 
the expected first year of required compliance with new or amended 
standards. Any amended standards would apply to oil and weatherized gas 
furnaces manufactured five years after the date on which any new or 
amended standard is published in the Federal Register. (42 U.S.C. 
6295(m)(4)(A)(ii)) For purposes of its analysis, DOE used 2030 as the 
first year of compliance with any amended standards for oil and 
weatherized gas furnaces.
    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 how 
all inputs to the LCC and PBP analyses are applied, are contained in 
chapter 8 of the November 2022 Preliminary Analysis TSD and its 
appendices.

[[Page 83449]]



 Table IV.15--Summary of Inputs and Methods for the LCC and PBP Analysis
                                    *
------------------------------------------------------------------------
               Input                            Source/method
------------------------------------------------------------------------
Product Cost......................  Derived by multiplying MPCs by
                                     manufacturer and distribution chain
                                     markups and sales tax, as
                                     appropriate. Used historical data
                                     to derive a price-scaling index to
                                     project product costs.
Installation Costs................  Baseline installation cost
                                     determined with data from RSMeans
                                     2023, manufacturer literature, and
                                     expert consultant. DOE assumed
                                     increased installation costs for
                                     condensing furnaces.
Annual Energy Use.................  The annual energy consumption per
                                     unit at each efficiency level (see
                                     section IV.D of this document).
                                     Variability: Based on RECS 2015 and
                                     CBECS 2012.
Energy Prices.....................  Natural Gas: Based on EIA's Natural
                                     Gas Navigator data for 2022 and
                                     RECS 2015 and CBECS 2012 billing
                                     data.
                                    Propane and Fuel Oil: Based on EIA's
                                     State Energy Data System (``SEDS'')
                                     for 2021.
                                    Electricity: Based on EIA's Form 861
                                     data for 2022 and RECS 2015 and
                                     CBECS 2012 billing data.
                                    Variability: State energy prices
                                     determined for residential and
                                     commercial applications.
                                    Marginal prices used for natural
                                     gas, propane, and electricity
                                     prices.
Energy Price Trends...............  Residential and commercial prices
                                     were escalated by using EIA's 2023
                                     Annual Energy Outlook (AEO 2023)
                                     forecasts to estimate future energy
                                     prices. Escalation was performed at
                                     the Census Division level.
Repair and Maintenance Costs......  Baseline installation cost
                                     determined with data from RSMeans
                                     2023, manufacturer literature, and
                                     expert consultant. DOE assumed
                                     increased repair and maintenance
                                     costs for condensing furnaces.
Product Lifetime..................  Based on shipments data, multi-year
                                     RECS, American Housing Survey,
                                     American Home Comfort Survey data.
                                     Average: 20.2-22.5 years
Discount Rates....................  For residential end users, approach
                                     involves identifying all possible
                                     debt or asset classes that might be
                                     used to purchase the considered
                                     appliances or might be affected
                                     indirectly. Primary data source was
                                     the Federal Reserve Board's Survey
                                     of Consumer Finances. For
                                     commercial end users, DOE
                                     calculates commercial discount
                                     rates as the weighted average cost
                                     of capital using various financial
                                     data.
Compliance Date...................  2030.
------------------------------------------------------------------------
* Note: References for the data sources mentioned in this table are
  provided in the sections following the table or in chapter 8 of the
  November 2022 Preliminary Analysis 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.
    DOE estimated product prices in the year of compliance by using a 
least-squares power-law fit on the inflation-adjusted, unified price 
index (historical Producer Price Index (``PPI'') data for warm-air 
furnaces from the Bureau of Labor Statistics (``BLS'') spanning the 
time period 1990-2018 versus cumulative shipments.\42\
---------------------------------------------------------------------------

    \42\ U.S. Department of Labor, Bureau of Labor Statistics, 
Produce Price Indices Series ID PCU333415333415C (Available at: 
www.bls.gov/ppi/) (Last accessed August 1, 2023).
---------------------------------------------------------------------------

    In order to improve real-world representativeness, NYSERDA 
recommended that DOE consider using piecewise power-law curves for 
different time intervals to estimate the learning rate parameter in the 
LCC analysis. NYSERDA provided data to explain that prices decreased 
until 2017 and then started to increase. NYSERDA added that one 
possible explanation for this is that growing economies are consuming 
more raw materials that go into manufacturing furnaces, and such an 
increase in global aggregate demand for raw materials exerts upward 
pressure on product prices. The commenter explained that piecewise 
power-law curves are a common approach in cases where there is a 
reversal in directionality of trends and cited an example journal 
article. NYSERDA commented that using one power-law curve before 2017 
and another after would more accurately capture the reduction in 
furnace prices in the future. (NYSERDA, No. 19 at pp. 3-4)
    DOE reviewed NYSERDA's suggestion for an alternative price learning 
approach; however, insufficient data are available to implement the 
approach for the products considered in this rulemaking. In addition, 
the recommendation to segment the curve before and after 2017 is 
similar to the alternative price scenarios that DOE typically explores 
when proposing or finalizing amended standards, but in this case, DOE 
has tentatively determined not to amend standards. For these reasons, 
DOE has not changed its methodology for this NOPD.
2. Installation Cost
    The installation cost is the expense to the consumer of installing 
the furnace, in addition to the cost of the furnace itself. 
Installation cost includes all labor, overhead, and any miscellaneous 
materials and parts needed that are associated with the replacement of 
an existing furnace or the installation of a furnace in a new home, as 
well as delivery of the new furnace, removal of the existing furnace, 
and any applicable permit fees. Higher-efficiency furnaces may require 
a consumer to incur additional installation costs. DOE used data from 
RSMeans,\43\ manufacturer literature, and expert consultants to 
estimate the installation cost, including labor costs, for oil and 
weatherized gas furnaces. DOE's analysis of installation costs 
accounted for regional differences in labor costs by aggregating city-
level labor rates from RSMeans into the 50 distinct State plus 
Washington DC to match RECS 2015 and CBECS 2012 data. The installation 
cost methodology accounts for all potential installation cases, 
including when a noncondensing furnace is replaced with a condensing 
furnace, with particular attention to venting issues in replacement 
applications (see descriptions which follow). The installation cost 
also depends on the furnace installation location, which DOE determined 
using information from RECS 2015 and CBECS 2012.
---------------------------------------------------------------------------

    \43\ RSMeans Company Inc., RSMeans Cost Data. Kingston, MA 
(2023) (Available at: www.rsmeans.com/products/books/2023-cost-data-books) (Last accessed August 1, 2023).
---------------------------------------------------------------------------

    For NWOF replacement installations, DOE included a number of 
additional costs (``adders'') for a fraction of the sample households 
that have particular features. For noncondensing furnaces, these 
additional costs included updating flue vent connectors, vent resizing, 
and chimney relining. For condensing furnaces, these additional costs 
included adding a new flue vent

[[Page 83450]]

(PVC), adding combustion air vent for direct vent installations (PVC), 
adding concealing vent pipes for indoor installations, addressing an 
orphaned water heater (by updating flue vent connectors, vent resizing, 
or chimney relining), and removing condensate, all based on 
manufacturer installation manuals and expert consultant input. Freeze 
protection (heat tape) is accounted for in the cost of condensate 
removal for a fraction of NWOFs installed in unconditioned attics.
    For WGF installations, DOE included additional cost adders for 
condensing WGFs to dispose of the condensate created and to prevent 
freezing of the condensate, as the entire product is outdoors based on 
manufacturer installation manuals, field study reports, and expert 
consultant input. DOE also accounted for a fraction of installations in 
colder climates that could require freeze protection (heat tape), a 
condensate line being buried below the frost line, or a condensate 
pump.
    AHRI commented that for WGFs installed in rooftop applications, 
heated drain lines are needed for winter use to avoid building water 
damage. AHRI added that condensate lines running within the unit are 
difficult to access and could have the potential to trap condensate. 
(AHRI, No. 23 at p. 5) JCI stated that while DOE considered the use of 
heat tape, the practical application/maintenance of heat tape internal 
to installed systems poses an undue installation and maintenance 
burden. (JCI, No. 25 at p. 2)
    As explained in section IV.D of this document, DOE accounted for 
heat tape use in cases when a WGF is installed in an outdoor 
environment that could face freezing conditions. DOE assumed that the 
installation location would be facing freezing conditions based on the 
outdoor heating design temperature (or the 99th percentile). For the 
WGF sample, which is largely in warmer parts of the country, DOE 
estimated that about five percent would require heat tape. For another 
five percent of installations, DOE accounted for the use of a 
condensate pump. Furthermore, DOE accounts for other condensate costs 
such as adding condensate piping, running condensate lines through the 
ground or inside the WGF unit and into the building, using condensate 
neutralizer, adding an electrical outlet for heat tape or condensate 
pump, adding a drain pan, and adding a non-corrosive drain. On average, 
the installation cost adder across these scenarios is $110.
    For further information on the derivation of installation costs, 
see chapter 7 of the November 2022 Preliminary Analysis TSD.
3. Annual Energy Consumption
    For each sampled household or commercial building, DOE determined 
the energy consumption for oil and weatherized gas furnace at different 
efficiency levels using the approach described previously in section 
IV.D of this document.
4. Energy Prices
    DOE derived 2022 annual residential and commercial electricity 
prices by state from EIA Form 861M data.\44\ DOE obtained 2022 annual 
residential and commercial natural gas prices by state from EIA's 
Natural Gas Navigator.\45\ DOE collected 2021 average LPG and fuel oil 
prices by state from EIA's 2021 State Energy Consumption, Price, and 
Expenditures Estimates (``SEDS'') and scaled to 2022 prices using 
AEO2023 data.\46\ To determine monthly prices for use in the analysis, 
DOE developed monthly energy price factors for each fuel based on long-
term monthly price data. Monthly electricity and natural gas prices 
were adjusted using seasonal marginal price factors to determine 
monthly marginal electricity and natural gas prices. These marginal 
energy prices were used to determine the cost to the consumer of the 
change in energy consumed. Because marginal price data is only 
available for residential electricity and natural gas, DOE only 
developed marginal monthly prices for these fuels. For LPG and fuel 
oil, DOE used average monthly prices.
---------------------------------------------------------------------------

    \44\ U.S. Department of Energy-Energy Information 
Administration, Form EIA-861M (formerly EIA-826) detailed data 
(2022) (Available at: www.eia.gov/electricity/data/eia861m/) (Last 
accessed August 1, 2023).
    \45\ U.S. Department of Energy-Energy Information 
Administration, Natural Gas Navigator (2022) (Available at: 
www.eia.gov/naturalgas/data.php) (Last accessed August 1, 2023).
    \46\ U.S. Department of Energy-Energy Information 
Administration, 2021 State Energy Data System (SEDS) (2021) 
(Available at: www.eia.gov/state/seds/) (Last accessed August 1, 
2023).
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 2022 
energy prices by the projection of annual average price changes for 
each state from the Reference case in AEO2023, which has an end year of 
2050.\47\ To estimate price trends after 2050, DOE used the average 
annual rate of change in prices from 2046 through 2050. See chapter 8 
of the November 2022 Preliminary Analysis TSD for details.
---------------------------------------------------------------------------

    \47\ EIA, Annual Energy Outlook 2023 with Projections to 2050 
(Available at: www.eia.gov/forecasts/aeo/) (Last accessed June 1, 
2023).
---------------------------------------------------------------------------

    NYSERDA recommended that DOE consider applying a correction factor 
to account for potential gaps between forecasted prices and actual 
prices for energy, particularly in oil and natural gas. NYSERDA 
provided data depicting the heating oil prices within New York over a 
23-year period and noted that there is significant variation in the 
time series. The commenter encouraged DOE to assemble multiple AEO 
reports for historic forecasts to determine a correction factor based 
on the comparison of actual prices to forecasted prices. NYSERDA added 
that this correction factor could then be applied to future forecasted 
prices to produce a more accurate result while still using EIA's price 
forecasts. (NYSERDA, No. 19 at pp. 4-5)
    In response to NYSERDA, DOE acknowledges that forecasted prices do 
not always accurately predict future prices. However, DOE does not 
agree that past discrepancies between the two can reliably be used to 
adjust EIA's forecasts, as there is not a firm basis for assuming that 
historic factors will develop in the same way in the future. For this 
reason, DOE is maintaining its practice of relying on AEO's energy 
price forecasts.
    The Joint Commenters reiterated their comments made in response to 
DOE's 2022 Request for Information pertaining to concerns with DOE's 
reliance on allegedly incorrect projections of natural gas price 
trends, marginal residential natural gas prices, and systematic 
problems with DOE's economic analysis. The Joint Commenters added that 
these earlier comments highlight flaws in DOE's process and stated that 
these flaws must be addressed both in this and future rulemakings 
before proposing any new minimum efficiency standards for appliances. 
(Joint Commenters, No. 24 at p. 3)
    In response to the Joint Commenters, DOE acknowledges that past 
projections of natural gas prices have not matched actual prices in 
recent years, but DOE maintains that this is due to factors that were 
difficult to predict and not to any flaws in the model that is used to 
develop AEO energy price projections, or to biases with regard to 
assumptions.
5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. The 
maintenance and repair costs (including labor hours, component costs, 
and frequency) at each considered efficiency level are derived based on 
2023 RSMeans Facilities Maintenance and

[[Page 83451]]

Repair Data,\48\ manufacturer literature, consultant input, and 
industry reports. DOE also accounted for regional differences in labor 
costs based on these 2023 RSMeans data.
---------------------------------------------------------------------------

    \48\ RSMeans Company Inc., RSMeans Facilities Maintenance & 
Repair Cost Data (2023) (Available at: www.rsmeans.com/) (Last 
accessed August 1, 2023).
---------------------------------------------------------------------------

    DOE assumes that condensing furnaces have a higher maintenance cost 
than noncondensing furnaces, but that this maintenance cost is the same 
at all noncondensing or condensing efficiency levels within each 
product class. The additional maintenance cost for condensing furnaces 
includes maintenance tasks related to the condensate withdrawal system 
(such as condensate pump or condensate neutralizer filter) and 
additional maintenance related to the cleaning or checking of the heat 
exchanger (in particular, for condensing oil-fired furnaces using high-
sulfur fuel oil).
    DOE also assumes that condensing furnaces have a higher repair cost 
than noncondensing furnaces, but the repair cost is the same at all 
non-condensing or condensing efficiency levels within each product 
class.
    For more details on DOE's methodology for calculating maintenance 
and repair costs, including all online resources reviewed, see appendix 
8E of the November 2022 Preliminary Analysis TSD.
6. Product Lifetime
    Product lifetime is the age at which an appliance is retired from 
service. DOE conducted an analysis of furnace lifetimes based on the 
methodology described in a recent journal paper.\49\ For this analysis, 
DOE relied on RECS 1990, 1993, 2001, 2005, 2009, and 2015.\50\ DOE also 
used the U.S. Census's biennial American Housing Survey (``AHS''), from 
1974-2021, which surveys all housing, noting the presence of a range of 
appliances.\51\ DOE used the appliance age data from these surveys, as 
well as the historical furnace shipments, to generate an estimate of 
the survival function. The survival function provides a lifetime range 
from minimum to maximum, as well as an average lifetime. For oil and 
weatherized gas furnaces, DOE developed Weibull distributions resulting 
in an average lifetime of 20.2 to 22.5 years (based on region).
---------------------------------------------------------------------------

    \49\ Lutz, J., A. Hopkins, V. Letschert, V. Franco, and A. 
Sturges, Using national survey data to estimate lifetimes of 
residential appliances, HVAC&R Research (2011) 17(5): p. 28. 
(Available at: www.tandfonline.com/doi/abs/10.1080/10789669.2011.558166) (Last accessed August 1, 2023).
    \50\ U.S. Department of Energy: Energy Information 
Administration, Residential Energy Consumption Survey (``RECS''), 
Multiple Years (1990, 1993, 1997, 2001, 2005, 2009, and 2015). 
(Available at: www.eia.gov/consumption/residential/) (Last accessed 
August 1, 2023).
    \51\ U.S. Census Bureau: Housing and Household Economic 
Statistics Division, American Housing Survey, Multiple Years (1974, 
1975, 1976, 1977, 1978, 1979, 1980, 1981, 1983, 1985, 1987, 1989, 
1991, 1993, 1995, 1997, 1999, 2001, 2003, 2005, 2007, 2009, 2011, 
2013, 2015, 2017, 2019, and 2021). (Available at: www.census.gov/programs-surveys/ahs/) (Last accessed August 1, 2023).
---------------------------------------------------------------------------

    Appendix 8F of the November 2022 Preliminary Analysis TSD provides 
further details on the methodology and sources DOE used to develop the 
subject furnace lifetimes.
7. Discount Rates
    The discount rate is the rate at which future expenditures and 
savings are discounted to establish their present value. DOE estimates 
discount rates separately for residential and commercial end users.
    For residential end users, DOE applies weighted-average discount 
rates calculated from consumer debt and asset data, rather than 
marginal or implicit discount rates. 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 (``SCF''). 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.
    For commercial end users, DOE estimated the weighted-average cost 
of capital using data from various financial sources. 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.
    See appendix 8G of the November 2022 Preliminary Analysis TSD for 
further details on the development of 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 (i.e., market shares) of product efficiencies under the 
no-new-standards case (i.e., the case without amended or new energy 
conservation standards) in the compliance year (2030). This approach 
reflects the fact that some consumers may purchase products with 
efficiencies greater than the baseline levels, such that even in a no-
new-standards case, consumers will be purchasing higher-efficiency 
furnaces.
    For consumer furnaces, DOE had limited historical-shipments data by 
efficiency level. For NWOFs/MHOFs, DOE reviewed market shares from 
HARDI 2013-2022 data and BRG 2007-2022 data.52 53 The 
shipments data are not disaggregated between NWOFs and MHOFs, but DOE 
assigned all shipments data below 83-percent AFUE to MHOFs. For WGFs, 
DOE had insufficient historical shipments data by efficiency level to 
develop a reliable efficiency distribution. To cover the lack of 
available shipments data, DOE referred to the DOE's Compliance 
Certification Database (``CCD'') \54\ for furnaces to develop 
efficiency distributions based on available models for WGFs.
---------------------------------------------------------------------------

    \52\ Heating, Air-conditioning and Refrigeration Distributors 
International (HARDI), DRIVE portal (HARDI Visualization Tool 
managed by D+R International until 2022), proprietary Gas Furnace 
Shipments Data from 2013-2022 provided to Lawrence Berkeley National 
Laboratory (LBNL).
    \53\ BRG Building Solutions. The North American Heating & 
Cooling Product Markets (2022 Edition) (Available at: 
www.brgbuildingsolutions.com/reports-insights) (Last accessed August 
1, 2023).
    \54\ U.S. Department of Energy Compliance Certification Database 
(``CCD'') (Available at: www.regulations.doe.gov/certification-data/
) (Last accessed August 1, 2023).
---------------------------------------------------------------------------

    The estimated market shares for the no-new-standards case for oil 
and weatherized gas furnaces are shown in Table IV.16. See chapter 8 of 
the November 2022 Preliminary Analysis TSD for further information on 
the derivation of the efficiency distributions.

[[Page 83452]]



  Table IV.16--No-New-Standards Case Energy Efficiency Distributions in
                2030 for Oil and Weatherized Gas Furnaces
------------------------------------------------------------------------
                                                           Distribution
          Product class              Efficiency level           (%)
------------------------------------------------------------------------
NWOF............................  Baseline..............            37.2
                                  1.....................            60.0
                                  2.....................             1.5
                                  3.....................             1.3
MHOF............................  Baseline..............              95
                                  1.....................               2
                                  2.....................               3
                                  3.....................               0
WGF.............................  Baseline..............              96
                                  1.....................               4
------------------------------------------------------------------------

    AHRI and Lennox stated that model counts from the public database 
do not reflect model or sales volume and that a high number of models 
at a specific efficiency level does not imply a large market share of 
those products. (AHRI, No. 23 at p. 4; Lennox, No. 26 at p. 3) Lennox 
stated that industry data for condensing weatherized gas furnaces 
indicate that the market adoption of these products has been de 
minimis. (Lennox, No. 26 at p. 8) NYSERDA commented that within New 
York's relatively cold climate, new sales of electric and weatherized 
gas furnaces are minimal. However, NYSERDA noted that oil furnaces 
continue to be sold and installed throughout the State, with a 2019 
study suggesting that most oil furnaces being installed are of low 
efficiency. (NYSERDA, No. 19 at p. 1)
    In response to AHRI and Lennox, as stated previously, to develop an 
efficiency distribution in the no-new-standards case, DOE used 
available historical shipments data by efficiency for NWOFs/MHOFs and 
made assumptions to disaggregate between NWOFs and MHOFs by AFUE. Due 
to limited information for WGF, DOE referred to CCD to develop 
efficiency distributions. DOE projected that condensing WGFs will 
continue to account for a minimal share of the WGF market in the no-
new-standards case, which aligns with Lennox's characterization of the 
industry data for condensing weatherized gas furnaces. In response to 
NYSERDA, DOE's estimates of efficiency distribution align with the 
findings that most oil furnaces being installed are of low efficiency. 
DOE received no other data with which to further refine the estimates 
of the efficiency distribution, and as such, DOE has not changed its 
existing methodology.
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. 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.
    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 amended standards 
would be required.

F. Shipments Analysis

    DOE uses projections of annual product shipments to calculate the 
national impacts of potential amended or new energy conservation 
standards on energy use, NPV, and future manufacturer cash flows.\55\ 
The shipments model takes an accounting approach in 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.
---------------------------------------------------------------------------

    \55\ 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.
---------------------------------------------------------------------------

    Lennox commented that DOE likely overstates shipments for gas 
furnaces. Lennox commented that the NWGF rulemaking and this rulemaking 
may significantly reduce the market shares of these products. (Lennox, 
No. 26 at p. 2) Lennox commented that NWOFs and EFs are each less than 
one percent of the consumer furnace market. (Id. at p. 1) Lennox stated 
that DOE's projections of a growing market for residential furnaces are 
inconsistent with federal and state policy efforts to electrify space 
heating in residences. (Lennox, No. 26 at p. 2) Lennox commented that 
decarbonization efforts to electrify space heating will have impacts on 
both the total market for furnaces, as well as the categories thereof. 
(Id.) Lennox commented that States such as California and New York, 
which represent approximately 8 to 12 percent of the annual furnace 
shipments, are implementing plans to completely electrify space heating 
as soon as 2030. (Id.) In addition, Lennox stated that furnace costs 
are likely to increase, resulting in a reduction in the market. (Id. at 
p. 3) Lennox commented that the information presented in the 
preliminary TSD similarly indicates a growing market for furnaces, in 
contrast to federal, state, and local efforts to decarbonize space 
heating. Lennox commented that gas furnace shipments will decline in 
the time period associated with this rulemaking, and further DOE action 
should reflect a substantial reduction in the market for furnaces that 
consume fossil fuels. (Id. at p. 8)

[[Page 83453]]

    In response, DOE notes that assumptions made in the November 2022 
Preliminary Analysis regarding future policies encouraging 
electrification of households were speculative at that time, so such 
policies were not incorporated into the shipments projection. 
Consequently, DOE's market share and shipments projections in the 
November 2022 Preliminary Analysis reflected the best information 
available to DOE at that time. For the NOPD, DOE accounted for the 2022 
update to Title 24 in California \56\ and also the decision of the 
California Public Utilities Commission to eliminate ratepayer subsidies 
for the extension of new gas lines beginning in July 2023. Together, 
these policies are expected to lead to the eventual phase-out of gas 
furnaces in new single-family homes in California. The California Air 
Resources Board has adopted a 2022 State Strategy for the State 
Implementation Plan that would effectively ban sales of new gas 
furnaces beginning in 2030.\57\ However, because a final decision on a 
rule would not happen until 2025, DOE did not include this latter 
policy in its analysis for this NOPD.
---------------------------------------------------------------------------

    \56\ The 2022 update includes heat pumps as a performance 
standard baseline for water heating or space heating in single-
family homes, as well as space heating in multi-family homes. Under 
the California Code, builders will need to either include one high-
efficiency heat pump in new constructions or subject those buildings 
to more-stringent energy efficiency standards.
    \57\ See ww2.arb.ca.gov/resources/documents/2022-state-strategy-state-implementation-plan-2022-state-sip-strategy (Last accessed 
June 2, 2023).
---------------------------------------------------------------------------

    DOE understands that ongoing electrification policies at the 
federal, State, and local levels are likely to encourage installation 
of heat pumps in some new homes and adoption of heat pumps in some 
homes that currently use gas or oil-fired furnaces. However, there are 
many uncertainties about the timing and effects of these policies that 
make it difficult to fully account for their likely impact on gas or 
oil furnaces market shares in the time frame for this analysis (i.e., 
2030 through 2059). Nonetheless, DOE has modified some of its 
projections to attempt to account for impacts that are most likely in 
the relevant time frame.\58\ These changes result in a decrease of 
shipments in the no-new-standards case in 2030 compared to the November 
2022 Preliminary Analysis, with a corresponding decrease in estimated 
energy savings resulting from the standards. DOE acknowledges that 
electrification policies may result in a larger decrease in shipments 
of gas furnaces than projected in this NOPD, especially if stronger 
policies are adopted in coming years. However, this would occur in the 
no-new amended standards case and, thus, would only reduce the energy 
savings estimated in this NOPD.
---------------------------------------------------------------------------

    \58\ Based on currently adopted policies and incentives, DOE 
estimated a lower saturation in the new construction market and a 
higher product switching rate for the replacement market for gas and 
oil furnaces for the NOPD shipments analysis. This change resulted 
in a decrease of 11 percent for WGFs, 62 percent for NWOF, and 68 
percent for MHOF for the no-new-standards case projection of total 
shipments between 2030 and 2059 compared to the preliminary 
analysis.
---------------------------------------------------------------------------

G. 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 energy conservation standards at specific efficiency 
levels.\59\ (``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.\60\ For the 
present analysis, DOE projected the energy savings, operating cost 
savings, product costs, and NPV of consumer benefits over the lifetime 
of oil and weatherized gas furnaces sold from 2030 through 2059.
---------------------------------------------------------------------------

    \59\ The NIA accounts for impacts in the U.S. and U.S. 
territories.
    \60\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the effects 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 ELs 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 EL. 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.17 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPD. Discussion of these inputs and methods follows 
the table. See chapter 10 of the November 2022 Preliminary Analysis TSD 
for details.

   Table IV.17--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
            Input                                Method
------------------------------------------------------------------------
Shipments....................  Annual shipments from shipments model.
Modeled Compliance Date of     2030.
 Standard.
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  Annual weighted-average values are a
 Unit.                          function of energy use at each EL.
                                Incorporates projection of future energy
                                use based on AEO2023 projections for HDD/
                                CDD and building shell efficiency index.
Total Installed Cost per Unit  Annual weighted-average values are a
                                function of cost at each EL.
                               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    Annual weighted-average values increase
 per Unit.                      for condensing levels.
Energy Prices................  AEO2023 projections (to 2050) and
                                extrapolation after 2050.
Energy Site-to-Primary and     A time-series conversion factor based on
 FFC Conversion.                AEO2023.

[[Page 83454]]

 
Discount Rate................  Three percent and seven percent.
Present Year.................  2023.
------------------------------------------------------------------------

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.E.8 of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered product classes for the year of anticipated compliance with 
an amended or new standard (2030).
    For the standards cases, DOE used a ``roll-up'' scenario to 
establish the shipment-weighted efficiency for the year that standards 
are assumed to become effective (2030). 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.
    To develop standards case efficiency trends after 2030, DOE 
estimated growth in shipment-weighted efficiency in the standards 
cases, except in the max-tech standards case.
2. National Energy Savings
    The NES analysis involves a comparison of national energy 
consumption of the considered products between each potential standards 
case (EL) 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 AEO2023. For 
natural gas and LPG, DOE assumed that site energy consumption is the 
same as primary energy consumption. Cumulative energy savings are the 
sum of the NES for each year over the timeframe of the analysis.
    Use of higher-efficiency products is sometimes associated with a 
direct rebound effect, which refers to an increase in utilization of 
the product due to the increase in efficiency. For oil and weatherized 
gas furnaces, DOE applied a rebound effect of 15 percent for 
residential applications by reducing the site energy savings (and the 
associated primary and FFC energy savings). However, for commercial 
applications, DOE applied no rebound effect in order to be consistent 
with other recent standards rulemakings.
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the NIA and emissions analyses 
included in future energy conservation standards rulemakings. 76 FR 
51281 (August 18, 2011). After evaluating the approaches discussed in 
the August 18, 2011 notice, DOE published a statement of amended policy 
in which DOE explained its determination that EIA's National Energy 
Modeling System (``NEMS'') is the most appropriate tool for its FFC 
analysis and its intention to use NEMS for that purpose. 77 FR 49701 
(August 17, 2012). NEMS is a public domain, multi-sector, partial 
equilibrium model of the U.S. energy sector \61\ 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 general approach used for 
deriving FFC measures of energy use and emissions is described in 
appendix 10B of the November 2022 Preliminary Analysis TSD.
---------------------------------------------------------------------------

    \61\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview May 2023, DOE/EIA, May 2023 (Available 
at: www.eia.gov/analysis/pdfpages/0581(2009)index.php) (Last 
accessed June 27, 2023).
---------------------------------------------------------------------------

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.E.1 of this document, DOE developed oil 
and weatherized gas furnace price trends based on historical PPI data 
and cumulative shipments. DOE applied the same trends to project prices 
for each product class at each considered efficiency level. By 2059, 
which is the end date of the projection period, the average oil and 
weatherized gas furnace price is projected to drop 17 percent relative 
to 2022. DOE's projection of product prices is described further in 
chapter 10 of the November 2022 Preliminary Analysis TSD.
    The operating cost savings are calculated as energy cost savings 
minus any repair and maintenance cost increases. Energy cost savings 
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 national-average energy 
prices derived in the LCC analysis by the projection of annual 
national-average residential (or commercial, as appropriate) energy 
price changes in the Reference case from AEO2023, which has an end year 
of 2050. To estimate price trends after 2050, DOE used the average 
annual rate of change in prices from 2046 through 2050. Repair and 
maintenance cost for each of the efficiency levels is calculated in the 
LCC, and repair and maintenance cost increases are calculated as the 
repair and maintenance cost differential between efficiency levels.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPD, 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

[[Page 83455]]

guidance provided by the Office of Management and Budget (``OMB'') to 
federal agencies on the development of regulatory analysis.\62\ The 
discount rates for the determination of NPV are in contrast to the 
discount rates used in the LCC analysis, which are designed to reflect 
a consumer's perspective. The 7-percent real value is an estimate of 
the average before-tax rate of return to private capital in the U.S. 
economy. The 3-percent real value represents the ``social rate of time 
preference,'' which is the rate at which society discounts future 
consumption flows to their present value.
---------------------------------------------------------------------------

    \62\ United States Office of Management and Budget, Circular A-
4: Regulatory Analysis (Sept. 17, 2003) Section E (Available at: 
www.whitehouse.gov/omb/information-for-agencies/circulars/) (Last 
accessed June 28, 2023).
---------------------------------------------------------------------------

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for oil 
and weatherized gas furnaces. It addresses the ELs examined by DOE (see 
section IV.B.1 of this document) and the projected impacts of each of 
these levels if adopted as energy conservation standards for the 
subject furnaces. Additional details regarding DOE's analyses are 
contained in the November 2022 Preliminary Analysis TSD supporting this 
document.

A. Economic Impacts on Individual Consumers

    DOE analyzed the cost-effectiveness (i.e., the savings in operating 
costs throughout the estimated average life of oil and weatherized gas 
furnaces compared to any increase in the price of, or in the initial 
charges for, or maintenance expenses of, oil and weatherized gas 
furnaces which are likely to result from the imposition of a standard) 
at an EL by considering the LCC and PBP at each EL. These analyses are 
discussed in the following sections.
    In general, higher-efficiency products can 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 November 
2022 Preliminary Analysis TSD provides detailed information on the LCC 
and PBP analyses.
    Table V.1 to Table V.6 show the average LCC and PBP results for the 
ELs considered in this analysis for oil and weatherized gas furnaces, 
respectively. In the first of each pair of tables, the simple payback 
is measured relative to the baseline product. In the second table, the 
impacts are measured relative to the efficiency distribution in the in 
the no-new-standards case in the compliance year (see section IV.E.8 of 
this document). The LCC and PBP results for oil and weatherized gas 
furnaces include both residential and commercial users. 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 EL. The savings refer only to consumers who are affected by a 
standard at a given EL. Those who already purchase a product with 
efficiency at or above a given EL are not affected. Consumers for whom 
the LCC increases at a given EL experience a net cost.

                                           Table V.1--Average LCC and PBP Results by Efficiency Level for NWOF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2022$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                    Efficiency level                                       First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................           4,333           2,132          32,211          36,544  ..............            22.2
1.......................................................           4,392           2,086          31,528          35,920             1.3            22.2
2.......................................................           4,451           2,043          30,876          35,327             1.3            22.2
3.......................................................           5,898           1,920          29,212          35,110             7.4            22.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.2--Average LCC Savings Relative to the No-New-Standards Case for
                                  NWOF
------------------------------------------------------------------------
                                              Life-cycle cost savings
                                         -------------------------------
                                                           Percentage of
            Efficiency level                Average LCC   consumers that
                                             savings *    experience net
                                              (2022$)        cost (%)
------------------------------------------------------------------------
1.......................................             608             0.5
2.......................................             820             1.4
3.......................................           1,015            37.0
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.


[[Page 83456]]


                                           Table V.3--Average LCC and PBP Results by Efficiency Level for MHOF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2022$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                    Efficiency level                                       First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................           3,377           1,142          17,913          21,290  ..............            22.6
1.......................................................           3,465           1,107          17,371          20,836             2.5            22.6
2.......................................................           3,523           1,085          17,030          20,553             2.5            22.6
3.......................................................           3,581           1,063          16,705          20,286             2.6            22.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.4--Average LCC Savings Relative to the No-New-Standards Case for
                                  MHOF
------------------------------------------------------------------------
                                              Life-cycle cost savings
                                         -------------------------------
                                                           Percentage of
            Efficiency level                Average LCC   consumers that
                                            savings \*\   experience net
                                              (2022$)        cost (%)
------------------------------------------------------------------------
1.......................................             452             0.8
2.......................................             724             0.9
3.......................................             971             1.0
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.


                                           Table V.5--Average LCC and PBP Results by Efficiency Level for WGF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2022$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                    Efficiency level                                       First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................           5,533             471           7,215          12,748  ..............            20.6
1.......................................................           5,822             433           6,698          12,519             7.5            20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.6--Average LCC Savings Relative to the No-New-Standards Case for
                                   WGF
------------------------------------------------------------------------
                                             Life-cycle cost savings
                                       ---------------------------------
                                                          Percentage of
           Efficiency level               Average LCC     consumers that
                                           savings *      experience net
                                            (2022$)          cost (%)
------------------------------------------------------------------------
1.....................................             223             40.4
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.

    NYSERDA commented that DOE does not specifically mention the types 
of consumer subgroups to be included in the analysis of this 
rulemaking. NYSERDA recommended that DOE include low-income customers 
as one of the subgroups for this analysis and include the percentage of 
monthly income spent on energy bills. (NYSERDA, No. 19 at p. 2) NYSERDA 
mentioned that the NWGF/MHGF rulemaking analysis found that a more-
stringent standard was especially beneficial to low-income and senior-
only households as compared to the overall population. The commenter 
argued that renters who pay their own energy bills will particularly 
benefit. NYSERDA encouraged DOE to continue such analysis for this 
rulemaking, as it anticipates a similar outcome to the NWGF/MHGF 
rulemaking. (Id. at pp. 2-3)
    In response, because DOE has tentatively determined that amended 
standards for the products considered in this NOPD would not be 
economically justified, DOE has not conducted a consumer subgroup 
analysis.

[[Page 83457]]

    NYSERDA encouraged DOE to report the fraction of customers who pay 
less than six percent of their monthly income in energy bills at each 
EL. The commenter asserted that such fraction would continue to 
increase at each EL with more-stringent standards, adding that this 
approach presents a more comprehensive framework to look at energy 
burdens reduced by appliance standards. NYSERDA recommended that this 
statistic should be a routine part of DOE's LCC subgroups analysis, 
especially for appliances involving natural gas and oil. (NYSERDA, No. 
19 at p. 3)
    As noted previously, DOE is not conducting a consumer subgroup 
analysis for this NOPD, but the Department may consider NYSERDA's 
recommendation as part of a future rulemaking.

B. 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 ELs considered as 
potential amended standards.
1. Significance of Energy Savings
    To estimate the energy savings attributable to potential amended 
standards for oil and weatherized gas furnaces, DOE compared their 
energy consumption under the no-new-standards case to their anticipated 
energy consumption under each EL. 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 (2030-
2059). Table V.7 presents DOE's projections of the NES for each EL 
considered for oil and weatherized gas furnaces. The savings were 
calculated using the approach described in section IV.G of this 
document.

    Table V.7--Cumulative National Energy Savings for Oil and Weatherized Gas Furnaces; 30 Years of Shipments
                                                   [2030-2059]
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
                          Product class                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                            FFC Energy savings (quads)
                                                                 -----------------------------------------------
Non-Weatherized Oil Furnace.....................................           0.004            0.01            0.05
Mobile Home Non-Weatherized Oil Furnace.........................          0.0004           0.001           0.001
Weatherized Gas Furnace.........................................            0.66  ..............  ..............
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \63\ 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 
determination, DOE undertook a sensitivity analysis using nine years, 
rather than 30 years, of product shipments. The choice of a nine-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.\64\ The review timeframe established in 
EPCA is generally not synchronized with the product lifetime, product 
manufacturing cycles, or other factors specific to oil and weatherized 
gas furnaces. 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 nine-year 
analytical period are presented in Table V.8. The impacts are counted 
over the lifetime of oil and weatherized gas furnaces purchased in 
2030-2038.
---------------------------------------------------------------------------

    \63\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (Sept. 17, 2003) (Available at: https://www.whitehouse.gov/omb/information-for-agencies/circulars/) (Last 
accessed June 1, 2023).
    \64\ 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. (42 U.S.C. 
6295(m)) If DOE makes a determination that amended standards are not 
needed, it must conduct a subsequent review within three years 
following such a determination. As DOE is evaluating the need to 
amend the standards, the sensitivity analysis is based on the review 
timeframe associated with amended 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.8--Cumulative National Energy Savings for Oil and Weatherized Gas Furnaces; 9 Years of Shipments
                                                   [2030-2038]
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
                          Product class                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                            FFC Energy savings (quads)
                                                                 -----------------------------------------------
Non-Weatherized Oil Furnace.....................................           0.002            0.01            0.02
Mobile Home Non-Weatherized Oil Furnace.........................          0.0002          0.0004           0.001
Weatherized Gas Furnace.........................................            0.20  ..............  ..............
----------------------------------------------------------------------------------------------------------------


[[Page 83458]]

2. 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 ELs considered for oil and 
weatherized gas furnaces. In accordance with OMB's guidelines on 
regulatory analysis,\65\ DOE calculated NPV using both a 7-percent and 
a 3-percent real discount rate. Table V.9 shows the consumer NPV 
results with impacts counted over the lifetime of products purchased in 
2030-2059.
---------------------------------------------------------------------------

    \65\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (Sept. 17, 2003) (Available at: 
obamawhitehouse.archives.gov/omb/circulars_a004_a-4/) (Last accessed 
June 1, 2023).

 Table V.9--Cumulative Net Present Value of Consumer Benefits for Oil and Weatherized Gas Furnaces; 30 Years of
                                                    Shipments
                                                   [2030-2059]
----------------------------------------------------------------------------------------------------------------
                                                                               Efficiency level (EL)
             Discount rate                    Product class      -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2022$
                                                                 -----------------------------------------------
3%....................................  Non-Weatherized Oil                 0.06            0.20            0.20
                                         Furnace.
                                        Mobile Home Non-                    0.01            0.01            0.01
                                         Weatherized Oil Furnace.
                                        Weatherized Gas Furnace.            1.88  ..............  ..............
7%....................................  Non-Weatherized Oil                 0.02            0.08            0.03
                                         Furnace.
                                        Mobile Home Non-                   0.002           0.003           0.005
                                         Weatherized Oil Furnace.
                                        Weatherized Gas Furnace.            0.45  ..............  ..............
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned nine-year analytical 
period are presented in Table V.10. The impacts are counted over the 
lifetime of oil and weatherized gas furnaces purchased in 2030-2038. 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.10--Cumulative Net Present Value of Consumer Benefits for Oil and Weatherized Gas Furnaces; 9 Years of
                                                    Shipments
                                                   [2030-2038]
----------------------------------------------------------------------------------------------------------------
                                                                               Efficiency level (EL)
             Discount rate                    Product class      -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2022$
                                                                 -----------------------------------------------
3%....................................  Non-Weatherized Oil                 0.03            0.11            0.12
                                         Furnace.
                                        Mobile Home Non-                   0.003            0.01            0.01
                                         Weatherized Oil Furnace.
                                        Weatherized Gas Furnace.            0.67  ..............  ..............
7%....................................  Non-Weatherized Oil                 0.02            0.05            0.02
                                         Furnace.
                                        Mobile Home Non-                   0.002           0.003           0.004
                                         Weatherized Oil Furnace.
                                        Weatherized Gas Furnace.            0.22  ..............  ..............
----------------------------------------------------------------------------------------------------------------

C. Proposed Determination

    After carefully considering the comments on the November 2022 
Preliminary Analysis and the available data and information, DOE has 
tentatively determined that the energy conservation standards for oil, 
electric, and weatherized gas furnaces do not need to be amended, for 
the reasons explained in the paragraphs immediately following. DOE will 
consider all comments received on this proposed determination prior to 
issuing the next document in this rulemaking proceeding.
    As required by EPCA, this NOPD analyzes whether amended standards 
for oil, electric, and weatherized gas furnaces would result in 
significant conservation of energy, be technologically feasible, and be 
cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C. 6295(n)(2)) 
DOE's initial findings under the enumerated statutory criteria and the 
additional analysis are discussed in the paragraphs that follows. 
Because an analysis of potential cost-effectiveness and energy savings 
first requires an evaluation of the relevant technology, DOE first 
discusses the technological feasibility of amended standards. DOE then 
addresses the cost-effectiveness and energy savings associated with 
potential amended standards for the subject furnaces.
1. Technological Feasibility
    EPCA mandates that DOE consider whether amended energy conservation 
standards for oil, electric, and weatherized gas furnaces would be 
technologically feasible. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C. 
6295(n)(2)(B)) DOE has tentatively determined that there are technology 
options that would improve the efficiency of oil and weatherized gas 
furnaces. These technology options are being used in commercially 
available oil and weatherized gas furnaces and, therefore, are 
technologically feasible. (See section IV.A.3 of this document for 
further information.) Hence, DOE has tentatively determined that 
amended energy conservation standards for oil and weatherized gas 
furnaces are technologically feasible. However, as discussed in section 
IV.A.1.a of this document, DOE is not aware of any technology options 
that would improve the efficiency of electric furnaces.

[[Page 83459]]

Therefore, DOE has tentatively determined that amended energy 
conservation standards for electric furnaces are not technologically 
feasible.
2. Cost-Effectiveness
    EPCA requires DOE to consider whether energy conservation standards 
for oil and weatherized gas furnaces would be cost-effective through an 
evaluation of the savings in operating costs throughout the estimated 
average life of the covered product compared to any increase in the 
price of, or in the initial charges for, or maintenance expenses of, 
the covered products which are likely to result from the imposition of 
an amended standard. (42 U.S.C. 6295(m)(1)(A), 42 U.S.C. 6295(n)(2)(C), 
and 42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducted an LCC analysis to 
estimate the net costs/benefits to users from increased efficiency in 
the considered oil and weatherized gas furnace product classes. As 
shown in Table V.1 through Table V.6, for all product classes, all of 
the considered efficiency levels result in positive LCC savings, with 
the percentage of consumers experiencing net cost ranging from 0.5 
percent at EL 1 to 37 percent at max-tech for NWOF, approximately 1 
percent at all ELs for MHOF, and 40 percent at the only considered 
efficiency level for WGF.
    DOE then aggregated the results from the LCC analysis to estimate 
the NPV of the total costs and benefits experienced by the Nation. (See 
results in Table V.9 and Table V.10) As noted, the inputs for 
determining the NPV 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.
3. Significant Conservation of Energy
    EPCA also mandates that DOE consider whether amended energy 
conservation standards for oil and weatherized gas furnaces would 
result in significant conservation of energy. (42 U.S.C. 6295(m)(1)(A) 
and 42 U.S.C. 6295(n)(2)(A))
    To estimate the energy savings attributable to potential amended 
standards for oil and weatherized gas furnaces, DOE compared their 
energy consumption under the no-new-standards case to their anticipated 
energy consumption under each potential standard level. 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 (2030-2059).
    As shown in Table V.7, DOE estimates that amended standards would 
results in FFC energy savings of 0.004 quads at EL 1 to 0.05 quads at 
max-tech level for non-weatherized oil furnaces, 0.0004 quads at EL 1 
to 0.001 quads at max-tech level for mobile home non-weatherized oil 
furnaces, and 0.66 quads at EL 1 (max-tech level) for weatherized gas 
furnaces, over a 30-year analysis period (2030-2059).
4. Further Considerations
Oil Furnaces
    DOE estimates that the shipments of NWOFs and MHOFs have declined 
by more than 70 percent over the past 20 years and only accounted for 
less than one percent of the overall consumer furnace market in the 
past 10 years. DOE considered this declining trend and the small market 
share for oil furnaces in the furnace shipments model and projected 
that the shipments of NWOFs and MHOFs will continue to decline over the 
analysis period (i.e., 2030-2059). DOE also considered that the 
shipments of NWOFs and MHOFs could decline faster than current 
projections, which may lead to further reductions in energy savings 
from potential amended standards.
    As the oil furnace market contracted, the industry has seen 
consolidation. DOE estimates there were 11 OEMs of NWOF selling into 
the U.S. market at the time of the June 2011 DFR that set current 
standard levels for oil furnaces. Since then, manufacturers have 
merged, been acquired, and left the market. Currently there are seven 
OEMs of NWOF selling into the U.S. market.
    DOE estimated the NWOF market to be approximately 36,000 units per 
year and the MHOF market to be approximately 2,000 units per year in 
2023. These products together are less than one percent of the overall 
U.S. residential furnace market, which is approximately 4.2 million 
shipments per year in 2023. The size of the market could make cost 
recovery challenging for manufacturers. With the small market size and 
continued trend of diminishing sales, the timeframe for recouping 
investments may be longer than acceptable for manufacturers. Given the 
small role of oil furnaces in the overall furnace market and the low 
sales relative to the consumer boiler and consumer water heater 
markets, manufacturers may de-prioritize updates for these product 
classes. The existing oil-fired furnace market currently has a 
diversity of competitors; however, the loss of a few manufacturers 
could lead to shifts in market competition.
Weatherized Gas Furnaces
    DOE estimates that the shipments of WGFs have been approximately 
0.35 million per year for the past 10 years and accounted for 
approximately 7 percent of the overall consumer furnace market over the 
past 20 years. DOE considered the small market share for WGFs in the 
furnace shipments model and projected that the shipments of WGFs will 
be approximately flat and account for less than 8 percent of the 
overall consumer furnace market over the analysis period (i.e., 2030-
2059). DOE also considered that the shipments of WGFs could be less 
than current projections, which may lead to reductions in energy 
savings from potential amended standards.
    WGFs have the largest potential energy savings of the product 
classes in this rulemaking. However, DOE recognizes challenges for the 
industry at the max-tech level, which requires condensing furnace 
designs. DOE identified eight OEMs of weatherized gas furnaces. Only 
one OEM offers models that can meet the max-tech level. Models that 
meet the max-tech level account for 1 percent of all WGF listings.
    All other OEMs would need to invest in new WGF designs to meet a 
condensing efficiency level. DOE expects that developing a new 
condensing model lines would require significant investment. If 
manufacturers plan to continue offering the same diversity of models, 
they would need to redesign nearly 1,500 basic models, or 99 percent of 
what is available on the market today. Designing condensing models 
would require the incorporation of a secondary heat exchanger and 
condensate management system. Manufacturers would likely need to 
reconfigure their existing heat exchanger to optimize airflow over the 
secondary heat exchanger, which could require investments in product 
redesign and retooling for hard-tooled portions of the heat exchanger. 
Manufacturers may also have to choose between adding the secondary heat 
exchanger within the physical limitations of the existing chassis 
dimension or adopting a new chassis size, which has the potential to be 
capital intensive. The added production of the secondary heat exchanger 
could necessitate additional floor space and increased assembly and 
fabrication times.
    DOE observed that the range of heating capacities offered at EL 1 
do not cover the same range of capacities as non-condensing models. 
Condensing WGF models range from 60 to 96 kBtu/h, whereas non-
condensing WGF

[[Page 83460]]

models span capacities from 40 to 150 kBtu/h. DOE is concerned that 
amended standards for WGFs may limit capacity availability for 
consumers.
5. Summary
    As discussed previously, a determination that amended standards are 
not needed must be based on consideration of whether amended standards 
will result in significant conservation of energy, are technologically 
feasible, and are cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42 
U.S.C. 6295(n)(2)) Additionally, DOE can only propose an amended 
standard if it is, among other things, economically justified. (42 
U.S.C. 6295(m)(1)(B); 42 U.S.C. 6295(o)(2)(A))
    As explained elsewhere in this document, DOE has tentatively 
determined that amended energy conservation standards for electric 
furnaces are not technologically feasible. Oil-fired furnaces and WGFs 
have relatively small markets and shipments of these products are 
expected to flatten or decline; manufacturers facing increased 
standards for these product categories may opt to focus on products 
with larger market shares, resulting in certain products or capacities 
becoming unavailable for consumers as well as further consolidation of 
the market. Consequently, DOE has tentatively determined that it is 
unable to conclude that amended standards for oil-fired furnaces and 
WGFs would be economically justified. For these reasons, as well as 
those discussed throughout this notice, DOE is unable to conclude that 
amended standards for furnaces at any of the efficiency levels analyzed 
would meet the applicable statutory criteria. Therefore, DOE has 
tentatively determined that energy conservation standards for oil, 
electric, and weatherized gas furnaces do not need to be amended at 
this time.
    DOE requests comments on its proposed determination that the 
existing energy conservation standards for oil, electric, and 
weatherized gas furnaces do not need to be amended. DOE will consider 
all comments received on this proposed determination before issuing the 
next document in this proceeding.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821 
(Jan. 21, 2011) and amended by E.O. 14094, ``Modernizing Regulatory 
Review,'' 88 FR 21879 (April 11, 2023), requires agencies, to the 
extent permitted by law, 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, the 
Office of Information and Regulatory Affairs (``OIRA'') in the Office 
of Management and Budget (``OMB'') 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 this preamble, this proposed regulatory 
action is consistent with these principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to OIRA for review. OIRA has 
determined that this proposed regulatory action does not constitute a 
``significant regulatory action'' within the scope of section 3(f)(1) 
of E.O. 12866, as amended by E.O. 14094. Accordingly, this action was 
not submitted to OIRA for review under E.O. 12866.

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'') 
and a final regulatory flexibility analysis (``FRFA'') 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 (August 16, 2002), DOE published procedures 
and policies in the Federal Register 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 (energy.gov/gc/office-general-counsel).
    DOE reviewed this proposed determination under the provisions of 
the Regulatory Flexibility Act and the policies and procedures 
published on February 19, 2003. Because DOE is proposing not to amend 
standards for oil, electric, and weatherized gas furnaces, if adopted, 
the determination would not amend any energy conservation standards. On 
the basis of the foregoing, DOE certifies that the proposed 
determination, if adopted, would not have a significant economic impact 
on a substantial number of small entities. Accordingly, DOE has not 
prepared an IRFA for this proposed determination. DOE will transmit 
this certification and supporting statement of factual basis to the 
Chief Counsel for Advocacy of the Small Business Administration for 
review under 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act of 1995

    This proposed determination, which proposes to determine that 
amended energy conservation standards for oil, electric, and 
weatherized gas furnaces are unneeded under the applicable statutory 
criteria, would impose no new informational or recordkeeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)

D. Review Under the National Environmental Policy Act of 1969

    DOE is analyzing this proposed action 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 actions which are interpretations or 
rulings with respect to existing regulations. 10 CFR part 1021, subpart 
D, appendix A4. DOE anticipates that this action qualifies for

[[Page 83461]]

categorical exclusion A4 because it is an interpretation or ruling in 
regard to an existing regulation and 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 action.

E. Review Under Executive Order 13132

    E.O. 13132, ``Federalism,'' 64 FR 43255 (August 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 determination 
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 
determination. 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 E.O. 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,'' 61 FR 4729 (Feb. 7, 1996), imposes on federal 
agencies the general duty to adhere to the following requirements: (1) 
eliminate drafting errors and ambiguity; (2) write regulations to 
minimize litigation; (3) provide a clear legal standard for affected 
conduct rather than a general standard, and (4) promote simplification 
and burden reduction. Regarding the review required by section 3(a), 
section 3(b) of E.O. 12988 specifically requires that Executive 
agencies make every reasonable effort to ensure that the regulation: 
(1) clearly specifies the preemptive effect, if any; (2) clearly 
specifies any effect on existing federal law or regulation; (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction; (4) specifies the retroactive 
effect, if any; (5) adequately defines key terms, and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this proposed determination 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, sec. 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 
energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE examined this proposed determination according to UMRA and its 
statement of policy and determined that the proposed determination does 
not contain a federal intergovernmental mandate, nor is it expected to 
require expenditures of $100 million or more in any one year by State, 
local, and Tribal governments, in the aggregate, or 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 determination 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 (March 
18, 1988), DOE has determined that this proposed determination 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 NOPD 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 the Office of 
Information and Regulatory Affairs (``OIRA'') at OMB, a

[[Page 83462]]

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 Executive 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.
    This proposed determination, which does not propose to amend energy 
conservation standards for oil, electric, and weatherized gas furnaces, 
is not a significant regulatory action under Executive Order 12866. 
Moreover, it would not 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. Therefore, it is not a significant energy 
action, and accordingly, DOE has not prepared a Statement of Energy 
Effects.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (``OSTP''), issued its Final Information 
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan. 
14, 2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' Id. at 70 FR 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 Peer Review report 
pertaining to the energy conservation standards rulemaking 
analyses.\66\ Generation of this report involved a rigorous, formal, 
and documented evaluation using objective criteria and qualified and 
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the 
productivity and management effectiveness of programs and/or projects. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences (``NAS'') to review DOE's analytical methodologies and 
ascertain whether modifications are needed to improve DOE's analyses. 
DOE is in the process of evaluating the resulting December 2021 
report.\67\
---------------------------------------------------------------------------

    \66\ ``Energy Conservation Standards Rulemaking Peer Review 
Report'' (2007) (Available at: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0) (Last 
accessed June 26, 2023).
    \67\ The December 2021 NAS report is available at 
www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards (Last accessed June 26, 
2023).
---------------------------------------------------------------------------

VII. Public Participation

A. Participation in the Public Meeting Webinar

    DOE will hold a public meeting webinar upon receiving a request by 
the deadline identified in the DATES section at the beginning of this 
proposed determination. Interested persons may submit their request for 
the public meeting webinar to the Appliance and Equipment Standards 
Program at [email protected]. If a public meeting 
webinar is requested, DOE will release webinar registration 
information, participant instructions, and information about the 
capabilities available to webinar participants on DOE's website at: 
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=59. Participants are responsible for ensuring 
their systems are compatible with the webinar software.

B. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed determination no later than the date provided in the DATES 
section at the beginning of this proposed determination. Interested 
parties may submit comments, data, and other information using any of 
the methods described in the ADDRESSES section at the beginning of this 
document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (``CBI'')). Comments submitted 
through www.regulations.gov cannot be claimed as CBI. Comments received 
through the 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, hand delivery/courier, or postal 
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If 
you do not want your personal contact information to be publicly 
viewable, do not include it in your comment or any accompanying 
documents. Instead, provide your contact information in a cover letter. 
Include your first and last names, email

[[Page 83463]]

address, telephone number, and optional mailing address. With this 
instruction followed, the cover letter will not be publicly viewable as 
long as it does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via postal mail 
or hand delivery/courier, please provide all items on a CD, if 
feasible, in which case it is not necessary to submit printed copies. 
No telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption, and, if possible, they should carry the 
electronic signature of the author.
    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).

C. Issues on Which DOE Seeks Comment

    Although DOE has not identified any specific issues on which it 
seeks comment, DOE welcomes comments on any aspect of this proposed 
determination.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this 
notification of proposed determination and request for comment.

Signing Authority

    This document of the Department of Energy was signed on November 
17, 2023, by Jeffrey Marootian, 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 November 17, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2023-25869 Filed 11-28-23; 8:45 am]
BILLING CODE 6450-01-P