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DEPARTMENT OF ENERGY FOR FURTHER INFORMATION CONTACT: a. Sample of Purchasers Lucy deButts, U.S. Department of b. Operating Hours 10 CFR Part 430 Energy, Office of Energy Efficiency and c. Power Consumption at Each Speed and Renewable Energy, Building Standby [Docket Number EERE–2012–BT–STD– 2. Inputs for Large-Diameter and High- 0045] Technologies Office, EE–5B, 1000 Speed Small-Diameter Ceiling Fans Independence Avenue SW., a. Sample of Purchasers RIN 1904–AD28 Washington, DC 20585–0121. b. Operating Hours Energy Conservation Program: Energy Telephone: (202) 287–1604. E-mail: c. Power Consumption at Each Speed and ApplianceStandardsQuestions@ Standby Conservation Standards for Ceiling 3. Impact on Air Conditioning or Heating Fans ee.doe.gov. Elizabeth Kohl, U.S. Department of Equipment Use F. Life-Cycle Cost and Payback Period AGENCY: Energy, Office of the General Counsel, Office of Energy Efficiency and Analysis Renewable Energy, Department of GC–33, 1000 Independence Avenue 1. Purchase Price Energy. SW., Washington, DC 20585–0121. 2. Electricity Prices ACTION: Final rule. Telephone: (202) 586–7796. E-mail: 3. Electricity Price Trends [email protected]. 4. Repair Costs SUMMARY: The Energy Policy and SUPPLEMENTARY INFORMATION: 5. Product Lifetime Conservation Act of 1975 (EPCA), as 6. Discount Rates amended, prescribes energy Table of Contents 7. Efficiency and Blade Span Distribution conservation standards for various I. Synopsis of the Final Rule in the No-New-Standards Case consumer products and certain A. Benefits and Costs to Consumers 8. Payback Period Analysis G. Shipments Analysis commercial and industrial equipment, B. Impact on Manufacturers C. National Benefits and Costs 1. Shipments Demand Model including ceiling fans. EPCA also 2. Stock-Accounting Model requires the U.S. Department of Energy D. Conclusion II. Introduction 3. Market-Share Projections (DOE) to periodically determine A. Authority 4. Price Trend whether more-stringent standards B. Background 5. Impact of a Standard on Shipments would be technologically feasible and 1. Current Standards H. National Impact Analysis economically justified, and would save 2. History of Standards Rulemaking for 1. National Energy Savings a significant amount of energy. In this Ceiling Fans 2. Net Present Value Analysis final rule, DOE amends the energy III. General Discussion I. Consumer Subgroup Analysis A. Product Classes and Scope of Coverage J. Manufacturer Impact Analysis conservation standards for ceiling fans. 1. Overview It has determined that the amended 1. Scope of Coverage 2. Product Classes 2. GRIM Analysis and Key Inputs energy conservation standards for these B. Test Procedure a. Capital and Product Conversion Costs products would result in significant C. Technological Feasibility b. Manufacturer Production Costs conservation of energy, and are 1. General c. Shipment Scenarios technologically feasible and 2. Maximum Technologically Feasible d. Markup Scenarios economically justified. Levels 3. Discussion of Comments 4. Manufacturer Interviews DATES: The effective date of this rule is D. Energy Savings 1. Determination of Savings a. Shift to Air Conditioning March 20, 2017. Compliance with the 2. Significance of Savings b. Testing Burden amended standards established for E. Economic Justification c. Utility of Brushless DC Motors for ceiling fans in this final rule is required 1. Specific Criteria Residential Consumers on and after January 21, 2020. a. Economic Impact on Manufacturers and K. Emissions Analysis ADDRESSES: The docket for this Consumers L. Monetizing Carbon Dioxide and Other rulemaking, which includes Federal b. Savings in Operating Costs Compared to Emissions Impacts 1. Social Cost of Carbon Register notices, public meeting Increase in Price (LCC and PBP) c. Energy Savings a. Monetizing Carbon Dioxide Emissions attendee lists and transcripts, d. Lessening of Utility or Performance of b. Development of Social Cost of Carbon comments, and other supporting Products Values documents/materials, is available for e. Impact of Any Lessening of Competition c. Current Approach and Key Assumptions review at www.regulations.gov. All f. Need for National Energy Conservation 2. Social Cost of Other Air Pollutants documents in the docket are listed in g. Other Factors M. Utility Impact Analysis the www.regulations.gov index. 2. Rebuttable Presumption N. Employment Impact Analysis However, not all documents listed in IV. Methodology and Discussion of Related V. Analytical Results and Conclusions the index may be publicly available, Comments A. Trial Standard Levels B. Economic Justification and Energy such as information that is exempt from A. Market and Technology Assessment 1. Product Classes Savings public disclosure. 2. Technology Options 1. Economic Impacts on Individual A link to the docket web page can be B. Screening Analysis Consumers found at https://www1.eere.energy.gov/ 1. Screened-Out Technologies a. Life-Cycle Cost and Payback Period buildings/appliance_standards/ 2. Remaining Technologies b. Consumer Subgroup Analysis standards.aspx?productid=5. The C. Engineering Analysis c. Rebuttable Presumption Payback docket web page contains instructions 1. Standard and Hugger Ceiling Fans 2. Economic Impacts on Manufacturers on how to access all documents, 2. VSD and HSSD Ceiling Fans a. Industry Cash Flow Analysis Results including public comments, in the 3. Large-Diameter Ceiling Fans b. Impacts on Employment docket. 4. Reducing Fan Speed to Improve c. Impacts on Manufacturing Capacity Efficiency d. Impacts on Subgroups of Manufacturers For further information on how to 5. Standard Level Equations e. Cumulative Regulatory Burden review the docket, contact Ms. Lucy D. Markups Analysis 3. National Impact Analysis deButts at: (202) 287–1604 or by e-mail: E. Energy Use Analysis a. Significance of Energy Savings ApplianceStandardsQuestions@ 1. Inputs for Standard, Hugger, and VSD b. Net Present Value of Consumer Costs ee.doe.gov. Ceiling Fans and Benefits
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c. Indirect Impacts on Employment K. Review Under Executive Order 13211 would apply to all ceiling fans listed in 4. Impact on Utility or Performance of L. Review Under the Information Quality Table I.1 and manufactured in, or Products Bulletin for Peer Review imported into, the United States on and 5. Impact of Any Lessening of Competition M. Congressional Notification after January 21, 2020. 6. Need of the Nation to Conserve Energy VII. Approval of the Office of the Secretary 7. Other Factors 8. Summary of National Economic Impacts I. Synopsis of the Final Rule TABLE I.1—ENERGY CONSERVATION C. Conclusion Title III, Part B 1 of the Energy Policy STANDARDS FOR CEILING FANS 1. Benefits and Burdens of TSLs and Conservation Act of 1975 (EPCA or [Compliance starting January 21, 2020] Considered for Ceiling Fan Standards the Act), Public Law 94–163 (42 U.S.C. 2. Summary of Annualized Benefits and 6291–6309), established the Energy Minimum efficiency Costs of the Adopted Standards Conservation Program for Consumer Product class equation VI. Procedural Issues and Regulatory Review 2 CFM/W * A. Review Under Executive Orders 12866 Products Other Than Automobiles. and 13563 These products include ceiling fans, ≤ which are the subject of this Very Small-Di- D 12 in.: 21 B. Review Under the Regulatory Flexibility ameter D > 12 in.: 3.16 D¥17.04 Act rulemaking. (VSD). 1. Need for, and Objectives of, the Rule Pursuant to EPCA, any new or Standard ...... 0.65 D + 38.03 2. Significant Comments in Response to the amended energy conservation standard Hugger ...... 0.29 D + 34.46 IRFA must be designed to achieve the High-Speed 4.16 D + 0.02 3. Comments Filed by the Chief Counsel maximum improvement in energy Small-Diame- for Advocacy efficiency that DOE determines is ter (HSSD). 4. Description and Estimate of the Number technologically feasible and Large Diameter 0.91 D ¥30.00 of Small Entities Affected economically justified. (42 U.S.C. 5. Description of Compliance Requirements 6295(o)(2)(A)) Furthermore, the new or * D is the ceiling fan’s blade span, in inches, 6. Significant Alternatives Considered and as determined in Appendix U. Steps Taken to Minimize Significant amended standard must result in Economic Impacts on Small Entities significant conservation of energy. (42 A. Benefits and Costs to Consumers C. Review Under the Paperwork Reduction U.S.C. 6295(o)(3)(B)) Act In accordance with these and other Table I.2 presents DOE’s evaluation of D. Review Under the National statutory provisions discussed in this the economic impacts of the adopted Environmental Policy Act of 1969 document, DOE is adopting amended standards on consumers of ceiling fans, E. Review Under Executive Order 13132 energy conservation standards for as measured by the average life-cycle F. Review Under Executive Order 12988 ceiling fans. The amended standards, cost (LCC) savings and the simple G. Review Under the Unfunded Mandates which are expressed for each product payback period (PBP).3 The average LCC Reform Act of 1995 savings are positive for all product H. Review Under the Treasury and General class as the minimum allowable Government Appropriations Act, 1999 efficiency in terms of cubic feet per classes, and the PBP is less than the I. Review Under Executive Order 12630 minute per watt (CFM/W), as a function average lifetime of ceiling fans, which is J. Review Under the Treasury and General of ceiling fan diameter in inches, are estimated to be 13.8 years for all Government Appropriations Act, 2001 shown in Table I.1. These standards product classes (see section IV.F.5).
TABLE I.2—IMPACTS OF AMENDED ENERGY CONSERVATION STANDARDS ON CONSUMERS OF CEILING FANS
Average LCC sav- Simple payback Product class ings * period (2015$) (years)
Standard ...... 25.78 1.7 Hugger ...... 21.50 1.8 Very Small-Diameter ...... 4.29 9.3 High-Speed Small-Diameter ...... 19.80 6.9 Large-Diameter ...... 128.90 4.1 * The calculation excludes consumers with zero LCC savings (no impact).
DOE’s analysis of the impacts of the discount rate of 7.4 percent, DOE described in section IV.J of this adopted standards on consumers is estimates that the INPV for document. described in section IV.F of this manufacturers of ceiling fans in the case C. National Benefits and Costs 4 document. without amended standards is $1,211.6 million in 2015$. Under the adopted DOE’s analyses indicate that the B. Impact on Manufacturers standards, DOE expects that adopted energy conservation standards The industry net present value (INPV) manufacturers may lose up to 9.9 for ceiling fans would save a significant is the sum of the discounted cash flows percent of this INPV, which is amount of energy. Relative to the case to the industry from the reference year approximately $119.4 million. without amended standards (referred to through the terminal year of the analysis DOE’s analysis of the impacts of the as the ‘‘no-new-standards case’’), the period (2016–2049). Using a real adopted standards on manufacturers is lifetime energy savings for ceiling fans
1 For editorial reasons, upon codification in the 3 The average LCC savings are measured relative section IV.C), which corresponds to the least U.S. Code, Part B was redesignated Part A. to the efficiency distribution in the no-new- efficient model available to purchase. 2 All references to EPCA in this document refer standards case, which depicts the market in the 4 All monetary values in this document are compliance year in the absence of standards (see to the statute as amended through the Energy expressed in 2015 dollars and, where appropriate, section IV.F.7). The simple PBP, which is designed Efficiency Improvement Act of 2015, Public Law to compare specific ceiling fan efficiency levels, is are discounted to 2016 unless explicitly stated 114–11 (April 30, 2015). measured relative to the baseline product (see otherwise.
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purchased in the 30-year period that that the standards would result in each set of SCC values, DOE estimates begins in the anticipated first full year cumulative greenhouse gas emission that the net present monetary value of of compliance with the amended reductions (over the same period as for the CO2 emissions reduction (not standards (2020–2049), amount to 2.008 energy savings) of 120.2 million metric including CO2 equivalent emissions of 6 quadrillion British thermal units (Btu), tons (Mt) of carbon dioxide (CO2), 64.0 other gases with global warming 5 or quads. This represents a total energy thousand tons of sulfur dioxide (SO2), potential) is between $0.8 billion and savings of 26 percent across all product 222.6 thousand tons of nitrogen oxides $11.7 billion, with a value of $3.8 classes relative to the energy use of (NOX), 530.1 thousand tons of methane billion using the SCC central value case these products in the no-new-standards (CH4), 1.3 thousand tons of nitrous represented by $40.6/metric ton (t) in case. oxide (N2O), and 0.2 tons of mercury 2015. DOE also estimates that the 7 The cumulative net present value (Hg). The cumulative reduction in CO2 present monetary value of the NOX (NPV) of total consumer costs and emissions through 2030 amounts to 18.2 emissions reduction to be $0.2 billion at savings of the standards for ceiling fans Mt, which is equivalent to the emissions a 7-percent discount rate, and $0.4 ranges from $4.488 billion (at a 7- resulting from the annual electricity use billion at a 3-percent discount rate.9 percent discount rate) to $12.123 billion of more than 1.9 million homes. DOE is investigating appropriate (at a 3-percent discount rate). This NPV The value of the CO2 reductions is valuation of the reduction in other expresses the estimated total value of calculated using a range of values per emissions, and did not include any future operating-cost savings minus the metric ton (t) of CO2 (otherwise known values for other emissions in this estimated increased product costs for as the ‘‘Social Cost of Carbon’’, or SCC) rulemaking. ceiling fans purchased in 2020–2049. developed by a Federal interagency Table I.3 summarizes the economic In addition, the standards for ceiling working group.8 The derivation of the benefits and costs expected to result fans are projected to yield significant SCC values is discussed in section IV.L. from the adopted standards for ceiling environmental benefits. DOE estimates Using discount rates appropriate for fans.
TABLE I.3—SELECTED CATEGORIES OF ECONOMIC BENEFITS AND COSTS OF AMENDED ENERGY CONSERVATION STANDARDS FOR CEILING FANS *
Present value Discount rate Category (billion 2015$) (%)
Benefits
Consumer Operating Cost Savings ...... 7.0 7 16.5 3 CO2 Reduction (using mean SCC at 5% discount rate) ** ...... 0.8 5 CO2 Reduction (using mean SCC at 3% discount rate) ** ...... 3.8 3 CO2 Reduction (using mean SCC at 2.5% discount rate) ** ...... 6.1 2.5 CO2 Reduction (using 95th percentile SCC at 3% discount rate) ** ...... 11.7 3 NOX Reduction † ...... 0.2 7 0.4 3 Total Benefits ‡ ...... 11.0 7 20.7 3
Costs
Consumer Incremental Installed Costs ...... 2.5 7 4.4 3
5 The quantity refers to full-fuel-cycle (FFC) Executive Order 12866. May 2013. Revised July et al., Order in Pending Case, available at http:// energy savings. FFC energy savings includes the 2015. Available at https://www.whitehouse.gov/ www.chamberlitigation.com/sites/default/files/ energy consumed in extracting, processing, and sites/default/files/omb/inforeg/scc-tsd-final-july- scotus/files/2016/SCOTUS%20Order%20Granting transporting primary fuels (i.e., coal, natural gas, 2015.pdf. %20U.S.%20Chamber%2C%20et%20al.%20Stay 9 petroleum fuels), and, thus, presents a more DOE estimated the monetized value of NOX %20Application%20—%20States%20of%20West complete picture of the impacts of energy efficiency emissions reductions associated with electricity %20Virginia%2C%20Texas%2C%20et%20al. standards. For more information on the FFC metric, savings using benefit per ton estimates from the %20v.%20EPA%20%28ESPS%29.pdf (last visited see section IV.H.1. Regulatory Impact Analysis for the Clean Power June 22, 2016). Pending the outcome of that 6 A metric ton is equivalent to 1.1 short tons. Plan Final Rule, published in August 2015 by EPA’s litigation, DOE continues to use the benefit-per-ton Office of Air Quality Planning and Standards. Results for emissions other than CO2 are presented estimates established in the Regulatory Impact Available at www.epa.gov/cleanpowerplan/clean- in short tons. Analysis for the Clean Power Plan. To be power-plan-final-rule-regulatory-impact-analysis. 7 DOE calculated emissions reductions relative to See section IV.L.2 for further discussion. On conservative, DOE is primarily using a national the no-new-standards-case, which reflects key February 9, 2016, the U.S. Supreme Court stayed benefit-per-ton estimate for NOX emitted from the assumptions in the Annual Energy Outlook 2015 the rule implementing the Clean Power Plan Electricity Generating Unit sector based on an (AEO 2015). pending disposition of the applicants’ petitions for estimate of premature mortality derived from the 8 United States Government-Interagency Working review in the United States Court of Appeals for the ACS study (Krewski et al. 2009). If the benefit-per- Group on Social Cost of Carbon. Technical Support District of Columbia Circuit and disposition of the ton estimates were based on the Six Cities study Document: Technical Update of the Social Cost of applicants’ petition for a writ of certiorari, if such (Lepuele et al. 2011), the values would be nearly Carbon for Regulatory Impact Analysis Under writ is sought. Chamber of Commerce, et al. v. EPA, two-and-a-half times larger.
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TABLE I.3—SELECTED CATEGORIES OF ECONOMIC BENEFITS AND COSTS OF AMENDED ENERGY CONSERVATION STANDARDS FOR CEILING FANS *—Continued
Present value Discount rate Category (billion 2015$) (%)
Total Net Benefits
Including CO2 and NOX Reduction Monetized Value ‡ ...... 8.5 7 16.3 3 * This table presents the costs and benefits associated with ceiling fans shipped in 2020–2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020–2049. The incremental installed costs include incremental equipment cost as well as installation costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. ** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from the integrated assessment models, at discount rates of 5 percent, 3 percent, and 2.5 percent. For example, for 2015 emissions, these val- ues are $12.4/t, $40.6/t, and $63.2/t, in 2015$, respectively. The fourth set ($118/t in 2015$ for 2015 emissions), which represents the 95th per- centile of the SCC distribution calculated using a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution. The SCC values are emission year specific. See section IV.L.1 for more details. † DOE estimated the monetized value of NOX emissions reductions associated with electricity savings using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Stand- ards. (Available at www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. To be conservative, DOE is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011), the values would be nearly two-and-a-half times larger. ‡ Total Benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate.
The benefits and costs of the adopted globally due to decreased domestic costs, while the estimated annualized standards, for ceiling fans sold in 2020– energy consumption that is expected to benefits are $688.1 million in reduced 2049, can also be expressed in terms of result from this rule. Because CO2 equipment operating costs, $214.1 annualized values. The monetary values emissions have a very long residence million in CO2 reductions, and $15.1 for the total annualized net benefits are time in the atmosphere, the SCC values million in reduced NOX emissions. In the sum of (1) the national economic in future years reflect future CO2- this case, the annualized net benefit value of the benefits in reduced emissions impacts that continue beyond amounts to $672.2 million per year. consumer operating costs, minus (2) the 2100. Using a 3-percent discount rate for all Estimates of annualized benefits and increases in product purchase prices benefits and costs and the SCC series and installation costs, plus (3) the value costs of the adopted standards are has a value of $40.6/t in 2015, the of the benefits of CO and NO emission shown in Table I.4. The results under 2 X estimated cost of the standards is $243.2 reductions, all annualized.10 the primary estimate are as follows. The national operating cost savings Using a 7-percent discount rate for million per year in increased equipment costs, while the estimated annualized are domestic private U.S. consumer benefits and costs other than CO2 monetary savings that occur as a result reduction, (for which DOE used a 3- benefits are $919.0 million in reduced of purchasing the covered products. The percent discount rate along with the operating costs, $214.1 million in CO2 national operating cost savings is SCC series that has a value of $40.6/t in reductions, and $21.5 million in measured for the lifetime of ceiling fans 2015),11 the estimated annualized cost reduced NOX emissions. In this case, the shipped in 2020–2049. The CO2 of the standards in this rule is $245.1 annualized net benefit amounts to reduction is a benefit that accrues million per year in increased equipment $911.4 million per year.
TABLE I.4—SELECTED CATEGORIES OF ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR CEILING FANS *
Low-net-benefits High-net-benefits Discount rate Primary estimate estimate estimate
(million 2015$/year)
Benefits
Consumer Operating Cost Savings ...... 7% ...... 688.1 ...... 579.7 ...... 793.5 3% ...... 919.0 ...... 764.2 ...... 1081.9 CO2 Reduction (using mean SCC at 5% discount rate) ** ... 5% ...... 62.8 ...... 53.7 ...... 71.0 CO2 Reduction (using mean SCC at 3% discount rate) ** ... 3% ...... 214.1 ...... 182.2 ...... 242.6 CO2 Reduction (using mean SCC at 2.5% discount rate) ** 2.5% ...... 314.2 ...... 267.2 ...... 356.3 CO2 Reduction (using 95th percentile SCC at 3% discount 3% ...... 652.7 ...... 555.4 ...... 739.8 rate) **. † NOX Reduction ...... 7% ...... 15.1 ...... 13.1 ...... 38.1 3% ...... 21.5 ...... 18.4 ...... 55.3 ‡ Total Benefits ...... 7% plus CO2 range ... 766 to 1,356 ...... 647 to 1,148 ...... 903 to 1,571
10 To convert the time-series of costs and benefits discounted the present value from each year to the compliance year,that yields the same present into annualized values, DOE calculated a present 2016. The calculation uses discount rates of 3 and value. value in 2016, the year used for discounting the 7 percent for all costs and benefits except for the 11 DOE used a 3-percent discount rate because the NPV of total consumer costs and savings. For the value of CO reductions, for which DOE used case- 2 SCC values for the series used in the calculation benefits, DOE calculated a present value associated specific discount rates, as shown in Table I.3. Using with each year’s shipments in the year in which the the present value, DOE then calculated the fixed were derived using a 3-percent discount rate (see shipments occur (e.g., 2020 or 2030), and then annual payment over a 30-year period, starting in section IV.L).
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TABLE I.4—SELECTED CATEGORIES OF ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR CEILING FANS *—Continued
Low-net-benefits High-net-benefits Discount rate Primary estimate estimate estimate
(million 2015$/year)
7% ...... 917.3 ...... 775.0 ...... 1,074.2 3% plus CO2 range ... 1,003 to 1,593 .... 836 to 1,338 ...... 1,208 to 1,877 3% ...... 1,154.6 ...... 964.8 ...... 1,379.9
Costs ***
Consumer Incremental Product Costs ...... 7% ...... 245.1 ...... 288.1 ...... 272.8 3% ...... 243.2 ...... 298.7 ...... 273.7
Net Benefits
‡ Total ...... 7% plus CO2 range ... 521 to 1,111 ...... 358 to 860 ...... 630 to 1,299 7% ...... 672.2 ...... 487.0 ...... 801.4 3% plus CO2 range ... 760 to 1,350 ...... 538 to 1,039 ...... 935 to 1,603 3% ...... 911.4 ...... 666.1 ...... 1,106.2 * This table presents the annualized costs and benefits associated with ceiling fans shipped in 2020–2049. These results include benefits to consumers which accrue after 2049 from the ceiling fans purchased from 2020–2049. The incremental installed costs include incremental equip- ment cost as well as installation costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary Estimate assumes the Reference case electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the same product price decrease for ceiling fans with DC motors as in the Primary Estimate. The methods used to derive projected price trends are explained in section IV.G.4. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding. ** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5-per- cent, 3-percent, and 2.5-percent discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC values are emission year specific. See section IV.L.1 for more details. † DOE estimated the monetized value of NOX emissions reductions associated with electricity savings using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Stand- ards. (Available at www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates for NOX emitted from the Electric Gener- ating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). For the High Net Benefits Esti- mate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study. ‡ Total Benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. *** For certain assumed design options (e.g., fan optimization) that are included at the selected standard level, DOE estimated no incremental costs to consumers, but did estimate a one-time industry conversion cost to manufacturers to make their products compliant with the selected standards that are not reflected in the Consumer Incremental Product Costs. The one-time industry conversion cost to manufacturers of these design options contribute to a loss in industry net present value of $4.8 million, which is equivalent to an annualized cost of $0.4 million/year at a 7.4-percent discount rate over the analysis period.
DOE’s analysis of the national impacts II. Introduction consider energy efficiency or energy use of the adopted standards is described in The following section briefly standards for the electricity used by sections IV.H, IV.K, and IV.L of this discusses the statutory authority ceiling fans to circulate air in a room. Id. notice. underlying this adopted rule, as well as Under 42 U.S.C. 6295(m), DOE must D. Conclusion some of the relevant historical periodically review its already background related to the establishment established energy conservation Based on the analyses culminating in of standards for ceiling fans. standards for a covered product. Under this final rule, DOE found the benefits A. Authority this requirement, the next review that to the nation of the standards (energy DOE would need to conduct must occur savings, consumer LCC savings, positive Title III, Part B of the Energy Policy no later than 6 years from the issuance and Conservation Act of 1975 (EPCA or NPV of consumer benefit, and emission of any final rule establishing or the Act), Public Law 94–163 (42 U.S.C. reductions) outweigh the burdens (loss amending a standard for a covered 6291, et seq.) established the Energy of INPV and LCC increases for some product. EPCA also provides that not Conservation Program for Consumer users of these products). DOE has Products Other Than Automobiles, a later than 6 years after issuance of any concluded that the standards in this program covering most major household final rule establishing or amending a final rule represent the maximum appliances (collectively referred to as standard, DOE must publish either a improvement in energy efficiency that is ‘‘covered products’’), which includes notice of determination that standards technologically feasible and the ceiling fans that are the subject of for the product do not need to be economically justified, and would result this rulemaking. (42 U.S.C. 6295(ff)) amended, or a notice of proposed in significant conservation of energy. EPCA, as amended, prescribes energy rulemaking including new proposed conservation standards for these energy conservation standards. (42 products and authorizes DOE to U.S.C. 6295(m))
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Pursuant to EPCA, DOE’s energy consumers of the products subject to the energy from that consumed by other conservation program for covered standard; covered products within such type (or products consists essentially of four (2) The savings in operating costs class); or (B) have a capacity or other parts: (1) Testing, (2) labeling, (3) the throughout the estimated average life of performance-related feature which other establishment of Federal energy the covered products in the type (or products within such type (or class) do conservation standards, and (4) class) compared to any increase in the not have and such feature justifies a certification and enforcement price, initial charges, or maintenance higher or lower standard. (42 U.S.C. procedures. The Federal Trade expenses for the covered products that 6295(q)(1)) In determining whether a Commission (FTC) is primarily are likely to result from the standard; performance-related feature justifies a responsible for labeling, and DOE (3) The total projected amount of different standard for a group of implements the remainder of the energy (or as applicable, water) savings products, DOE must consider such program. Subject to certain criteria and likely to result directly from the factors as the utility to the consumer of conditions, DOE is required to develop standard; such a feature and other factors DOE test procedures to measure the energy (4) Any lessening of the utility or the deems appropriate. Id. Any rule efficiency, energy use, or estimated performance of the covered products prescribing such a standard must annual operating cost of each covered likely to result from the standard; include an explanation of the basis on product. (42 U.S.C. 6295(o)(3)(A) and (5) The impact of any lessening of which such higher or lower level was (r)) Manufacturers of covered products competition, as determined in writing established. (42 U.S.C. 6295(q)(2)) must use the prescribed DOE test by the Attorney General, that is likely to Federal energy conservation procedure as the basis for certifying to result from the standard; requirements generally supersede State DOE that their products comply with (6) The need for national energy and laws or regulations concerning energy the applicable energy conservation water conservation; and conservation testing, labeling, and standards adopted under EPCA and (7) Other factors the Secretary of standards. (42 U.S.C. 6297(a)–(c)) DOE when making representations to the Energy (Secretary) considers relevant. may, however, grant waivers of Federal public regarding the energy use or (42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) preemption for particular State laws or efficiency of those products. (42 U.S.C. Further, EPCA, as codified, regulations, in accordance with the 6293(c) and 6295(s)) Similarly, DOE establishes a rebuttable presumption procedures and other provisions set must use these test procedures to forth under 42 U.S.C. 6297(d)). determine whether the products comply that a standard is economically justified with standards adopted pursuant to if the Secretary finds that the additional EPCA also requires that for any final EPCA. (42 U.S.C. 6295(s)) The DOE test cost to the consumer of purchasing a rule for new or amended energy procedures for ceiling fans appear at product complying with an energy conservation standards promulgated title 10 of the Code of Federal conservation standard level will be less after July 1, 2010, DOE must address Regulations (CFR) part 430, subpart B, than three times the value of the energy standby mode and off mode energy use. appendix U, 10 CFR 430.23(w) and 10 savings during the first year that the (42 U.S.C. 6295(gg)(3)) Specifically, CFR 429.32. consumer will receive as a result of the when DOE adopts a standard for a DOE must follow specific statutory standard, as calculated under the covered product after that date, it must, criteria for prescribing new or amended applicable test procedure. (42 U.S.C. if justified by the criteria for adoption of standards for covered products, 6295(o)(2)(B)(iii)) standards under EPCA (42 U.S.C. including ceiling fans. Any new or EPCA, as codified, also contains what 6295(o)), incorporate standby mode and amended standard for a covered product is known as an ‘‘anti-backsliding’’ off mode energy use into a single must be designed to achieve the provision, which prevents the Secretary standard, or, if that is not feasible, adopt maximum improvement in energy from prescribing any amended standard a separate standard for such energy use efficiency that is technologically that either increases the maximum for that product. (42 U.S.C. feasible and economically justified. (42 allowable energy use or decreases the 6295(gg)(3)(A)–(B)) The amended U.S.C. 6295(o)(2)(A) and (3)(B)) minimum required energy efficiency of standards DOE is adopting in this final Furthermore, DOE may not adopt any a covered product. (42 U.S.C. rule incorporate standby mode and off standard that would not result in the 6295(o)(1)) Also, the Secretary may not mode energy use into a single standard. significant conservation of energy. (42 prescribe an amended or new standard U.S.C. 6295(o)(3)) Moreover, DOE may if interested persons have established by B. Background not prescribe a standard (1) for certain a preponderance of the evidence that 1. Current Standards products, including ceiling fans, if no the standard is likely to result in the test procedure has been established for unavailability in the United States in The Energy Policy and Conservation the product, or (2) if DOE determines by any covered product type (or class) of Act of 1975 (EPCA) defined and rule that the standard is not performance characteristics (including established design standards for ceiling technologically feasible or economically reliability), features, sizes, capacities, fans. EPCA defined a ‘‘ceiling fan’’ as ‘‘a justified. (42 U.S.C. 6295(o)(3)(A)–(B)) and volumes that are substantially the nonportable device that is suspended In deciding whether a proposed same as those generally available in the from a ceiling for circulating air via the standard is economically justified, DOE United States. (42 U.S.C. 6295(o)(4)) rotation of fan blades.’’ (42 U.S.C. must determine whether the benefits of Additionally, EPCA specifies 6291(49)) In a final rule technical the standard exceed its burdens. (42 requirements when promulgating an amendment published in the on October U.S.C. 6295(o)(2)(B)(i)) DOE must make energy conservation standard for a 18, 2005, DOE codified the statutorily- this determination after receiving covered product that has two or more prescribed design standards for ceiling comments on the proposed standard, subcategories. DOE must specify a fans. 70 FR 60407, 60413. These and by considering, to the greatest different standard level for a type or standards are set forth in DOE’s extent practicable, the following seven class of products that has the same regulations at 10 CFR 430.32(s), and statutory factors: function or intended use if DOE require all ceiling fans manufactured on (1) The economic impact of the determines that products within such or after January 1, 2007, to have the standard on manufacturers and group (A) consume a different kind of following features:
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1. Fan speed controls separate from on November 19, 2014, to present the DOE previously interpreted the any lighting controls; preliminary analysis, which included definition of a ceiling fan such that it 2. adjustable speed controls (either presenting preliminary results for the excluded certain types of ceiling fans more than one speed or variable speed); engineering and downstream economic commonly referred to as hugger fans. 71 and analyses, seek comments from FR 71343 (Dec. 8, 2006). Hugger ceiling 3. the capability for reverse action interested parties on these subjects, and fans are typically understood to be set (other than fans sold for industrial or facilitate interested parties’ involvement flush to the ceiling (e.g., mounted outdoor application or where safety in the rulemaking. without a downrod). The previous would be an issue)). On January 13, 2016, DOE published interpretation exempted hugger fans (42 U.S.C. 6295(ff)(1)(A) and (6)) a notice of proposed rulemaking (NOPR) from standards on the basis that they are for the ceiling fans energy conservation set flush to the ceiling. However, in the 2. History of Standards Rulemaking for standards rulemaking (ceiling fans test procedure final rule for ceiling fan Ceiling Fans NOPR). 81 FR 1688. DOE posted the light kits, DOE reinterpreted the EPCA established energy conservation ceiling fans NOPR analysis, as well as definition of a ceiling fan to include standards for ceiling fans as described the complete NOPR TSD on its Web hugger fans, and clarified that the in Section II.B.1 and authorized DOE to site.15 DOE held a public meeting on definition also included ceiling fans consider, if the requirements of 42 February 3, 2016 to present the ceiling capable of producing large volumes of U.S.C. 6295(o) and (p) are met, fans NOPR, which included the airflow. 80 FR 80209 (Dec. 24, 2015). establishing energy efficiency or energy engineering analysis, downstream The changes in interpretation of the use standards for the electricity used by economic analyses, manufacturer ceiling fan definition discussed above ceiling fans to circulate air in a room. impact analysis, and proposed resulted in the applicability of the (42 U.S.C. 6295(ff)) standards. In the public meeting, DOE design standards set forth in EPCA at 42 As noted in section II.B.1, DOE also sought comments from interested U.S.C. 6295(ff)(1) to these fan types as codified the statutorily-prescribed parties on these subjects, and facilitated of January 25, 2016. DOE research design standards for ceiling fans in the interested parties’ involvement in the indicates that all ceiling fans currently CFR at 10 CFR 430.32(s). 70 FR 60407, rulemaking. At the public meeting, and on the market, including hugger ceiling 60413 (Oct. 18, 2005). DOE also adopted during the comment period, DOE fans and ceiling fans that produce a test procedures for ceiling fans at 10 received comments that helped DOE large volume of airflow, appear to meet CFR part 430, subpart B, appendix U identify issues and refine the analyses the EPCA design standards. Compliance and 10 CFR 430.23(w). 71 FR 71340, presented in the ceiling fans NOPR for with requirements related to the ceiling 71366–67 (Dec. 8, 2006). Sampling and this final rule. The key changes since fan reinterpretation was discussed in certification requirements for ceiling the ceiling fans NOPR were the the Ceiling Fan Light Kit test procedure fans are set forth at 10 CFR 429.32. following: (1) The engineering analysis final rule. 80 FR 80209 (Dec. 24, 2015) On March 15, 2013, DOE published a was updated based on additional test Specifically, DOE will not assert civil notice announcing the availability of the data, and (2) the efficiency distribution penalty authority for violations of the framework document, ‘‘Energy in the no-new-standards case for the applicable standards arising as a result Conservation Standards Rulemaking standard and hugger product classes of the reinterpretation of the ceiling fan Framework Document for Ceiling Fans was updated with significantly more definition before June 26, 2017. and Ceiling Fan Light Kits,’’ 12 and a market share at the lower efficiency DOE is also establishing efficiency public meeting to discuss the proposed levels based on comments from standards for these fan types, which analytical framework for the energy manufacturers. include hugger ceiling fans and ceiling conservation standards rulemaking. 78 This final rule responds to issues fans that produce a large volume of FR 16643. DOE held the public meeting raised by commenters in response to the airflow, in this ceiling fans final rule. Compliance with those standards, as for the framework document on March framework document, preliminary discussed in the DATES section, is 22, 2013,13 to present the framework analysis, and NOPR. January 21, 2020. document, describe the analyses DOE III. General Discussion Additionally, in the ceiling fan test planned to conduct during the procedure final rule, DOE provided rulemaking, seek comments from DOE developed this proposal after considering comments, data, and clarification on those ceiling fans that interested parties on these subjects, and are not subject to the test procedure. 81 inform them about and facilitate their information from interested parties that represent a variety of interests. The FR 48620 (July 25, 2016). The test involvement in the rulemaking. procedures do not apply to belt-driven On September 29, 2014, DOE following section provides general discussion of the final standards rule; ceiling fans, centrifugal ceiling fans, published the preliminary analysis for oscillating ceiling fans, or ceiling fans the ceiling fan energy conservation section IV addresses the issues raised by these commenters. whose blades’ plane of rotation cannot standards rulemaking. 79 FR 58290. be within 45 degrees of horizontal. DOE posted the preliminary analysis, as A. Product Classes and Scope of American Lighting Association (ALA) well as the complete preliminary Coverage requested that DOE clarify that if the technical support document (TSD), on plane of rotation is not within 45 14 1. Scope of Coverage its website. DOE held a public meeting degrees of horizontal, the ceiling fan is EPCA defines a ‘‘ceiling fan’’ as ‘‘a not subject to DOE’s proposed efficiency 12 The energy conservation standards final rule nonportable device that is suspended for ceiling fan light kits was published on January standards, certification requirements or from a ceiling for circulating air via the labeling requirements. (ALA, No. 137 at 6, 2016. 81 FR 580. rotation of fan blades.’’ (42 U.S.C. 13 The framework document is available at p. 4) DOE confirms that it is not regulations.gov under docket number EERE–2012– 6291(49)) establishing performance standards for BT–STD–0045–0001. ceiling fans whose blades’ plane of 14 The preliminary analysis, preliminary TSD, 15 The NOPR analysis, NOPR TSD and NOPR and preliminary analysis public meeting public meeting information are available at rotation cannot be within 45 degrees of information are available at regulations.gov under regulations.gov under docket number EERE–2012– horizontal in this final rule. The design docket number EERE–2012–BT–STD–0045–0066. BT–STD–0045–0130. standards set forth in EPCA at 42 U.S.C.
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6295(ff) remain applicable to these fans further details on product classes, see thorough review of all available test and manufacturers must certify section IV.A.1 of this rulemaking. data, including additional test data compliance with those design standards supplied by manufacturers, to identify B. Test Procedure to DOE. opportunities to decrease testing In summary, this DOE final rule is not EPCA sets forth generally applicable variation. establishing performance standards for criteria and procedures for DOE’s DOE attempted to issue the final test belt-driven ceiling fans, centrifugal adoption and amendment of test procedure prior to the NOPR proposing ceiling fans, oscillating ceiling fans, or procedures. (42 U.S.C. 6293) energy conservation standards. ceiling fans whose blades’ plane of Manufacturers of covered products must However, additional time to address rotation cannot be within 45 degrees of use these test procedures to certify to comments received on the NOPR and horizontal. DOE is also not establishing DOE that their product complies with SNOPR lead to modification of the test performance standards for highly energy conservation standards and to procedure, which caused deviations decorative fans. Manufacturers must quantify the efficiency of their product. from the guidance provided in 10 CFR continue to submit certification reports (42 U.S.C. 6293, 6295(s)) Similarly, DOE part 430, subpart C, Appendix A. to DOE for such fans with respect to the must use these test procedures to Currently no energy efficiency statutory design standards. Both DOE determine compliance with its energy performance standards exist for ceiling and manufacturers would determine conservation standards. (42 U.S.C. fans, just design standards for certain whether a fan met the definition of a 6295(s)) As noted, the test procedures ceiling fans. In this final rule, DOE is highly decorative fan using the final test for ceiling fans are provided in 10 CFR setting energy efficiency performance procedure, though manufacturers would 430.23(w) and appendix U to subpart B standards in terms of a minimum not be required to submit the supporting of 10 CFR part 430. DOE published a efficiency equation established in the information, including any test data that NOPR to amend the ceiling fan test test procedure final rule. 81 FR 48620 supports their highly decorative procedures on October 17, 2014, 79 FR (July 25, 2016). The test procedure final classification as part of their 62521, and published a supplemental rule established test procedures for an certification submission to DOE. In NOPR (SNOPR) on June 3, 2015. 80 FR integrated efficiency metric measured in addition, manufacturers would be 31487. DOE finalized the test procedure cubic feet per minute per watt (CFM/W) required to test highly-decorative fans on July 25, 2016. 81 FR 48620. that is applicable to all ceiling fans for according to the test procedure With respect to the process of which DOE establishes energy established in the test procedure final establishing test procedures and conservation standards in this final rule. rule to make representations of the standards for a given product, DOE In the July 2016 test procedure final energy efficiency of such fans (e.g., for notes that, while not legally obligated to rule, DOE: (1) Specified new test the EnergyGuide label)). do so, it generally follows the approach procedures for large-diameter ceiling laid out in guidance found in 10 CFR fans, multi-mount ceiling fans, ceiling 2. Product Classes part 430, subpart C, Appendix A fans with multiple fan heads, and When establishing energy (Procedures, Interpretations and Policies ceiling fans where the airflow is not conservation standards, DOE divides for Consideration of New or Revised directed vertically, and (2) adopted the covered products into product classes Energy Conservation Standards for following changes to the current test by the type of energy used or by Consumer Products). That guidance procedure: (a) Low-speed small- capacity or other performance-related provides, among other things, that DOE diameter ceiling fans must be tested at features that justify differing standards. issues final, modified test procedures high and low speeds; (b) high-speed In making a determination whether a for a given product prior to publication small-diameter ceiling fans must be performance-related feature justifies a of the NOPR proposing energy tested at high speed only; (c) large- different standard, DOE must consider conservation standards for that product. diameter ceiling fans must be tested at such factors as the utility of the feature While DOE strives to follow the up to five speeds; (d) a test cylinder is to the consumer and other factors DOE procedural steps outlined in its not to be used during testing; (e) fans determines are appropriate. (42 U.S.C. guidance, there may be circumstances in that can be mounted at more than one 6295(q)) which it may be necessary or height are to be mounted in the Currently there are no product classes appropriate to deviate from it. In such configuration that minimizes the for ceiling fans, because the previous instances, the guidance indicates that distance between the fan blades and the final rule for ceiling fans published on DOE will provide notice and an ceiling; (f) any heater installed with a October 18, 2005 set design standards, explanation for the deviation. ceiling fan is to be switched off during but did not establish product classes. 70 Accordingly, DOE has provided notices testing; (g) small-diameter ceiling fans FR 60407. In the ceiling fans NOPR, while it continued to develop the final must be mounted directly to the real DOE proposed seven product classes test procedure for ceiling fans. DOE ceiling; (h) the allowable measurement and their associated definitions, which received comments regarding test tolerance for air velocity sensors is ± included highly-decorative, belt-driven, methods for ceiling fans for which the 5%; (i) the allowable mounting distance very small-diameter, hugger, standard, plane of rotation of the ceiling fan’s tolerance for air velocity sensors is high-speed small-diameter and large- blades cannot be within 45 degrees of ± 1/16’’; (j) the air delivery room must diameter fans. 81 FR 1688 (January 13, horizontal, high-volume small-diameter be at 70 F ± 5 F during testing; (k) air 2016). Chapter 3 of the TSD provides ceiling fans and ceiling fans with blade delivery room doors and air additional discussion on the spans greater than seven feet leading to conditioning vents must be closed and establishment of these product classes modification to test methods proposed forced-air conditioning equipment pursuant to 42 U.S.C. 6295(q). In the in the NOPR. (79 FR 62521 (October 17, turned off during testing; (l) low speed ceiling fans test procedure final rule, 2014)). DOE also received comments small diameter and HSSD fans capable DOE finalized the definitions for these regarding the variability of results from of operating with single- and multi- types of ceiling fans. 81 FR 48620 (July the test procedures proposed in the phase power be tested with single-phase 25, 2016). In this final rule, DOE is SNOPR (80 FR 31487 (June 3, 2015)), power, and large diameter fans capable finalizing all seven product classes based on testing conducted by of operating with single- and multi- proposed in the ceiling fans NOPR. For manufacturers. Lastly, DOE conducted a phase power be tested with multi-phase
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power; (m) the supply voltage must be efficiency level. Section IV.B of this the site energy, DOE calculates NES in 120 V if the ceiling fan’s minimum rated notice discusses the results of the terms of primary energy savings at the voltage is 120 V or the lowest rated screening analysis for ceiling fans, site or at power plants, and also in terms voltage range contains 120 V; 240 V if particularly the designs DOE of full-fuel-cycle (FFC) energy savings. the ceiling fan’s minimum rated voltage considered, those it screened out, and The FFC metric includes the energy is 240 V or the lowest rated voltage those that are the basis for the standards consumed in extracting, processing, and range contains 240 V; the ceiling fan’s considered in this rulemaking. For transporting primary fuels (i.e., coal, minimum rated voltage (if a voltage further details on the screening analysis natural gas, petroleum fuels), and thus range is not given) or the mean of the for this rulemaking, see section IV.B of presents a more complete picture of the lowest rated voltage range, in all other this notice and chapter 4 of the final impacts of energy conservation cases; (n) measurement axes shall be rule TSD. standards.17 DOE’s approach is based on perpendicular to test room walls; and 2. Maximum Technologically Feasible the calculation of an FFC multiplier for (o) measurement stabilization Levels each of the energy types used by requirements shall be met for a valid covered products or equipment. For test (i.e., average air velocity readings in When DOE proposes to adopt an more information on FFC energy each axis for each sensor are within 5% amended standard for a type or class of savings, see section IV.H.1 of this and average electrical power covered product, it must determine the rulemaking. measurement in each axis for each maximum improvement in energy 2. Significance of Savings sensor are within 1%). DOE also efficiency or maximum reduction in determined that belt-driven ceiling fans, energy use that is technologically To adopt standards for a covered centrifugal ceiling fans, oscillating feasible for such product. (42 U.S.C. product, DOE must determine that such ceiling fans, and ceiling fans for which 6295(p)(1)) Accordingly, in the action would result in significant energy the plane of rotation of the fan blades engineering analysis, DOE determined savings. (42 U.S.C. 6295(o)(3)(B)) cannot be within 45 degrees of the maximum technologically feasible Although the term ‘‘significant’’ is not horizontal are not subject to the ceiling (‘‘max-tech’’) improvements in energy defined in the Act, the U.S. Court of fan test procedure. Manufacturers of efficiency for ceiling fans, using the Appeals, for the District of Columbia highly decorative ceiling fans must use design parameters for the most efficient Circuit in Natural Resources Defense the test procedure as described in products available on the market or in Council v. Herrington, 768 F.2d 1355, working prototypes. The max-tech section III.A.1. 1373 (D.C. Cir. 1985), indicated that levels that DOE determined for this Congress intended ‘‘significant’’ energy C. Technological Feasibility rulemaking are described in section IV.C savings in the context of EPCA to be 1. General of this proposed rule and in chapter 5 savings that are not ‘‘genuinely trivial.’’ of the final rule TSD. The energy savings for all the TSLs In each energy conservation standards considered in this rulemaking, which rulemaking, DOE conducts a screening D. Energy Savings range from 0.807 quads to 3.738 quads, analysis based on information gathered 1. Determination of Savings are nontrivial, and, therefore, DOE on all current technology options and For each trial standard level (TSL), considers them ‘‘significant’’ within the prototype designs that could improve DOE projected energy savings from meaning of section 325 of EPCA. the efficiency of the products or application of the TSL to ceiling fans equipment that are the subject of the E. Economic Justification purchased in the 30-year period that rulemaking. As the first step in such an begins in the first full year of 1. Specific Criteria analysis, DOE develops a list of compliance with any amended technology options for consideration in As noted above, EPCA provides seven standards (2020–2049).16 The savings consultation with manufacturers, design factors to be evaluated in determining are measured over the entire lifetime of engineers, and other interested parties. whether a potential energy conservation products purchased in the 30-year DOE then determines which of those standard is economically justified. (42 analysis period. DOE quantified the means for improving efficiency are U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) The energy savings attributable to each TSL technologically feasible. DOE considers following sections discuss how DOE has as the difference in energy consumption technologies incorporated in addressed each of those seven factors in between each standards case and the no- commercially available products or in this rulemaking. new-standards case. The no-new- working prototypes to be standards case represents a projection of a. Economic Impact on Manufacturers technologically feasible. 10 CFR part energy consumption that reflects how and Consumers 430, subpart C, appendix A, section the market for a product would likely 4(a)(4)(i) In determining the impacts of a evolve in the absence of amended After DOE has determined that potential amended standard on energy conservation standards. particular technology options are manufacturers, DOE conducts a DOE used its national impact analysis technologically feasible, it further manufacturer impact analysis (MIA), as (NIA) spreadsheet models to estimate evaluates each technology option in discussed in section IV.J. DOE first uses national energy savings (NES) from light of the following additional an annual cash-flow approach to potential amended standards for ceiling screening criteria: (1) Practicability to determine the quantitative impacts. This fans. The NIA spreadsheet model manufacture, install, and service; (2) step includes both a short-term (described in section IV.H of this adverse impacts on product utility or assessment—based on the cost and rulemaking) calculates energy savings in availability; and (3) adverse impacts on capital requirements during the period terms of site energy, which is the energy health or safety. 10 CFR part 430, between when a regulation is issued and directly consumed by products at the subpart C, appendix A, section when entities must comply with the locations where they are used. Based on 4(a)(4)(ii)–(iv) Additionally, it is DOE 17 The FFC metric is discussed in DOE’s policy not to include in its analysis any 16 DOE also presents a sensitivity analysis that statement of policy and notice of policy proprietary technology that is a unique considers impacts for products shipped in a 9-year amendment. 76 FR 51282 (August 18, 2011), as pathway to achieving a certain period. amended at 77 FR 49701 (Aug. 17, 2012).
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regulation—and a long-term assessment recover the increased purchase cost NOPR TSD to the Attorney General for over a 30-year period. The industry- (including installation) of a more- review, with a request that the DOJ wide impacts analyzed include (1) efficient product through lower provide its determination on this issue. INPV, which values the industry on the operating costs. DOE calculates the PBP In its assessment letter responding to basis of expected future cash flows; (2) by dividing the change in purchase cost DOE, DOJ concluded that the proposed cash flows by year; (3) changes in due to a more-stringent standard by the energy conservation standards for revenue and income; and (4) other change in annual operating cost for the ceiling fans are unlikely to have a measures of impact, as appropriate. year that standards are assumed to take significant adverse impact on Second, DOE analyzes and reports the effect. competition. DOE is publishing the impacts on different types of For its LCC and PBP analysis, DOE Attorney General’s assessment at the manufacturers, including impacts on assumes that consumers will purchase end of this final rule. small manufacturers. Third, DOE the covered products in the first full f. Need for National Energy considers the impact of standards on year of compliance with amended Conservation domestic manufacturer employment and standards. The LCC savings for the manufacturing capacity, as well as the considered efficiency levels are DOE also considers the need for potential for standards to result in plant calculated relative to the case that national energy conservation in closures and loss of capital investment. reflects projected market trends in the determining whether a new or amended Finally, DOE takes into account absence of amended standards. DOE’s standard is economically justified. (42 cumulative impacts of various DOE LCC and PBP analysis is discussed in U.S.C. 6295(o)(2)(B)(i)(VI)) The energy regulations and other regulatory further detail in section IV.F. savings from the adopted standards may requirements on manufacturers. provide improvements to the security For individual consumers, measures c. Energy Savings and reliability of the nation’s energy of economic impact include the changes Although significant conservation of system. Reductions in the demand for in LCC and payback period (PBP) energy is a separate statutory electricity also may result in reduced associated with new or amended requirement for adopting an energy costs for maintaining the reliability of standards. These measures are conservation standard, EPCA requires the Nation’s electricity system. DOE discussed further in the following DOE, in determining the economic conducts a utility impact analysis to section. For consumers in the aggregate, justification of a standard, to consider estimate how standards may affect the DOE also calculates the national net the total projected energy savings that nation’s needed power generation present value of the economic impacts are expected to result directly from the capacity, as discussed in section IV.M. applicable to a particular rulemaking. standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) The adopted standards also are likely DOE also evaluates the LCC impacts of As discussed in section IV.H, DOE uses to result in environmental benefits in potential standards on identifiable the NIA spreadsheet models to project the form of reduced emissions of air subgroups of consumers that may be national energy savings. pollutants and greenhouse gases (GHGs) affected disproportionately by a national associated with energy production and d. Lessening of Utility or Performance of standard. use. DOE conducts an emissions Products analysis to estimate how potential b. Savings in Operating Costs Compared In establishing product classes, and in standards may affect these emissions, as to Increase in Price (LCC and PBP) evaluating design options and the discussed in section IV.K; the emissions EPCA requires DOE to consider the impact of potential standard levels, DOE impacts are reported in section V.B.6 of savings in operating costs throughout evaluates potential standards that would this rulemaking. DOE also estimates the the estimated average life of the covered not lessen the utility or performance of economic value of emissions reductions product in the type (or class) compared the considered products. (42 U.S.C. resulting from the considered TSLs, as to any increase in the price of, or in the 6295(o)(2)(B)(i)(IV)) Based on data discussed in section IV.L. To date, this initial charges for, or maintenance available to DOE, the standards adopted accounting for environmental benefits expenses of, the covered product that in this final rule would not reduce the has not had a decisive impact on the are likely to result from a standard. (42 utility or performance of the products outcome of any standards rulemaking, U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts under consideration in this rulemaking. which is also the case for today’s final this comparison in its LCC and PBP e. Impact of Any Lessening of rule. analysis. The LCC is the sum of the purchase Competition g. Other Factors price of a product (including its EPCA directs DOE to consider the In determining whether an energy installation) and the operating cost impact of any lessening of competition, conservation standard is economically (including energy, maintenance, and as determined in writing by the justified, DOE may consider any other repair expenditures) discounted over Attorney General, that is likely to result factors that the Secretary deems to be the lifetime of the product. The LCC from a standard. (42 U.S.C. relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) analysis requires a variety of inputs, 6295(o)(2)(B)(i)(V)) It also directs the To the extent interested parties submit such as product prices, product energy Attorney General to determine the any relevant information regarding consumption, energy prices, impact, if any, of any lessening of economic justification that does not fit maintenance and repair costs, product competition likely to result from a into the other categories described lifetime, and discount rates appropriate standard and to transmit such above, DOE could consider such for consumers. To account for determination to the Secretary within 60 information under ‘‘other factors.’’ uncertainty and variability in specific days of the publication of a proposed inputs, such as product lifetime and rule, together with an analysis of the 2. Rebuttable Presumption discount rate, DOE uses a distribution of nature and extent of the impact. (42 As set forth in 42 U.S.C. values, with probabilities attached to U.S.C. 6295(o)(2)(B)(ii)) To assist the 6295(o)(2)(B)(iii), EPCA creates a each value. Department of Justice (DOJ) in making rebuttable presumption that an energy The PBP is the estimated amount of such a determination, DOE transmitted conservation standard is economically time (in years) it takes consumers to copies of its proposed rule and the justified if the additional cost to the
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consumer of a product that meets the A. Market and Technology Assessment In this final rule, DOE finalizes the standard is less than three times the product classes proposed in the ceiling value of the first year’s energy savings DOE develops information in the fans NOPR for the energy conservation resulting from the standard, as market and technology assessment that standards. DOE received several calculated under the applicable DOE provides an overall picture of the comments to the ceiling fans NOPR test procedure. DOE’s LCC and PBP market for the products concerned, regarding the product classes that were analyses generate values used to including the purpose of the products, proposed. Westinghouse stated that they calculate the effect potential amended the industry structure, manufacturers, agree and appreciate the minor changes energy conservation standards would market characteristics, and technologies made to the product class structure, and have on the payback period for used in the products. This activity that the changes make a big difference, consumers. These analyses include, but includes both quantitative and particularly regarding safety. are not limited to, the 3-year payback qualitative assessments, based primarily (Westinghouse, Public Meeting period contemplated under the on publicly-available information. The Transcript, No. 133 at p. 21) ALA rebuttable-presumption test. In addition, subjects addressed in the market and commented that they agreed in general DOE routinely conducts an economic technology assessment for this with the product class structure analysis that considers the full range of rulemaking include (1) the scope of the proposed in the NOPR. (ALA, No. 137 impacts to consumers, manufacturers, rulemaking and product classes, (2) at p. 4) BAS stated that they are the Nation, and the environment, as manufacturers and industry structure, generally supportive of the product required under 42 U.S.C. (3) existing efficiency programs, (4) class structure. (BAS, No. 138 at p. 2) 6295(o)(2)(B)(i). The results of this shipments information, (5) market and However, BAS expressed concern that analysis serve as the basis for DOE’s industry trends, and (6) technologies or the product classes may be too complex, evaluation of the economic justification design options that could improve the in particular, comparing the standard for a potential standard level (thereby energy efficiency of ceiling fans. See fans to HSSD fans. The two different supporting or rebutting the results of chapter 3 of the final rule TSD for methods of tests may provide some any preliminary determination of further discussion of the market and confusion to end users. Specifically, economic justification). The rebuttable technology assessment. BAS was concerned that HSSD ceiling presumption payback calculation is DOE received several comments fans will be tested at one speed, while discussed in section IV.F.8 of this final regarding product classes, and the standard ceiling fans will be tested at rule. technology options DOE identified that two speeds (BAS, Public Meeting can improve the efficiency of ceiling Transcript, No. 133 at p. 22) (BAS, No. IV. Methodology and Discussion of fans. The comments are discussed in the 138 at p. 2) Related Comments following sections. DOE finds that HSSD ceiling fans This section addresses the analyses 1. Product Classes provide different utility to the consumer DOE has performed for this rulemaking than standard ceiling fans. HSSD ceiling with regard to ceiling fans. Separate DOE divides covered products into fans generally operate at much higher subsections address each component of classes by: (a) The type of energy used speeds (in terms of RPM) than standard DOE’s analyses. DOE also responds to by the product; (b) the capacity of the ceiling fans, and are installed in comments received on its analyses in product; or (c) other performance- commercial applications. HSSD ceiling this section. related features that justify different fans are available in a blade span range DOE used several analytical tools to standard levels, considering the similar to standard ceiling fans, but an estimate the impact of the standards consumer utility of the feature and other HSSD fan typically provides more considered in this document. The first relevant factors. (42 U.S.C. 6295(q)) airflow at a given blade span because it tool is a spreadsheet that calculates the In the ceiling fans NOPR, DOE runs at much higher RPMs. LCC savings and PBP of amended proposed seven product classes based Additionally, DOE observed that HSSD energy conservation standards (the Life- on the capacity of the product and other ceiling fans are generally used in Cycle Cost Analysis spreadsheet). The performance-related features that justify commercial buildings whereas standard national impacts analysis uses a second a different standard, considering the fans are installed in residential spreadsheet set that provides shipments utility to the consumer. 81 FR 1688. The buildings. Therefore, HSSD and forecasts and calculates national energy product classes include: Highly- standard ceiling fans provide distinct savings and net present value of total decorative, belt-driven, very-small- utility to different end-users and are not consumer costs and savings expected to diameter, hugger, standard, high-speed market substitutes. As a result, result from potential energy small-diameter and large-diameter establishing separate product classes conservation standards (the National ceiling fans. DOE also proposed and differing test methods should not Impact Analysis spreadsheet). DOE uses definitions for these product classes in provide confusion to end-users. the third spreadsheet tool, the the ceiling fan energy conservation Also, in general, the product class Government Regulatory Impact Model standard proposed rule. In the ceiling structure was developed to follow the (GRIM), to assess manufacturer impacts fan test procedure final rule, DOE Underwriters Laboratory (UL) ceiling of potential standards. These three finalized the definitions for the fan existing safety standards (UL spreadsheet tools are available on the following types of ceiling fans: highly- Standard 507–1999, ‘‘UL Standard for 18 DOE website for this rulemaking: decorative, belt-driven, very-small- Safety for Electric Fans’’ (UL 507)). https://www.regulations.gov/ diameter, hugger, standard, high speed The UL 507 standard uses both blade #!docketDetail;D=EERE-2012-BT-STD- small-diameter and large-diameter thickness and maximum tip speed to 0045. Additionally, DOE used output ceiling fans. DOE responded to any differentiate fans, such that ceiling fans from the latest version of EIA’s Annual comments received in response to the are safe for use in applications where Energy Outlook (AEO), a widely known ceiling fans NOPR regarding the 18 definitions for these type of ceiling fans Underwriters Laboratories Inc. UL Standard for energy forecast for the United States, for Safety for Electric Fans, UL 507. 1999. Northbrook, the emissions and utility impact in the test procedure final rule. 81 FR IL. http://www.comm-2000.com/ analyses. 48620 (July 25, 2016). ProductDetail.aspx?UniqueKey=8782.
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the distance between the fans blades movement performance is a secondary fan controls, which include occupancy and the floor is 10 feet or less. While design feature. (42 sensors; and (4) fan optimization. standard ceiling fans are used in U.S.C.6295(ff)(6)(B)(i)–(ii)) DOE did not DOE received no comments in locations where blades are typically have data to determine whether opposition to the technology options within 10 feet of the floor, HSSD ceiling standards for belt-driven ceiling fans proposed in the ceiling fans NOPR. fans are not and do not have to comply were technically feasible and However, DOE did receive comments with the UL 507 standard. A product economically justified due to the regarding including an additional class structure that is consistent with limited number of basic models for belt- technology option specific to large- UL 507 provides a method to driven ceiling fans. DOE did not receive diameter ceiling fans. BAS requested differentiate standard and HSSD ceiling any comments regarding these product that an additional efficiency level be fans, while still ensuring that the safety classes and has not received any added to represent a large diameter fan standards are in place. Simplifying the additional data to analyze potential using a premium AC motor instead of a product class structure without using standards for belt-driven ceiling fans. As three-phased geared brushless DC the UL507 standard could result in a result, in this final rule, DOE does not motor. BAS stated that premium AC safety issues. set any standards for highly-decorative motors are almost as efficient as In summary, HSSD ceiling fans and belt-driven ceiling fans. permanent magnet motors. (BAS, Public provide a different utility to consumers DOE is also not establishing Meeting Transcript, No. 133 at pp. 35– compared to standard fans, and that performance standards for centrifugal 36) warrants a separate product class for ceiling fans, oscillating ceiling fans, or these ceiling fans. Therefore, in this ceiling fans whose blades’ plane of In response to BAS’s comment, and final rule, DOE continues to define rotation cannot be within 45 degrees of for the reasons discussed in section separate product classes for HSSD and horizontal fans. In the ceiling fan test IV.C.3, DOE added premium AC motor standard ceiling fans. procedure final rule, DOE stated that as an additional technology option in For the reasons discussed above, DOE those ceiling fans are also not subject to this final rule to account for the costs finalizes the seven product classes the test procedure. 81 FR 48620 (July 25, and benefits of premium AC motors proposed in the ceiling fans NOPR in 2016). used in ceiling fans in DOE’s analysis. this final rule. The product classes Further discussion regarding how DOE finalized in this final rule are: Highly- 2. Technology Options implemented this technology option in decorative, belt-driven, very-small- In the NOPR market and technology the analysis is provided in chapter 5 of diameter, hugger, standard, high-speed assessment, DOE identified technology the TSD. small-diameter and large-diameter options that would improve the In the absence of adverse comments, ceiling fans. efficiency of ceiling fans, as measured DOE analyzed the same technology In the ceiling fans NOPR, DOE did not by the DOE test procedure. These options from the ceiling fans NOPR, as propose standards for ceiling fans in the technology options fall into four main well as the premium AC motor highly-decorative fan and belt-driven categories: (1) More efficient motors, technology option specific to large- ceiling fan product classes. EPCA which include larger direct-drive single diameter ceiling fans, in this final rule. requires DOE to consider exempting, or phase induction motors, three-phase Table IV.1 provides the list of setting different standards for, certain induction motors, geared brushless DC technology options considered in the product classes for which the ‘‘primary motors, gearless brushless DC motors, analysis and their descriptions. The standards’’ are not technically feasible and brushless DC motors, and; (2) more screening analysis, which is discussed or economically justified. EPCA also efficient blades, which include curved in the next section, provides further requires DOE to consider establishing blades, airfoil blades, twisted blades, discussion on which of these technology separate exempted product classes for beveled blades, blade attachments, options DOE retained as design options highly-decorative fans for which air alternative blade materials; (3) ceiling for the engineering analysis.
TABLE IV.1—TECHNOLOGY OPTIONS AND DESCRIPTIONS
Technology option Description
Fan optimization ...... This represents increasing the efficiency of a fan by adjusting existing fan design features. These ad- justments could include changing blade pitch, fine-tuning motor RPM, and/or changing internal motor characteristics. The material, mass, and design/assembly of the motor lamination stack will have an impact on effi- ciency (via reducing eddy current losses, for example). Similarly, the material, diameter, length, con- figuration, etc. of the wire in the motor will influence electrical resistance losses inside motor as well as the overall efficiency of the motor. More efficient motors: Larger direct drive single-phase in- This represents increasing the mass and/or choosing steel with better energy efficiency characteristics duction motors. for the stator and rotor stack, improving the lamination design, increasing the cross section and/or length of the copper wiring inside the motor. Three-phase induction motors ...... Three-phase induction motors have lower thermal energy losses than the single-phase motors typically found in residential line-power applications. They also have a more even torque on the rotor resulting in a more efficient rotation and less motor ‘‘hum.’’ However, three-phase power is extremely uncommon in residential applications. For most residences, these types of motors require electronic drive systems that convert single-phase power into a three- phase power supply. Brushless DC motor ...... In residential applications, brushless DC motors typically consist of a permanent magnet synchronous AC motor that is driven by a multi-pole electronic drive system. Similar to DC motors, brushless DC motors typically achieve better efficiency than standard AC motors because they too have no rotor energy losses.
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TABLE IV.1—TECHNOLOGY OPTIONS AND DESCRIPTIONS—Continued
Technology option Description
Geared Brushless DC motor ...... Brushless DC motor fans with geared motors have fan blades attached to the motor via a geared mechanism, which allows the fan blades to rotate at a different speed from the motor. Premium AC motor ...... Premium AC motors are NEMA Premium® motors that are highly energy efficient electric motors. A motor can be marketed as a NEMA Premium motor if it meets or exceeds a set of minimum full-load efficiency levels.19 Such NEMA motors are available in integral horsepower capacities (i.e., 1 hp+). Gearless Brushless DC motor ...... Fans with a brushless DC motor that drive the fan blades directly without the use of a geared mecha- nism. More efficient blades: Curved blades ...... Curved blades are blades for which the centerline of the blade cross section is cambered. Curved blades generally have uniform thickness and no significant internal volume. Airfoil blades ...... Airfoil blades use curved surfaces to improve aerodynamics, but the thickness is not uniform and the top and bottom surfaces do not follow the same path from leading edge to trailing edge. Airfoil blades typically do not operate as efficiently in reverse, potentially impacting consumer utility on models where reverse flow was an option. Twisted blades ...... Twisted blades reduce aerodynamic drag and improve efficiency by decreasing the blade pitch or twist from where the blade attaches to the motor casing to the blade tip. Blade attachments ...... Blade attachments refer to upswept blade tips or other components that can be fastened to a fan blade to potentially increase airflow or reduce drag. Beveled blades ...... Beveled blades are typically beveled at the blade edges from the motor casing to the blade tip. Beveled fan blades are more aerodynamic than traditional fan blades. Alternative blade materials ...... Use of alternative materials could enable more complex and efficient blade shapes (plywood vs. MDF vs. injection-molded resin, for example). Ceiling fan controls: Occupancy sensors ...... Occupancy sensors use technologies that detect the presence of people through movement, body heat, or other means. Ceiling fans used with an occupancy sensor could power down if they sense that a room is unoccupied. Wind and Temperature Sensors ... Wind and temperature sensors detect temperature changes in the surrounding space, or potential wind speed reductions below certain thresholds. Ceiling fans could potentially adjust fan speed based on the wind and temperature in the space the ceiling fan is located when coupled with these sensors.
B. Screening Analysis substantially the same as products for hugger and standard ceiling fans. DOE uses the following four screening generally available in the United States (ALA, No. 137 at p. 6) The discussion criteria to determine which technology at the time, it will not be considered regarding retaining brushless DC motors options are suitable for further further. as a technology option is provided in (4) Adverse impacts on health or consideration in an energy conservation section IV.B.2. safety. If it is determined that a standards rulemaking: technology would have significant 1. Screened-Out Technologies (1) Technological feasibility. adverse impacts on health or safety, it In the ceiling fans NOPR, DOE Technologies that are not incorporated will not be considered further. screened out the following technologies: in commercial products or in working (1) For standard, hugger and VSD prototypes will not be considered 10 CFR part 430, subpart C, appendix A, ceiling fans: Three-phase induction further. 4(a)(4) and 5(b) motors, occupancy sensors, and blade (2) Practicability to manufacture, In sum, if DOE determines that a design elements including airfoil blades, install, and service. If it is determined technology, or a combination of beveled blades, twisted blades, blade that mass production and reliable technologies, fails to meet one or more attachments, and alternative blade installation and servicing of a of the above four criteria, DOE will materials; (2) For HSSD ceiling fans: technology in commercial products exclude it from further consideration in Larger direct-drive single-phase could not be achieved on the scale the engineering analysis. The reasons induction motors, three-phase induction necessary to serve the relevant market at for eliminating any technology are motors, twisted blades, blade the time of the projected compliance discussed below. The subsequent attachments, alternative blade materials, date of the standard, then that sections include comments from and occupancy sensors; (3) For large- technology will not be considered interested parties pertinent to the diameter ceiling fans: Larger direct- further. screening criteria, DOE’s evaluation of drive single-phase induction motors, (3) Impacts on product utility or each technology option against the beveled blades, twisted blades, blade product availability. If it is determined screening analysis criteria, and whether attachments, alternative blade materials, that a technology would have significant DOE determined that a technology and occupancy sensors. 81 FR 1688, adverse impact on the utility of the option should be excluded (‘‘screened (January 13, 2016). product to significant subgroups of out’’) based on the screening criteria. consumers or would result in the Westinghouse agreed in general with DOE received several comments unavailability of any covered product the screened in and screened out regarding the screened-out technologies, type with performance characteristics technologies, and said they appreciated specifically occupancy sensors, and (including reliability), features, sizes, that DOE considered a significant wind and temperature sensors. ALA capacities, and volumes that are amount of stakeholder feedback. supported screening out occupancy (Westinghouse, Public Meeting sensors from DOE’s analysis. According 19 NEMA Premium Motors Information Page: Transcript, No. 133 at p. 46) With the to ALA, while this technology has the https://www.nema.org/Policy/Energy/Efficiency/ exception of brushless DC motors, ALA potential to reduce consumer ceiling fan Pages/NEMA-Premium-Motors.aspx. agreed with DOE’s screening analysis usage, occupancy sensors would be
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problematic for ceiling fans in reduced operating hours based on what the industry or consumer would bedrooms. (ALA, No. 137 at p. 7) BAS implementing controls. DOE also did consider a different fan model. DOE stated that in the Lawrence Berkeley not find data to show that wind and defined ‘‘fan optimization’’ for its National Laboratory (LBNL) study cited temperature sensors can be installed analysis as adjusting existing design by DOE in the TSD, more than 50 reliably market-wide. Therefore, for this features. These adjustments include percent of surveyed people indicated final rule, DOE continues to screen out adjusting blade pitch, fine-tuning motor there is a ceiling fan operating in an wind and temperature sensors for all rpm, and changing internal motor empty room at least half of the time. ceiling fans because DOE cannot characteristics. DOE does not expect any BAS believes that adding occupancy satisfactorily evaluate the energy of these adjustments to require sensors to those ceiling fans would savings potential, technological significant changes to the appearance, dramatically reduce the annual energy feasibility and impact on consumer materials, or outputs of the fan. use of the fan. (BAS, No. 138 at p. 6) utility of implementing wind and Consequently, the optimized fan should DOE acknowledges that occupancy temperature sensors. look and feel almost identical to the sensors have the potential to save In the absence of any adverse non-optimized version of the same fan, energy by reducing the number of comments regarding the technology only consume less energy. ceiling fan operating hours. However, options that were screened out in the Regal requested that DC motors be available data was insufficient for DOE NOPR, DOE continues to screen-out the referred to as ‘‘brushless DC motors’’ to evaluate any potential tradeoff same technology options from the NOPR instead of just ‘‘DC motors’’ in the between consumer utility and the in this final rule. Specifically, DOE standard. (Regal, Public Meeting energy savings of reduced operating screened out the following technologies Transcript, No. 133 at p. 52) DOE agrees hours. DOE also researched the option in this final rule—(1) For standard, with Regal and recognizes that of introducing occupancy sensors in hugger and VSD ceiling fans: Three- ‘‘brushless DC motors’’ is a more ceiling fans. DOE did not find data to phase induction motors, and blade accurate technical descriptor for these show that occupancy sensor can be design elements including airfoil blades, motors. As such, DOE refers to these installed reliably market-wide. beveled blades, twisted blades, blade motors as ‘‘brushless DC motors’’ Therefore, in this final rule, DOE attachments, and alternative blade throughout this final rule notice and continues to screen out occupancy materials, and occupancy, wind and accompanying TSD. sensors because DOE cannot temperature sensors; (2) For HSSD For brushless DC motors in standard satisfactorily evaluate the energy ceiling fans: More efficient direct-drive and hugger ceiling fans, ALA savings potential, technological single-phase induction motors, three- commented that they are concerned feasibility and impact on consumer phase induction motors, twisted blades, about the technological feasibility of DC utility of implementing sensors or blade attachments, alternative blade motors due to concerns about their schedule controls. materials, and occupancy, wind and reliability and their incompatibility In terms of wind and temperature temperature sensors; (3) For large- with existing wall-mounted controls. sensors, Center for the Built diameter ceiling fans: More efficient (ALA, No. 137 at p. 6) Appliance Environment (CBE) commented that direct-drive single-phase induction Standards Awareness Project (ASAP), additional research is needed to motors, beveled blades, twisted blades, Alliance to Save Energy (ASE), demonstrate to what degree integrated blade attachments, alternative blade American Council for an Energy- temperature and wind sensors in a materials, and occupancy, wind and Efficient Economy (ACEEE), Natural ceiling fan may save energy with current temperature sensors. Resources Defense Council (NRDC), and commercial building controls, or Northwest Energy Efficiency Alliance standard thermostats found in most 2. Remaining Technologies (herein knows as ‘‘Advocates’’) claimed homes. (CBE, No. 143 at p. 1) ALA In the ceiling fans NOPR, DOE they were unaware of any data agreed with DOE’s decision to not retained the following technology indicating any reliability issues include wind or temperature sensors as options—(1) For standard, hugger and associated with DC motors for ceiling technology options. ALA stated they are VSD ceiling fans: Fan optimization, fans. (Advocates, No. 142 at p. 4) not aware of any ceiling fans or working larger direct-drive single-phase DOE has observed that several ceiling prototypes that include integrated wind induction motor and brushless DC fan manufacturers offer small-diameter or temperature sensors, or any data that motors; (2) For HSSD ceiling fans: fan ceiling fans that use brushless DC would indicate that these products optimization, curved blades, airfoil motors, and that these fans are some of could lead to energy savings in real blades and brushless DC motors; (3) For the most efficient small-diameter ceiling world applications. (ALA, No. 137 at p. large-diameter ceiling fans: Fan fans on the market. DOE does 6) BAS stated that many large diameter optimization, airfoil blades, geared acknowledge, however, that brushless fan manufacturers offer some sort of brushless DC motors and gearless DC motors are a relatively new speed control based on space brushless DC motors. 81 FR 1688 technology. Consequently, most small temperature (Big Ass Fans’ SmartSense). (January 13, 2016). diameter ceiling fans that use brushless (BAS, No. 138 at pp. 4–5) DOE received several comments DC motors that are currently installed in Similar to occupancy sensors, DOE regarding the retained technology the field are early in their expected acknowledges that wind and options. For fan optimization, lifespan and, in turn, any reliability temperature sensors have the potential Westinghouse commented that there are issues may become apparent as these to save energy by reducing the number always a few changes that can be made fans age. Nevertheless, their availability of ceiling fan operating hours. As BAS to fans to optimize fans, but not all of in the market indicates to DOE that stated, there are large-diameter the options can be made or it will result brushless DC motors meet the screening manufacturers that offer some sort of in a completely different product. criteria of technological feasibility, speed control based on space (Westinghouse, Public Meeting practicability to manufacture, install, temperature. However, available data is Transcript, No. 133 at p. 48) DOE and service, and no significant impacts insufficient for DOE to evaluate any recognizes Westinghouse’s concern that on utility (including reliability and potential tradeoff between consumer making changes to a ceiling fan to product availability). Consequently, utility and the energy savings of improve performance may result in DOE screened in brushless DC motors
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for this final rule for standard and brushless DC motors. DOE also did Fan optimization, curved blades, airfoil hugger fans. DOE accounted for some online research regarding pedestal blades and brushless DC motors; (3) For differences in reliability between and desk fans that use brushless DC large-diameter ceiling fans: Fan brushless DC and AC motors in the life motors, and observed that there are optimization, airfoil blades, premium cycle cost analyses. In addition, the several models available in the market AC motors, geared brushless DC motors energy conservation standard efficiency at blade spans 18 inches or less. Desk and gearless brushless DC motors. level adopted in this final rule (see fans and pedestal fans are similar in DOE determined that these section V.C.1 for discussion on TSLs) is utility compared to VSD ceiling fans technology options are technologically consistent with performance achieved because they generally provide feasible because they are being used in by standard and hugger ceiling fans that consumers with targeted airflow, and commercially-available products or use larger direct-drive single-phase can be used to provide air to smaller working prototypes. DOE also finds that induction motors. As a result, any spaces. However, more importantly, all of the remaining technology options issues, if they exist, with the use of these fans have similar physical meet the other screening criteria (i.e., brushless DC motors in standard and characteristics to VSD ceiling fans in practicable to manufacture, install, and hugger ceiling fans, should not be terms of fan design; the fans typically service and do not result in adverse influenced by this rule. have similar blade spans, similar impacts on consumer utility, product For brushless DC motors in VSD airflows, and similar design (e.g., axial availability, health, or safety). For ceiling fans, ALA objected to screening blades and a single motor). additional details, see chapter 4 of the in this technology option. ALA stated Additionally, desk fans and VSD fans final rule TSD. they are not aware of any brushless DC have similar size constraints for the C. Engineering Analysis motor VSD fans on the market, or motor housing. Because DOE has currently in development, that would observed that brushless DC motors are In the engineering analysis, DOE provide an acceptable substitute for the commercially available in VSD ceiling establishes the relationship between the functionality of AC motors in VSD fans. fans, and in desk and pedestal fans, manufacturer production cost (MPC) (ALA, No. 137 at p. 6) Pacific Gas and DOE concludes that brushless DC motor and improved ceiling fan efficiency. Electric Company (PG&E), Southern is practicable to manufacture, install, This relationship serves as the basis for California Gas Company (SCGC), San and service that does not have cost-benefit calculations for individual Diego Gas and Electric (SDG&E), significant adverse impacts on utility consumers, manufacturers, and the Southern California Edison (SCE), and (including reliability and product Nation. Arizona Public Service (APS) (herein availability). Therefore, in this final In this final rule, for small-diameter known as California Investor Owned rule, DOE continues to retain brushless ceiling fans (VSD, Standard, Hugger and Utilities, or CA IOUs), on the other DC motors as a technology option for HSSD ceiling fans), DOE performed its hand, commented that they continue to VSD ceiling fans. In addition, the energy analysis in terms of incremental support the inclusion of brushless DC conservation standard efficiency level increases in efficiency due to the motor technology for all product classes, adopted in this final rule (see section implementation of selected design including VSD ceiling fans. CA IOUs V.C.1 for discussion on TSLs) is options. DOE selected representative also identified several VSD models that consistent with performance achieved sizes, and for each size, DOE identified use brushless DC motors, including by VSD ceiling fans that use larger a baseline efficiency as a reference point Vaxcel F1008, Fanimation MAD3255, direct-drive single-phase induction from which to measure changes and Sunpentown SF–1691C. In motors. As a result, any issues, if they resulting from each design option. For addition, CA IOUs stated that several exist, with the use of brushless DC large-diameter ceiling fans, DOE pedestal and desk fans that are similar motors in VSD ceiling fans, should not performed its analysis based on a in technology, utility, and physical be influenced by this rule. representative data set of ceiling fan dimensions to VSD ceiling fans use For the large-diameter product class, performance data. DOE determined brushless DC motors. (CA IOUs, No. 144 BAS requested that an additional efficiency as observed in the at p. 2) efficiency level be added with a representative dataset by best-fitting DOE’s understanding from premium AC motor instead of the three- lines to the data for fans that incorporate manufacturer interviews is that phased geared brushless DC motor. each design option analyzed. Efficiency brushless DC motors in VSD ceiling fans (BAS, Public Meeting Transcript, No. for all ceiling fans is represented in could be technologically feasible, as 133 at p. 35) DOE acknowledges that for terms of the metric finalized in the test brushless DC motors are used in large-diameter ceiling fans, premium AC procedure. 81 FR 48620 (July 25, 2016). traditional standard and hugger ceiling motors and three-phase geared motors For both small and large-diameter fans. DOE reviewed the list provided by are readily available in the market. ceiling fans, MPCs for each successive CA IOUs regarding VSD ceiling fans Therefore, DOE retained both design option are based on reverse- with brushless DC motors that are technology options in the screening engineering, which includes product available in the market. The Fanimation analysis because they meet the four teardowns and a bottom-up MAD 3255 ceiling fan model screening criteria for this final rule. manufacturing cost assessment. The specifications on the Fanimation Through a review of each technology, estimated MPCs also include the costs website states that the smallest diameter DOE concludes that all of the other of controls. DOE then developed the for the model is 44-inches; 20 therefore, identified technologies listed in this relationship between MPC and ceiling this fan is not a VSD ceiling fan. The section meet all four screening criteria fan efficiency; this relationship is Vaxcel F0018 and the Sunpentown SF– to be examined further as design options referred to as a cost-efficiency curve. 1619C, however, are VSD ceiling fans in DOE’s final rule analysis. In The efficiency ranges from that of the that have a brushless DC motor. summary, DOE retained the following least-efficient ceiling fan sold today (i.e., Therefore, DOE confirms that there are technology options: (1) For standard, the baseline) to the maximum- VSD ceiling fan in the market with hugger and VSD ceiling fans: Fan technologically feasible (max-tech) optimization, larger direct-drive single- efficiency level. 20 http://www.fanimation.com/products/ phase induction motors and brushless The following is a summary of the index.php/louvre.html. DC motors; (2) For HSSD ceiling fans: method DOE used to determine the
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cost-efficiency relationship for ceiling manufacturers are likely to employ create an aggregate curve for all fans: brushless DC motors. Therefore, at the standard ceiling fans and all hugger • Perform airflow and power max-tech efficiency, there is potential ceiling fans. consumption tests on a representative for energy savings for the flat-blade fans. Since the NOPR, DOE received sample of ceiling fans in each product For this final rule, DOE adjusted the additional test data for hugger and class. power consumption at max-tech to standard fans from manufacturers, • Develop a detailed BOM for the include the potential energy savings which was used in the analysis for the tested ceiling fans through product from the flat-blade fans. DOE used the final rule. The additional test data was teardowns, and construct a ceiling fan same weighting between flat and used to update some of the efficiency cost model. unconventional blade fans at max tech deltas (i.e., the difference in efficiency DOE used a combination of test data, (i.e., unconventional blade fans make up for a particular design option) in the data from spec sheets, the cost model, about 2 percent of the market, while flat analysis. Additionally, the test data and feedback from manufacturers to blade fans are about 98 percent of the informed the conversion factors used to calculate the incremental increase in market) as at all the other efficiency convert efficiencies from ENERGY efficiency and cost increase from levels. STAR test method, to efficiencies based baseline to max-tech. Further details can In the engineering analysis for on testing small-diameter ceiling fans be found in chapter 5 of the TSD. standard and hugger ceiling fans, DOE using the test method in the July 2016 1. Standard and Hugger Ceiling Fans used an aggregate cost-efficiency curve test procedure final rule (i.e., mounting for flat and unconventional blade fans, fans directly to the real ceiling). Based In the ceiling fans NOPR, DOE as opposed to defining two separate on the new test data, DOE increased the combined the cost-efficiency curves of product classes, because fans with flat conversion factors since the NOPR. DOE flat-blade fans and unconventional- blades and fans with unconventional then used these conversion factors to blade fans in the standard and hugger blades are functionally determine the efficiency results for the product classes to create an aggregate indistinguishable. Both fan types move engineering analysis. Further details on curve for all standard ceiling fans and air via the rotation of fan blades, the updates to the conversion factor is all hugger ceiling fans. DOE used the improve comfort by this air movement, provided in Chapter 5 of the TSD. following design options to create the and can be used in similar spaces 2. VSD and HSSD Ceiling Fans curves: Fan optimization, larger direct (unlike the distinction between standard drive motors, and brushless DC motors. and hugger fans, where the former For the NOPR analysis, DOE was not DOE used the maximum efficiency of cannot be used in rooms with low aware of unconventional blade and flat the unconventional-blade fans as the ceilings). Further, because flat blade and blade fan variations for VSD and HSSD max-tech for the aggregate curve to unconventional blade fans on the fans, so DOE did not use an aggregate ensure that all types of ceiling fans, market appear to operate within the curve approach for these ceiling fans. including designs with unconventional- same CFM range, they have the same DOE used the same design option blades, can achieve the max-tech level product capacity. Therefore, when approach as standard and hugger ceiling of efficiency. DOE received several setting the max-tech for the standard fans to determine cost-efficiency comments on the engineering analysis and hugger ceiling fan product classes, relationships for all representative sizes specific to the standard and hugger DOE set it at the max-tech efficiency for in both VSD and HSSD product classes. product classes. unconventional-blade fans, because this DOE used the following design options Advocates commented that the energy ensures that even at max-tech, all types for VSD ceiling fans to create the curves: savings associated with EL 4 for of ceiling fans, including designs with Fan optimization, larger direct drive standard and hugger fans are likely to be unconventional blades, can achieve this single-phase induction motors, and significantly greater than shown in the level of efficiency. brushless DC motors. DOE used the analysis. They stated that it looks like Advocates also stated that the costs following design options for HSSD the analysis is assuming that the power associated with EL4 for standard and ceiling fans to create the curves: Fan consumption of a flat-blade fan hugger fans are likely to be lower than optimization, curved blades, airfoil incorporating a DC motor would be shown in the analysis, but did not blades and brushless DC motors. equivalent to that of an unconventional- provide supporting data for this DOE did not receive any specific blade fan with a DC motor. In practice, statement. (Advocates, No. 142 at p. 4) comments on the engineering approach it seems very unlikely that flat-blade As described in section IV.C, DOE used for the VSD product class. fans with DC motors would not reverse engineered several ceiling fans However, DOE received several significantly exceed the efficiency levels at EL4 (with brushless DC motors) to comments specific to the HSSD given that DOE’s analysis shows that a determine the MPC for that EL. To engineering analysis. Westinghouse flat-blade fan with a DC motor is 30% investigate the Advocates’ claims, DOE commented that they were concerned more efficient than an unconventional- reverse engineered several more with the additive approach used in blade fan with a DC motor. (Advocates, brushless DC motor fans, and revisited calculating cost differences for the No. 142 at p. 4) the cost model to review the costs used HSSD efficiency levels. They stated that For the NOPR, because DOE set the in the NOPR. Based on the review, DOE the approach may not be fully max-tech efficiency for standard and corroborated the costs presented in the calculating or capturing what the true hugger ceiling fan product classes as the NOPR, rather than lower costs. Absent cost increase will be. (Westinghouse, max-tech efficiency for unconventional- any additional cost data, DOE continues Public Meeting Transcript, No. 133 at p. blade fans, DOE also set the power to use the MPC results from the NOPR 92) consumption at max-tech as the max- for EL4 for standard and hugger fans in DOE interprets Westinghouse’s tech power consumption for this final rule. comment to mean that the full cost for unconventional-blade fans to match the In summary, in this final rule, DOE the ELs with multiple design options is max-tech efficiency. DOE acknowledges continues to use the combined cost- not being captured in the engineering that to comply with the EL 4 efficiency efficiency curves of flat-blade fans and analysis. As described in section IV.C, for both flat blade fans and unconventional-blade fans in the DOE developed the manufacturer unconventional-blade fans, standard and hugger product classes to production costs based on actual
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product teardowns. When actual torn pp. 113–114) ALA commented that they Because TSL 4 is justified, EPCA down models were not available for are skeptical of DOE’s estimate of the prohibits DOE from considering TSL 3, certain design options, DOE estimated net benefits that DC motor-based fan which included a lower efficiency level costs based on materials and provide to consumers, and generally for HSSD ceiling fans (EL 3, which manufacturing processes necessary for believe that DC motor-based ceiling fan included only airfoil blades and fan each design option, and by using input efficiency standards, like DOE’s optimization as design options on a from manufacturers. DOE performed proposed TSL 4-based standard for baseline fan). Thus, the change to the this analysis through a catalog HSSD fans, are not technologically order of the efficiency levels for HSSD teardown, which uses published feasible. Additionally, ALA stated that ceiling fans suggested by Westinghouse manufacturer product literature and DOE’s proposed max-tech standard is would not change the results of DOE’s supplementary component data to not economically justified because it walkdown analysis. Therefore, DOE has estimate the costs of major physical relies upon the airfoil blade design not analyzed an alternate EL3 with a differences between the catalog option, which is not economically brushless DC motor and with flat metal teardown unit and a similar physical justified. ALA stated that if DOE blades in this final rule. teardown unit. Some efficiency levels declines to adopt a standard at EL 3 or Since the NOPR, DOE received are consistent with performance of below for HSSD fans, DOE should additional test data for hugger and ceiling fans that use multiple design consider adopting a standard for HSSD standard fans from manufacturers that options, such as fan optimization and fans based on an efficiency level that was used in the analysis for the final larger direct-drive single-phase corresponds to the fan optimization and rule. The additional test data was used induction motors. When determining DC motor design options, without the to update some of the efficiency deltas the MPCs for efficiency levels that use of curved blades or airfoil blades. in the analysis. Because some of the incorporate several design options, (ALA, No. 137, pp. 2–3) VSD and HSSD efficiency deltas are DOE’s engineering analysis incorporates Pursuant to EPCA, DOE must adopt dependent on the standard and hugger the costs of all design options included standards that achieve the maximum analysis, the engineering results for VSD in that efficiency level (i.e., the additive improvement in energy efficiency that is and HSSD analyses were updated approach) added to the baseline MPC. technologically feasible and accordingly. Further details on the The result, therefore, includes all of the economically justified. (42 U.S.C. engineering analysis is provided in production costs associated with 6295(o)(2)(A)) To do this, DOE first Chapter 5 of the TSD. manufacturing a baseline fan and all the establishes TSLs by combining specific 3. Large-Diameter Ceiling Fans incremental costs of adding or efficiency levels for each of the product In the NOPR, DOE used a substituting technology options to classes analyzed. Higher TSLs generally combination of the reverse-engineering consist of a combination of higher improve efficiency. Westinghouse did and design option approach for the efficiency levels for each product class, not identify specific costs not captured large-diameter ceiling fan engineering and the highest TSL generally by DOE’s analysis, or provide analysis. DOE relied on test data and represents the max-tech efficiency level information to support a contention that feedback from manufacturers to for all product classes. Therefore, higher the additive approach does not fully determine energy ELs to analyze. DOE TSLs typically represent higher calculate or capture the actual cost estimated baseline ceiling fan potential energy savings. (See section increase. Absent additional information, efficiencies based on test data for large- V.A for more details on TSLs chosen for DOE concludes that its MPC estimates diameter ceiling fans at intermediate this rulemaking). DOE then considers capture all manufacturing costs ELs adjusted by efficiency deltas. After the impacts of amended standards for applicable to the efficiency levels establishing the baseline efficiency for ceiling fans at each TSL beginning with analyzed. See chapter 5 of the final rule large-diameter ceiling fans, DOE applied the maximum technologically feasible TSD for further discussion on the HSSD efficiency deltas associated with each level, to determine whether that level is ceiling fan engineering analysis, which design option to the baseline to economically justified. Where the max- includes details about the costs calculate the efficiency consistent with tech level is not justified, DOE then included in DOE’s MPC estimates. DOE performance of large-diameter ceiling ‘‘walks down’’ to the next most efficient did increase the conversion costs for all fans that use each design option from level and conducts the same evaluation ceiling fans as part of the MIA. See baseline to max-tech. In DOE’s analysis, until it reached the highest efficiency section IV.J.2.a for further discussion on efficiency deltas are estimated level that is both technologically manufacturer conversion costs. differences in ceiling fan efficiency feasible and economically justified and Westinghouse also asked if DOE had based on comparing performance of saves a significant amount of energy. considered reordering the HSSD ceiling fans that use different For this final rule, TSLs 4 and 5 efficiency levels to have EL3 with DC technology options, but are otherwise correspond to the max-tech efficiency motor and with flat metal blade identical. This analysis resulted in an level for HSSD ceiling fans.21 Therefore, followed by EL4 with DC motor and efficiency curve, as a function of ceiling when DOE performed a walk-down from airfoil blades instead of adding the fan diameter, for each efficiency level. airfoil blades in EL3 and DC motor in TSL 5 and determined that TSL 4 would During the NOPR public meeting, EL4. Westinghouse commented that this result in the maximum improvement in BAS requested that an additional is different from hugger and standard energy efficiency that was efficiency level be added to represent fans, where the motor options are what technologically feasible and large-diameter ceiling fans that use a drive the cost. They stated that the economically justified (see section premium AC motor instead of a three- airfoil blade is a high cost adder with V.C.1), the efficiency level for HSSD phased geared brushless DC motor, and not the same payback as a motor ceiling fans still corresponded to the stated that the premium AC motors are upgrade would be. (Westinghouse, max-tech EL for HSSD ceiling fans. almost as efficient as permanent magnet Public Meeting Transcript, No. 133 at p. motors. (BAS, Public Meeting 21 For HSSD ceiling fans, the max-tech efficiency 113) Fanimation agreed with level analyzed included fan optimization, airfoil Transcript, No. 133 at pp. 35–36) Westinghouse’s comments. (Fanimation, blades and a brushless DC motor as design options DOE received test data from BAS that Public Meeting Transcript, No. 133 at on a baseline fan. included ceiling fans using premium AC
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motors. After evaluating the data, DOE (BAS, Public Meeting Transcript, No. motors. DOE realizes that the data for EL confirmed BAS’s assertions that large- 133 at p. 39) In written comments, BAS 4 ceiling fans is more scattered meaning diameter ceiling fans that use premium stated that the fundamental assumption that not all ceiling fans produce the AC motors have comparable efficiencies that all ceiling fans of the same diameter same amount of airflow and that airflow to those that use geared brushless DC move the same amount of air is untrue, has a direct effect on the efficiency of motors. In addition, DOE conducted a allows inefficient low airflow products ceiling fans. However, for EL 2 and EL teardown analysis, which estimated that to remain on the market, and creates an 3, the tight range of efficiency and ceiling fans with a premium AC motor upper limit to ceiling fan performance at airflow data at EL 2 and EL 3 suggests have lower MPC than ceiling fans with each diameter. (BAS, No. 138 at p. 12) that the slope from the best fit line is a a geared brushless DC motor. Therefore, BAS further urged DOE to consider a good representation of the relationship DOE expects that manufacturers would metric that will not eliminate high between efficiency and diameter. use the lower-cost premium AC motors efficiency, high utility ceiling fans from For this final rule, the energy instead of geared brushless DC motors to the market. BAS recommended that an conservation standard efficiency level meet a standard that is consistent with efficiency metric based on ceiling fan adopted is consistent with performance the performance of ceiling fans that use diameter and maximum airflow be used achieved by large-diameter ceiling fans either of these technologies. to provide energy savings across all with EL 3 characteristics. See section Consequently, DOE replaced the geared airflows and diameters, while still V.C.1 for discussion on TSLs. Therefore, brushless DC motor design option with allowing the continued development of DOE believes that the relationship premium AC motors for EL 3 in this high utility products. (BAS, No. 138 at between diameter and efficiency is an analysis to reflect this expectation. p. 15) In this discussion, DOE appropriate basis for an energy In addition to the test data for fans understood BAS’ use of the phrase efficiency standard. However, based on with premium AC motors, DOE also ‘‘high utility ceiling fans’’ to mean the data, DOE did observe that there received additional test data from BAS ceiling fans with high maximum were some high airflow ceiling fans that for the other efficiency levels analyzed airflows. The Advocates also might be disproportionally in the analysis. With this data, DOE’s encouraged DOE to consider standards disadvantaged based on a standard database of large-diameter fan for large-diameter ceiling fans that take using the best fit line. Therefore, to performance includes 87 ceiling fans at both diameter and airflow into account. preserve consumer utility that require EL 2, EL 3 and EL 4, comprising of According to the Advocates, by taking ceiling fans with high airflow, DOE ceiling fans from six different only diameter into account in decreased the y-intercept of the best fit manufacturers, and with blade spans of establishing ELs for large-diameter equations, while maintaining the slopes. 8, 10, 12, 14, 16, 18, 20 and 24 feet. Due ceiling fans, the standards may have DOE aimed to preserve consumer utility to the large number of ceiling fans, the little impact on ceiling fans that deliver by maintaining the maximum airflow range of efficiency levels, and the relatively low airflow rates, while produced at each diameter, or identify variety of manufacturers, DOE simultaneously prohibiting ceiling fans a close alternative, by shifting the determined that this dataset is of the same diameter that deliver higher equation downwards. representative of the EL 2, EL 3 and EL airflow rates than those assumed in the For each of the eight diameters 4 large-diameter ceiling fans in the analysis. (Advocates, No. 142 at pp. 1– analyzed (ranging from 8–24 feet), DOE market. 2) identified the ceiling fan with the A representative dataset allowed DOE DOE’s understanding of both BAS and maximum tested airflow from all to shift from the design option approach Advocates concern is that an efficiency efficiency levels. At two of the eight used in the NOPR (i.e., evaluating standard only based on diameter only diameters, a ceiling fan at EL 2 produces technology pairs to determine efficiency could disproportionally impact ceiling the largest airflow, and at the other six deltas associated with each design fans that deliver higher airflows, diameters, a ceiling fan at EL 3 produces option) to an efficiency-level approach compared to those that deliver lower the maximum airflow. At three of the (i.e., representing efficiency as observed airflows. To investigate this further, eight diameters, the fan with the highest in the representative dataset by using DOE analyzed the test data provided by airflow achieves the efficiency level best-fit lines for each technology option BAS, in addition to DOE’s own test data established in this final rule. analyzed). In its dataset, DOE observed of large-diameter ceiling fans. For the other five diameters, where a broad range of efficiencies in ceiling DOE began its analysis by confirming the highest airflow ceiling fan does not fans with a gearless brushless DC motor that the relationship between diameter meet the established standard level, and airfoil blades (i.e., max-tech), and a and ceiling fan efficiency is an DOE identified the ceiling fan with the narrow range of efficiencies in ceiling appropriate basis for an energy highest airflow that achieves the fans either with airfoil blades (i.e., EL 2) efficiency standard. DOE plotted a best standard level and compared it to the or with a premium AC motor and airfoil fit line between diameter and efficiency ceiling fan with the maximum airflow at blades (i.e., EL3). This change in of all the ceiling fans at max-tech and that diameter. DOE calculated the methodology also updated the observed a R2 correlation of 0.51 percentage of maximum airflow for engineering results for the large- between diameter and efficiency. DOE these ceiling fans to determine whether diameter analysis. Further discussion conducted a similar exercise for ceiling the EL 3 standard is still achievable regarding the efficiency-level approach fans at EL 2 and EL 3. At these ELs, with an EL 3 ceiling fan, without and the engineering results for large- however, DOE observed a narrower eliminating ceiling fans with high diameter ceiling fans is provided in range of efficiencies at each diameter, maximum airflows. DOE further chapter 5 of the TSD. which resulted in better R2 correlations investigated any diameter where the During the NOPR public meeting, of 0.87 and 0.97 for EL 2 and EL 3, maximum airflow ceiling fan did not BAS recommended that efficiencies be respectively, compared to max-tech. achieve the standard level, in order to gauged using a CFM/W curve as a Therefore, the greater variation in max- see if the maximum airflow or a close function of airflow for each diameter. tech test data suggests that the variation alternative could be achieved. At two of This would essentially require a CFM in efficiency with airflow is much the remaining five diameters, the ceiling per watt standard equation as a function greater for ceiling fans with gearless fan with the highest airflow that of airflow at every diameter available. brushless DC motors than those with AC achieved the standard level produced 99
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percent of the airflow recorded for the the impact of the reduced performance do so, it is unlikely that many will due ceiling fan with the maximum airflow. will likely not be known to the to the market pressures identified by At two other diameters, the ceiling fans consumer because there are no Westinghouse. In addition, the FTC is that meet the standard produced 90 guidelines, equations or standards that primarily responsible for labeling, and percent of airflow of the highest airflow allow consumers to translate CFM into issued amendments to the ceiling fan ceiling fan. For the last diameter, the cooling effect. BAS felt this would be label for all ceiling fans except large- highest airflow of a ceiling fan achieving especially true if the labeling diameter and HSSD ceiling fans on the standard was 85 percent of the requirements do not prominently September 15, 2016. 81 FR 63634. The ceiling fan with the maximum airflow. display the maximum CFM of the fan. ceiling fan label includes a prominent The lower percentages at the three (BAS, No. 138 at p. 7) ALA stated they display of the CFM based on typical use diameters may be a representation of do not believe that reducing fan speeds of a ceiling fan. The FTC is planning to smaller sample size, and not an outcome available to a consumer is a viable way seek comments on the need for, and of the stringency of the standard. to improve efficiency because reducing content of, fan labels for large-diameter For the reasons mentioned, DOE fan speed directly impairs consumer and HSSD ceiling fans in a separate believes that the high efficiency, high utility. ALA therefore agreed with notice. 81 FR 63634, 63637. airflow ceiling fans will not be DOE’s statement in the NOPR, that 5. Standard Level Equations eliminated from the market when using ‘‘manufacturers will not reduce airflow the shifted best fit equation. Therefore, to levels that are unacceptable when In the ceiling fans NOPR, DOE DOE continued with the methodology other cost-justified pathways to proposed best-fit linear standard level outlined in the NOPR by adopting a compliance are available.’’ (ALA, No. equations in terms of ceiling fan standard equation that is only a function 137 at p. 7) CA IOUs asked whether diameter, based on the efficiency results of diameter, and not airflow. companies may simply reduce their for the representative sizes analyzed for BAS commented that the repair costs fans’ RPMs in order to meet the each product classes. The linear should be separated for the geared and efficiency standard, and ASAP standard level equations were gearless versions for DC motors used in suggested that in such a case, consumers established so that the proposed the large-diameter analysis. BAS stated may run their fans at higher speeds, minimum efficiencies could be that the gearless DC motor will take thereby reducing the energy savings calculated for all ceiling fan diameters more hours to service than the geared from the standard. (CA IOUs, Public within a product class. DOE received a comment regarding the standard level motor because the entire fan assembly Meeting Transcript, No. 133 at p. 159; equations proposed. has to be removed to repair the gearless ASAP, Public Meeting Transcript, No. motor. (BAS, Public Meeting Transcript, In general, ALA commented that DOE 133 at pp. 154–155) Westinghouse should, in adopting final efficiency No. 133 at p. 99) BAS also stated that responded by suggesting that efficiency losses resulting from standards for ceiling fans, clarify that manufacturers that try to meet the the efficiency equation found in the gearboxes are generally less than 5 standard by reducing the utility (i.e., percent, not 20 percent. (BAS, Public table in proposed 10 CFR § 430.32(s)(2) airflow) of their fans would lose represents minimum ceiling fan Meeting Transcript, No. 133 at p. 31) business. (Westinghouse, Public In the final rule, DOE replaced the efficiency. (ALA, No. 137 at p. 3) DOE Meeting Transcript, No. 133 at pp. 155– geared brushless DC motor with the appreciates the comment from ALA, and 156) In addition, Westinghouse noted premium AC motor for efficiency level has updated references to the standard that if a manufacturer tried to make an 3. Therefore, these comments do not level equations in this final rule to obsolete product simply to meet the affect the large-diameter analysis in the clarify that it represents minimum standard, demand for the product would final rule. ceiling fan efficiency. wane over time and competition would In this final rule, DOE continues to 4. Reducing Fan Speed To Improve publicize how that manufacturer’s develop standard level equations based Efficiency products are lacking in performance. on diameter for all product classes. As In the NOPR analysis, DOE had (Westinghouse, Public Meeting discussed in the ceiling fans NOPR, requested comments on what an Transcript, No. 133 at pp. 158–159) DOE believes that blade diameter is a acceptable reduction of fan speed may DOE understands that slowing down better proxy for utility than airflow. The be to improve ceiling fan efficiency such a fan can significantly reduce energy size of a fan determines the cooling area, that it does not affect consumer utility consumption. However, DOE also impacts room aesthetics, and for each of the proposed product recognizes that airflow, which determines if a fan physically fits into classes. DOE received several comments diminishes at lower fan speeds, factors a room. Literature published by regarding this topic. heavily into consumer utility. DOE manufacturers clearly indicates that CBE stated that, based on CBE observes that the airflow produced by blade span is an important criterion for laboratory tests, at least one ceiling fan commercially available fans of the same consumer fan selection. Manufacturers tested is more efficient at lower speed. diameter varies. While DOE interprets include sizing guides in published However, limiting the maximum air this to mean that some variation in product literature to instruct consumers speed would not satisfy human comfort airflow at a given diameter is acceptable on how to properly size a fan for a given at higher temperatures. CBE suggested to the market and does not represent a room size. These fan sizing guides that one way to avoid this may be reduction in utility, DOE did not specify the affected square footage of a setting a limit for the maximum air include slowing down the fan as a room based on fan blade diameter. DOE speed for a ceiling fan, while requiring design option to avoid setting standards did not find such guides for other that the energy efficiency standard be that may result in reduced utility. ceiling fan characteristics such as met as well. (CBE, No. 143 at p. 1) BAS Leaving out reducing fan speed as a airflow. commented that a decrease of 50% in design option ensures that Therefore, based on the updates to the airflow nets an approximate gain of manufacturers can meet the level engineering analyses described in 220% on efficiency, but would result in adopted by this final rule in a cost- sections IV.C.1 through IV.C.3 for all a dramatic reduction in cooling effect justified manner without reducing fan product classes, DOE also updated the and consumer utility. BAS stated that speed. While manufacturers may opt to best-fit linear standard level equations.
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DOE is not aware of commercially separate markups were developed for To develop markups for the market available VSD fan models below 12 the brand manufacturer and for the participants involved in the distribution inches in diameter. However, extending home improvement centers which serve of ceiling fans, DOE utilized several a best-fit linear equation below 12 only as a retailer. sources, including: (1) The SEC 10–K inches for VSD would result in For large-diameter and HSSD ceiling reports and U.S. Census Bureau’s minimum ceiling fan efficiency fans, the two distribution channels that annual retail trade survey for building standards below 0 CFM/Watt at near 0 DOE considered can be characterized as material and supplier dealer industry 23 inch diameters. In this final rule, DOE follows: (to develop home improvement center is continuing to use a best-fit linear Manufacturer → Dealer → Customer markups); (2) the U.S. Census Bureau’s equation for VSD fans 12 inches in Manufacturer → In-house Dealer → annual wholesale trade report for diameter and above (the range in which Customer electrical and electronic appliance, all known commercially-available VSD television, and radio set merchant models currently exist). However, DOE The second distribution channel for wholesaler industry 24 (to develop is extending the minimum ceiling fan large-diameter and HSSD ceiling fans is wholesaler markups); (3) 2014 RSMeans efficiency required at 12 inches to all a direct sale channel where the Electrical Cost Data 25 (to develop VSD fans below 12 inches in diameter manufacturer sells the product directly contractor markups); and (4) the SEC to avoid standards 0 CFM/Watt and to a customer through its in-house 10–K reports (to develop dealer below for any VSD models that may dealer. DOE assumed the markup for in- markups). exist in this range. house dealers is the same as the To develop the markups when home conventional dealer markup; therefore, centers serve as both brand D. Markups Analysis the overall markup for these two manufacturer and retailer, DOE relied The markups analysis develops distribution channels is the same. upon input from an industry expert.26 appropriate markups (e.g., manufacturer To account for manufacturers’ non- For each of the market participants, markups, retailer markups, distributor production costs and profit margin, DOE DOE developed baseline and markups, contractor markups) in the applied the manufacturer markup to the incremental markups based on the distribution chain and sales taxes to full MPC derived in the engineering product markups at each step in the convert the MPC estimates derived in analysis. The resulting manufacturing distribution chain. The baseline markup the engineering analysis to consumer selling price (MSP) is the price at which relates the change in the MSP of prices, which are then used in the LCC the manufacturer can recover all baseline models to the change in the and PBP analysis and in the production and non-production costs consumer purchase price. The manufacturer impact analysis. At each and earn a profit. To meet new or incremental markup relates the change step in the distribution channel, the amended energy conservation in the MSP of higher-efficiency models markups are multipliers that are applied standards, manufacturers typically (the incremental cost increase) to the to the purchase cost to cover business introduce design changes to their change in the consumer purchase price. costs and profit margin. product lines, which increase In addition to the markups, DOE DOE characterized four distribution manufacturer production costs. As derived state and local taxes from data channels to describe how standard, production costs increase, provided by the Sales Tax hugger and VSD ceiling fans pass from manufacturers typically incur additional Clearinghouse.27 These data represent manufacturers to consumers. These four overhead. weighted average taxes that include distribution channels can be To calculate the manufacturer county and city rates. DOE derived characterized as follows: markups, DOE reviewed 10–K reports 22 shipment-weighted average tax values Manufacturer → Home Improvement submitted to the U.S. Securities and for each region considered in the Center → Consumer Exchange Commission (SEC) by analysis. Manufacturer/Home Improvement publicly-owned ceiling fan companies. Chapter 6 of the final rule TSD Center (in-store label) → Consumer The financial figures necessary for provides details on DOE’s development Manufacturer → Wholesaler → calculating the manufacturer markup of markups for ceiling fans. → are net sales, costs of sales, and gross Contractor Consumer E. Energy Use Analysis Manufacturer → Showroom → profit. Few ceiling fan manufacturing Consumer companies are publicly owned, and The purpose of the energy use most of the publicly-owned ceiling fan analysis is to determine the annual DOE developed separate markups for manufacturing companies are energy consumption of ceiling fans at home improvement centers that have subsidiaries of more diversified parent different efficiency levels in their in-store label ceiling fans and for companies, so the financial information those that sell independent-label ceiling summarized may not be exclusively for 23 U.S. Census Bureau. 2012 Annual Retail Trade fans. As indicated in the market the ceiling fan portion of their business Survey. Building Material and Supplier Dealer. assessment, two of the top three ceiling 2012 (Last Accessed April 22, 2015) http:// and can also include financial _ fan brands in the market are the in-store www.census.gov/retail/arts/historic releases.html. information from other product sectors. 24 U.S. Bureau of the Census. 2012 Annual brands for two home improvement DOE discussed the manufacturer Wholesale Trade Report, NAICS 423620: Electrical centers. These home improvement markup with manufacturers during and Electronic Appliance, Television and Radio Set Merchant Wholesaler. 2012. Washington, DC. (Last centers therefore serve as both in-store interviews, and used product specific brand manufacturers and home Accessed April 22, 2015) http://www.census.gov/ feedback on market share, markups and wholesale/index.html. improvement centers that carry both cost structure from manufacturers to 25 RS Means Company Inc. Electrical Cost Data: store-brand and independent-brand adjust the manufacturer markup 36th Annual Edition. 2014. Kingston, MA. ceiling fans. For in-store label ceiling calculated through review of SEC 10–K 26 Mehta, V. Independent ceiling fan industry consultant. Personal communication. E-mail to fans, DOE developed an overall markup reports. that encompasses the margins for Colleen Kantner, LBNL. November 24, 2013. 27 Sales Tax Clearinghouse Inc., State Sales Tax manufacturing as well as selling the 22 U.S. Securities and Exchange Commission, Rates Along with Combined Average City and product. For the independent-label Annual 10–K Reports (various years between 2007 County Rates (2014) available at http://thestc.com/ ceiling fans sold through home centers, and 2013), available at http://sec.gov. STrates.stm (last accessed May 27, 2014).
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representative U.S. homes and the total daily operating hours for each are shown in chapter 5 of the final rule commercial buildings, and to assess the sampled RECS household. In that study, TSD. DOE estimated that all ceiling fans energy savings potential of increased the authors asked a nationally with brushless DC motors expend ceiling fan efficiency. To develop representative sample of more than standby power, and that 7 percent of annual energy use estimates, DOE 2,500 ceiling fan users to report their standard, hugger, and VSD ceiling fans multiplied ceiling fan input power by ceiling fan operating hours for high, with AC motors come with a remote, the number of hours of use (HOU) per medium, and low speeds. The LBNL and therefore consume power while in year. The energy use analysis estimates study reported a distribution of standby mode. DOE further estimated the range of operating hours of ceiling operating hours, with an average of 6.45 0.7 watts as the power consumption fans in the field (i.e., as they are actually hours of operation per day. The value for standby for all representative used by consumers). The energy use operating hours for each sample fans belonging to the standard, hugger, analysis provides the basis for other household were drawn from the and VSD product classes, based on analyses that DOE performed, distribution of operating hours reported testing conducted in association with particularly assessments of the energy in the LBNL study, and further developing the engineering analysis. savings and the savings in consumer apportioned into operating hours at BAS commented that the percentage operating costs that could result from different fan speeds. energy savings for ceiling fans with adoption of amended standards. As in the NOPR analyses, DOE occupancy sensors will be similar to estimated that the average fraction of that of lighting systems with occupancy 1. Inputs for Standard, Hugger, and VSD sensors and that this similarity could be Ceiling Fans time that standard, hugger, and VSD ceiling fans were operated at each speed used to estimate savings from ceiling a. Sample of Purchasers was equal to the simple average of the fans with occupancy sensors. (BAS, No. As in the NOPR analysis, DOE has fractions reported by the LBNL survey 138 at p. 5) DOE acknowledges that included only residential applications and an AcuPOLL 30 survey submitted by occupancy sensors have the potential to in the energy use analysis of standard, ALA in response to the ceiling fan test have an impact on the energy hugger, and VSD ceiling fans. DOE used procedure NOPR. This average yields an consumption of ceiling fans. However, the Energy Information Administration estimate of 33 percent of time spent in available data is insufficient for DOE to (EIA) 2009 Residential Energy active mode on high speed, 38 percent determine what impact occupancy Consumption Survey (RECS) 28 to on medium speed, and 29 percent on sensors may have on energy use in choose a random sample of households low speed. In written comments practice. In the absence of supporting in which new ceiling fans could be received in response to the NOPR, data or evidence to substantiate energy installed. RECS is a national sample Westinghouse and ALA indicated savings, DOE does not believe it is survey of housing units that collects agreement with these estimated average appropriate to assume ceiling fans and statistical information on the hours of use for standard, hugger, and lighting systems to have similar consumption of, and expenditures for, VSD ceiling fans. (Westinghouse, Public percentage energy savings. Furthermore, energy in housing units, along with data Meeting Transcript, No. 133 at p. 79; occupancy sensors have been screened on energy-related characteristics of the ALA, No. 137 at p. 8) out of the final rule analysis (see section housing units and occupants. RECS For the final rule, DOE refined the IV.B.1), and it is unclear if fans with collected data on 12,083 housing units, NOPR approach by accounting for a occupancy sensors will make up a non- and was constructed by EIA to be a distribution in operating hours spent at negligible portion of the market in the national representation of the household each speed.31 Specifically, for each future, especially in the residential population in the United States. sampled household, the fraction of time sector. The CA IOUs indicated that many In creating the sample of RECS that the fan spends at each of low and hugger, standard, and VSD ceiling fans households, DOE used the subset of medium speed was drawn from a with brushless DC motors have six RECS records that met the criterion that uniform distribution over the interval speeds, not three speeds. Therefore, the the household had at least one ceiling between zero and twice the average CA IOUs recommended that DOE fan. DOE chose a sample of 10,000 fraction of time for that speed. Since the consider incorporating the advantages of households from RECS to estimate sum of fractions of time spent at each six-speed ceiling fans by averaging the annual energy use for standard, hugger, speed must equal one, the fraction of performance characteristics at the and VSD ceiling fans. Because RECS time spent at high speed is simply given lowest two speeds, the middle two provides no means of determining the by the remaining fraction. DOE then speeds, and the highest two speeds as type of ceiling fan in a given household, used these fractions to apportion the DOE used the same sample for the proxies for the currently-proposed low- total hours of use into hours of use at speed setting, middle-speed setting, and standard, hugger, and VSD product high, medium and low speeds. classes. high-speed setting, respectively. (CA c. Power Consumption at Each Speed IOUs, No. 144 at p. 3) As previously b. Operating Hours and Standby mentioned, in the energy use analysis, DOE used the power consumption As in the NOPR analysis, DOE used DOE determined the power 29 estimates developed for each data from an LBNL study that consumption at high, medium, and low representative fan in the engineering surveyed ceiling fan owners to estimate speed for each representative fan size in analysis. In the engineering analysis, the engineering analysis. These values 28 U.S. Department of Energy–Energy Information power consumption estimates at high, Administration. 2009 RECS Survey Data. (Last ® medium, and low speed were developed accessed May 3, 2016.) http://www.eia.gov/ 30 AcuPOLL Precision Research, Inc. Survey of consumption/residential/data/2009/. Consumer Ceiling Fan Usage and Operations. 2014. based on the test method set forth in the 29 Kantner, C. L. S., S. J. Young, S. M. Donovan, 31 For the final rule, DOE used a distribution of test procedure final rule (CITE). and K. Garbesi. Ceiling Fan and Ceiling Fan Light operating hours at each speed, rather than an Consistent with the test procedure final Kit Use in the U.S.—Results of a Survey on Amazon average, to better represent the distribution of rule, testing was conducted at the Mechanical Turk. 2013. Lawrence Berkeley impacts on a sample of 10,000 households. The lowest and highest speed for fans for National Laboratory: Berkeley, CA. Report No. average time at each speed from the distribution is LBNL–6332E. http://www.escholarship.org/uc/ unchanged from average value used in the NOPR with brushless DC motors. Testing was item/3r67c1f9. analysis. not conducted at the other four fan
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speeds. Power consumption at medium In the energy conservation standards For the final rule, based on lack of speed for such fans was estimated based NOPR analysis, DOE’s estimate of the available data to suggest otherwise, DOE on scaling the power consumption at daily total hours of operation for large- gave equal weighting to each of the five the middle speed setting from diameter fans was consistent with total speeds from the test procedure, representative fans with three speeds. hours of operation estimate from the test consistent with BAS’s suggestion and The specific distribution of time procedure SNOPR. (80 FR 31487 (Jun. 3, consistent with the approach in the test between the six fan speeds commonly 2015)) In the test procedure SNOPR, to procedure final rule. (CITE) had by DC-motor fans is unknown, but weight the performance results of the c. Power Consumption at Each Speed DOE concludes that the current ceiling fans at each of the five speeds, and Standby approach should be a representative DOE took a simple average of the total estimate of overall energy use for DC- daily hours-of-use estimate of 18 hours For the large-diameter ceiling fan motor ceiling fans. per day provided by MacroAir and an product class, the power consumption example of the fraction of time spent at for a given representative fan was 2. Inputs for Large-Diameter and High- each speed from BAS that DOE assumed determined by the weighted average of Speed Small-Diameter Ceiling Fans implicitly agreed with the 12 hours per power consumption at the five speeds a. Sample of Purchasers day estimate from the October 2014 test discussed previously, where each speed was weighted by an equal fraction of As in the NOPR analysis, DOE has procedure NOPR, which yielded an average value of 15 hours per day. Id. time spent at that speed, as detailed in included only commercial and chapter 5 of the final rule TSD. industrial applications in the energy use BAS took issue with DOE’s assumption and, therefore, disagreed with DOE’s For the HSSD ceiling fan product analysis of large-diameter and HSSD class, as in the NOPR analysis, DOE ceiling fans. Although some large- estimate of 15 hours of use per day (BAS, No. 138 at p. 6) determined power consumption at high diameter and HSSD fans are used in speed for each representative fan in the To estimate the energy consumption residential applications, they represent engineering analysis. To estimate the of large-diameter ceiling fans, DOE must a very small portion of the total market power consumption at medium speed, make an estimate of average operating for large-diameter and HSSD ceiling DOE multiplied the high-speed power hours for such fans. Based on the fans. Similar to standard, hugger, and by the average ratio between high-speed available data on daily operating hours, VSD ceiling fans, DOE developed a power and medium-speed power in the for the final rule DOE estimated 12 sample of 10,000 fans to represent the standard, hugger, and VSD fans hours of use per day in active mode for range of large-diameter and HSSD engineering analysis. DOE used the large-diameter ceiling fans, consistent ceiling fan energy use. The sample same approach for low-speed power, with the hours of use estimate for HSSD captured variations in operating hours. using the average ratio between high- fans, which are also used in commercial speed power and low-speed power from b. Operating Hours and industrial applications, and also the standard, hugger, and VSD fans consistent with estimate from the test In the NOPR analysis, DOE used engineering analysis. procedure final rule (CITE). feedback from manufacturers to estimate As in the NOPR analysis, in this final total hours of operation for HSSD In the NOPR analysis, DOE also rule DOE considered all HSSD fans at ceiling fans. Manufacturers suggested a modeled the fraction of time spent at the efficiency levels with a brushless DC range of possible hours of operation, each of five speeds by large-diameter motor to have standby power, assuming depending on industry and application, ceiling fans in an approach aligned with a remote control was included for all with 12 hours per day as a the ceiling fans test procedure SNOPR, such fans. DOE estimated 0.7 watts as representative value. To represent a which proposed to test all large- the standby power value for all range of possible operating hours diameter ceiling fans at maximum representative fans in the HSSD product around this representative value, DOE speed, 80% speed, 60% speed, 40% class. Because these fans also have drew 10,000 samples from a uniform speed, and 20% speed. 80 FR 31487 standby power as a result of a remote distribution between 6 hours per day (June 3, 2015). Taking the average of control receiver, this is the same value and 18 hours per day when calculating manufacturer inputs yielded the used for standard, hugger and VSD fans, the energy use of HSSD fans. DOE also following hours of use distribution for as discussed in section IV.E.1.c. used manufacturer feedback to the NOPR analysis: 1.8 hours at DOE also considered large-diameter determine the proportion of operating maximum speed, 3.5 hours at 80% fans to have standby power, because time spent at each speed, estimating speed, 3.6 hours at 60% speed, 2 hours available information indicated that the that, on average, HSSD fans spend at 40% speed, and 4.1 hours at 20% majority of large-diameter ceiling fans in approximately 10 percent of the time at speed. BAS clarified that the input on the market use a variable-frequency high or low speed, and the rest of their distribution of time at different speeds drive and/or are operated by remote time (approximately 80 percent) at a was intended as an example and not as control, which consumes standby medium speed. an estimate to be used in calculations. power. The standby power for large- Westinghouse and ALA agreed with (BAS, No. 138 at p. 8) BAS further diameter ceiling fans was estimated to the average hours of use estimate for commented that there is insufficient be 7 watts in the engineering analysis HSSD fans in the NOPR analysis, and no data to assign operating hours or (see chapter 5 of the final rule TSD). stakeholders expressed disagreement. estimate percentages of operation. (BAS, For HSSD and large-diameter ceiling (Westinghouse, Public Meeting Public Meeting Transcript, No. 133 at fans with standby power consumption, Transcript, No. 133 at p. 79; ALA, No. pp. 83–84) BAS recommended against DOE assumed that all hours not spent in 137 at p. 8) Accordingly, DOE assumed the use of an average of two sets of active mode were in standby mode. for this final rule that HSSD fans operate operating hours in deriving operating for 12 hours a day on average when hours for large-diameter ceiling fans and 3. Impact on Air Conditioning or conducting analysis for the final rule, recommended measuring at high speed Heating Equipment Use and has maintained its assumptions only or using a metric that includes DOE did not account for any regarding the operating hours equal weighting at the five proposed interaction between ceiling fans and air distribution. operating speeds. (BAS, No. 138 at p. 6) conditioning or heating equipment in
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the NOPR analyses. In DOE’s estimation (CBE, No. 143 at p. 2) BAS cited three For any given efficiency level, DOE it appeared unlikely that consumers projects using building automation measures the change in LCC relative to would substantially increase air systems to vary ceiling fan speed that the LCC in the no-new-standards case, conditioning use, or forego purchasing a resulted in a reduction or elimination of which reflects the estimated efficiency ceiling fan in lieu of an air conditioning air conditioning use. (BAS, No. 138 at distribution of ceiling fans in the unit, due to a modest increase in the p. 10) It was reported in one of the absence of new or amended energy initial cost of a ceiling fan due to an projects cited by BAS that the use of conservation standards. In contrast, the amended energy conservation standard. ceiling fans in a school can provide up PBP for a given efficiency level is Therefore the interaction between to 4 °F of ‘‘additional effective’’ or measured relative to the baseline ceiling fan use and air conditioning use ‘‘perceived’’ cooling. In the other two product. would be unlikely to be different in the projects, the use of ceiling fans resulted DOE calculated the LCC and PBP for case of amended standards than it in expanded temperature ranges in each considered efficiency level for a would be in the no-new-standards case. buildings, such as from a 72 °F to 75 °F nationally representative consumer ASAP, et al. and the CA IOUs agree range to a 68 °F to 82 °F range. sample for each of the product classes. that the interaction between ceiling fan While DOE appreciates the provision DOE developed consumer samples that and air conditioning use would be of quantifiable outcomes, it is not clear account for variation in factors such as negligible on a national level. (ASAP, et if and how such cooling translates to geographic location. Two types of al., No. 142 at p. 5) The CA IOUs also applications beyond the specific cases consumer samples were created: one for agreed with DOE’s decision not to cited, which may not be representative the standard, hugger and VSD group of include the air conditioning interaction of ceiling fan usage in general. fans and another for the HSSD and in its analyses for this rule, based on the Moreover, as discussed previously, the large-diameter group. This was done to lack of available data. (CA IOUs, No. interaction between ceiling fan use and capture the variability in energy 144 at p. 2) ALA suggested that DOE’s air conditioning use is unlikely to be consumption, discount rates and energy proposed ceiling fan efficiency significantly different in the case of prices associated with the different standards could result in increased air amended standards than it would be in groups of ceiling fans. conditioning use, because many ceiling the no-new-standards case. Customers For VSD, hugger, and standard ceiling fan consumers already have air who would purchase ceiling fans as a fans, DOE created a sample in a manner conditioning units—which provide cost-effective substitute are for air- similar to that outlined in section substitutionary cooling at no additional conditioning or heating equipment are IV.E.1. Due to a lack of data on the cost—and will therefore be more price free to do so regardless of whether there location of HSSD and large- diameter sensitive to the price of ceiling fans. is any amended standard. fans, DOE assumed that the geographic (ALA, No. 137 at p. 8) BAS pointed out distribution of HSSD and large- F. Life-Cycle Cost and Payback Period that shipments projections do not diameter fan purchasers is similar to Analysis directly reflect the possibility of that of standard, hugger, and VSD consumers increasing their air DOE conducts LCC and PBP analyses ceiling fan purchasers. Therefore, DOE conditioning set point and using the to evaluate the economic impacts on chose the location of HSSD and large- ceiling fan at high speeds. (BAS, Public individual consumers of potential diameter fan purchasers according to Meeting Transcript, No. 133 at pp. 77– energy conservation standards. The the geographic distribution of 78) effect of new or amended energy households in RECS. For each consumer As noted in the NOPR, DOE agrees conservation standards on individual in the sample used for HSSD and large- that ceiling fans have the theoretical consumers usually involves a reduction diameter fans, DOE determined the potential to be an inexpensive and in operating cost and an increase in energy consumption of ceiling fans and effective replacement for air purchase cost. DOE uses the following the appropriate electricity price for the conditioning use; however, the two metrics to measure consumer location and sector. interaction between ceiling fan use and impacts: The calculation of the total installed air conditioning use is unlikely to be • The LCC (life-cycle cost) is the total cost includes MPCs, manufacturer different in the case of amended consumer expense of an appliance or markups, retailer and distributor standards than it would be in the no- product over the life of that product, markups, and sales taxes. Installation new-standards case. The shipments consisting of total installed cost costs were assumed not to vary by analysis projects a modest change of (manufacturer selling price, distribution efficiency level, and therefore were not shipments for standard, hugger, and chain markups, sales tax, and considered in the analysis. VSD fans of less than 1% under the installation costs) plus operating costs Inputs to the calculation of operating adopted standard level, and it is unclear (expenses for energy use, maintenance, expenses include annual energy what would motivate consumers to and repair). To compute the operating consumption, energy prices and price change their air conditioner’s set point costs, DOE discounts future operating projections, repair and maintenance or otherwise change their air- costs to the time of purchase and sums costs, product lifetimes, and discount conditioning behavior if they own a them over the lifetime of the product. rates. ceiling fan regardless of whether there is • The PBP (payback period) is the DOE created distributions of values a new or amended standard. DOE did estimated amount of time (in years) it for product lifetime, discount rates, and not account for such interaction in the takes consumers to recover the sales taxes, with probabilities attached final rule analyses. increased purchase cost (including to each value, to account for their The Center for the Built Environment installation) of a more-efficient product uncertainty and variability. at the University of California, Berkeley through lower operating costs. DOE The computer model DOE uses to (CBE) agreed with DOE that a modest calculates the PBP by dividing the calculate the LCC and PBP relies on a increase in ceiling fan price is unlikely change in purchase cost at higher Monte Carlo simulation to incorporate to increase air conditioning use, but efficiency levels by the change in uncertainty and variability into the suggested that DOE conduct analyses on annual operating cost for the year that analysis. The Monte Carlo simulations the building level rather than only amended or new standards are assumed randomly sample input values from the considering ceiling fan cost savings. to take effect. probability distributions and ceiling fan
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user samples. The model calculated the amended standards. The final rule is the LCC and PBP calculations. The LCC and PBP for products at each expected to publish in late 2016, with subsections that follow provide further efficiency level for a sample of 10,000 a compliance date in late 2019. For this discussion. Details of the spreadsheet consumers per simulation run. final rule, DOE analyzes LCC results for model, and of all the inputs to the LCC DOE calculated the LCC and PBP for 2020, the first full year of compliance and PBP analyses, are contained in all consumers as if each were to with final rule. chapter 8 and its appendices of the final purchase a new product in the expected Table IV.2 summarizes the approach rule TSD. first full year of compliance with and data DOE used to derive inputs to
TABLE IV.2—SUMMARY OF INPUTS AND METHODS FOR THE LCC AND PBP ANALYSES *
Inputs Source/method
Purchase Price ...... DOE estimated the purchase price of ceiling fans (CF) by combining the different cost components along the production, import, distribution and retail chain. DOE further used a price trend to project prices of CF with brushless DC motors to the compliance year. Sales Tax ...... Derived 2020 population-weighted-average tax values for each reportable domain based on Census population projections and sales tax data from Sales Tax Clearinghouse. Energy Use ...... Derived in the energy use analysis, and takes into account variations in factors such as operating hours. Variation in geographic location is taken into account for certain product classes. Energy Prices ...... Electricity: Based on 2014 marginal electricity price data from the Edison Electric Institute. Variability: Electricity prices vary by season, U.S. region, and baseline electricity consumption level. Energy Price Trends ...... Based on AEO 2015 price forecasts. Product Lifetime ...... Derived a mean ceiling fan life time of 13.8 years from a best-fit model based on the Weibull distribu- tion. Discount Rates ...... Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board’s Survey of Consumer Finances. Efficiency Distribution ...... Current efficiency distribution for standard and hugger ceiling fans is based on feedback from manufac- turers. Current efficiency distribution for VSD, HSSD and large-diameter ceiling fans is based on on- line model counts. Efficiency distribution for the compliance year is estimated by the market-share module of shipments model. See chapter 9 of the final rule TSD for details. Assumed Compliance Date ...... 2019.** * References for the data sources mentioned in this table are provided in the sections following the table and in chapter 8 of the final rule TSD. ** The compliance date was assumed to be in late 2019, so the LCC analysis was conducted for 2020, the first full year of compliance.
1. Purchase Price data from the Sales Tax Clearinghouse 33 control systems (i.e., control systems and used population projections from intended to control ceiling fan operation DOE estimates the purchase price by the Census bureau 34 to develop in addition to other appliances) to combining manufacturing and population-weighted-average sales tax replace those controls systems, which is production cost, manufacturer markups, values for each state in 2020. expensive and would remove energy tariffs, import costs, retail markups, and In the final rule analyses, as in the savings potential. (Lutron, No. 141 at p. sales tax. Section IV.D provides the NOPR analysis, DOE assumed that 2) details of the markups analysis. installation costs are the same regardless Regarding the estimate of 20 million DOE used a price trend to account for of efficiency level and do not affect the installed speed controls for ceiling fans changes in the incremental brushless DC LCC or PBP. Westinghouse, ALA, and with AC motors, DOE notes that motor price that are expected to occur BAS agreed that installation costs are brushless DC-motor ceiling fans are between the time for which DOE has not based on efficiency level of fan assumed to be sold with a remote data for brushless DC motor prices technology. (Westinghouse, Public control and that the cost of the (2014) and the first full year after the Meeting Transcript, No. 133 at p. 96; associated control is included in DOE’s assumed compliance date of the ALA, No. 137 at p. 8; BAS, No. 138 at rulemaking (2020). DOE estimated a 6 p. 10) analyses. Therefore, consumer ability to percent price decline rate associated Lutron estimated that, conservatively, control fan speed is preserved for with the electronics used to control there are approximately 20 million ceiling fans with brushless DC motors. brushless DC motor fans based on an ceiling fan speed controls installed in Regarding high-cost integrated control analysis of the Producer Price Index the U.S. that generally work well with systems, DOE acknowledges that there (PPI) of semiconductor components.32 AC-motor ceiling fans. Because controls may be a higher installation cost for This rate is applied only to the for DC-motor ceiling fans are more consumers who purchase a DC-motor incremental cost between a brushless complicated, requiring brushless DC ceiling fan and need to upgrade from an DC motor and an AC motor and not to motors for standard, hugger, and VSD existing integrated control system that the price of the entire ceiling fan. For ceiling fans would unintentionally force only works with AC-motor ceiling fans details on the price trend analysis, see consumers with high-cost, integrated to an integrated control system that section IV.G. works with DC-motor ceiling fans; 33 https://thestc.com/STRates.stm. Last accessed however it is unclear what fraction of DOE applied sales tax, which varies May 7th 2015. by geographic location, to the total 34 U.S. Census Bureau, Population Division, AC-motor standard, hugger, and VSD product cost. DOE collected sales tax Interim State Population Projections, 2005. Table ceiling fans are currently operated by A1: Interim Projections of the Total Population for high-cost integrated control systems. the United States and States: April 1, 2000 to July 32 PCU334413334413. 1, 2030. DOE’s best estimate is that this fraction
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is negligibly small.35 Furthermore, DOE analysis, the marginal electricity prices 4. Repair Costs notes that the standard adopted for vary by season, region, and baseline In the NOPR analysis, DOE used standard, hugger, and VSD ceiling fans household electricity consumption information on repairs and installation by this final rule does not require the level. DOE estimated these prices using from manufacturer interviews to usage of DC-motor ceiling fans. data published with the Edison Electric estimate the cost to consumers of The CA IOUs suggested that DOE Institute (EEI) Typical Bills and Average repairing a ceiling fan. DOE also remove the remote control cost from the Rates reports for summer and winter assumed that 2.5 percent and 9 percent installed cost, as the remote control is 2014.36 DOE assigned seasonal marginal of AC-motor and DC-motor ceiling fans not an essential component for a ceiling prices to each LCC sample based on the incurred repair costs, respectively. DOE fan. Alternatively, if DOE decides to location and the baseline monthly based these assumptions on repair rate include the cost of remote controls, the electricity consumption for an average estimates provided by a ceiling fan CA IOUs encourage DOE to consider summer or winter month associated technical expert.38 adding the cost for wall mount controls with that sample. DOE approximated CA IOUs and ASAP commented that for AC ceiling fans. (CA IOUs, No. 144 the electricity prices for the industrial the repair rate for brushless DC motors at p. 4) sector using the commercial sector in ceiling fans may actually be lower DOE clarifies that in the final rule prices. This approximation was made as than the repair rate for AC motors. (CA analysis, the cost of the basic means of the type of industrial facility that uses IOUs, Public Meeting Transcript, No. control has been accounted for in the ceiling fans typically occupies a regular 133 at p. 98; ASAP, Public Meeting engineering analysis at all efficiency building, rather than a heavy industrial Transcript, No. 133 at p. 98) The CA levels for all product classes (see section complex. For a detailed discussion of IOUs and ASAP disagreed with the IV.C). For standard, hugger and VSD the development of electricity prices, repair cost increase for brushless DC fans with an AC motor, the means of see appendix 8B of the final rule TSD. motor ceiling fans due to a lack of control are assumed to be 3. Electricity Price Trends supporting data, and ASAP further electromechanical, e.g., a pull chain or noted that this may have caused the wall-mounted controls, as the vast To arrive at average and marginal economic results presented in the NOPR majority of AC-motor ceiling fans are electricity prices in future years, DOE to be underestimated. (CA IOUs, No. operated with these types of controls. multiplied the average and marginal 144 at p. 5; ASAP, Public Meeting For fans with a brushless DC motor, the electricity prices in the reference year Transcript, No. 133 at pp. 12–13; ASAP, means of control is assumed to be a (2014) by the forecast of annual No. 142 at p. 4) remote control, as the vast majority of residential or commercial electricity DOE reexamined this issue and found ceiling fans with a brushless DC motor price changes for each Census division no suitable data with which to update are operated by remote control. Chapter from EIA’s AEO 2015, which has an end its assumption that the excess rate of 5 of the final TSD provides more detail year of 2040.37 To estimate the trends failure for brushless DC motors, above on the assumptions and costs regarding after 2040, DOE used the average rate of the repair rate for AC motors, is 6.5 the means of control. In the case of change during 2025–2040. percent of purchases. Because brushless standard, hugger and VSD fans, DOE For each fan purchase sampled, DOE DC motors incorporate electronics that will continue to estimate, as in the applied the projection for the Census AC motors do not have, the reliability of NOPR analysis, that 7 percent of fans division in which the purchase was AC motors is likely to exceed brushless with AC motors are operated with a located. The AEO electricity price DC motors. Hence, DOE has continued remote control, which is accounted for trends do not distinguish between to use the same assumptions in the final separately when calculating the marginal and average prices, so DOE rule analyses. purchase price. used the AEO 2015 trends for the 5. Product Lifetime 2. Electricity Prices marginal prices. DOE reviewed the EEI DOE estimated ceiling fan lifetimes by data for the years 2007 to 2014 and In the final rule analysis, as in the fitting a survival probability function to determined that there is no systematic NOPR analysis, DOE used average data of historical shipments and the difference in the trends for marginal vs. electricity prices to characterize energy 2012 age distributions of installed stock. average electricity prices in the data. costs associated with the baseline Data on the age distribution for the efficiency level and marginal electricity DOE used the electricity price trends installed standard, hugger, and VSD prices to characterize incremental associated with the AEO Reference case ceiling fan stock in 2012 was available energy costs associated with the other scenarios for the nine Census divisions. from the LBNL study.39 By combining efficiency levels considered. Marginal The Reference case is a business-as- data from the LBNL study with historic electricity prices are used to usual estimate, given expected market, data on standard, hugger, and VSD characterize incremental energy costs demographic, and technological trends. ceiling fan shipments from NPD, because they capture more accurately DOE also included prices from AEO ENERGY STAR and Appliance the small, incremental cost or savings high-growth and AEO low-growth Magazine (see chapter 3 for more associated with a change in energy use scenarios in the analysis. The high- and information on historical shipments), relative to the consumer’s bill in the low-growth cases show the projected DOE estimated the percentage of reference case, and may provide a better effects of alternative economic growth appliances of a given age that are still representation of consumer costs than assumptions on energy markets. in operation. This survival function, average electricity prices. In the LCC which DOE assumed has the form of a 36 Edison Electric Institute. Typical Bills and cumulative Weibull distribution,40 35 In the aforementioned LBNL study, only 1 Average Rates Report. Winter 2014 published April provides a mean of 13.8 years and a percent of ceiling fan owners indicated that their 2014, Summer 2014 published October 2014. See ceiling fans were operated via means other than http://www.eei.org/resourcesandmedia/products/ pull chain/chord, wall switch (on-off only), wall Pages/Products.aspx. 38 Mehta, V. Personal communication. E-mail to control (on-off and variable speed control, and 37 U.S. Department of Energy-Energy Information Mohan Ganeshalingam, LBNL. January 14, 2014. remote control (battery operated). Integrated Administration, Annual Energy Outlook 2015 with 39 Kantner, et al. (2013), op. cit. controls such as the ones mentioned here are Projections to 2040 (Available at:
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median of 13.0 years for ceiling fan support an increase in average lifetime of rates for each type of debt and asset lifetime and is the same distribution for large-diameter ceiling fans, in this by income group to represent the rates employed in the preliminary and NOPR final rule DOE used the same survival that may apply in the year in which analyses. Shipment data were available function proposed in the NOPR for all amended standards would take effect. only for standard, hugger, and VSD product classes. DOE assigned each sample household, ceiling fans, so DOE assumed the based on its income group, a specific 6. Discount Rates survival probability function of large- discount rate drawn from one of the diameter and HSSD ceiling fans is the In calculating the LCC, DOE applies distributions. The average rate across all same as that for standard, hugger, and discount rates appropriate to consumers types of household debt and equity and VSD ceiling fans. to estimate the present value of future income groups, weighted by the shares Westinghouse and ALA agreed with operating costs. To identify appropriate of each type, is 4.4 percent. See chapter the ceiling fan survival function used by discount rates for purchasers, DOE 8 of the final rule TSD for further details DOE in the NOPR analysis, but estimated the percentage of HSSD and on the development of residential Westinghouse commented that large-diameter fan purchasers in the discount rates. commercial building ‘‘turning’’ (i.e., commercial and industrial sectors. For To establish discount rates for where a building is repurposed for a HSSD fans, DOE estimated the ratio in commercial and industrial users, DOE new business) can shorten the service floor space between likely building estimated the cost of capital for life of commercial fans. (Westinghouse, types where a fan would be installed in companies that purchase ceiling fans. Public Meeting Transcript, No. 133 at p. commercial settings to that in industrial The weighted average cost of capital is 101; ALA, No. 137 at p. 8) CA IOUs settings. Manufacturer interviews commonly used to estimate the present added that there is qualitative online informed DOE of the likely locations of value of cash flows to be derived from information suggesting that ceiling fans CF installations. Floor space estimates a typical company project or with brushless DC motors last longer by building type were taken from the investment. Most companies use both than ceiling fans with AC motors. (CA 2010 U.S. Lighting Market debt and equity capital to fund IOUs, Public Meeting Transcript, No. Characterization,41 which extrapolates investments, so their cost of capital is 133 at p. 102) The CA IOUs also estimates for commercial floor space the weighted average of the cost to the indicated that DC-motor ceiling fans from the 2003 Commercial Buildings firm of equity and debt financing, as may last longer than AC-motor ceiling Energy Consumption Survey (CBECS) estimated from financial data for fans, and that consumers are less likely and industrial floor space from the 2006 publicly traded firms in the sectors that to discard DC-motor ceiling fans prior to Manufacturing Energy Consumption purchase ceiling fans. For this analysis, the end of their useful life when Survey (MECS) to 2010 values using DOE used Damodaran online 43 as the compared to AC-motor ceiling fans. (CA measured growth trends. The ratio source of information about company IOUs, No. 144 at p. 3) BAS added that suggests that 80 percent of HSSD debt and equity financing. The average the average lifetime for large-diameter installations are in the commercial rate across all types of companies, fans is on the order of 15–20 years, with sector and 20 percent are in the weighted by the shares of each type, is a large spread in the distribution of industrial sector. For large-diameter 5.0 percent. See chapter 8 of the final expected lifetimes. (BAS, No. 138 at p. fans, DOE used manufacturer feedback rule TSD for further details on the 11) Finally, HKC commented that the about common applications for these development of commercial and service life of ceiling fans can be fans. DOE estimated that 20 percent of industrial sector discount rates. shortened by changing design trends. large-diameter ceiling fan installations 7. Efficiency and Blade Span (HKC, Public Meeting Transcript, No. are in the commercial sector and 80 Distribution in the No-New-Standards 133 at pp. 103–104) percent are in the industrial sector. DOE acknowledges that ceiling fans For residential consumers, DOE Case that use different technologies and estimated a distribution of discount To estimate the share of consumers belong to product classes may have rates for ceiling fans based on consumer that would be affected by a potential different technical lifetimes. However, financing costs and opportunity cost of energy conservation standard at a in its analyses, DOE considers the funds related to appliance energy cost particular efficiency level, DOE’s LCC service lifetime of ceiling fans, savings and maintenance costs. First, analysis considered the projected including the types of effects mentioned DOE identified all relevant household distribution (market shares) of product by HKC and Westinghouse. The survival debt or asset classes to approximate a efficiencies in the no-new-standards function used in the NOPR and final consumer’s opportunity cost of funds case (i.e., the case without new rule analyses inherently incorporates related to appliance energy cost savings. efficiency performance standards). factors other than product failure, such It estimated the average percentage Shipments data for ceiling fans as home renovation rates or design trend shares of the various types of debt and disaggregated by efficiency level are not changes, by virtue of its derivation from equity by household income group available, so it is not possible to derive the actual age distribution of installed using data from the Federal Reserve the current shipments-weighted ceiling fans in the stock. Therefore, the Board’s Survey of Consumer Finances 42 efficiency distribution. Instead, for the technical possibility of ceiling fans with (SCF) for 1995, 1998, 2001, 2004, 2007, NOPR analysis, DOE developed the brushless DC motors lasting longer than 2010 and 2013. Using the SCF and other current efficiency market share ceiling fans with AC motors should not sources, DOE developed a distribution distributions for the standard, hugger, significantly alter the survival function. and VSD product classes using online With respect to large-diameter ceiling 41 Navigant Consulting, Inc. Final Report: 2010 data from a ceiling fan retailer 44 and fans, given that the general survival U.S. Lighting Market Characterization. January data obtained from in-store visits of 2012. (Last Accessed May 7, 2016.) http:// function DOE used results in and a apps1.eere.energy.gov/buildings/publications/pdfs/ major retailers. Ceiling fan models were median lifetime of 13 years and an ssl/2010-lmc-final-jan-2012.pdf. average lifetime of 13.8 years—which 42 Board of Governors of the Federal Reserve 43 Damodaran, A. Cost of Capital by Sector. does not drastically differ from the System. Survey of Consumer Finances. 1995, 1998, January 2014. (Last accessed May 7, 2016.) http:// 2001, 2004, 2007, 2010 and 2013. (Last accessed people.stern.nyu.edu/adamodar/New_Home_Page/ average lifetime suggested by BAS—and May 7, 2016.) http://www.federalreserve.gov/ datafile/wacc.htm. that DOE is unaware of any data to econresdata/scf/scfindex.htm. 44 http://www.hansenwholesale.com/.
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binned according to their efficiency to comply with the proposed standards levels below the proposed standard arrive at the current distributions. To (ALA, No. 139 at pp. 2–3) level, market shares were assumed to be estimate the efficiency distributions in DOE understands that model counts split evenly between EL0, EL1, and EL2. 2019, DOE applied a consumer-choice are not necessarily representative of The efficiency distribution for 2020 was model sensitive only to the first cost of market share. With respect to the then projected using the consumer- options representative of each efficiency estimate that 90 percent of shipments choice model described in section level given by the engineering analysis. would not comply with the proposed IV.G.3. standards for certain manufacturers, No comments were received regarding Westinghouse commented at the DOE notes that any given NOPR public meeting that the fraction the efficiency distribution for VSD manufacturer’s efficiency distribution ceiling fans, so DOE has maintained its of hugger fans currently estimated to may differ from the efficiency meet EL 3 appeared to be too high. approach from the NOPR analysis for distribution of the entire market. For the the VSD product class. Westinghouse and ALA also commented 70 percent of standard and hugger that model counts of ceiling fans are not sample products that did not meet the For HSSD and large-diameter ceiling representative of market share. proposed standard level based on recent fans, DOE developed the current (Westinghouse, Public Meeting testing results, it is unclear how efficiency distributions using model Transcript, No. 133 at p. 107–110; ALA, representative these sample products counts available on HSSD and large- No. 139 at pp. 2–3) ALA estimated that are of the entire ceiling fan market diameter fan manufacturer websites. approximately 70 percent of standard without corresponding shipments data. DOE assumed the current distribution and hugger ceiling fan models do not However, in the absence of a shipments- observed in 2015 would also be meet the standard level proposed in the weighted efficiency distribution, for this representative of the efficiency NOPR based on test results of sample final rule DOE has adopted an updated distribution in 2020. products, and added that higher sales- 2015 efficiency distribution with 70 The estimated market shares for the volume ceiling fan models are less percent of shipments of standard and no-new-standards case for all ceiling likely to meet that standard than lower hugger ceiling fans below the proposed fans are shown in Table IV.3. See sales-volume models. For certain standard level in the NOPR. Because no chapter 8 of the final rule TSD for manufacturers, ALA estimated that over market share distribution was suggested further information on the derivation of 90 percent of shipments would not by ALA amongst the three efficiency the efficiency distributions.
TABLE IV.3.—MARKET EFFICIENCY DISTRIBUTION FOR THE NO-NEW-STANDARDS CASE IN 2020
EL 0 EL 1 EL 2 EL 3 EL 4 Total * Product class (%) (%) (%) (%) (%) (%)
Standard ...... 22.7 22.7 22.7 28.9 3.1 100 Hugger ...... 22.6 22.6 22.6 28.8 3.4 100 VSD ...... 4.1 0.0 96.0 0.0 ...... 100 HSSD ...... 44.7 44.7 0.0 2.7 8.0 100 Large-Diameter ...... 5.1 5.1 58.3 14.1 17.3 100 * Rows may not sum to 100% due to rounding.
DOE also developed size distributions indicated a rough split of market share approach, DOE retained the same within each product class to determine between the two representative blade methodology for the final rule analysis the likelihood that a given purchaser spans, so DOE assumed that the VSD to estimate the blade span distribution would select each of the representative market was evenly split between the for all the product classes. DOE fan sizes from the engineering analysis. two blade spans. estimated the blade span distribution by For the NOPR, DOE estimated the Westinghouse agreed with the ″ ″ using the distribution of models distribution of diameters for standard, proposed market shares for 36 and 56 currently seen on the market for the hugger, HSSD and large-diameter ceiling high-speed small-diameter ceiling fans final rule. Table IV.4 presents the blade in the NOPR, as well as the market fans using the distribution of models span distribution of each of the product currently seen on the market. In shares by diameter for hugger, standard, classes. (For the NIA, DOE assumed that particular, DOE estimated that the and very-small diameter low-volume blade size distribution remains constant current market share for 36-inch and 56- ceiling fans. (Westinghouse, Public inch HSSD ceiling fans are 7 percent Meeting Transcript, No. 133 at p. 91, over the years considered in the and 93 percent, respectively. A limited 117) In the absence of additional data or analysis.) pool of available VSD fan models comments to support an alternative
TABLE IV.4.—BLADE SPAN DISTRIBUTION
Product class Standard Hugger VSD HSSD Large-Diameter
Blade Span (inches)...... 44 52 60 44 52 13 16 36 56 96 144 240 Market Share (%)...... 21.1 72.5 6.5 46.2 53.8 50.0 50.0 7.0 93.0 22.0 27.0 51.0
8. Payback Period Analysis additional installed cost of more- Payback periods are expressed in years. efficient products, compared to baseline Payback periods that exceed the life of The payback period is the amount of products, through energy cost savings. the product mean that the increased time it takes the consumer to recover the
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total installed cost is not recovered in ceiling fan first cost to estimate market for the commercial and industrial reduced operating expenses. shares across efficiency level. For HSSD sectors. As all of the inputs used in the The inputs to the PBP calculation for and large-diameter ceiling fans, DOE downstream analyses are the same for each efficiency level are the change in used a roll-up approach to estimate the both sectors, DOE does not distinguish total installed cost of the product and efficiency distribution in each standards between shipments to the commercial or the change in the first-year annual case. industrial sector. operating expenditures relative to the The ceiling fan shipments demand baseline. The PBP calculation uses the 1. Shipments Demand Model model considers four market segments same inputs as the LCC analysis, except DOE used historical shipment data of that affect the net demand for total that discount rates are not needed. hugger, standard, and VSD fans from shipments: replacements for retired EPCA, as amended, establishes a Appliance Magazine’s Statistical Review stock, additions due to new building rebuttable presumption that a standard from 1991 to 2006,45 data from ENERGY construction, additions due to is economically justified if the Secretary STAR annual reports from 2003 to expanding demand in existing finds that the additional cost to the 2013,46 and data purchased from NPD buildings, and reductions due to consumer of purchasing a product Research group from 2007–2011.47 building demolitions, which erodes complying with an energy conservation Figure 9.3.1 in Chapter 9 of this final demand from replacements and existing standard level will be less than three rule TSD displays the historical time buildings. times the value of the first year’s energy series used for DOE’s shipments savings resulting from the standard, as analysis. 2. Stock-Accounting Model calculated under the applicable test As the data were not disaggregated by The stock accounting model tracks the procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) product class, DOE estimated the age (vintage) distribution of the installed For each considered efficiency level, relative split between standard, hugger, ceiling fan stock. The age distribution of DOE determined the value of the first and VSD product classes. In the NOPR the stock impacts both the national year’s energy savings by calculating the analysis, DOE used online and in-store energy savings (NES) and NPV energy savings in accordance with the ceiling fan data and applied a price- calculations, because the operating costs applicable DOE test procedure, and weighting approach based on market for any year depend on the age multiplying those savings by the average share data as a function of retail price distribution of the stock. Older, less energy price forecast for the year in for ceiling fans collected by the NPD efficient units may have higher which compliance with the amended Group from 2007 to 2011. These data operating costs, while newer, more standards would be required. inform the price-weighting scheme, efficient units have lower operating which apportions more market share to costs. The stock accounting model is G. Shipments Analysis ceiling fans with lower first costs. DOE initialized using historical shipments DOE uses projections of product calculated 48.7 percent and 51.3 percent data and accounts for additions to the shipments to calculate the national current market shares for hugger and stock (i.e., shipments) and retirements. impacts of potential amended energy standard ceiling fans, respectively. The age distribution of the stock in 2012 conservation standards on energy use, DOE’s calculation assumed that multi- is estimated using results from a recent NPV, and future manufacturer cash mount ceiling fan installations are split survey of ceiling fan owners.48 The flows. Historical shipments data are 27 percent/73 percent as hugger and stock age distribution is updated for used to build up an equipment stock, standard ceiling fans, respectively. subsequent years using projected and to calibrate the shipments model to Westinghouse agreed with DOE’s shipments and retirements determined project shipments over the course of the estimates for the market split between by the stock age distribution and a analysis period based on the estimated standard, hugger, and VSD ceiling fans product retirement function. future demand for ceiling fans. Details in the NOPR analyses. (Westinghouse, of the shipments analysis are described Public Meeting Transcript, No. 133 at p. 3. Market-Share Projections in chapter 9 of the final rule TSD. 91, 117) DOE retains this methodology The consumer-choice model used for The shipments model projects total for estimating market share by product standard, hugger, and VSD ceiling fans shipments and market-share efficiency class for the final rule. estimates the market shares of purchases distributions in each year of the 30-year DOE’s estimate for HSSD historical in each year in the analysis period for analysis period for the no-new- shipments is based on scaling historical each efficiency level presented in the standards case and each of the standards shipments of standard, hugger, and VSD engineering analysis. DOE assumed that cases, calibrated using historical ceiling fans using a scaling factor each of these product classes provides a shipments. This final rule is expected to estimated from feedback from specific utility and consumers do not publish in late 2016 with a compliance manufacturer interviews. DOE’s choose between options in different date in late 2019. DOE begins its estimate for large-diameter fans is based product classes. The consumer-choice shipments analysis for the final rule in on matching a linear shipments trend to module selects which ceiling fans are 2020, the first full year of compliance, an estimate of 2013 installed stock purchased within a product class in any and extends over 30 years until 2049. assuming large-diameter fans were given year based on consumer The shipments model consists of three introduced to the market in 2000. sensitivity to first cost, as well as on the main components: (1) A shipments Shipments for standard, hugger, and ceiling fan options available, which demand model that determines the total VSD ceiling fans are calculated for the were determined in the engineering demand for new ceiling fans in each residential sector. Shipments for HSSD analysis. Deviations from purely cost- year of the analysis period, (2) a stock and large-diameter fans are calculated driven behavior are accounted for using model that tracks the age distribution of factors found by calibrating the model to the stock over the analysis period, and 45 Appliance® Statistical Review, Annual Report, observed historical data. (3) a model that determines the market Appliance Magazine (1991–2006). Westinghouse agreed with DOE’s shares of purchased ceiling fans across 46 United States Environmental Protection NOPR assumption that consumers of Agency, ENERGY STAR® and Other Climate efficiency levels. For standard, hugger, Protection Partnerships: Annual Report (2003– standard, hugger, and VSD ceiling fans and VSD ceiling fans, DOE used a 2013). consumer-choice model sensitive to 47 NPD Group, 2007–2011. 48 Kantner, et al. (2013), op. cit.
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are most sensitive to first cost. for use in ceiling fans, and thus DOE context refers to consumers of the (Westinghouse, Public Meeting expects price declines. Given the product being regulated.) DOE Transcript, No. 133 at p. 123) DOE absence of data on cumulative calculates the NES and NPV based on maintains this assumption for the shipments of brushless DC motors, DOE projections of annual product consumer-choice model in the final models learning lowering costs, and shipments, along with the annual rule. thus prices, with time. In the NOPR energy consumption, total installed cost, In the NOPR analysis, DOE assumed analysis, DOE adopted a price decline and repair costs. For the final rule the no-new-standards case efficiency rate of 6 percent applied to the analysis, DOE projected the energy distribution for HSSD and large- incremental (not total) cost associated savings, operating cost savings, product diameter ceiling fans remained fixed at with a brushless DC motor, based on costs, and NPV of consumer benefits the estimated 2015 efficiency information from a technical expert for over the lifetime of ceiling fans shipped distribution over the shipments analysis standard, hugger, and VSD ceiling from 2020 through 2049, beginning with period. In the standards cases, market fans.49 ASAP agreed with DOE’s the first full year of compliance with a shares for those levels that do not meet approach to apply price learning only to potential standard. the standard roll up to the standard the electronic component of brushless DOE evaluates the impacts of new and level, and shares above the standard DC motors, as opposed to applying price amended standards by comparing a case level are unchanged. In the NOPR learning to the entire product. (ASAP, without such standards with standards- analysis, DOE assumed no product class Public Meeting Transcript, No. 133 at p. case projections. The no-new-standards switching between the HSSD and large- 122) DOE continues to use this case projection characterizes energy use diameter product classes. methodology for applying price trends and consumer costs for each product Westinghouse and BAS agreed with to brushless DC motors in this final rule. class in the absence of new or amended the roll-up approach DOE used in its 5. Impact of a Standard on Shipments energy conservation standards. For this NOPR analysis, but BAS added that projection, DOE considers historical large-diameter ceiling fan manufacturers DOE assumes that any increase in the trends in efficiency and various forces are likely to meet the minimum average price of a ceiling fan due to a that are likely to affect the mix of efficiency by reducing the utility of their standard would result in a decrease in efficiencies over time. DOE compares fans (i.e., by reducing the maximum shipments. For this final rule analysis, the no-new-standards case with airflow). (Westinghouse, Public Meeting DOE uses a relative price elasticity of projections characterizing the market for Transcript, No. 133 at pp. 123–124; demand of -0.34, which is the value each product class if DOE adopted new BAS, Public Meeting Transcript, No. DOE has typically used for residential or amended standards at specific energy 133 at p. 126) appliances. efficiency levels (i.e., the TSLs or For this final rule, DOE continues to DOE notes that an increase in the standards cases) for that class. For the use the roll-up approach for HSSD and price of ceiling fan light kits due to the standards cases, DOE considers how a large-diameter ceiling fans. As adopted ceiling fan light kit standard given standard would likely affect the discussed in section IV.C.3, DOE will also impact the shipments of market shares of products with adjusted the efficiency equation ceiling fans sold with ceiling fan light efficiencies greater than the standard associated with the considered standard kits. The ceiling fan final rule analysis when ceiling fans that do not meet the levels to ensure that high airflow ceiling included the impact on ceiling fan TSL being analyzed are excluded as fans would be preserved under the shipments from the estimated ceiling options available to the consumer. standard level in this final rule. fan light kit price change due to the adopted ceiling fan light kit standard. DOE uses a spreadsheet model to 4. Price Trend (81 FR 580 (Jan. 6, 2016)) The impact calculate the energy savings and the The consumer-choice model uses from a ceiling fan light kit standard to national consumer costs and savings ceiling fan prices, which change over ceiling fan shipments is applied to both from each TSL. Interested parties can time in some cases. There is the no ceiling fan standards case and the review DOE’s analyses by changing considerable evidence of learning-by- ceiling fan standards case shipments. various input quantities within the doing lowering the cost of new spreadsheet. The NIA spreadsheet technologies along with increases in H. National Impact Analysis model uses typical values (as opposed production of the new technology. The The NIA assesses the national energy to probability distributions) as inputs. concept behind this empirical savings (NES) and the net present value Table IV.5 summarizes the inputs and phenomenon is that as the new (NPV) from a national perspective of methods DOE used for the NIA analysis technology is produced in greater total consumer costs and savings that for the final rule. Discussion of these numbers, employees and firms will find would be expected to result from new inputs and methods follows the table. ways to lower costs. Brushless DC or amended standards at specific See chapter 10 of the final rule TSD for motors are a relatively new technology efficiency levels. (‘‘Consumer’’ in this further details.
TABLE IV.5—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS
Inputs Method
Shipments ...... Annual shipments from shipments model. Assumed Compliance Date of Standard ...... 2019.* No Standard-Case Forecasted Efficacies ...... Estimated by market-share module of shipments model. Standards-Case Forecasted Efficacies ...... Estimated by market-share module of shipments model.
49 Mehta, V. Personal communication. E-mail to Mohan Ganeshalingam, LBNL. January 14, 2014.
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TABLE IV.5—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS—Continued
Inputs Method
Annual Energy Consumption per Unit ...... Annual weighted-average values are a function of energy use at each EL. 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 per Unit ...... DC motor fans have a 6.5% higher failure rate compared to AC motor fans. Energy Prices ...... AEO 2015 forecasts (to 2040) and extrapolation thereafter. Energy Site-to-Primary and FFC Conversion ...... A time-series conversion factor based on AEO 2015. Discount Rate ...... Three and seven percent. Present Year ...... 2016. * The compliance date was assumed to be in late 2019, so the shipments analysis was conducted for products shipped from 2020–2049, be- ginning with the first full year of compliance.
1. National Energy Savings for that purpose. 77 FR 49701 (Aug. 17, 2. Net Present Value Analysis 2012). NEMS is a public domain, multi- The inputs for determining the NPV The national energy savings analysis sector, partial equilibrium model of the of the total costs and benefits involves a comparison of national U.S. energy sector 50 that EIA uses to experienced by consumers are (1) total energy consumption of the considered prepare its Annual Energy Outlook. The annual installed cost, (2) total annual products between each potential approach used for deriving FFC operating costs savings, and (3) a standards case and the case with no new measures of energy use and emissions is or amended energy conservation described in appendix 10B of the final discount factor to calculate the present standards. DOE calculated the national rule TSD. value of costs and savings. DOE energy consumption by multiplying the The rebound effect accounts for calculates net savings each year as the number of units (stock) of each product increased usage of an appliance by difference between the no-new- (by vintage or age) by the unit energy consumers after the implementation of a standards case and each standards case consumption (also by vintage). DOE standard, reducing the energy savings in terms of total savings in operating calculated annual NES based on the attributed to a standard. DOE generally costs versus total increases in installed difference in national energy accounts for the direct rebound effect in costs. DOE calculates operating cost consumption for the no-new-standards its estimates of the national energy savings over the lifetime of each product case and for the case where a standard savings when available data suggest shipped during the forecast period. is set at each TSL. DOE estimated consumers may increase product usage The operating cost savings are energy consumption and savings based in the event of a standard which acts to primarily energy cost savings, which are on site energy and converted the decrease the average power associated calculated using the estimated energy electricity consumption and savings to with the product. In the case of ceiling savings in each year and the projected primary energy (i.e., the energy fans, DOE found no data pertaining to price of electricity. To estimate consumed by power plants to generate a rebound effect associated with more electricity prices in future years, DOE site electricity) using annual conversion efficient products and also received multiplied the average regional energy factors derived from AEO 2015. comments in response to the Framework prices by the forecast of annual Cumulative energy savings are the sum document from ALA indicating that national-average residential energy price of the NES for each year over the they did not believe a rebound effect changes in the Reference case from AEO timeframe of the analysis. due to a ceiling fan standard was likely. 2015, which has an end year of 2040. To In 2011, in response to the (ALA, No 39, at pg. 39) In this final rule, estimate price trends after 2040, DOE recommendations of a committee on DOE assumes no rebound effect in its used the average annual rate of change ‘‘Point-of-Use and Full-Fuel-Cycle reference scenario. Nevertheless, DOE in prices from 2020 through 2040. As Measurement Approaches to Energy performed a sensitivity scenario part of the NIA, DOE also analyzed Efficiency Standards’’ appointed by the assuming a rebound of 3-percent to scenarios that used inputs from the AEO National Academy of Sciences, DOE examine the implications of rebound. 2015 Low Economic Growth and High announced its intention to use full-fuel- The rebound sensitivity reduces Economic Growth cases. NIA results cycle (FFC) measures of energy use and national energy savings at each TSL by based on these cases are presented in greenhouse gas and other emissions in 3 percent without impacting NPV appendix 10C of the final rule TSD. the national impact analyses and results. The full results of this DOE estimated the range of potential emissions analyses included in future sensitivity analysis can be found in impacts of amended standards by energy conservation standards appendix 10C of this final rule TSD. The considering four sensitivity scenarios: a rulemakings. 76 FR 51281 (Aug. 18, rebound effect explored in this high-benefit scenario, a low-benefit 2011). After evaluating the approaches sensitivity analysis can reduce expected scenario, and a scenario that includes a discussed in the August 18, 2011 notice, savings in energy costs to consumers in 3-percent rebound effect. In the high DOE published a statement of amended the standards case. benefits scenario, DOE used the AEO policy in which DOE explained its 2015 high economic growth case determination that EIA’s National 50 For more information on NEMS, refer to The estimates for new housing starts and National Energy Modeling System: An Overview Energy Modeling System (NEMS) is the 2009, DOE/EIA–0581(2009), October 2009. electricity prices along with its most appropriate tool for its FFC Available at http://www.eia.gov/forecasts/aeo/ reference price trend for DC motor fans. analysis and its intention to use NEMS index.cfm. As discussed in section IV.G.4, price
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trend is only applied to the price spreadsheet model to estimate the financial parameters derived in the first premium between a DC motor and a impacts of the considered efficiency phase and the shipments derived in the direct drive AC motor. In the low levels on these subgroups. shipment analysis. In the third phase, benefits scenario, DOE used the low DOE calculated the LCC and PBP DOE conducted interviews with a economic growth AEO 2015 estimates results for standard, hugger, and VSD variety of ceiling fan manufacturers that for housing starts and electricity prices, fans based on a sample of low-income account for more than 30 percent of along with no price trend. In the 3- households or consumers who were domestic ceiling fan sales covered by percent rebound scenario, DOE assumed identified in the RECS 2009 survey as this rulemaking. During these that there would be increased ceiling being at or below the ‘‘poverty line.’’ interviews, DOE discussed engineering, fan usage due to the decreased operating The poverty line varies with household manufacturing, procurement, and cost savings associated with a standard. size, head of household age, and family financial topics specific to each As noted previously, DOE assumes any income. company, and obtained each operating cost incurred by increased In the case of the HSSD and large- manufacturer’s view of the ceiling fan usage due to the rebound effect is offset diameter fans, DOE conducted a industry as a whole. The interviews by the economic value associated with subgroup analysis based on small provided information that DOE used to that increased usage. The NIA results businesses that purchase ceiling fans by evaluate the impacts of amended based on these alternative scenarios are applying the small company discount standards on manufacturers’ cash flows, presented in appendix 10C of the final rate distributions for each sector in the manufacturing capacities, and direct rule TSD. LCC and PBP calculation, instead of the domestic manufacturing employment In calculating the NPV, DOE discount rate associated with the entire levels. See section V.B.2.b of this final multiplies the net savings in future industry. rule for the discussion on the estimated years by a discount factor to determine Chapter 11 in the final rule TSD changes in the number of domestic their present value. For this final rule, describes the consumer subgroup employees involved in manufacturing DOE estimated the NPV of consumer analysis. ceiling fans covered by standards. benefits using both a 3-percent and a 7- During the third phase, DOE used the percent real discount rate. DOE uses J. Manufacturer Impact Analysis results of the industry characterization these discount rates in accordance with 1. Overview analysis in the first phase and feedback guidance provided by the Office of from manufacturer interviews to group Management and Budget (OMB) to DOE conducted an MIA for ceiling manufacturers that exhibit similar Federal agencies on the development of fans to estimate the financial impact of production and cost structure regulatory analysis.51 The discount rates amended standards on manufacturers of characteristics. DOE identified one for the determination of NPV are in ceiling fans. The MIA has both manufacturer subgroup for a separate contrast to the discount rates used in the quantitative and qualitative aspects. The impact analysis; small businesses. DOE LCC analysis, which are designed to quantitative part of the MIA relies on determined that ceiling fan reflect a consumer’s perspective. The 7- the GRIM, an industry cash-flow model manufacturing falls under the North percent real value is an estimate of the customized for the ceiling fans covered American Industry Classification average before-tax rate of return to in this rulemaking. The key GRIM System (NAICS) code 335210, small private capital in the U.S. economy. The inputs are data on the industry cost electrical appliance manufacturing. The 3-percent real value represents the structure, MPCs, shipments, and U.S. Small Business Administration ‘‘social rate of time preference,’’ which assumptions about manufacturer (SBA) defines a small business as is the rate at which society discounts markups, and conversion costs. The key having less than 1,500 total employees future consumption flows to their MIA output is INPV. DOE used the for manufacturing operating under this present value. GRIM to calculate cash flows using NAICS code. This threshold includes all standard accounting principles and to employees in a business’ parent I. Consumer Subgroup Analysis compare changes in INPV between the company and any other subsidiaries. In analyzing the potential impact of no-new-standards case and various Based on this classification, DOE new or amended energy conservation TSLs (the standards cases). The identified six domestic ceiling fan standards on consumers, DOE evaluates difference in INPV between the no-new- businesses that manufacturer ceiling the impact on identifiable subgroups of standards case and the standards cases fans in the United States and qualify as consumers that may be represents the financial impact of small businesses per the SBA threshold. disproportionately affected by a new or amended energy conservation standards DOE analyzed the impact on the small amended national standard. The on ceiling fan manufacturers. Different business subgroup in the complete MIA, purpose of a subgroup analysis is to sets of assumptions (scenarios) produce which is presented in chapter 12 of the determine the extent of any such different INPV results. The qualitative final rule TSD, and in the Regulatory disproportional impacts. DOE evaluates part of the MIA addresses factors such Flexibility analysis required by the impacts on particular subgroups of as manufacturing capacity; Regulatory Flexibility Act, 5 U.S.C. 601, consumers by analyzing the LCC characteristics of, and impacts on, any et. seq., presented in section VI.B of this impacts and PBP for those particular particular subgroup of manufacturers, final rule. consumers from alternative standard including small manufacturers; and levels. For this final rule, DOE analyzed impacts on competition. 2. GRIM Analysis and Key Inputs the impacts of the considered standard DOE conducted the MIA for this DOE uses the GRIM to quantify the levels on low-income households and rulemaking in three phases. In the first changes in cash flows over time due to small businesses that purchase ceiling phase, DOE prepared an industry amended energy conservation fans. DOE used the LCC and PBP characterization based on the market standards. These changes in cash flows and technology assessment, preliminary result in either a higher or lower INPV 51 United States Office of Management and manufacturer interviews, and publicly for the standards case compared to the Budget. Circular A–4: Regulatory Analysis. available information. In the second no-new-standards case. The GRIM uses September 17, 2003. Section E. Available at www.whitehouse.gov/omb/memoranda/m03- phase, DOE estimated industry cash standard annual cash-flow analysis that 21.html. flows in the GRIM using industry incorporates MPCs, manufacturer
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markups, shipments, and industry financing costs that could be incurred projected by AEO 2015, and the number financial information as inputs. It then by some manufacturers to purchase of additions to existing buildings due to models changes in MPCs, investments, manufacturing equipment needed to expanding demand throughout the and manufacturer margins that may produce ceiling fans that comply with analysis period taking into account result from analyzed amended energy the standard (ALA, No. 139, p. 4). Also, demolitions in the housing stock. conservation standards. The GRIM uses Westinghouse commented that they DOE updated the initial 2015 these inputs to calculate a series of were concerned DOE’s analysis may not efficiency distribution for the final rule annual cash flows beginning with the be fully calculating or capturing what analysis for standard and hugger fans reference year of the analysis, 2016, and the true cost increase for manufacturers based on feedback from manufacturers. continuing to the terminal year of the will be. (Westinghouse, Public Meeting To estimate the distribution of analysis, 2049. DOE computes INPV by Transcript, No. 133 at p. 92) shipments across ELs over the analysis summing the stream of annual DOE increased the per model capital period for standard, hugger, and VSD discounted cash flows during the and product conversion costs associated ceiling fans, a consumer-choice model analysis period. DOE used a real with converting a failing ceiling fan was used to project consumer purchases discount rate of 7.4 percent for ceiling model into a compliant model, based on based on consumer sensitivity to first fan manufacturers. This is the same ALA and Westinghouse’s comments. cost. For HSSD and large-diameter discount rate used in the NOPR This per model conversion cost increase ceiling fans, a roll-up approach was analysis. Many of the GRIM inputs come resulted in higher overall conversion used, in which consumers who would from the engineering analysis, the costs from the NOPR to the final rule. have purchased ceiling fans that fail to shipment analysis, manufacturer This increase in per model conversion meet the new standards in the no-new- interviews, and other research costs was in addition to the increase in standards case purchase the least conducted during the MIA. The major the number of models needed to be efficient, compliant ceiling fans in the GRIM inputs are described in detail in converted due to the changes in the standards cases. Consumers that would the following sections. efficiency distribution previously have purchased compliant ceiling fans described. in the no-new-standards case continue a. Capital and Product Conversion Costs to purchase the exact same ceiling fans DOE expects amended ceiling fan b. Manufacturer Production Costs in the standards cases. energy conservation standards to cause Manufacturing a more efficient For all ceiling fans, DOE also manufacturers to incur conversion costs product is typically more expensive included price elasticity in the by bringing their tooling and product than manufacturing a lower efficient shipments analysis for all standards designs into compliance with amended product due to the use of more complex cases. When price elasticity is included standards. For the MIA, DOE classified components, which are typically more in the shipment analysis, the total these conversion costs into two major costly than less efficient components. number of ceiling fans declines as the groups: (1) Capital conversion costs and The increases in the MPCs of the average price of a ceiling fan increases (2) product conversion costs. Capital analyzed products can affect the due to standards. For a complete conversion costs are investments in revenues, gross margins, and cash flow description of the shipments, see the property, plant, and equipment of the industry, making these product shipments analysis discussion in necessary to adapt or change existing costs key inputs for the GRIM and the section IV.G of this final rule. tooling equipment so new product MIA. d. Markup Scenarios designs can be fabricated and In the MIA, DOE used the MPCs assembled. Product conversion costs are calculated in the engineering analysis, As discussed in section IV.J.2.b, the investments in research, development, as described in section IV.C and further MPCs for ceiling fans are the testing, marketing, certification, and detailed in chapter 5 of the final rule manufacturers’ costs for those units. other non-capitalized costs necessary to TSD. To calculate MPCs for ceiling fans. These costs include materials, labor, make product designs comply with DOE updated the MPCs used in the depreciation, and overhead, which are amended standards. NOPR analysis based on manufacturer collectively referred to as the cost of ALA commented that DOE feedback for the final rule analysis. The goods sold (COGS). The MSP is the underestimated conversion costs due to MIA used these updated MPCs for the price received by ceiling fan an understated percentage of shipments final rule analysis. manufacturers from the first sale, that will meet the standard in the typically to a distributor, regardless of compliance year (ALA, No. 139, p. 2–4). c. Shipment Scenarios the downstream distribution channel ALA maintains that conversion costs INPV, which is the key GRIM output, through which the ceiling fans are would be doubled had DOE used the depends on industry revenue, which ultimately sold. The MSP is not the cost efficiency distribution estimated by depends on the quantity and prices of the end-user pays for ceiling fans, ALA. ceiling fans shipped in each year of the because there are typically multiple For the final rule, DOE revised the analysis period. Industry revenue sales along the distribution chain and shipment efficiency distribution in the calculations require forecasts of: (1) various markups applied to each sale. shipment analysis for standard and Total annual shipment volume of The MSP equals the MPC multiplied by hugger ceiling fans based on feedback ceiling fans; (2) the distribution of the manufacturer markup. The from ALA. The MIA used the shipment shipments across the product class manufacturer markup covers all the efficiency distribution when calculating (because prices vary by product class); ceiling fan manufacturer’s non- the industry conversion costs. and, (3) the distribution of shipments production costs (i.e., selling, general, Conversion costs significantly increased across ELs (because prices vary with and administrative expenses [SG&A]; from the NOPR to the final rule due to ceiling fan efficiency). research and development [R&D]; these changes in the efficiency DOE modeled the no-new-standards interest) as well as profit. Total industry distribution. case ceiling fan shipments and the revenue for ceiling fan manufacturers ALA went on to comment that growth of ceiling fan shipments using equals the MSPs at each efficiency level conversion costs are further understated replacement shipments of failed ceiling multiplied by the number of shipments due to their exclusion of additional fan units, new construction starts as at that efficiency level.
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Modifying these manufacturer could result in more energy use, as For the HSSD and large-diameter markups in the standards cases yields a ceiling fans tend to be more efficient at product classes, which are expected to different set of impacts on ceiling fan cooling rooms than air conditioners. represent less than three percent of all manufacturers than in the no-new- Manufacturers also stated that overly covered ceiling fan shipments in 2020, standards case. For the MIA, DOE stringent ceiling fan standards could manufacturers stated that the use of modeled three standards case markup force manufacturers to reduce the brushless DC motors in HSSD ceiling scenarios for ceiling fans to represent aesthetic quality of some ceiling fans to fans and gearless DC motors in large- the uncertainty regarding the potential comply with energy conservation diameter ceiling fans will not impacts on prices and profitability for standards. This could cause some significantly impact consumer utility. ceiling fan manufacturers following the residential consumers to forgo the HSSD and large-diameter ceiling fans implementation of amended standards. purchase of these ceiling fans because are typically used in commercial and The three scenarios are: (1) A the aesthetic appearance of ceiling fans industrial applications as opposed to in preservation of gross margin markup is an important factor when residential residential applications. Most scenario; (2) a preservation of operating consumers purchase ceiling fans. manufacturers indicated that profit markup scenario; and (3) a two- Manufacturers claim this reduction in commercial and industrial consumers tiered markup scenario. Each scenario aesthetic quality could again result in do not dislike using a handheld remote leads to different manufacturer markup more energy use, because residential that is required when operating a ceiling values, which, when applied to the consumers who do not purchase ceiling fan with a brushless or gearless DC inputted MPCs, result in varying fans would need to use air conditioners motor, and in some applications it is revenue and cash-flow impacts on to cool their homes. DOE addresses this preferable. Also, these commercial and ceiling fan manufacturers. issue in section IV.E.3 of this final rule. industrial consumers tend to be better The manufacturer markups for the equipped to respond to the increased preservation of operating profit and two- b. Testing Burden maintenance costs associated with tiered markup scenarios depend on the Manufacturers are concerned about owning and operating ceiling fans with efficiency distribution of shipments the additional testing burden associated brushless or gearless DC motors because calculated in the shipment analysis. with complying with amended energy these consumers are more likely to Therefore, the manufacturer markups conservation standards. Most repair their own products and for the preservation of operating profit manufacturers use third-party testing equipment than residential consumers are. and two-tiered markup scenarios are facilities for testing and reporting DOE conducted a screening analysis slightly different in the final rule that purposes, which can be expensive. those in the NOPR analysis. as part of this final rule analysis and Manufacturers stated that ceiling fan concluded that brushless or gearless DC 3. Discussion of Comments standards would significantly increase motors should be considered as a viable Only ALA and Westinghouse the amount that they already invest in technology for all respective product commented on the assumptions and testing each year. DOE includes the classes of covered ceiling fans for the results of the NOPR MIA. These additional testing and certification costs engineering analysis. See section IV.B of comments addressed the capital and that manufacturers must make due to this final rule for a detailed discussion product conversion costs and are standards as part of the MIA. DOE of the screening analysis. Additionally, addressed in section IV.J.2.a. No further calculates the total industry conversion DOE did include the additional repair comments on the NOPR were submitted costs for manufacturers, which includes costs of ceiling fans using brushless or regarding the MIA. the additional testing and certification gearless DC motors as part of the LCC costs of complying with amended analysis. See section IV.F.4 for a 4. Manufacturer Interviews standards. These conversion costs complete description of the repair cost DOE conducted additional interviews impact the INPV at each TSL. Industry assumptions of brushless and gearless with manufacturers following the cash flow analysis results are discussed DC motors. preliminary analysis as part of the in detail in section V.B.2.a. K. Emissions Analysis NOPR analysis. DOE outlined the key c. Utility of Brushless and Gearless DC issues for ceiling fan manufacturers in Motors for Residential Consumers The emissions analysis consists of the NOPR. 81 FR 1689 (January 13, two components. The first component 2016). DOE considered the information Manufacturers stated that amended estimates the effect of potential energy received during these interviews in the energy conservation standards that conservation standards on power sector development of the NOPR and this final required the use of brushless DC motors and site (where applicable) combustion rule. DOE did not receive any comments in residential ceiling fans would limit emissions of CO2, NOX, SO2, and Hg. regarding the key issues described in the the overall utility of the fan and increase The second component estimates the NOPR analysis. maintenance costs. Manufacturers claim impacts of potential standards on that brushless DC motors require emissions of two additional greenhouse a. Shift to Air Conditioning significantly more maintenance and gases, CH4 and N2O, as well as the Several manufacturers stated that have a higher warranty factor compared reductions to emissions of all species ceiling fan energy conservation to ceiling fans with AC motors. due to ‘‘upstream’’ activities in the fuel standards could cause residential Additionally, ceiling fans with production chain. These upstream consumers to forgo the purchase of a brushless DC motors require the use of activities consist of extraction, ceiling fan in lieu of an air conditioner a handheld remote, which processing, and transporting fuels to the due to the price increase, or could cause manufacturers claim is not preferred by site of combustion. The associated residential ceiling fan owners to run many residential consumers. Therefore, emissions are referred to as upstream their air conditioners more frequently manufacturers stated any ceiling fan emissions. instead of using their ceiling fan. standard that required the use of a The analysis of power sector Manufacturers assert that if residential brushless DC motor would significantly emissions uses marginal emissions consumers instead use their air reduce the overall utility of ceiling fans factors that were derived from data in conditioner to cool their homes, this to residential consumers. AEO 2015, as described in section IV.M.
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Details of the methodology are Clean Air Interstate Rule (CAIR). 70 FR Beginning in 2016, however, SO2 described in the appendices to chapters 25162 (May 12, 2005). CAIR created an emissions will fall as a result of the 13 and 15 of the final rule TSD. allowance-based trading program that Mercury and Air Toxics Standards Combustion emissions of CH4 and operates along with the Title IV (MATS) for power plants. 77 FR 9304 N2O are estimated using emissions program. In 2008, CAIR was remanded (Feb. 16, 2012). In the MATS rule, EPA intensity factors published by the EPA- to EPA by the U.S. Court of Appeals for established a standard for hydrogen GHG Emissions Factors Hub.52 The FFC the District of Columbia Circuit, but it chloride as a surrogate for acid gas upstream emissions are estimated based remained in effect.54 In 2011, EPA hazardous air pollutants (HAP), and also on the methodology described in issued a replacement for CAIR, the established a standard for SO2 (a non- chapter 15 of the final rule TSD. The Cross-State Air Pollution Rule (CSAPR). HAP acid gas) as an alternative upstream emissions include both 76 FR 48208 (Aug. 8, 2011). On August equivalent surrogate standard for acid emissions from fuel combustion during 21, 2012, the D.C. Circuit issued a gas HAP. The same controls are used to extraction, processing, and decision to vacate CSAPR,55 and the reduce HAP and non-HAP acid gas; transportation of fuel, and ‘‘fugitive’’ court ordered EPA to continue thus, SO2 emissions will be reduced as emissions (direct leakage to the administering CAIR. On April 29, 2014, a result of the control technologies atmosphere) of CH4 and CO2. the U.S. Supreme Court reversed the installed on coal-fired power plants to The emissions intensity factors are judgment of the D.C. Circuit and comply with the MATS requirements expressed in terms of physical units per remanded the case for further for acid gas. AEO 2015 assumes that, in MWh or MMBtu of site energy savings. proceedings consistent with the order to continue operating, coal plants Total emissions reductions are Supreme Court’s opinion.56 On October must have either flue gas estimated using the energy savings 23, 2014, the D.C. Circuit lifted the stay desulfurization or dry sorbent injection calculated in the national impact of CSAPR.57 Pursuant to this action, systems installed by 2016. Both analysis. CSAPR went into effect (and CAIR technologies, which are used to reduce For CH4 and N2O, DOE calculated ceased to be in effect) as of January 1, acid gas emissions, also reduce SO2 emissions reduction in tons and also in 2015. emissions. Under the MATS, emissions terms of units of carbon dioxide EIA was not able to incorporate will be far below the cap established by CSAPR into AEO 2015, so it assumes equivalent (CO2eq). Gases are converted CAIR, so it is unlikely that excess SO2 to CO2eq by multiplying each ton of gas implementation of CAIR. Although emissions allowances resulting from the by the gas’ global warming potential DOE’s analysis used emissions factors lower electricity demand would be (GWP) over a 100-year time horizon. that assume that CAIR, not CSAPR, is needed or used to permit offsetting the regulation in force, the difference Based on the Fifth Assessment Report of increases in SO2 emissions by any the Intergovernmental Panel on Climate between CAIR and CSAPR is not regulated EGU.58 Therefore, DOE Change,53 DOE used GWP values of 28 significant for the purpose of DOE’s believes that energy conservation analysis of emissions impacts from for CH4 and 265 for N2O. standards will generally reduce SO2 The AEO incorporates the projected energy conservation standards. emissions in 2016 and beyond. The attainment of emissions caps is impacts of existing air quality CAIR established a cap on NO typically flexible among EGUs and is X regulations on emissions. AEO 2015 emissions in 28 eastern States and the enforced through the use of emissions generally represents current legislation District of Columbia.59 Energy allowances and tradable permits. Under and environmental regulations, conservation standards are expected to existing EPA regulations, any excess including recent government actions, for have little effect on NO emissions in SO emissions allowances resulting X which implementing regulations were 2 those States covered by CAIR because from the lower electricity demand available as of [October 31, 2014]. DOE’s excess NOX emissions allowances estimation of impacts accounts for the caused by the adoption of an efficiency standard could be used to permit resulting from the lower electricity presence of the emissions control demand could be used to permit offsetting increases in SO2 emissions by programs discussed in the following offsetting increases in NOX emissions paragraphs. any regulated EGU. In past rulemakings, DOE recognized that there was from other facilities. However, SO2 emissions from affected electric uncertainty about the effects of standards would be expected to reduce generating units (EGUs) are subject to NOX emissions in the States not affected nationwide and regional emissions cap- efficiency standards on SO2 emissions covered by the existing cap-and-trade by the caps, so DOE estimated NOX and-trade programs. Title IV of the emissions reductions from the standards Clean Air Act sets an annual emissions system, but it concluded that negligible reductions in power sector SO2 cap on SO2 for affected EGUs in the 48 58 DOE notes that the Supreme Court remanded contiguous States and the District of emissions would occur as a result of standards. EPA’s 2012 rule regarding national emission Columbia (D.C.). (42 U.S.C. 7651 et seq.) standards for hazardous air pollutants from certain electric utility steam generating units. See Michigan SO2 emissions from 28 eastern States 54 See North Carolina v. EPA, 550 F.3d 1176 (D.C. v. EPA (Case No. 14–46, 2015). DOE has tentatively and D.C. were also limited under the Cir. 2008); North Carolina v. EPA, 531 F.3d 896 determined that the remand of the MATS rule does (D.C. Cir. 2008). not change the assumptions regarding the impact of 52 Available at www2.epa.gov/climateleadership/ 55 See EME Homer City Generation, LP v. EPA, energy efficiency standards on SO2 emissions. center-corporate-climate-leadership-ghg-emission- 696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 Further, while the remand of the MATS rule may factors-hub. U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 have an impact on the overall amount of mercury 53 Intergovernmental Panel on Climate Change. (U.S. June 24, 2013) (No. 12–1182). emitted by power plants, it does not change the Anthropogenic and Natural Radiative Forcing. In 56 See EPA v. EME Homer City Generation, 134 impact of the energy efficiency standards on Climate Change 2013: The Physical Science Basis. S. Ct. 1584, 1610 (U.S. 2014). The Supreme Court mercury emissions. DOE will continue to monitor Contribution of Working Group I to the Fifth held in part that EPA’s methodology for quantifying developments related to this case and respond to Assessment Report of the Intergovernmental Panel emissions that must be eliminated in certain States them as appropriate. 59 on Climate Change. Chapter 8. 2013. Stocker, T.F., due to their impacts in other downwind States was CSAPR also applies to NOX and it supersedes D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. based on a permissible, workable, and equitable the regulation of NOX under CAIR. As stated Boschung, A. Nauels, Y. Xia, V. Bex, and P.M. interpretation of the Clean Air Act provision that previously, the current analysis assumes that CAIR, Midgley, Editors. Cambridge University Press: provides statutory authority for CSAPR. not CSAPR, is the regulation in force. The Cambridge, United Kingdom and New York, NY, 57 See Georgia v. EPA, Order (D.C. Cir. filed difference between CAIR and CSAPR with regard to USA. October 23, 2014) (No. 11–1302). DOE’s analysis of NOX emissions is slight.
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considered in this final rule for these incorporate the monetized social updating these estimates as the science States. benefits of reducing CO2 emissions into and economic understanding of climate The MATS limit mercury emissions cost-benefit analyses of regulatory change and its impacts on society from power plants, but they do not actions. The estimates are presented improves over time. In the meantime, include emissions caps and, as such, with an acknowledgement of the many the interagency group will continue to DOE’s energy conservation standards uncertainties involved and with a clear explore the issues raised by this analysis would likely reduce Hg emissions. DOE understanding that they should be and consider public comments as part of estimated mercury emissions reduction updated over time to reflect increasing the ongoing interagency process. using emissions factors based on AEO knowledge of the science and 2015, which incorporates the MATS. b. Development of Social Cost of Carbon economics of climate impacts. Values As part of the interagency process that L. Monetizing Carbon Dioxide and Other In 2009, an interagency process was Emissions Impacts developed these SCC estimates, technical experts from numerous initiated to offer a preliminary As part of the development of this agencies met on a regular basis to assessment of how best to quantify the rule, DOE considered the estimated consider public comments, explore the benefits from reducing carbon dioxide monetary benefits from the reduced technical literature in relevant fields, emissions. To ensure consistency in emissions of CO2 and NOX expected to and discuss key model inputs and how benefits are evaluated across result from each of the TSLs considered. assumptions. The main objective of this Federal agencies, the Administration To make this calculation analogous to process was to develop a range of SCC sought to develop a transparent and the calculation of the NPV of consumer values using a defensible set of input defensible method, specifically benefit, DOE considered the reduced assumptions grounded in the existing designed for the rulemaking process, to emissions expected to result over the scientific and economic literatures. In quantify avoided climate change lifetime of products shipped in the this way, key uncertainties and model damages from reduced CO2 emissions. forecast period for each TSL. This differences transparently and The interagency group did not section summarizes the basis for the consistently inform the range of SCC undertake any original analysis. Instead, monetary values used for of CO2 and estimates used in the rulemaking it combined SCC estimates from the NOX emissions and presents the values process. existing literature to use as interim considered in this final rule. values until a more comprehensive For this final rule, DOE relied on a set a. Monetizing Carbon Dioxide Emissions analysis could be conducted. The of values for the social cost of carbon When attempting to assess the outcome of the preliminary assessment (SCC) that was developed by a Federal by the interagency group was a set of incremental economic impacts of CO2 interagency process. The basis for these emissions, the analyst faces a number of five interim values: Global SCC values is summarized in the next challenges. A report from the National estimates for 2007 (in 2006$) of $55, section, and a more detailed description Research Council 60 points out that any $33, $19, $10, and $5 per metric ton of of the methodologies used is provided assessment will suffer from uncertainty, CO2. These interim values represented as an appendix to chapter 14 of the final speculation, and lack of information the first sustained interagency effort rule TSD. about (1) future emissions of GHGs, (2) within the U.S. government to develop an SCC for use in regulatory analysis. 1. Social Cost of Carbon the effects of past and future emissions The results of this preliminary effort The SCC is an estimate of the on the climate system, (3) the impact of changes in climate on the physical and were presented in several proposed and monetized damages associated with an final rules. incremental increase in carbon biological environment, and (4) the emissions in a given year. It is intended translation of these environmental c. Current Approach and Key to include (but is not limited to) impacts into economic damages. As a Assumptions climate-change-related changes in net result, any effort to quantify and After the release of the interim values, agricultural productivity, human health, monetize the harms associated with the interagency group reconvened on a property damages from increased flood climate change will raise questions of regular basis to generate improved SCC risk, and the value of ecosystem science, economics, and ethics and estimates. Specially, the group services. Estimates of the SCC are should be viewed as provisional. considered public comments and provided in dollars per metric ton of Despite the limits of both further explored the technical literature quantification and monetization, SCC CO2. A domestic SCC value is meant to in relevant fields. The interagency group reflect the value of damages in the estimates can be useful in estimating the relied on three integrated assessment United States resulting from a unit social benefits of reducing CO2 models commonly used to estimate the emissions. The agency can estimate the change in CO2 emissions, while a global SCC: The FUND, DICE, and PAGE SCC value is meant to reflect the value benefits from reduced (or costs from models. These models are frequently of damages worldwide. increased) emissions in any future year cited in the peer-reviewed literature and Under section 1(b)(6) of Executive by multiplying the change in emissions were used in the last assessment of the Order 12866, ‘‘Regulatory Planning and in that year by the SCC values Intergovernmental Panel on Climate Review,’’ 58 FR 51735 (Oct. 4, 1993), appropriate for that year. The NPV of Change (IPCC). Each model was given agencies must, to the extent permitted the benefits can then be calculated by equal weight in the SCC values that by law, ‘‘assess both the costs and the multiplying each of these future benefits were developed. benefits of the intended regulation and, by an appropriate discount factor and Each model takes a slightly different recognizing that some costs and benefits summing across all affected years. approach to model how changes in are difficult to quantify, propose or It is important to emphasize that the emissions result in changes in economic adopt a regulation only upon a reasoned interagency group is committed to damages. A key objective of the determination that the benefits of the interagency process was to enable a 60 National Research Council. Hidden Costs of intended regulation justify its costs.’’ Energy: Unpriced Consequences of Energy consistent exploration of the three The purpose of the SCC estimates Production and Use. 2009. National Academies models, while respecting the different presented here is to allow agencies to Press: Washington, DC. approaches to quantifying damages
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taken by the key modelers in the field. model developers’ best estimates and tails of the SCC distribution. The values An extensive review of the literature judgments. grow in real terms over time. was conducted to select three sets of In 2010, the interagency group Additionally, the interagency group input parameters for these models: selected four sets of SCC values for use determined that a range of values from Climate sensitivity, socio-economic and in regulatory analyses. Three sets of 7 percent to 23 percent should be used emissions trajectories, and discount values are based on the average SCC to adjust the global SCC to calculate rates. A probability distribution for from the three integrated assessment domestic effects,61 although preference climate sensitivity was specified as an models, at discount rates of 2.5, 3, and is given to consideration of the global input into all three models. In addition, 5 percent. The fourth set, which benefits of reducing CO2 emissions. the interagency group used a range of represents the 95th percentile SCC Table IV.6 presents the values in the scenarios for the socio-economic estimate across all three models at a 3- 2010 interagency group report,62 which parameters and a range of values for the percent discount rate, was included to is reproduced in appendix 14A of the discount rate. All other model features represent higher-than-expected impacts were left unchanged, relying on the from climate change further out in the final rule TSD.
TABLE IV.6—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050
[2007$ per metric ton CO2]
Discount rate Year 5% 3% 2.5% 3% Average Average Average 95th percentile
2010 ...... 4.7 21.4 35.1 64.9 2015 ...... 5.7 23.8 38.4 72.8 2020 ...... 6.8 26.3 41.7 80.7 2025 ...... 8.2 29.6 45.9 90.4 2030 ...... 9.7 32.8 50.0 100.0 2035 ...... 11.2 36.0 54.2 109.7 2040 ...... 12.7 39.2 58.4 119.3 2045 ...... 14.2 42.1 61.7 127.8 2050 ...... 15.7 44.9 65.0 136.2
The SCC values used for this shows the updated sets of SCC estimates models at the 3-percent discount rate. document were generated using the from the latest interagency update in 5- However, for purposes of capturing the most recent versions of the three year increments from 2010 through uncertainties involved in regulatory integrated assessment models that have 2050. The full set of annual SCC impact analysis, the interagency group been published in the peer-reviewed estimates from 2010 through 2050 is emphasizes the importance of including literature, as described in the 2013 reported in appendix 14B of the final all four sets of SCC values. update from the interagency working rule TSD. The central value that group (revised July 2015).63 Table IV.7 emerges is the average SCC across
TABLE IV.7—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE (REVISED JULY 2015), 2010–2050
[2007$ per metric ton CO2]
Discount rate Year 5% 3% 2.5% 3% Average Average Average 95th percentile
2010 ...... 10 31 50 86 2015 ...... 11 36 56 105 2020 ...... 12 42 62 123 2025 ...... 14 46 68 138 2030 ...... 16 50 73 152 2035 ...... 18 55 78 168 2040 ...... 21 60 84 183 2045 ...... 23 64 89 197 2050 ...... 26 69 95 212
61 It is recognized that this calculation for Cost of Carbon for Regulatory Impact Analysis Support Document: Technical Update of the Social domestic values is approximate, provisional, and Under Executive Order 12866. February 2010. Cost of Carbon for Regulatory Impact Analysis highly speculative. There is no a priori reason why https://www.whitehouse.gov/sites/default/files/ Under Executive Order 12866. May 2013. Revised domestic benefits should be a constant fraction of omb/inforeg/for-agencies/Social-Cost-of-Carbon-for- July 2015. https://www.whitehouse.gov/sites/ net global damages over time. RIA.pdf. default/files/omb/inforeg/scc-tsd-final-july- 62 United States Government-Interagency 63 United States Government-Interagency 2015.pdf. Working Group on Social Cost of Carbon. Social Working Group on Social Cost of Carbon. Technical
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It is important to recognize that a decrease power sector NOX emissions in and generation that would result for number of key uncertainties remain, and those 22 States not affected by the CAIR. each TSL. The analysis is based on that current SCC estimates should be DOE estimated the monetized value of published output from the NEMS treated as provisional and revisable NOX emissions reductions from associated with AEO 2015. NEMS because they will evolve with improved electricity generation using benefit per produces the AEO Reference case, as scientific and economic understanding. ton estimates from the Regulatory well as a number of side cases that The interagency group also recognizes Impact Analysis for the Clean Power estimate the economy-wide impacts of that the existing models are imperfect Plan Final Rule, published in August changes to energy supply and demand. and incomplete. The National Research 2015 by EPA’s Office of Air Quality DOE uses published side cases to Council report mentioned previously Planning and Standards.65 The report estimate the marginal impacts of points out that there is tension between includes high and low values for NOX reduced energy demand on the utility the goal of producing quantified (as PM2.5) for 2020, 2025, and 2030 sector. These marginal factors are estimates of the economic damages from using discount rates of 3 percent and 7 estimated based on the changes to an incremental ton of carbon and the percent; these values are presented in electricity sector generation, installed limits of existing efforts to model these appendix 14C of the final rule TSD. capacity, fuel consumption and effects. There are a number of analytical DOE primarily relied on the low emissions in the AEO Reference case challenges that are being addressed by estimates to be conservative.66 DOE and various side cases. Details of the the research community, including assigned values for 2021–2024 and methodology are provided in the research programs housed in many of 2026–2029 using, respectively, the appendices to chapters 13 and 15 of the the Federal agencies participating in the values for 2020 and 2025. DOE assigned final rule TSD. interagency process to estimate the SCC. values after 2030 using the value for The output of this analysis is a set of The interagency group intends to 2030. DOE developed values specific to time-dependent coefficients that capture periodically review and reconsider the end-use category for ceiling fans the change in electricity generation, those estimates to reflect increasing using a method described in appendix primary fuel consumption, installed knowledge of the science and 14C of the final rule TSD. capacity and power sector emissions economics of climate impacts, as well as DOE multiplied the emissions due to a unit reduction in demand for improvements in modeling.64 reduction (in tons) in each year by the a given end use. These coefficients are associated $/ton values, and then multiplied by the stream of electricity In summary, in considering the discounted each series using discount savings calculated in the NIA to provide potential global benefits resulting from rates of 3 percent and 7 percent as estimates of selected utility impacts of reduced CO emissions, DOE used the 2 appropriate. new or amended energy conservation values from the 2013 interagency report DOE is evaluating appropriate standards. (revised July 2015), adjusted to 2015$ monetization of avoided SO and Hg 2 N. Employment Impact Analysis using the implicit price deflator for emissions in energy conservation gross domestic product (GDP) from the standards rulemakings. DOE has not DOE considers employment impacts Bureau of Economic Analysis. For each included monetization of those in the domestic economy as one factor of the four sets of SCC cases specified, emissions in the current analysis. in selecting a standard. Employment the values for emissions in 2015 were impacts from new or amended energy $12.4, $40.6, $63.2, and $118 per metric M. Utility Impact Analysis conservation standards include both ton avoided (values expressed in The utility impact analysis estimates direct and indirect impacts. Direct 2015$). DOE derived values after 2050 several effects on the electric power employment impacts are any changes in based on the trend in 2010–2050 in each generation industry that would result the number of employees of of the four cases. from the adoption of new or amended manufacturers of the products subject to DOE multiplied the CO2 emissions energy conservation standards. The standards, their suppliers, and related reduction estimated for each year by the utility impact analysis estimates the service firms. The MIA addresses those SCC value for that year in each of the changes in installed electrical capacity impacts. Indirect employment impacts four cases. To calculate a present value are changes in national employment of the stream of monetary values, DOE 65 Available at www.epa.gov/cleanpowerplan/ that occur due to the shift in discounted the values in each of the clean-power-plan-final-rule-regulatory-impact- expenditures and capital investment four cases using the specific discount analysis. See Tables 4A–3, 4A–4, and 4A–5 in the caused by the purchase and operation of report. The U.S. Supreme Court has stayed the rule rate that had been used to obtain the implementing the Clean Power Plan until the more-efficient appliances. Indirect SCC values in each case. current litigation against it concludes. Chamber of employment impacts from standards Commerce, et al. v. EPA, et al., Order in Pending consist of the net jobs created or 2. Social Cost of Other Air Pollutants Case, 577 U.S. ll (2016). However, the benefit- eliminated in the national economy, per-ton estimates established in the Regulatory As noted previously, DOE has Impact Analysis for the Clean Power Plan are based other than in the manufacturing sector estimated how the considered energy on scientific studies that remain valid irrespective being regulated, caused by (1) reduced conservation standards would reduce of the legal status of the Clean Power Plan. spending by end users on energy, (2) 66 For the monetized NOX benefits associated site NOX emissions nationwide and reduced spending on new energy supply with PM2.5, the related benefits are primarily based on an estimate of premature mortality derived from by the utility industry, (3) increased 64 In November 2013, OMB announced a new the ACS study (Krewski et al. 2009), which is the consumer spending on new products to opportunity for public comment on the interagency lower of the two EPA central tendencies. Using the which the new standards apply, and (4) technical support document underlying the revised lower value is more conservative when making the the effects of those three factors SCC estimates. 78 FR 70586. In July 2015 OMB policy decision concerning whether a particular published a detailed summary and formal response standard level is economically justified. [Include throughout the economy. to the many comments that were received: This is this explanation the first time/previous times where One method for assessing the possible available at https://www.whitehouse.gov/blog/2015/ these two cites are referenced.] If the benefit-per-ton effects on the demand for labor of such 07/02/estimating-benefits-carbon-dioxide- estimates were based on the Six Cities study shifts in economic activity is to compare emissions-reductions. It also stated its intention to (Lepuele et al. 2012), the values would be nearly seek independent expert advice on opportunities to two-and-a-half times larger. (See chapter 14 of the sector employment statistics developed improve the estimates, including many of the final rule TSD for citations for the studies by the Labor Department’s Bureau of approaches suggested by commenters. mentioned above.) Labor Statistics (BLS). BLS regularly
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publishes its estimates of the number of understands the uncertainties involved classes analyzed by DOE. DOE presents jobs per million dollars of economic in projecting employment impacts, the results for the TSLs in this activity in different sectors of the especially changes in the later years of document, while the results for all economy, as well as the jobs created the analysis. Because ImSET does not efficiency levels that DOE analyzed are elsewhere in the economy by this same incorporate price changes, the in the final rule TSD. economic activity. Data from BLS employment effects predicted by ImSET Table V.1 presents the TSLs and the indicate that expenditures in the utility may over-estimate actual job impacts sector generally create fewer jobs (both over the long run for this rule. corresponding efficiency levels for directly and indirectly) than Therefore, DOE generated results for ceiling fans. TSL 5 represents the max- expenditures in other sectors of the near-term timeframes (2020 and 2025), tech energy efficiency for all product economy.67 There are many reasons for where these uncertainties are reduced. classes. these differences, including wage For more details on the employment TSL 4 corresponds to maximum NPV differences and the fact that the utility impact analysis, see chapter 16 of the with an AC motor for all product classes sector is more capital-intensive and less final rule TSD. other than HSSD fans, and maximum labor-intensive than other sectors. V. Analytical Results and Conclusions NPV for HSSD fans. In addition, at this Energy conservation standards have the TSL, less than 50 percent of consumers effect of reducing consumer utility bills. The following section addresses the experience a net cost, and large- results from DOE’s analyses with Because reduced consumer diameter ceiling fans that provide high respect to the considered energy expenditures for energy likely lead to levels of airflow are not increased expenditures in other sectors conservation standards for ceiling fans. disproportionally impacted. of the economy, the general effect of It addresses the TSLs examined by DOE, Specifically, for large-diameter ceiling efficiency standards is to shift economic the projected impacts of each of these activity from a less labor-intensive levels if adopted as energy conservation fans, while max-tech provides LCC sector (i.e., the utility sector) to more standards for ceiling fans, and the savings and NPV that are both positive, labor-intensive sectors (e.g., the retail standards levels that DOE is adopting in max-tech has potential unintended and service sectors). Thus, the BLS data this final rule. Additional details consequence of disproportionately suggest that net national employment regarding DOE’s analyses are contained impacting large diameter fans that may increase due to shifts in economic in the final rule TSD supporting this provide high levels of airflow. DOE does activity resulting from energy rulemaking. not have enough data to be certain that conservation standards. large-diameter ceiling fans at the current DOE estimated indirect national A. Trial Standard Levels max CFM levels offered on the market employment impacts for the standard In the NOPR analysis, DOE had six at all diameters can meet the max-tech levels considered in this final rule using TSLs with TSL 6 corresponding to level, even when using brushless DC an input/output model of the U.S. maximum technologically feasible (max motors. Therefore, if large-diameter economy called Impact of Sector Energy tech) efficiency level, TSL 5 ceiling fans that provide the highest Technologies version 3.1.1 (ImSET).68 corresponding to maximum NPV (at a 7 levels of airflow in today’s market ImSET is a special-purpose version of percent discount rate), and TSL 4 cannot meet the max tech level even the ‘‘U.S. Benchmark National Input- corresponding to maximum NPV (at a 7 when using brushless DC motors, these Output’’ (I–O) model, which was percent discount rate) with positive LCC fans could be unintentionally designed to estimate the national savings. For the final rule, DOE now has eliminated from the market, employment and income effects of five TSLs with TSL 5 corresponding to diminishing product availability and energy-saving technologies. The ImSET both max tech and maximum NPV, and utility. software includes a computer-based I–O TSL 4 corresponding to maximum NPV model having structural coefficients that with an AC motor for all product classes TSL 3 corresponds to the highest characterize economic flows among 187 other than HSSD fans, and maximum efficiency level that can be met with a sectors most relevant to industrial, NPV for HSSD fans. The criteria for standard (AC) motor for all product commercial, and residential building TSLs 1–3 remains unchanged. classes. TSL 2 corresponds to the fan- energy use. The TSLs for the final rule were optimization design-option efficiency DOE notes that ImSET is not a general developed by combining specific level. TSL 1 corresponds to the first equilibrium forecasting model, and efficiency levels for each of the product non-baseline efficiency level (i.e., EL 1).
TABLE V.1—TRIAL STANDARD LEVELS FOR CEILING FANS
Large- VSD Hugger Standard HSSD diameter
TSL 1 ...... EL 1 EL 1 EL 1 EL 1 EL 1 TSL 2 ...... EL 1 EL 2 EL 2 EL 1 EL 1 TSL 3 ...... EL 2 EL 3 EL 3 EL 3 EL 3 TSL 4 ...... EL 2 EL 3 EL 3 EL 4 EL 3 TSL 5 ...... EL 3 EL 4 EL 4 EL 4 EL 4
67 See U.S. Department of Commerce—Bureau of www.bea.gov/scb/pdf/regional/perinc/meth/ Pacific Northwest National Laboratory: Richland, Economic Analysis. Regional Multipliers: A User rims2.pdf. WA. PNNL–18412. Available at www.pnl.gov/main/ Handbook for the Regional Input-Output Modeling 68 J.M. Roop, M.J. Scott, and R.W. Schultz. ImSET publications/external/technical_reports/PNNL- System (RIMS II). 1997. U.S. Government Printing 3.1: Impact of Sector Energy Technologies. 2009. 18412.pdf. Office: Washington, DC. Available at http://
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B. Economic Justification and Energy operating costs decrease. Inputs used for second table, the impacts are measured Savings calculating the LCC and PBP include relative to the efficiency distribution in total installed costs (i.e., product price 1. Economic Impacts on Individual the in the no-new-standards case in the plus installation costs), and operating Consumers compliance year (see section IV.F.7 of costs (i.e., annual energy use, energy this notice). Because some consumers DOE analyzed the economic impacts prices, energy price trends, repair costs, purchase products with higher on ceiling fans consumers by looking at and maintenance costs). The LCC efficiency in the no-new-standards case, the effects potential amended standards calculation also uses product lifetime the average savings are less than the at each TSL would have on the LCC and and a discount rate. Chapter 8 of the difference between the average LCC of PBP. DOE also examined the impacts of final rule TSD provides detailed EL 0 and the average LCC at each TSL. potential standards on consumer information on the LCC and PBP The savings refer only to consumers subgroups. These analyses are discussed analyses. below. Table V.2 through Table V.11 show who are affected by a standard at a given the LCC and PBP results for the TSL TSL. Those who already purchase a a. Life-Cycle Cost and Payback Period efficiency levels considered for each product with efficiency at or above a In general, higher-efficiency products product class. In the first of each pair of given TSL are not affected. Consumers affect consumers in two ways: (1) tables, the simple payback is measured for whom the LCC increases at a given Purchase price increases and (2) annual relative to the baseline product. In the TSL experience a net cost.
TABLE V.2—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR STANDARD FANS
Average costs (2015$) Simple Average EL Lifetime payback lifetime Installed cost First year’s operating LCC (years) (years) operating cost cost
0 ...... 113.49 16.99 190.29 303.79 ...... 13.8 1 ...... 113.49 12.75 144.06 257.55 0.0 13.8 2 ...... 113.49 11.48 130.20 243.70 0.0 13.8 3 ...... 124.95 10.33 117.58 242.53 1.7 13.8 4 ...... 158.01 5.86 75.92 233.93 4.0 13.8 Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
TABLE V.3—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION FOR STANDARD FANS
Life-cycle cost savings Percent of EL consumers that Average LCC experience savings * net cost (2015$)
...... 1 ...... 0.0 46.61 2 ...... 0.0 37.20 3 ...... 27.5 25.78 4 ...... 50.4 26.80 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.4—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR HUGGER FANS
Average costs (2015$) Simple Average EL Lifetime payback lifetime Installed cost First year’s operating LCC (years) (years) operating cost cost
0 ...... 100.39 15.05 168.74 269.13 ...... 13.8 1 ...... 100.39 11.30 127.78 228.17 0.0 13.8 2 ...... 100.39 10.17 115.51 215.90 0.0 13.8 3 ...... 110.63 9.24 105.27 215.90 1.8 13.8 4 ...... 139.90 5.52 71.83 211.73 4.1 13.8 Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
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TABLE V.5—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION FOR HUGGER FANS
Life-cycle cost savings Percent of EL consumers that Average LCC experience savings * net cost (2015$)
...... 1 ...... 0.0 39.02 2 ...... 0.0 31.75 3 ...... 27.8 21.50 4 ...... 51.4 19.20 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.6—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR VSD FANS
Average costs (2015$) Simple Average EL Lifetime payback lifetime Installed cost First year’s operating LCC (years) (years) operating cost cost
0 ...... 268.25 14.12 158.25 426.50 ...... 13.8 1 ...... 268.25 12.72 142.90 411.15 0.0 13.8 2 ...... 289.30 11.87 133.65 422.95 9.3 13.8 3 ...... 352.51 7.82 96.53 449.04 13.4 13.8 Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
TABLE V.7—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION FOR VSD FANS
Life-cycle cost savings Percent of EL consumers that Average LCC experience savings * net cost (2015$)
...... 1 ...... 0.0 16.10 2 ...... 2.1 4.29 3 ...... 75.8 ¥25.94 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.8—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR HSSD FANS
Average costs (2015$) Simple Average EL Lifetime payback lifetime Installed cost First year’s operating LCC (years) (years) operating cost cost
0 ...... 145.28 20.27 204.44 349.72 ...... 13.8 1 ...... 145.28 18.24 184.24 329.52 0.0 13.8 2 ...... 169.20 17.05 172.35 341.55 7.4 13.8 3 ...... 177.92 16.92 177.65 355.56 9.8 13.8 4 ...... 227.81 8.38 92.49 320.30 6.9 13.8 Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
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TABLE V.9—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION FOR HSSD FANS
Life-cycle cost savings Percent of EL consumers that Average LCC experience savings * net cost (2015$)
...... 1 ...... 0.0 20.17 2 ...... 58.8 ¥1.90 3 ...... 70.0 ¥15.81 4 ...... 38.7 19.80 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.10.—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR LARGE-DIAMETER FANS
Average costs (2015$) Simple Average EL Lifetime payback lifetime Installed cost First year’s operating LCC (years) (years) operating cost cost
0 ...... 4119.72 292.21 2921.38 7041.10 ...... 13.8 1 ...... 4119.72 262.99 2632.90 6752.62 0.0 13.8 2 ...... 4261.44 239.08 2396.87 6658.31 2.7 13.8 3 ...... 4458.32 210.14 2110.93 6569.25 4.1 13.8 4 ...... 4706.71 156.42 1624.11 6330.82 4.3 13.8 Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
TABLE V.11—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION FOR LARGE-DIAMETER FANS
Life-cycle cost savings Percent of EL consumers that Average LCC experience savings * net cost (2015$)
...... 1 ...... 0.0 291.52 2 ...... 1.0 247.21 3 ...... 23.3 128.90 4 ...... 16.2 347.93 * The calculation excludes consumers with zero LCC savings (no impact).
DOE conducted a sensitivity analysis cost impacts on consumers, DOE passed with the average LCC savings for the to determine the potential impacts to through these product conversion costs entire sample for all the product classes. consumers for a scenario in which at TSL 1 and TSL 2 to the higher TSL For standard, hugger, and VSD ceiling manufacturers increase their levels and presents the results in fans, the average LCC savings and PBP manufacturer selling price in order to appendix 8.E of the TSD. For this for low-income households at the pass through to consumers their sensitivity, the LCC savings are positive considered efficiency levels are not conversion costs at TSL 1 and TSL 2. At and the PBPs are less than the lifetime substantially different from the averages TSL 1 and TSL 2, DOE estimates no of the products for each product class at for all households. For HSSD and large- incremental installed costs to the chosen TSL level. diameter ceiling fans, the average consumers because the assumed design savings and PBP for small businesses at options (e.g., fan optimization) b. Consumer Subgroup Analysis the considered efficiency levels show implemented at those levels would not In the consumer subgroup analysis, result in incremental MPC or differences DOE estimated the impact of the moderate differences from the averages in installation costs based on considered TSLs on low-income for all businesses, but the differences are manufacturer interviews. However, DOE households and small businesses. Table not significant enough to recommend a estimates that manufacturers will incur V.12 through different standard level be adopted. conversion costs at TSL 1 and TSL 2 to Table V.16 compare the average LCC Chapter 11 of the final rule TSD make their products compliant. To savings and PBP at each efficiency level presents the complete LCC and PBP provide a high estimate of the potential for the two consumer subgroups, along results for the subgroups.
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TABLE V.12—COMPARISON OF LCC SAVINGS AND PBP FOR LOW-INCOME HOUSEHOLDS AND ALL HOUSEHOLDS FOR STANDARD FANS
Average LCC savings * Simple payback period EL (2015$) (years) All Low-income All Low-income
...... 1 ...... 46.61 42.26 0.0 0.0 2 ...... 37.20 34.65 0.0 0.0 3 ...... 25.78 23.73 1.7 1.7 4 ...... 26.80 24.99 4.0 4.0 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.13—COMPARISON OF LCC SAVINGS AND PBP FOR LOW-INCOME HOUSEHOLDS AND ALL HOUSEHOLDS FOR HUGGER FANS
Average LCC savings * Simple payback period EL (2015$) (years) All Low-income All Low-income
...... 1 ...... 39.02 40.04 0.0 0.0 2 ...... 31.75 33.22 0.0 0.0 3 ...... 21.50 22.49 1.8 1.8 4 ...... 19.20 19.56 4.1 4.2 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.14—COMPARISON OF LCC SAVINGS AND PBP FOR LOW-INCOME HOUSEHOLDS AND ALL HOUSEHOLDS FOR VSD FANS
Average LCC savings * Simple payback period EL (2015$) (years) All Low-income All Low-income
...... 1 ...... 16.10 16.90 0.0 0.0 2 ...... 4.29 5.99 9.3 9.5 3 ...... ¥25.94 ¥27.10 13.4 13.6 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.15—COMPARISON OF LCC SAVINGS AND PBP FOR SMALL BUSINESSES AND ALL BUILDINGS FOR HSSD FANS
Average LCC savings * Simple payback period EL (2015$) (years) All Small businesses All Small businesses
...... 1 ...... 20.17 17.49 0.0 0.0 2 ...... ¥1.90 ¥4.96 7.4 7.4 3 ...... ¥15.81 ¥18.39 9.8 9.7 4 ...... 19.80 6.08 6.9 6.9 * The calculation excludes consumers with zero LCC savings (no impact).
TABLE V.16—COMPARISON OF LCC SAVINGS AND PBP FOR SMALL BUSINESSES AND ALL BUILDINGS FOR LARGE- DIAMETER FANS
Average LCC savings * Simple payback period EL (2015$) (years) All Small businesses All Small businesses
...... 1 ...... 291.52 250.66 0.0 0.0 2 ...... 247.21 191.28 2.7 2.6 3 ...... 128.90 80.70 4.1 4.1 4 ...... 347.93 254.52 4.3 4.3 * The calculation excludes consumers with zero LCC savings (no impact).
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c. Rebuttable Presumption Payback values, and, as required by EPCA, based for this rule are economically justified the energy use calculation on the DOE through a more detailed analysis of the As discussed in section IV.F.8, EPCA test procedures for ceiling fans. In economic impacts of those levels, establishes a rebuttable presumption contrast, the PBPs presented in section pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that an energy conservation standard is V.B.1.a were calculated using that considers the full range of impacts economically justified if the increased distributions that reflect the range of to the consumer, manufacturer, Nation, purchase cost for a product that meets energy use in the field. and environment. The results of that the standard is less than three times the Table V.17 presents the rebuttable- analysis serve as the basis for DOE to value of the first-year energy savings presumption payback periods for the evaluate the economic justification for a resulting from the standard. In considered TSLs for ceiling fans. While potential standard level, thereby calculating a rebuttable presumption DOE examined the rebuttable- supporting or rebutting the results of payback period for each of the presumption criterion, it considered any preliminary determination of considered TSLs, DOE used discrete whether the standard levels considered economic justification.
TABLE V.17—REBUTTABLE PRESUMPTION PAYBACK PERIOD RESULTS
Large- EL Standard Hugger VSD HSSD diameter
...... 1 ...... 0.0 0.0 0.0 0.0 0.0 2 ...... 0.0 0.0 9.4 3.5 2.9 3 ...... 1.5 1.5 12.6 4.2 4.5 4 ...... 3.2 3.3 ...... 3.2 4.7
2. Economic Impacts on Manufacturers difference in cash flows between the no- investments that are required to comply DOE performed an MIA to estimate new-standards case and the standards with amended ceiling fan energy the impact of amended energy cases in the year before the compliance conservation standards, but instead are conservation standards on date of amended standards. This only able to maintain the same manufacturers of ceiling fans. This difference in cash flow represents the operating profit in the standards cases section describes the expected impacts size of the required conversion costs at that was earned in the no-new-standards on manufacturers at each TSL. Chapter each TSL relative to the cash flow case. This scenario represents a 12 of the final rule TSD explains the generated by the ceiling fan industry in potential lower bound on the range of analysis in further detail. the absence of amended energy impacts on manufacturers because conservation standards. manufacturers are only able to maintain a. Industry Cash Flow Analysis Results To assess the upper (less severe) the operating profit that they would Table V.18 through Table V.20 bound on the range of potential impacts have earned in the no-new-standards present the financial impacts, on ceiling fan manufacturers, DOE case despite higher production costs represented by changes in INPV, of modeled a preservation of gross margin, and investments. Manufacturers must amended standards on ceiling fan or flat, markup scenario. This scenario therefore, reduce margins as a result of manufacturers as well as the conversion assumes that in the standards cases, this manufacturer markup scenario, costs that DOE estimates ceiling fan manufacturers would be able to pass which reduces profitability. manufacturers would incur at each TSL. along the higher production costs DOE also modeled a two-tiered To evaluate the range of cash-flow required for more efficient products to markup scenario as a potential lower impacts on the ceiling fan industry, their consumers. Specifically, the (more severe) bound on the range of DOE modeled three manufacturer industry would be able to maintain its potential impacts on ceiling fan markup scenarios that correspond to the average no-new-standards case gross manufacturers. In this manufacturer range of anticipated market responses to margin (as a percentage of revenue) markup scenario, manufacturers have amended standards. Each scenario despite the higher product costs in the two tiers of markups that are results in a unique set of cash flows and standards cases. In general, the larger differentiated, in part, by efficiency corresponding industry values at each the product price increases, the less level. The higher efficiency tiers TSL. likely manufacturers are to achieve the typically earn premiums (for the In the following discussion, the INPV cash flow from operations calculated in manufacturer) over the baseline results refer to the difference in industry this manufacturer markup scenario efficiency tier. Several manufacturers value between the no-new-standards because it is less likely that suggested that amended standards case and each TSL in the standards manufacturers would be able to fully would lead to a reduction in premium cases. INPV is calculated by summing mark up these larger cost increases. markups and reduce the profitability of the discounted cash flows from the To assess the lower (more severe) higher efficiency products. During the reference year (2016) through the end of bound on the range of potential impacts MIA interviews, manufacturers the analysis period (2049). INPV values on ceiling fan manufacturers, DOE provided information on the range of vary by the manufacturer markup modeled two additional manufacturer typical efficiency levels in those tiers scenario modeled to produce them. DOE markup scenarios; a preservation of and the change in profitability at each believes that these manufacturer operating profit markup scenario and a level. DOE used this information to markup scenarios are most likely to two-tiered markup scenario. In the estimate markups for ceiling fans under capture the range of impacts on ceiling preservation of operating profit markup a two-tiered pricing strategy in the no- fan manufacturers as a result of the scenario manufacturers are not able to new-standards case. In the standards amended energy conservation yield additional operating profit from cases, DOE modeled the situation in standards. The results also discuss the higher production costs and the which standards result in less product
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differentiation, compression of the markup tiers, and an overall reduction in profitability.
TABLE V.18—MANUFACTURER IMPACT ANALYSIS FOR CEILING FANS—PRESERVATION OF GROSS MARGIN MARKUP SCENARIO
No-new- Trial standard levels Units standards case 1 2 3 4 5
INPV ...... 2015$ millions ...... 1,211.6 1,214.6 1,227.2 1,213.2 1,206.8 1,265.3 Change in INPV ...... 2015$ millions ...... 3.0 15.6 1.6 (4.8) 53.8 % ...... 0.2 1.3 0.1 (0.4) 4.4 Product Conversion Costs ...... 2015$ millions ...... 5.1 9.4 31.7 33.2 46.5 Capital Conversion Costs ...... 2015$ millions ...... 7.1 13.1 63.0 66.7 109.5 Total Conversion Costs ...... 2015$ millions ...... 12.3 22.5 94.7 99.9 155.9
TABLE V.19—MANUFACTURER IMPACT ANALYSIS FOR CEILING FANS—PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO
No-new- Trial standard levels Units standards case 1 2 3 4 5
INPV ...... 2015$ millions ...... 1,211.6 1,200.8 1,188.6 1,107.9 1,092.1 926.7 Change in INPV ...... 2015$ millions ...... (10.7) (23.0) (103.7) (119.4) (284.8) % ...... (0.9) (1.9) (8.6) (9.9) (23.5) Product Conversion Costs ...... 2015$ millions ...... 5.1 9.4 31.7 33.2 46.5 Capital Conversion Costs ...... 2015$ millions ...... 7.1 13.1 63.0 66.7 109.5 Total Conversion Costs ...... 2015$ millions ...... 12.3 22.5 94.7 99.9 155.9
TABLE V.20—MANUFACTURER IMPACT ANALYSIS FOR CEILING FANS—TWO-TIERED MARKUP SCENARIO
No-new- Trial standard levels Units standards case 1 2 3 4 5
INPV ...... 2015$ millions ...... 1,211.6 1,232.8 1,275.8 1,123.8 1,116.6 1,164.2 Change in INPV ...... 2015$ millions ...... 21.2 64.3 (87.7) (95.0) (47.3) % ...... 1.8 5.3 (7.2) (7.8) (3.9) Product Conversion Costs ...... 2015$ millions ...... 5.1 9.4 31.7 33.2 46.5 Capital Conversion Costs ...... 2015$ millions ...... 7.1 13.1 63.0 66.7 109.5 Total Conversion Costs ...... 2015$ millions ...... 12.3 22.5 94.7 99.9 155.9
TSL 1 sets the efficiency level at EL ceiling fan shipments, on a total volume compliance for amended ceiling fan 1 for all ceiling fans. At TSL 1, DOE basis, already meet or exceed the energy conservation standards. In the estimates that impacts on INPV range efficiency levels required at TSL 1. DOE preservation of gross margin markup from ¥$10.7 million to $21.2 million, estimates that ceiling fan manufacturers scenario, manufacturers are able to fully or changes in INPV of ¥0.9 percent to will incur a total of $12.3 million in pass on this slight cost increase to 1.8 percent. At TSL 1, industry free cash conversion costs at TSL 1 based on consumers. The slight increase in the flow (operating cash flow minus capital estimates for product conversion costs shipment-weighted average MPC for all expenditures) is expected to decrease by and capital conversion costs. DOE ceiling fans outweighs the $12.3 million approximately 6.3 percent to $69.9 estimates that ceiling fan manufacturers in conversion costs, causing a slightly million, compared to the no-new- will incur $5.1 million in product positive change in INPV at TSL 1 under standards case value of $74.6 million in conversion costs as they must develop the preservation of gross margin markup 2019, the year leading up to the and redesign any ceiling fan models that scenario. standards. do not meet the efficiency levels Under the preservation of operating Percentage impacts on INPV are required at TSL 1. DOE estimates that profit markup scenario, manufacturers slightly negative to slightly positive at manufacturers will incur $7.1 million in earn the same operating profit as would TSL 1. DOE estimates that 77 percent of capital conversion costs at TSL 1, as be earned in the no-new-standards case, standard and hugger ceiling fan ceiling fan manufacturers most likely but manufacturers do not earn shipments, 96 percent of VSD ceiling will need to purchase new tooling for additional profit from their investments. fan shipments, 55 percent of HSSD any redesigned models. The average manufacturer markup for ceiling fan shipments, and 95 percent of At TSL 1, the shipment-weighted both the preservation of operating profit large-diameter ceiling fan shipments average MPC for all ceiling fans and two-tiered markup scenarios is would meet or exceed the efficiency increases by approximately 1.5 percent calculated by averaging the ceiling fan levels required at TSL 1. relative to the no-new-standards case industry manufacturer markup, for all DOE expects conversion costs to be shipment-weighted average MPC for all ceiling fan product classes in aggregate, small at TSL 1 because most of the ceiling fans in 2020, the year of from the year of compliance (2020) until
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the terminal year (2049). In this ceiling fans to meet the efficiency levels redesign and retest a significant portion scenario, the 1.5 percent increase in the required at TSL 2. of their ceiling fan models that do not shipment-weighted average MPC for all At TSL 2, the shipment-weighted meet the efficiency levels required at ceiling fans results in a slight reduction average MPC for all ceiling fans this TSL. DOE estimates that in average manufacturer markup, from increases by approximately 4.2 percent manufacturers will incur $31.7 million 1.370 in the no-new-standards case to relative to the no-new-standards case in product conversion costs at TSL 3 as 1.368 at TSL1. The slight reduction in shipment-weighted average MPC for all manufacturers must research, develop, average manufacturer markup and $12.3 ceiling fans in 2020. In the preservation and redesign numerous ceiling fan million in conversion costs causes a of gross margin markup scenario, models to meet the efficiency levels slightly negative change in INPV at TSL manufacturers are able to recover their required at TSL 3. Capital conversion 1 under the preservation of operating $22.5 million in conversion costs over costs are estimated to be $63.0 million profit markup scenario. the course of the analysis period at TSL 3. Capital conversion costs at Under the two-tiered markup through the increase in the shipment- TSL 3 are driven by retooling costs scenario, where manufacturers earn weighted MPC for all ceiling fans, associated with producing redesigned different markups for more efficient causing a slightly positive change in standard, hugger, and VSD ceiling fans products, the average manufacturer INPV at TSL 2 under the preservation of with larger direct drive motors; HSSD markup increases from 1.370 in the no- gross margin markup scenario. ceiling fans with air foil blades; and new-standards case to 1.373 at TSL 1 as Under the preservation of operating large-diameter ceiling fans with more shipments are purchased at the profit markup scenario, the 4.2 percent premium AC motors and airfoil blades. higher markup efficiency tiers. The increase in the shipment-weighted At TSL 3, the shipment-weighted increase in the average manufacturer average MPC for all ceiling fans results average MPC increases by markup and the increase in the in a slight reduction in the average approximately 11.5 percent for all shipment-weighted average MPC for all manufacturer markup, from 1.370 in the ceiling fans relative to the no-new- ceiling fans outweigh the $12.3 million no-new-standards case to 1.365 at TSL standards case MPC in 2020. In the in conversion costs, causing a slightly 2. The slight reduction in the average preservation of gross margin markup positive change in INPV at TSL 1 under manufacturer markup and $22.5 million scenario, manufacturers are able to in conversion costs cause a slightly the two-tiered markup scenario. recover their $94.7 million in negative change in INPV at TSL 2 under TSL 2 sets the efficiency level at EL conversion costs through the moderate the preservation of operating profit increase in MPC over the course of the 1 for VSD, HSSD, and large-diameter scenario. analysis period causing a slightly ceiling fans and EL 2 for standard and Under the two-tiered markup positive change in INPV at TSL 3 under hugger ceiling fans. At TSL 2, DOE scenario, the average manufacturer the preservation of gross margin markup estimates that impacts on INPV range markup increases from 1.370 in the no- scenario. from ¥$23.0 million to $64.3 million, ¥ new-standards case to 1.377 at TSL 2 as Under the preservation of operating or changes in INPV of 1.9 percent to more shipments are purchased at the profit markup, the 11.5 percent MPC 5.3 percent. At this TSL, industry free higher markup efficiency tiers. The increase for all ceiling fans results in a cash flow is estimated to decrease by increase in the average manufacturer reduction in manufacturer markup after approximately 11.5 percent to $66.0 markup and the increase in the the compliance year, from 1.370 in the million, compared to the no-new- shipment-weighted average MPC for all no-new-standards case to 1.356 at TSL standards case value of $74.6 million in ceiling fans outweigh the $22.5 million 3. This reduction in manufacturer 2019. in conversion costs, causing a slightly markup and $94.7 million in conversion Percentage impacts on INPV range positive change in INPV at TSL 2 under costs incurred by manufacturers cause a from slightly negative to slightly the two-tiered markup scenario. moderately negative change in INPV at positive at TSL 2. DOE projects that in TSL 3 sets the efficiency level at EL TSL 3 under the preservation of 2020, 55 percent of standard and hugger 2 for VSD ceiling fans and EL 3 for operating profit scenario. ceiling fan shipments, 96 percent of standard, hugger, HSSD, and large- Under the two-tiered markup VSD ceiling fan shipments, 55 percent diameter ceiling fans. At TSL 3, DOE scenario, the average manufacturer of HSSD ceiling fan shipments, and 95 estimates that impacts on INPV range markup decreases from 1.370 in the no- percent of large-diameter ceiling fan from ¥$103.7 million to $1.6 million, new-standards case to 1.359 at TSL 3. At shipments would meet or exceed the or changes in INPV of ¥8.6 percent to TSL 3 under the two-tiered markup efficiency levels required at TSL 2. 0.1 percent. At this level, industry free scenario, manufacturers reduce their DOE expects conversion costs to be cash flow is estimated to decrease by markups on their more efficient moderate at TSL 2 because most of the approximately 50.1 percent to $37.2 shipments, as these premium products ceiling fan shipments, on a total volume million, compared to the no-new- are no longer able to earn higher basis, currently meet or exceed the standards case value of $74.6 million in markups as they become the baseline efficiency levels analyzed at TSL 2. DOE 2019. due to standards. The decrease in the estimates that manufacturers will incur Percentage impacts on INPV range average manufacturer markup and the a total of $22.5 million in conversion from moderately negative to slightly $94.7 million in conversion costs costs at TSL 2. DOE estimates that positive at TSL 3. DOE projects that in incurred by manufacturers outweighs manufacturers will incur $9.4 million in 2020, 32 percent of standard and hugger the moderate increase in the shipment- product conversion costs at TSL 2 as ceiling fan shipments, 96 percent of weighted average MPC for all ceiling manufacturers must develop and VSD ceiling fan shipments, 11 percent fans, causing a moderately negative redesign any ceiling fan models that do of HSSD ceiling fan shipments, and 31 change in INPV at TSL 3 under the two- not meet the efficiency levels required percent of large-diameter ceiling fan tiered markup scenario. at TSL 2. Capital conversion costs are shipments would meet or exceed the TSL 4 sets the efficiency level at EL estimated to be $13.1 million at TSL 2. efficiency levels analyzed at TSL 3. 2 for VSD ceiling fans; EL 3 for Capital conversion costs at TSL 2 are DOE expects higher conversion costs standard, hugger, and large-diameter driven by investments in tooling needed at TSL 3 than at lower TSLs because ceiling fans; and EL 4 for HSSD ceiling to further optimize standard and hugger manufacturers will be required to fans. At TSL 4, DOE estimates impacts
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on INPV range from ¥$119.4 million to Under the two-tiered markup In the preservation of gross margin ¥$4.8 million, or decreases in INPV of scenario, the increase in the shipment- markup scenario, manufacturers are able ¥9.9 percent to ¥0.4 percent. At this weighted average MPC for all ceiling to recover their $155.9 million in level, industry free cash flow is fans results in a reduction of the average conversion costs over the course of the estimated to decrease by approximately manufacturer markup, from 1.370 in the analysis period through the significant 52.9 percent to $35.1 million, compared no-new-standards case to 1.359 at TSL increase in the shipment-weighted to the no-new-standards case value of 4. At TSL 4 under the two-tiered average MPC for all ceiling fans, causing $74.6 million in 2019. markup scenario, manufacturers reduce a positive change in INPV at TSL 5 Percentage impacts on INPV range their markups on their more efficient under the preservation of gross margin from moderately negative to slightly shipments, as these premium products markup scenario. negative at TSL 4. DOE projects that in are no longer able to earn higher Under the preservation of operating 2020, 32 percent of standard and hugger markups as they become the baseline profit markup scenario, the 45.1 percent ceiling fan shipments, 96 percent of due to standards. The decrease in the increase in the shipment-weighted MPC VSD ceiling fan shipments, 8 percent of average manufacturer markup and the for all ceiling fans results in a reduction HSSD ceiling fan shipments, and 31 $99.9 million in conversion costs of the average manufacturer markup, percent of large-diameter ceiling fan outweigh the increase in the shipment- from 1.370 in the no-new-standards case shipments would meet or exceed weighted average MPC for all ceiling to 1.332 at TSL 5. The reduction of the efficiency levels analyzed at TSL 4. fans, causing a moderately negative average manufacturer markup and For TSL 4, DOE concluded that change in INPV at TSL 4 under the two- $155.9 million in conversion costs cause manufacturers would likely use DC tiered markup scenario. a significantly negative change in INPV motors in the HSSD ceiling fan product TSL 5 represents max-tech for all at TSL 5 under the preservation of class. DOE estimates that manufacturers ceiling fan product classes. This TSL operating profit markup scenario. will incur a total of $99.9 million in sets the efficiency level at EL 3 for VSD Under the two-tiered markup conversion costs at TSL 4. DOE ceiling fans and EL 4 for standard, scenario, the 45.1 percent increase in estimates that manufacturers will incur hugger, HSSD, and large-diameter the shipment-weighted average MPC for $33.2 million in product conversion ceiling fans. At TSL 5, DOE estimates all ceiling fans results in a reduction of costs at TSL 4 as manufacturers must that impacts on INPV range from the average manufacturer markup, from research, develop, and redesign ¥$284.8 million to $53.8 million, or 1.370 in the no-new-standards case to numerous ceiling fan models to meet changes in INPV of ¥23.5 percent to 4.4 1.359 at TSL 5. At TSL 5 under the two- the efficiency levels required at TSL 4. percent. At this level, industry free cash tiered markup scenario, manufacturers Capital conversion costs are estimated flow is estimated to decrease by reduce their markups on their more to be $66.7 million at TSL 4. Capital approximately 83.4 percent to $12.4 efficient shipments, as these premium conversion costs at TSL 4 are driven by million, compared to the no-new- products are no longer able to earn retooling costs associated with standards case value of $74.6 million in higher markups as they become the producing redesigned standard, hugger, 2019. baseline due to standards. The decrease and VSD ceiling fans with larger direct Percentage impacts on INPV range in the average manufacturer markup and drive motors; HSSD ceiling fans with from significantly negative to slightly $155.9 million in conversion costs DC motors and airfoil blades; and large- positive at TSL 5. DOE projects that in outweigh the increase in the shipment- diameter ceiling fans with premium AC 2020, 3 percent of standard ceiling fan weighted average MPC for all ceiling motors and airfoil blades. shipments, 4 percent of hugger ceiling fans, causing a slightly negative change At TSL 4, the shipment-weighted fan shipments, no VSD ceiling fan in INPV at TSL 5 under the two-tiered average MPC for all ceiling fans shipments, 8 percent of HSSD ceiling markup scenario. increases by approximately 12.8 percent fan shipments, and 17 percent of large- b. Impacts on Employment relative to the no-new-standards case diameter ceiling fan shipments would shipment-weighted average MPC for all meet the efficiency levels analyzed at DOE quantitatively assessed the ceiling fans in 2020. In the preservation TSL 5. impacts of amended energy of gross margin markup scenario, DOE estimates that manufacturers conservation standards on direct manufacturers are not able to recover will incur a total of $155.9 million in employment in the ceiling fan industry. their $99.9 million in conversion costs conversion costs at TSL 5. DOE DOE used the GRIM to estimate the over the course of the analysis period estimates that manufacturer will incur domestic labor expenditures and through the moderate increase in the $46.5 million in product conversion number of domestic production workers shipment-weighted average MPC for all costs at TSL 5 as manufacturers must in the no-new-standards case and at ceiling fans, causing a slightly negative research, develop, and redesign the vast each TSL from 2016 to 2049. DOE used change in INPV at TSL 4 under the majority of their ceiling fan models to statistical data from the U.S. Census preservation of gross margin markup meet the efficiency levels required at Bureau’s 2014 Annual Survey of scenario. TSL 5. Capital conversion costs are Manufacturers, the results of the Under the preservation of operating estimated to be $109.5 million at TSL 5, engineering analysis, and interviews profit markup scenario, the 12.8 percent driven by retooling costs associated with manufacturers to determine the increase in the shipment-weighted with producing redesigned, max-tech inputs necessary to calculate industry- average MPC for all ceiling fans results standard, hugger, and VSD ceiling fans wide labor expenditures and domestic in a reduction of the average with DC motors; and HSSD and large- employment levels. Labor expenditures manufacturer markup, from 1.370 in the diameter ceiling fans with DC motors involved with the manufacturing of the no-new-standards case to 1.355 at TSL and airfoil blades. product are a function of the labor 4. The reduction of the average At TSL 5, the shipment-weighted intensity of the product, the sales manufacturer markup and $99.9 million average MPC for all ceiling fans volume, and an assumption that wages in conversion costs cause a moderately significantly increases by approximately remain fixed in real terms over time. negative change in INPV at TSL 4 under 45.1 percent relative to the no-new- In the GRIM, DOE used the labor the preservation of operating profit standards case shipment-weighted content of ceiling fans and the MPCs to scenario. average MPC for all ceiling fans in 2020. estimate the annual labor expenditures
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in the industry. DOE used Census data have on domestic production moved outside of the United States. and interviews with manufacturers to employment. The upper bound of the While the results present a range of estimate the portion of the total labor results estimates the maximum change estimates, the following sections also expenditures that is attributable to in the number of production workers include qualitative discussions of the domestic labor. that could occur after compliance with employment impacts at the various The production worker estimates in amended energy conservation standards TSLs. Finally, the domestic production this section only cover workers up to when assuming that manufacturers employment impacts shown are the line-supervisor level directly continue to produce the same scope of independent of the employment impacts involved in fabricating and assembling covered products in the same from the broader U.S. economy, a product within a manufacturing production facilities. It also assumes documented in chapter 17 of the final facility. Workers performing services that domestic production does not shift rule TSD. that are closely associated with to lower labor-cost countries. Because DOE estimates that in the absence of production operations, such as material there is a real risk of manufacturers amended energy conservation handing with a forklift, are also evaluating sourcing and production standards, there would be included as production labor. DOE’s facility location decisions in response to approximately 33 domestic production estimates account for production amended energy conservation workers involved in manufacturing workers who manufacture only the standards, the lower bound of the ceiling fans in 2020. Table V.21 presents specific products covered by this employment results estimate the the range of potential impacts of rulemaking. maximum decrease in domestic amended energy conservation standards Table V.21 represents the potential production workers in the industry if on U.S. production workers in the impacts the amended standards could some or all existing production was ceiling fan industry.
TABLE V.21—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC CEILING FAN PRODUCTION WORKERS IN 2020
No-new- Trial standard level standards case 1 2 3 4 5
Total Number of Domestic Production Workers in 2020 (without changes in production locations) ...... 33 33 33 32 32 28 Potential Changes in Domestic Production Workers in 2020 * ...... 0–(33) 0–(33) (1)–(33) (1)–(33) (5)–(33) * DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
At the upper end of the employment abroad would result in significantly concern during interviews that currently impact range, DOE expects there to be high shipping costs. Based on the only a few ceiling fan shipments slight or no negative impacts on prohibitive shipping costs and incorporate DC motors, and there would domestic production employment at manufacturer feedback, DOE does not be major sourcing concerns if all ceiling each of the TSLs. Slight negative expect the impacts on domestic fan were required to use DC motors. impacts on domestic production production employment to approach the Manufacturers would most likely employment at higher TSLs are driven lower bound at any TSL. meet the standard required at TSL 4 for by the reduction in total ceiling fan At TSL 4, the TSL adopted in today’s the HSSD ceiling fans by using DC shipments. DOE included price final rule, DOE concludes that, based on motors, HSSD ceiling fans only account elasticity as part of the shipments the shipment analysis, manufacturer for less than 3 percent of all ceiling fan analysis, so as the average price of interviews, and the results of the direct shipments. Therefore, DOE does not ceiling fans increases due to amended domestic employment analysis, anticipate a manufacturer capacity standards, fewer ceiling fans would be manufacturers could face a slight constraint on the supply of DC motors sold. Therefore, the amount of labor negative impact on domestic production for this small portion of the overall associated with these fewer shipments employment due to a slight reduction in ceiling fan market. DOE expects that the also decreases. It is important to note overall ceiling fan shipments in 2020. motor manufacturers that supply ceiling that while the average total MPC fan manufacturers with DC motors c. Impacts on Manufacturing Capacity increases for more efficient ceiling fans, would be able to increase production of the increase in MPC is almost entirely Ceiling fan manufacturers stated that DC motors in the 3 years from the attributed to the increase in the material they anticipate manufacturing capacity publication of the final rule to the costs used to produce more efficient constraints if all ceiling fans are compliance date of the final rule to meet fans. The amount of labor associated required to use DC motors to comply demand for ceiling fans that require DC with producing more efficient ceiling with the amended energy conservation motors due to amended standards. DOE fans remains virtually the same even as standards. DOE learned during does not anticipate any significant the total MPC of a ceiling fan increases interviews that manufacturers primarily impact on the manufacturing capacity as at higher efficiency levels. source motors for ceiling fans from a result of the adopted amended energy At the lower end of the range, DOE either ceiling fan original equipment conservation standards in this final rule. models a situation where all domestic manufacturers or directly from motor See section V.C.1 for more details on the employment associated with ceiling fan manufacturers and then insert them into standard adopted in this rulemaking. production moves abroad as a result of their ceiling fan models. During d. Impacts on Subgroups of energy conservation standards. The interviews, manufacturers stated that Manufacturers majority of manufacturers that have demand for DC motors may outpace domestic production produce large- supply if DC motors are required for all Using average cost assumptions to diameter ceiling fans. Moving ceiling fans to comply with amended develop an industry cash-flow estimate production of large-diameter fans standards. Manufacturers expressed may not be adequate for assessing
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differential impacts among energy conservation standards for additional cumulative regulatory burden manufacturer subgroups. Small ceiling fans, that ceiling fan on ceiling fan manufacturers. manufacturers, niche product manufacturers will face for products DOE has published a final rule manufacturers, and manufacturers they manufacture approximately three pertaining to energy conservation exhibiting cost structures substantially years leading up to and three years standards for ceiling fan light kits. 81 FR different from the industry average following the compliance date of these 581 The ceiling fan light kit standard could be affected disproportionately. amended standards. The following affects the majority of ceiling fan DOE identified only one manufacturer section addresses key related concerns manufacturers and will require subgroup that required a separate that manufacturers raised during manufacturers impacted by both analysis in the MIA; small businesses. interviews regarding cumulative DOE analyzes the impacts on small regulatory burden. standards to make investments to bring both ceiling fan light kits and ceiling businesses in a separate analysis in Manufacturers raised concerns about section VI.B. DOE did not identify any fans into compliance during the same existing regulations and certifications time period. Additionally, redesigned other adversely impacted manufacturer separate from DOE’s energy ceiling fan light kits could potentially subgroups for ceiling fans for this conservation standards that ceiling fan require adjustments to ceiling fan rulemaking based on the results of the manufacturers must meet. These redesigns that are separate from those industry characterization. include California Title 20, which has potentially required by the amended the same energy conservation standards e. Cumulative Regulatory Burden ceiling fan rule. While any one regulation may not to DOE’s existing ceiling fan standards, but requires an additional certification, In addition to the amended energy impose a significant burden on conservation standards on ceiling fans, manufacturers, the combined effects of and California Air Resources Board several other existing and pending recent or impending regulations may Standards limiting the amount of Federal regulations may apply to other have serious consequences for some formaldehyde in composite wood used products produced by ceiling fan manufacturers, groups of manufacturers, to make fan blades, among others. or an entire industry. Assessing the DOE discusses these and other manufacturers. DOE acknowledges that impact of a single regulation may requirements in chapter 12 of the final each regulation can affect a overlook this cumulative regulatory rule TSD, which lists the estimated manufacturer’s financial operations. burden. Multiple regulations affecting compliance costs of those requirements Multiple regulations affecting the same the same manufacturer can strain profits when available. In considering the manufacturer can strain manufacturers’ and lead companies to abandon product cumulative regulatory burden, DOE profit and possibly cause them to exit lines or markets with lower expected evaluates the timing of regulations that particular markets. Table V.22 presents future returns than competing products. affect the same product, because the other DOE energy conservation For these reasons, DOE conducts a coincident requirements could strain standards that could also affect ceiling cumulative regulatory burden analysis financial resources in the same profit fan manufacturers in the three years as part of its rulemaking for ceiling fans. center and consequently affect capacity. leading up to and after the compliance DOE identified a number of DOE also identified the ceiling fan light date of amended energy conservation requirements, in addition to amended kit standards rulemaking as a source of standards for these products. TABLE V.22—OTHER DOE REGULATIONS POTENTIALLY AFFECTING CEILING FAN MANUFACTURERS
Number of Number of Approximate manufactur- Regulation manufactur- compliance Estimated industry total conver- Annual industry revenue ers from to- ers * date sion expenses day’s rule affected **
Electric Motors, 79 FR 30933 (May 29, 2014) ...... 7 2016 $84.6 million (2013$) ...... $3,880 million (2013$) ...... 1 General Service Fluorescent Lamps, 80 FR 4042 47 2018 $26.6 million (2013$) ...... $2,820 million (2013$) ...... 1 (January 26, 2015). Ceiling Fan Light Kits, 81 FR 580 (January 6, 2016) 67 2019 $18.9 million (2014$) ...... $310 million (2014$) ...... 53 Commercial Industrial Fans and Blowers † ...... † 242 † 2019 TBD † ...... TBD † ...... † 8 General Service Lamps, 81 FR 14528 (NOPR) † 142 † 2020 $509.0 million (2014$) † ...... 1,903 million (2014$) † ...... † 1 March 17, 2016 †. * The number of manufacturers listed in the final rule for the energy conservation standard that is contributing to cumulative regulatory burden ** The number of manufacturers producing ceiling fans that are affected by the listed energy conservation standards † The final rule for this energy conservation standard has not been published.
DOE did not receive any data on other ceiling fans, DOE compared their energy with amended standards (2020–2049). regulatory costs that affect the industry consumption under the no-new- Table V.23 presents DOE’s projections modeled in the cash-flow analysis. standards case to their anticipated of the national energy savings for each 3. National Impact Analysis energy consumption under each TSL. TSL considered for ceiling fans. The The savings are measured over the savings were calculated using the a. Significance of Energy Savings entire lifetime of products purchased in approach described in section IV.H.1 of To estimate the energy savings the 30-year period that begins in the this notice. attributable to potential standards for first full year of anticipated compliance
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TABLE V.23—CUMULATIVE NATIONAL ENERGY SAVINGS FOR CEILING FANS; 30 YEARS OF SHIPMENTS [2020–2049]
Trial standard level 1 2 3 4 5
Quads
Primary energy...... 0.772 1.205 1.760 1.921 3.577 FFC energy...... 0.807 1.260 1.839 2.008 3.738
OMB Circular A–4 69 requires product shipments. The choice of a 9- presented for informational purposes agencies to present analytical results, year period is a proxy for the timeline only and are not indicative of any including separate schedules of the in EPCA for the review of certain energy change in DOE’s analytical monetized benefits and costs that show conservation standards and potential methodology. The NES sensitivity the type and timing of benefits and revision of and compliance with such analysis results based on a 9-year costs. Circular A–4 also directs agencies revised standards.70 The review analytical period are presented in Table to consider the variability of key timeframe established in EPCA is V.24. The impacts are counted over the elements underlying the estimates of generally not synchronized with the lifetime of ceiling fans purchased in benefits and costs. For this rulemaking, product lifetime, product manufacturing 2020–2028. DOE undertook a sensitivity analysis cycles, or other factors specific to using nine, rather than 30, years of ceiling fans. Thus, such results are
TABLE V.24—CUMULATIVE NATIONAL ENERGY SAVINGS FOR CEILING FANS; 9 YEARS OF SHIPMENTS [2020–2028]
Trial standard level 1 2 3 4 5
quads
Primary energy...... 0.221 0.332 0.465 0.510 1.068 FFC energy...... 0.231 0.347 0.486 0.533 1.116
b. Net Present Value of Consumer Costs consumers that would result from the percent real discount rate. Table V.25 and Benefits TSLs considered for ceiling fans. In shows the consumer NPV results with accordance with OMB’s guidelines on impacts counted over the lifetime of DOE estimated the cumulative NPV of regulatory analysis,71 DOE calculated products purchased in 2020–2049. the total costs and savings for NPV using both a 7-percent and a 3-
TABLE V.25—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR CEILING FANS; 30 YEARS OF SHIPMENTS [2020–2049]
Trial standard level Discount rate (billion 2015$) 1 2 3 4 5
3 percent ...... 6.464 9.286 11.389 12.123 21.006 7 percent...... 2.700 3.744 4.228 4.488 7.454
The NPV results based on the products purchased in 2020–2028. As change in DOE’s analytical methodology aforementioned 9-year analytical period mentioned previously, such results are or decision criteria. are presented in Table V.26. The presented for informational purposes impacts are counted over the lifetime of only and are not indicative of any
69 U.S. Office of Management and Budget. compliance is required, except that in no case may period may not be appropriate given the variability Circular A–4: Regulatory Analysis. September 17, any new standards be required within 6 years of the that occurs in the timing of standards reviews and 2003. www.whitehouse.gov/omb/circulars_a004_a- compliance date of the previous standards. While the fact that for some products, the compliance 4/. adding a 6-year review to the 3-year compliance period is 5 years rather than 3 years. 70 Section 325(m) of EPCA requires DOE to review period adds up to 9 years, DOE notes that it may 71 U.S. Office of Management and Budget. its standards at least once every 6 years, and undertake reviews at any time within the 6 year Circular A–4: Regulatory Analysis. September 17, requires, for certain products, a 3-year period after period and that the 3-year compliance date may 2003. www.whitehouse.gov/omb/circulars_a004_a- any new standard is promulgated before yield to the 6-year backstop. A 9-year analysis 4/.
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TABLE V.26—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR CEILING FANS; 9 YEARS OF SHIPMENTS [2020–2028]
Trial standard level Discount rate (billion 2015$) 1 2 3 4 5
3 percent...... 2.302 3.165 3.556 3.752 6.298 7 percent...... 1.312 1.753 1.814 1.904 2.895
The above results reflect the use of a employment. Chapter 16 of the final are unlikely to have a significant default trend to estimate the change in rule TSD presents detailed results adverse impact on competition. DOE is price for ceiling fans over the analysis regarding anticipated indirect publishing the Attorney General’s period (see section IV.G of this employment impacts. assessment at the end of this final rule. document). DOE also conducted a 4. Impact on Utility or Performance of 6. Need of the Nation To Conserve sensitivity analysis that considered one Products Energy scenario with no price decline. The results of these alternative cases are Based on testing and teardowns Enhanced energy efficiency, where presented in appendix 10C of the NOPR conducted in support of this rule as economically justified, improves the TSD. discussed in section IV.C of this notice, Nation’s energy security, strengthens the DOE has concluded that the standards c. Indirect Impacts on Employment economy, and reduces the adopted in this final rule would not environmental impacts (costs) of energy DOE expects energy conservation reduce the utility or performance of the production. Reduced electricity demand standards for ceiling fans to reduce ceiling fans under consideration in this due to energy conservation standards is energy bills for consumers of those rulemaking. Manufacturers of these also likely to reduce the cost of products, with the resulting net savings products currently offer units that meet maintaining the reliability of the or exceed the adopted standards. being redirected to other forms of electricity system, particularly during economic activity. These expected shifts 5. Impact of Any Lessening of peak-load periods. As a measure of this in spending and economic activity Competition reduced demand, chapter 15 in the final could affect the demand for labor. As DOE considered any lessening of rule TSD presents the estimated described in section IV.N of this competition that would be likely to reduction in generating capacity, document, DOE used an input/output result from new or amended standards. relative to the no-new-standards case, model of the U.S. economy to estimate As discussed in section III.E.1.e, the for the TSLs that DOE considered in this indirect employment impacts of the Attorney General of the United States rulemaking. TSLs that DOE considered in this (Attorney General) to determine the Energy conservation resulting from rulemaking. DOE understands that there impact, if any, of any lessening of amended standards for ceiling fans is are uncertainties involved in projecting competition likely to result from a expected to yield environmental employment impacts, especially proposed standard and to transmit such benefits in the form of reduced changes in the later years of the determination in writing to the emissions of air pollutants and analysis. Therefore, DOE generated Secretary within 60 days of the greenhouse gases. Table V.27 provides results for near-term timeframes (2020– publication of a proposed rule, together DOE’s estimate of cumulative emissions 2025), where these uncertainties are with an analysis of the nature and reductions expected to result from the reduced. extent of the impact. To assist the TSLs considered in this rulemaking. The results suggest that the adopted Attorney General in making this The table includes both power sector standards are likely to have a negligible determination, DOE provided the emissions and upstream emissions. The impact on the net demand for labor in Department of Justice (DOJ) with copies emissions were calculated using the the economy. The net change in jobs is of the NOPR and the TSD for review. In multipliers discussed in section IV.K. so small that it would be imperceptible its assessment letter responding to DOE, DOE reports annual emissions in national labor statistics and might be DOJ concluded that the proposed energy reductions for each TSL in chapter 13 of offset by other, unanticipated effects on conservation standards for ceiling fans the final rule TSD.
TABLE V.27—CUMULATIVE EMISSIONS REDUCTION FOR CEILING FANS SHIPPED IN 2020–2049
Trial standard level 1 2 3 4 5
Power Sector Emissions
CO2 (million metric tons) ...... 45.79 71.38 104.07 113.66 212.43 SO2 (thousand tons) ...... 25.38 39.50 57.48 62.75 117.87 NOX (thousand tons) ...... 51.65 80.54 117.49 128.34 239.51 Hg (tons) ...... 0.09 0.15 0.21 0.23 0.44 CH4 (thousand tons) ...... 3.67 5.71 8.31 9.08 17.03 N2O (thousand tons) ...... 0.52 0.81 1.17 1.28 2.40
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TABLE V.27—CUMULATIVE EMISSIONS REDUCTION FOR CEILING FANS SHIPPED IN 2020–2049—Continued
Trial standard level 1 2 3 4 5
Upstream Emissions
CO2 (million metric tons) ...... 2.64 4.12 6.02 6.58 12.23 SO2 (thousand tons) ...... 0.49 0.76 1.11 1.22 2.26 NOX (thousand tons) ...... 37.87 59.12 86.36 94.31 175.36 Hg (tons) ...... 0.00 0.00 0.00 0.00 0.00 CH4 (thousand tons) ...... 209.18 326.60 477.10 521.03 968.66 N2O (thousand tons) ...... 0.02 0.04 0.06 0.06 0.11
Total FFC Emissions
CO2 (million metric tons) ...... 48.43 75.50 110.09 120.24 224.66 SO2 (thousand tons) ...... 25.87 40.26 58.59 63.97 120.13 NOX (thousand tons) ...... 89.51 139.66 203.85 222.65 414.87 Hg (tons) ...... 0.10 0.15 0.22 0.24 0.44 CH4 (thousand tons) ...... 212.85 332.31 485.41 530.11 985.69 CH4 (thousand tons CO2eq) * ...... 5959.68 9304.79 13591.50 14843.04 27599.41 N2O (thousand tons) ...... 0.54 0.84 1.23 1.34 2.51 N2O (thousand tons CO2eq) * ...... 143.43 223.33 325.12 354.94 665.94
*CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). Negative values refer to an increase in emissions.
As part of the analysis for this rule, value from a distribution that uses a 5- Table V.28 presents the global value DOE estimated monetary benefits likely percent discount rate), $40.6/t (the of CO2 emissions reductions at each to result from the reduced emissions of average value from a distribution that TSL. For each of the four cases, DOE CO2 and NOX that DOE estimated for uses a 3-percent discount rate), $63.2/t calculated a present value of the stream each of the considered TSLs for ceiling (the average value from a distribution of annual values using the same fans. As discussed in section IV.L of this that uses a 2.5-percent discount rate), discount rate as was used in the studies document, for CO2, DOE used the most and $118/t (the 95th-percentile value upon which the dollar-per-ton values recent values for the SCC developed by from a distribution that uses a 3-percent are based. DOE calculated domestic an interagency process. The four sets of discount rate). The values for later years values as a range from 7 percent to 23 SCC values for CO2 emissions are higher due to increasing damages percent of the global values; these reductions in 2015 resulting from that (public health, economic, and results are presented in chapter 14 of process (expressed in 2015$) are environmental) as the projected the final rule TSD. represented by $12.4/t (the average magnitude of climate change increases.
TABLE V.28—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR PRODUCTS SHIPPED IN 2020–2049
SCC case * TSL 2.5% discount 5% discount rate, 3% discount rate, rate, 3% discount rate, average average average 95th percentile
Million 2015$
Power Sector Emissions
1 ...... 321.5 1472.2 2338.6 4486.8 2 ...... 498.5 2287.8 3635.9 6973.5 3 ...... 722.5 3324.3 5286.2 10134.5 4 ...... 789.6 3632.1 5775.3 11072.8 5 ...... 1500.9 6854.9 10882.2 20887.5
Upstream Emissions
1 ...... 18.2 84.1 133.9 256.6 2 ...... 28.3 131.0 208.5 399.5 3 ...... 41.2 190.7 303.7 581.7 4 ...... 45.0 208.3 331.8 635.5 5 ...... 85.0 391.1 621.8 1192.4
Total FFC Emissions
1 ...... 339.8 1556.4 2472.5 4743.4 2 ...... 526.8 2418.8 3844.4 7373.0 3 ...... 763.6 3515.0 5589.9 10716.3
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TABLE V.28—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR PRODUCTS SHIPPED IN 2020–2049—Continued
SCC case * TSL 2.5% discount 5% discount rate, 3% discount rate, rate, 3% discount rate, average average average 95th percentile
Million 2015$
4 ...... 834.6 3840.4 6107.1 11708.4 5 ...... 1585.9 7246.0 11503.9 22079.9 * For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.4, $40.6, $63.2, and $118 per metric ton (2015$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
DOE is well aware that scientific and review will consider the comments on reductions anticipated to result from the economic knowledge about the this subject that are part of the public considered TSLs for ceiling fans. The contribution of CO2 and other GHG record for this and other rulemakings, as dollar-per-ton values that DOE used are emissions to changes in the future well as other methodological discussed in section IV.L of this global climate and the potential assumptions and issues. However, document. Table V.29 presents the resulting damages to the world economy consistent with DOE’s legal obligations, cumulative present values for NOX continues to evolve rapidly. Thus, any and taking into account the uncertainty emissions for each TSL calculated using value placed on reduced CO2 emissions involved with this particular issue, DOE 7-percent and 3-percent discount rates. in this rulemaking is subject to change. has included in this rule the most recent This table presents values that use the DOE, together with other Federal values and analyses resulting from the low dollar-per-ton values, which reflect agencies, will continue to review interagency review process. DOE’s primary estimate. Results that various methodologies for estimating DOE also estimated the cumulative reflect the range of NO dollar-per-ton the monetary value of reductions in CO monetary value of the economic benefits X 2 values are presented in Table V.31. and other GHG emissions. This ongoing associated with NOX emissions
TABLE V.29—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR CEILING FANS SHIPPED IN 2020–2049 *
TSL 3% discount rate 7% discount rate
Million 2015$
Power Sector Emissions
1 ...... 86.2 35.2 2 ...... 133.4 54.0 3 ...... 193.7 77.6 4 ...... 213.4 85.6 5 ...... 404.6 166.6
Upstream Emissions
1 ...... 69.9 27.9 2 ...... 108.5 43.0 3 ...... 157.5 61.7 4 ...... 172.1 67.5 5 ...... 326.3 131.4
Total FFC Emissions
1 ...... 156.1 63.1 2 ...... 241.9 96.9 3 ...... 351.2 139.4 4 ...... 385.5 153.1 5 ...... 730.9 297.9 * Results are based on the low benefit-per-ton values.
7. Other Factors 6295(o)(2)(B)(i)(VII)) No other factors can be viewed as a complement to the were considered in this analysis. NPV of the consumer savings calculated The Secretary of Energy, in for each TSL considered in this 8. Summary of National Economic determining whether a standard is rulemaking. Table V.30 presents the Impacts economically justified, may consider NPV values that result from adding the any other factors that the Secretary The NPV of the monetized benefits estimates of the potential economic deems to be relevant. (42 U.S.C. associated with emissions reductions benefits resulting from reduced CO2 and
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NOX emissions in each of four valuation considered in this rulemaking, at both a each table correspond to the 2015 values scenarios to the NPV of consumer 7-percent and 3-percent discount rate. in the four sets of SCC values discussed savings calculated for each TSL The CO2 values used in the columns of above.
TABLE V.30—NET PRESENT VALUE OF CONSUMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS
Consumer NPV at 3% discount rate added with: TSL SCC case $12.4/t SCC case $40.6/t SCC case $63.2/t SCC case $118/t and 3% low NOX and 3% low NOX and 3% low NOX and 3% low NOX values values values values
Billion 2015$
1 ...... 6.960 8.177 9.093 11.364 2 ...... 10.055 11.947 13.372 16.901 3 ...... 12.502 15.254 17.329 22.455 4 ...... 13.343 16.349 18.615 24.217 5 ...... 23.323 28.983 33.241 43.817 Consumer NPV at 7% discount rate added with: TSL SCC case $12.4/t SCC case $40.6/t SCC case $63.2/t SCC case $118/t and 7% low NOX and 7% low NOX and 7% low NOX and 7% low NOX values values values values
1 ...... 3.103 4.320 5.236 7.507 2 ...... 4.367 6.259 7.685 11.213 3 ...... 5.131 7.882 9.957 15.083 4 ...... 5.475 8.481 10.748 16.349 5 ...... 9.338 14.998 19.256 29.832 Note: The SCC case values represent the global SCC in 2015, in 2015$ per metric ton (t), for each case.
In considering the above results, two standard is economically justified, the DOE also notes that the economics issues are relevant. First, the national Secretary must determine whether the literature provides a wide-ranging operating cost savings are domestic U.S. benefits of the standard exceed its discussion of how consumers trade off monetary savings that occur as a result burdens by, to the greatest extent upfront costs and energy savings in the of market transactions, while the value practicable, considering the seven absence of government intervention. of CO2 reductions is based on a global statutory factors discussed previously. Much of this literature attempts to value. Second, the assessments of (42 U.S.C. 6295(o)(2)(B)(i)) The new or explain why consumers appear to operating cost savings and the SCC are amended standard must also result in undervalue energy efficiency performed with different methods that significant conservation of energy. (42 improvements. There is evidence that use different time frames for analysis. U.S.C. 6295(o)(3)(B)) consumers undervalue future energy savings (or appear to do so) as a result The national operating cost savings is For this final rule, DOE considered of (1) a lack of information; (2) a lack of measured for the lifetime of products the impacts of amended standards for sufficient salience of the long-term or shipped in 2020–2049. Because CO2 ceiling fans at each TSL, beginning with aggregate benefits; (3) a lack of sufficient emissions have a very long residence the maximum technologically feasible 72 savings to warrant delaying or altering time in the atmosphere, the SCC level, to determine whether that level values in future years reflect future purchases; (4) excessive focus on the was economically justified. Where the climate-related impacts that continue short term, in the form of inconsistent max-tech level was not justified, DOE beyond 2100. weighting of future energy cost savings then considered the next most efficient relative to available returns on other C. Conclusion level and undertook the same evaluation investments; (5) computational or other When considering new or amended until it reached the highest efficiency difficulties associated with the energy conservation standards, the level that is both technologically evaluation of relevant tradeoffs; and (6) standards that DOE adopts for any type feasible and economically justified and a divergence in incentives (for example, (or class) of covered product must be saves a significant amount of energy. between renters and owners, or builders designed to achieve the maximum To aid the reader as DOE discusses and purchasers). Having less than improvement in energy efficiency that the benefits and/or burdens of each TSL, perfect foresight and a high degree of the Secretary determines is tables in this section present a summary uncertainty about the future, consumers technologically feasible and of the results of DOE’s quantitative may trade off these types of investments economically justified. (42 U.S.C. analysis for each TSL. In addition to the at a higher than expected rate between 6295(o)(2)(A)) In determining whether a quantitative results presented in the current consumption and uncertain tables, DOE also considers other future energy cost savings. 72 The atmospheric lifetime of CO2 is estimated of burdens and benefits that affect In DOE’s current regulatory analysis, the order of 30–95 years. Jacobson, M.Z. Correction economic justification. These include potential changes in the benefits and to ‘‘Control of fossil-fuel particulate black carbon the impacts on identifiable subgroups of costs of a regulation due to changes in and organic matter, possibly the most effective method of slowing global warming.’’ J. Geophys. consumers who may be consumer purchase decisions are Res. 2005. 110: D14105. doi: 10.1029/ disproportionately affected by a national included in two ways. First, if 2005JD005888. standard and impacts on employment. consumers forego the purchase of a
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product in the standards case, this consumer price sensitivity variation energy conservation standards on decreases sales for product according to household income.73 consumer choice and how to quantify manufacturers, and the impact on While DOE is not prepared at present this impact in its regulatory analysis in manufacturers attributed to lost revenue to provide a fuller quantifiable future rulemakings. is included in the MIA. Second, DOE framework for estimating the benefits 1. Benefits and Burdens of TSLs accounts for energy savings attributable and costs of changes in consumer Considered for Ceiling Fan Standards only to products actually used by purchase decisions due to an energy consumers in the standards case; if a conservation standard, DOE is committed to developing a framework Table V.31 and Table V.32 summarize regulatory option decreases the number that can support empirical quantitative the quantitative impacts estimated for of products purchased by consumers, tools for improved assessment of the each TSL for ceiling fans. The national this decreases the potential energy consumer welfare impacts of appliance impacts are measured over the lifetime savings from an energy conservation standards. DOE has posted a paper that of ceiling fans purchased in the 30-year standard. DOE provides estimates of discusses the issue of consumer welfare period that begins in the anticipated shipments and changes in the volume of impacts of appliance energy first full year of compliance with product purchases in chapter 9 of the conservation standards, and potential amended standards (2020–2049). The final rule TSD. However, DOE’s current enhancements to the methodology by energy savings, emissions reductions, analysis does not explicitly control for which these impacts are defined and and value of emissions reductions refer heterogeneity in consumer preferences, estimated in the regulatory process.74 to full-fuel-cycle results. The efficiency preferences across subcategories of DOE welcomes comments on how to levels contained in each TSL are products or specific features, or more fully assess the potential impact of described in section V.A of this notice. TABLE V.31—SUMMARY OF ANALYTICAL RESULTS FOR CEILING FANS TSLS: NATIONAL IMPACTS
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
Cumulative FFC National Energy Savings (quads)
quads ...... 0.807 1.260 1.839 2.008 3.738.
NPV of Consumer Costs and Benefits (billion 2015$)
3% discount rate ...... 6.464 9.286 11.388 12.123 21.006. 7% discount rate ...... 2.700 3.744 4.228 4.488 7.454.
Cumulative FFC Emissions Reduction (Total FFC Emission)
CO2 (million metric tons) ...... 48.43 75.50 110.09 120.24 224.66. SO2 (thousand tons) ...... 25.87 40.26 58.59 63.97 120.13. NOX (thousand tons) ...... 89.51 139.66 203.85 222.65 414.87. Hg (tons) ...... 0.10 0.15 0.22 0.24 0.44. CH4 (thousand tons) ...... 212.85 332.31 485.41 530.11 985.69. CH4 (thousand tons CO2eq) * ...... 5,959.68 9,304.79 13,591.50 14,843.04 27,599.41. N2O (thousand tons) ...... 0.54 0.84 1.23 1.34 2.51. N2O (thousand tons CO2eq) * ...... 143.43 223.33 325.12 354.94 665.94.
Value of Emissions Reduction (Total FFC Emissions)
CO2 (billion 2015$) ** ...... 0.340 to 4.743 0.527 to 7.373 0.764 to 10.716 0.835 to 11.708 1.586 to 22.080. NOX—3% discount rate (million 2015$) ...... 156.1 to 355.9 241.9 to 551.6 351.2 to 800.7 385.5 to 878.9 730.9 to 1,666.3. NOX—7% discount rate (million 2015$) ...... 63.1 to 142.2 96.9 to 218.5 139.4 to 314.2 153.1 to 345.3 297.9 to 671.8. Parentheses indicate negative (¥) values. *CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). ** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
TABLE V.32—SUMMARY OF ANALYTICAL RESULTS FOR CEILING FANS TSLS: MANUFACTURER AND CONSUMER IMPACTS
Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * TSL 5 *
Manufacturer Impacts
Industry NPV (million 2015$) (No-new-standards case INPV = 1,211.6) 1,200.8–1,232.8 1,188.6–1,275.8 1,107.9–1,213.2 1,092.1–1,206.8 926.7 to 1,265.3. Industry NPV (% change) ...... (0.9)–1.8 (1.9)–5.3 (8.6)–0.1 (9.9)–(0.4) (23.5) to 4.4.
Consumer Average LCC Savings ** (2015$)
Standard ...... 46.61 37.20 25.78 25.78 26.80. Hugger ...... 39.01 31.75 21.50 21.50 19.20. Very Small-Diameter ...... 16.10 16.10 4.29 4.29 (25.94). High-Speed Small-Diameter ...... 20.17 20.17 (15.81) 19.80 19.80. Large-Diameter ...... 291.52 291.52 128.90 128.90 347.93.
Consumer Simple PBP *** (years)
Standard ...... 0.0 0.0 1.7 1.7 4.0.
73 P.C. Reiss and M.W. White. Household 74 Sanstad, A.H. Notes on the Economics of buildings/appliance_standards/pdfs/consumer_ee_ Electricity Demand, Revisited. Review of Economic Household Energy Consumption and Technology theory.pdf. Studies. 2005. 72(3): pp. 853–883. doi: 10.1111/ Choice. 2010. Lawrence Berkeley National 0034–6527.00354. Laboratory. https://www1.eere.energy.gov/
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TABLE V.32—SUMMARY OF ANALYTICAL RESULTS FOR CEILING FANS TSLS: MANUFACTURER AND CONSUMER IMPACTS— Continued
Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * TSL 5 *
Hugger ...... 0.0 0.0 1.8 1.8 4.1. Very Small-Diameter ...... 0.0 0.0 9.3 9.3 13.4. High-Speed Small-Diameter ...... 0.0 0.0 9.8 6.9 6.9. Large-Diameter ...... 0.0 0.0 4.1 4.1 4.3.
Percent of Consumers that Experience a Net Cost
Standard ...... 0.0 0.0 27.5 27.5 50.4. Hugger ...... 0.0 0.0 27.8 27.8 51.4. Very Small-Diameter ...... 0.0 0.0 2.1 2.1 75.8. High-Speed Small-Diameter ...... 0.0 0.0 70.0 38.7 38.7. Large-Diameter ...... 0.0 0.0 23.3 23.3 16.2. * Parentheses indicate negative (¥) values. The entry ‘‘n.a.’’ means not applicable because there is no change in the standard at certain TSLs. ** The calculation excludes consumers with zero LCC savings (no impact). *** Simple PBP results are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product.
DOE first considered TSL 5, which VSD ceiling fan product class, the for VSD ceiling fans, $21.50 for hugger represents the max-tech efficiency average LCC savings in 2015$ for all ceiling fans, $25.78 for standard ceiling levels. TSL 5 would save 3.738 quads of consumers, and affected consumers fans, $19.80 for HSSD ceiling fans, and energy, an amount DOE considers relative to no standards case is negative. $128.90 for large-diameter ceiling fans. significant. Under TSL 5, the NPV of Manufacturers may experience a loss in The simple payback period is 9.3 years consumer benefit would be $7.454 INPV of up to 23.5 percent. for VSD ceiling fans, 1.8 years for billion using a discount rate of 7 The Secretary concludes that at TSL hugger ceiling fans, 1.7 years for percent, and $21.006 billion using a 5, the benefits of energy savings, standard ceiling fans, 6.9 years for discount rate of 3 percent. positive NPV of consumer benefits, HSSD ceiling fans, and 4.1 years for The cumulative emissions reductions emission reductions, and the estimated large-diameter ceiling fans. The fraction at TSL 5 are 224.66 Mt of CO2, 120.13 monetary value of the emissions of consumers experiencing a net LCC thousand tons of SO2, 414.87 thousand reductions would be outweighed by the cost is 2 percent for VSD ceiling fans, 28 tons of NOX, 0.44 ton of Hg, 985.69 percentage of consumers that experience percent for hugger ceiling fans, 27 thousand tons of CH4, and 2.51 net cost for the VSD, hugger, and percent for standard ceiling fans, 39 thousand tons of N2O. The estimated standard ceiling fan product classes, the percent for HSSD ceiling fans, and 23 monetary value of the CO2 emissions negative average LCC savings for the percent for large-diameter ceiling fans. reduction at TSL 5 ranges from $1.586 VSD ceiling fan product class, and the At TSL 4, the projected change in billion to $22.080 billion. potential reduction in manufacturer INPV ranges from decreases of $119.4 At TSL 5, the average LCC impact for industry value. Consequently, the million to $4.8 million, which represent affected consumers is a cost of $25.94 Secretary has tentatively concluded that decreases of 9.9 percent and 0.4 percent, for VSD ceiling fans and a savings of TSL 5 is not economically justified. respectively. $19.20, $26.80, $19.80, and $347.93 for DOE then considered TSL 4, which For TSL 4, the efficiency levels for hugger, standard, HSSD and large- corresponds to the maximum NPV with each product class correspond to the diameter ceiling fans, respectively. The an AC motor for all product classes following: max-tech for HSSD ceiling simple payback period is 13.4 years for other than HSSD fans, and maximum fan product class, EL 3 for the hugger, VSD ceiling fans, 4.1 years for hugger NPV for HSSD fans. At this TSL, less standard, and large-diameter ceiling fan ceiling fans, 4.0 years for standard than 50 percent of consumers product classes, and EL 2 for the very- ceiling fans, 6.9 years for HSSD ceiling experience a net cost, and large- small diameter ceiling fan product class. fans, and 4.3 years for large-diameter diameter ceiling fans that provide high Within large-diameter ceiling fans, TSL ceiling fans. The fraction of consumers levels of airflow are not 4 does not disproportionately impact experiencing a net LCC cost is 76 disproportionally impacted. TSL 4 fans that provide high levels of airflow. percent for VSD ceiling fans, 51 percent would save 2.008 quads of energy, an At TSL 4, the average LCC savings in for hugger ceiling fans, 50 percent for amount DOE considers significant. 2015$ are positive for all product standard ceiling fans, 39 percent for Under TSL 4, the NPV of consumer classes. Also, the fraction of consumers HSSD ceiling fans, and 16 percent for benefit would be $4.488 billion using a that experience net savings at TSL 4 is large-diameter ceiling fans. discount rate of 7 percent, and $12.123 greater than the fraction of consumers At TSL 5, the projected change in billion using a discount rate of 3 that experience a net cost. INPV ranges from a decrease of $284.8 percent. Manufacturers may experience a loss in million to an increase of $53.8 million, The cumulative emissions reductions INPV of up to 9.9 percent. which represents a decrease of 23.5 at TSL 4 are 120.24 Mt of CO2, 63.97 After considering the analysis and percent and an increase of 4.4 percent. thousand tons of SO2, 222.65 thousand weighing the benefits and burdens, the At TSL 5, the corresponding tons of NOX, 0.24 ton of Hg, 530.11 Secretary has concluded that at TSL 4 efficiency levels for all product classes thousand tons of CH4, and 1.34 for ceiling fans, the benefits of energy are the max-tech efficiency levels. thousand tons of N2O. The estimated savings, positive NPV of consumer Specifically for the VSD, hugger, and monetary value of the CO2 emissions benefits, emission reductions, the standard ceiling fan product classes, the reduction at TSL 4 ranges from $0.835 estimated monetary value of the percentages of consumers that billion to $11.708 billion. emissions reductions, and positive experience net cost are greater than 50 At TSL 4, the average LCC impact for average LCC savings would outweigh percent. Additionally, specific to the affected consumers is a savings of $4.29 the negative impacts on some
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consumers and on manufacturers, TABLE V.33—AMENDED ENERGY CON- expressed in 2015$. The results under including the conversion costs that SERVATION STANDARDS FOR CEILING the primary estimate are as follows. could result in a reduction in INPV for FANS—Continued Using a 7-percent discount rate for manufacturers. Accordingly, the benefits and costs other than CO2 Secretary has concluded that TSL 4 Minimum efficiency reductions (for which DOE used a 3- would offer the maximum improvement Product class equation percent discount rate along with the in efficiency that is technologically (CFM/W)* average SCC series corresponding to a value of $40.6/t in 2015 (2015$)), the feasible and economically justified, and High-Speed Small-Di- 4.16 D + 0.02 would result in the significant ameter (HSSD). estimated cost of the adopted standards conservation of energy. Large Diameter ...... 0.91 D ¥30.00 for ceiling fans is $245.1 million per year in increased equipment costs, Therefore, based on the above *D is the ceiling fan’s blade span, in inches, while the estimated benefits are $688.1 considerations, DOE adopts the energy as determined in Appendix U. million per year in reduced equipment conservation standards for ceiling fans operating costs, $214.1 million per year at TSL 4. The amended energy 2. Summary of Annualized Benefits and in CO reductions, and $15.1 million conservation standards for ceiling fans, Costs of the Adopted Standards 2 per year in reduced NO emissions. In which are expressed as minimum CFM/ X The benefits and costs of the adopted this case, the net benefit amounts to W, are shown in Table V.33. standards can also be expressed in terms $672.2 million per year. of annualized values. The annualized Using a 3-percent discount rate for all TABLE V.33—AMENDED ENERGY CON- net benefit is the sum of (1) the benefits and costs and the average SCC SERVATION STANDARDS FOR CEILING annualized national economic value series corresponding to a value of FANS (expressed in 2015$) of the benefits $40.6/t in 2015 (in 2015$), the estimated from operating products that meet the cost of the adopted standards for ceiling Minimum efficiency adopted standards (consisting primarily fans is $243.2 million per year in Product class equation of operating cost savings from using less (CFM/W)* increased equipment costs, while the energy, minus increases in product estimated annual benefits are $919.0 purchase costs, and (2) the annualized Very Small-Diameter D ≤ 12 in.: 21 million in reduced operating costs, monetary value of the benefits of CO (VSD). D > 12 in.: 3.16 D 2 $214.1 million in CO2 reductions, and 75 ¥17.04 and NOX emission reductions. $21.5 million in reduced NOX Standard ...... 0.65 D + 38.03 Table V.34 shows the annualized emissions. In this case, the net benefit Hugger ...... 0.29 D + 34.46 values for ceiling fans under TSL 4, amounts to $911.4 million per year.
TABLE V.34—SELECTED CATEGORIES OF ANNUALIZED BENEFITS AND COSTS OF ADOPTED STANDARDS (TSL 4) FOR CEILING FANS
Primary Low-net-benefits High-net-benefits Discount rate estimate estimate estimate
Million 2015$/year
Benefits
Consumer Operating Cost Savings ...... 7% ...... 688.1 ...... 579.7 ...... 793.5. 3% ...... 919.0 ...... 764.2 ...... 1081.9. CO2 Reduction (using mean SCC at 5% discount rate) ** ... 5% ...... 62.8 ...... 53.7 ...... 71.0. CO2 Reduction (using mean SCC at 3% discount rate) ** ... 3% ...... 214.1 ...... 182.2 ...... 242.6. CO2 Reduction (using mean SCC at 2.5% discount rate) ** 2.5% ...... 314.2 ...... 267.2 ...... 356.3. CO2 Reduction (using 95th percentile SCC at 3% discount 3% ...... 652.7 ...... 555.4 ...... 739.8. rate ) **. NOX Reduction † ...... 7% ...... 15.1 ...... 13.1 ...... 38.1. 3% ...... 21.5 ...... 18.4 ...... 55.3. Total Benefits ‡ ...... 7% plus CO2 range ... 766 to 1,356 ...... 647 to 1,148 ...... 903 to 1,571. 7% ...... 917.3 ...... 775.0 ...... 1,074.2. 3% plus CO2 range ... 1,003 to 1,593 .... 836 to 1,338 ...... 1,208 to 1,877. 3% ...... 1,154.6 ...... 964.8 ...... 1,379.9.
Costs ***
Consumer Incremental Product Costs ...... 7% ...... 245.1 ...... 288.1 ...... 272.8. 3% ...... 243.2 ...... 298.7 ...... 273.7.
Net Benefits
Total ‡ ...... 7% plus CO2 range ... 521 to 1,111 ...... 358 to 860 ...... 630 to 1,299. 7% ...... 672.2 ...... 487.0 ...... 801.4. 3% plus CO2 range ... 760 to 1,350 ...... 538 to 1,039 ...... 935 to 1,603.
75 To convert the time-series of costs and benefits with each year’s shipments in the year in which the value of CO2 reductions, for which DOE used case- into annualized values, DOE calculated a present shipments occur (2020, 2030, etc.), and then specific discount rates. Using the present value, value in 2014, the year used for discounting the discounted the present value from each year to DOE then calculated the fixed annual payment over NPV of total consumer costs and savings. For the 2015. The calculation uses discount rates of 3 and a 30-year period, starting in the compliance year benefits, DOE calculated a present value associated 7 percent for all costs and benefits except for the that yields the same present value.
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TABLE V.34—SELECTED CATEGORIES OF ANNUALIZED BENEFITS AND COSTS OF ADOPTED STANDARDS (TSL 4) FOR CEILING FANS—Continued
Primary Low-net-benefits High-net-benefits Discount rate estimate estimate estimate
3% ...... 911.4 ...... 666.1 ...... 1,106.2. * This table presents the annualized costs and benefits associated with ceiling fans shipped in 2020–2049. These results include benefits to consumers which accrue after 2049 from the ceiling fans purchased from 2020–2049. The incremental installed costs include incremental equip- ment cost as well as installation costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary Estimate assumes the Reference case electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the same product price decrease for ceiling fans with DC motors as in the Primary Estimate. The methods used to derive projected price trends are explained in section IV.G.4. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding. ** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5-per- cent, 3-percent, and 2.5-percent discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC values are emission year specific. See section IV.L.1 for more details. † DOE estimated the monetized value of NOX emissions reductions associated with electricity savings using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Stand- ards. (Available at www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates for NOX emitted from the Electric Gener- ating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). For the High Net Benefits Esti- mate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study. ‡ Total Benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. *** For certain assumed design options (e.g. fan optimization) that are included at the selected standard level, DOE estimated no incremental costs to consumers, but did estimate a one-time industry conversion cost to manufacturers to make their products compliant with the selected standards that are not reflected in the Consumer Incremental Product Costs. The one-time industry conversion cost to manufacturers of these design options contribute to a loss in industry net present value of $4.8 million, which is equivalent to an annualized cost of $0.4 million/year at a 7.4-percent discount rate over the analysis period.
VI. Procedural Issues and Regulatory energy security that are not reflected in anticipated from the regulatory action, Review energy prices, such as reduced together with, to the extent feasible, a emissions of air pollutants and quantification of those costs; and an A. Review Under Executive Orders greenhouse gases that impact human 12866 and 13563 assessment, including the underlying health and global warming. DOE analysis, of costs and benefits of Section 1(b)(1) of Executive Order attempts to qualify some of the external potentially effective and reasonably 12866, ‘‘Regulatory Planning and benefits through use of social cost of feasible alternatives to the planned Review,’’ 58 FR 51735 (Oct. 4, 1993), carbon values. regulation, and an explanation why the requires each agency to identify the The Administrator of the Office of planned regulatory action is preferable problem that it intends to address, Information and Regulatory Affairs to the identified potential alternatives. including, where applicable, the failures (OIRA) in the OMB has determined that These assessments can be found in the of private markets or public institutions the regulatory action in this document technical support document for this that warrant new agency action, as well is a significant regulatory action under rulemaking. as to assess the significance of that section (3)(f) of Executive Order 12866. problem. The problems that the adopted Accordingly, pursuant to section DOE has also reviewed this regulation standards for ceiling fans are intended 6(a)(3)(B) of the Order, DOE has pursuant to Executive Order 13563, to address are as follows: provided to OIRA: (i) The text of the issued on January 18, 2011. 76 FR 3281, (1) Insufficient information and the draft regulatory action, together with a Jan. 21, 2011. EO 13563 is supplemental high costs of gathering and analyzing reasonably detailed description of the to and explicitly reaffirms the relevant information leads some need for the regulatory action and an principles, structures, and definitions consumers to miss opportunities to explanation of how the regulatory action governing regulatory review established make cost-effective investments in will meet that need; and (ii) an in Executive Order 12866. To the extent energy efficiency. assessment of the potential costs and permitted by law, agencies are required (2) In some cases the benefits of more benefits of the regulatory action, by Executive Order 13563 to (1) propose efficient equipment are not realized due including an explanation of the manner or adopt a regulation only upon a to misaligned incentives between in which the regulatory action is reasoned determination that its benefits purchasers and users. An example of consistent with a statutory mandate. justify its costs (recognizing that some such a case is when the equipment DOE has included these documents in benefits and costs are difficult to purchase decision is made by a building the rulemaking record. quantify); (2) tailor regulations to contractor or building owner who does In addition, the Administrator of impose the least burden on society, not pay the energy costs. OIRA has determined that the regulatory consistent with obtaining regulatory (3) There are external benefits action is an ‘‘economically’’ significant objectives, taking into account, among resulting from improved energy regulatory action under section (3)(f)(1) other things, and to the extent efficiency of appliances that are not of Executive Order 12866. Accordingly, practicable, the costs of cumulative captured by the users of such pursuant to section 6(a)(3)(C) of the regulations; (3) select, in choosing equipment. These benefits include Order, DOE has provided to OIRA an among alternative regulatory externalities related to public health, assessment, including the underlying approaches, those approaches that environmental protection and national analysis, of benefits and costs maximize net benefits (including
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potential economic, environmental, elsewhere in the preamble and not manufacturer by reaching out directly to public health and safety, and other repeated here. those potential small businesses and advantages; distributive impacts; and using market research tools (e.g., 2. Significant Comments in Response to equity); (4) to the extent feasible, specify www.hoovers.com, www.manta.com, the IRFA performance objectives, rather than glassdoor.com, www.linkedin.com, etc.). specifying the behavior or manner of DOE did not receive comments in DOE also asked interested parties and compliance that regulated entities must response to the IRFA. Comments on the industry representatives if they were adopt; and (5) identify and assess economic impacts of amended aware of any small businesses during available alternatives to direct standards are addressed in section manufacturer interviews and DOE regulation, including providing IV.J.2.a and section IV.J.3 and did not public meetings. DOE used information economic incentives to encourage the result in significant changes to the from these sources to create a list of desired behavior, such as user fees or FRFA. companies that manufacture or sell marketable permits, or providing 3. Comments Filed by the Chief Counsel ceiling fans and would be affected by information upon which choices can be for Advocacy this rulemaking. made by the public. For ceiling fans, DOE identified 66 DOE emphasizes as well that The SBA’s Chief Counsel for companies that sell ceiling fans covered Executive Order 13563 requires agencies Advocacy did not submit comments on by this rulemaking. 25 of these to use the best available techniques to this rulemaking. companies are large businesses with quantify anticipated present and future 4. Description and Estimate of the more than 1,500 total employees or are benefits and costs as accurately as Number of Small Entities Affected foreign-owned and operated. DOE possible. In its guidance, OIRA has determined that of the remaining 41 For manufacturers of ceiling fans, the emphasized that such techniques may companies with less than 1,500 SBA has set a size threshold, which include identifying changing future employees, only six companies are defines those entities classified as compliance costs that might result from small businesses that maintain domestic ‘‘small businesses’’ for the purposes of technological innovation or anticipated production facilities. the statute. DOE used the SBA’s small behavioral changes. For the reasons business size standards to determine 5. Description of Compliance stated in the preamble, DOE believes whether any small entities would be Requirements that this final rule is consistent with subject to the requirements of the rule. these principles, including the There are six small domestic ceiling See 13 CFR part 121. The size standards requirement that, to the extent fan manufacturers identified. Four small are listed by North American Industry permitted by law, benefits justify costs. businesses manufacture HSSD ceiling Classification System (NAICS) code and fans and three small businesses B. Review Under the Regulatory industry description available at: manufacture large-diameter ceiling fans Flexibility Act https://www.sba.gov/sites/default/files/ _ _ (one of these small businesses The Regulatory Flexibility Act (5 files/Size Standards Table.pdf. Ceiling manufactures both HSSD and large- U.S.C. 601 et seq.) requires preparation fan manufacturing is classified under diameter ceiling fans and are therefore of a final regulatory flexibility analysis NAICS code 335210, ‘‘Small Electrical counted in each of these small business (FRFA) for any final rule where the Appliance Manufacturing.’’ The SBA counts). To estimate conversion costs agency was first required by law to sets a threshold of 1,500 employees or for small manufacturers, DOE publish a proposed rule for public less for an entity to be considered as a multiplied an estimate of the number of comment. As required by Executive small business for this category. platforms that would need to be Order 13272, ‘‘Proper Consideration of To estimate the number of companies redesigned at TSL 4 by the per-platform Small Entities in Agency Rulemaking,’’ that manufacture ceiling fans covered by conversion cost estimated for the 67 FR 53461 (Aug. 16, 2002), DOE this rulemaking, DOE conducted a respective type of conversion cost, published procedures and policies on market survey using publicly available efficiency level, and product class for February 19, 2003, to ensure that the information. DOE first attempted to each manufacturer. Additionally, DOE potential impacts of its rules on small identify all ceiling fan manufacturers by obtained company revenue information researching industry trade associations entities are properly considered during 76 from publicly available databases such the rulemaking process. 68 FR 7990. (e.g., ALA ), information from as Hoovers 77 and Manta.78 DOE has made its procedures and previous rulemakings, individual Leveraging these assumptions, DOE policies available on the Office of the company websites, and SBA’s database. estimated total conversion costs and General Counsel’s website (http:// DOE then attempted to gather conversion costs relative to small ceiling energy.gov/gc/office-general-counsel). information on the location and number fan manufacturers’ annual revenues. DOE has prepared the following FRFA of employees to see if these companies DOE presents the estimated total for the products that are the subject of met SBA’s definition of a small business conversion costs incurred by small this rulemaking. for each potential ceiling fan domestic ceiling fan manufacturers at TSL 4 in Table VI.1. 1. Need for, and Objectives of, the Rule 76 ALA. Membership Directory and Buyer’s Guide 2015. Last Accessed June 9, 2015. http:// A description of the need for, and www.lightrays-digital.com/lightrays/2015_ 77 www.hoovers.com. objectives of, this rule is set forth membership_directory#pg1. 78 www.manta.com.
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TABLE VI.1—CONVERSION COSTS FOR SMALL CEILING FAN MANUFACTURERS AT THE ADOPTED TRIAL STANDARD LEVEL [TSL 4]
Product conversion costs Capital conversion costs Total conversion costs Average total conversion costs as (2015$ millions) (2015$ millions) (2015$ millions) a percentage of annual revenue
$0.7 $1.6 $2.3 2.6
There are four small manufacturers increased burden on small procedures. DOE has established that make HSSD fans. For one of these manufacturers. regulations for the certification and small manufacturers, their entire HSSD DOE also considered TSLs lower than recordkeeping requirements for all product offerings use DC motors and the TSL adopted. At TSL 1, the energy covered consumer products and they should be able to meet the HSSD savings was reduced by 60 percent and commercial equipment, including standard without any modifications to consumer NPV was reduced by 40 ceiling fans. 76 FR 12422 (March 7, their product offerings. For the other percent compared to TSL 4. At TSL 2, 2011); 80 FR 5099 (Jan. 30, 2015). The three HSSD small manufacturer, two the energy savings was reduced by 37 collection-of-information requirement only offer one HSSD ceiling fan and one percent and consumer NPV was reduced for the certification and recordkeeping only offers five HSSD ceiling fans. by 17 percent compared to TSL 4. At is subject to review and approval by These small manufacturers primarily TSL 3, the energy savings was reduced OMB under the Paperwork Reduction sell commercial, industrial, and/or by 8 percent and consumer NPV was Act (PRA). This requirement has been agricultural fans not covered by this reduced by 6 percent compared to TSL approved by OMB under OMB control rulemaking. DOE does not believe that 4. DOE concludes that establishing number 1910–1400. Public reporting HSSD ceiling fan sales significantly standards at TSL 4 balances the benefits burden for the certification is estimated contribute to these companies’ revenue. of the energy savings and consumer to average 30 hours per response, HSSD small manufacturers either make NPV with the potential burdens placed including the time for reviewing compliant HSSD ceiling fans or these on ceiling fan manufacturers, including instructions, searching existing data HSSD ceiling fans do not comprise a small businesses. Accordingly, DOE is sources, gathering and maintaining the significant portion of their company’s declining to adopt one of the other data needed, and completing and revenue. If these manufacturers decide TSLs, or the other policy alternatives reviewing the collection of information. not to invest in making compliant HSSD detailed as part of the regulatory Notwithstanding any other provision ceiling fans, DOE does not believe their impacts analysis included in chapter 17 of the law, no person is required to revenue will be significantly reduced. of the final rule TSD. respond to, nor shall any person be Additional compliance flexibilities There are three small manufacturers subject to a penalty for failure to comply may be available through other means. that make large-diameter fans. Two of with, a collection of information subject For example, individual manufacturers these small manufacturers primarily to the requirements of the PRA, unless may petition for a waiver of the make ceiling fans that have DC motors that collection of information displays a applicable test procedure (see 10 CFR currently valid OMB Control Number. and exceed the efficiency levels 430.27). Further, EPCA provides that a required for large-diameter ceiling fans manufacturer whose annual gross D. Review Under the National at the adopted standard. The last small revenue from all of its operations does Environmental Policy Act of 1969 manufacturer has eight large-diameter not exceed $8 million may apply for an Pursuant to the National ceiling fans that would have to be exemption from all or part of an energy Environmental Policy Act (NEPA) of converted to comply with the adopted conservation standard for a period not 1969, DOE has determined that the rule standards for this product class. This longer than 24 months after the effective fits within the category of actions would require replacing the motor on date of a final rule establishing the included in Categorical Exclusion (CX) these eight large-diameter ceiling fans standard. Additionally, Section 504 of B5.1 and otherwise meets the with a more efficient AC motor. the Department of Energy Organization requirements for application of a CX. 6. Significant Alternatives Considered Act, 42 U.S.C. 7194, provides authority (See 10 CFR part 1021, App. B, B5.1(b); and Steps Taken To Minimize for the Secretary to adjust a rule issued 1021.410(b) and App. B, B(1)–(5).) The Significant Economic Impacts on Small under EPCA in order to prevent ‘‘special rule fits within this category of actions Entities hardship, inequity, or unfair because it is a rulemaking that distribution of burdens’’ that may be establishes energy conservation The discussion in section VI.B.5 imposed on that manufacturer as a standards for consumer products or analyzes impacts on small businesses result of such rule. Manufacturers industrial equipment, and for which that would result from DOE’s adopted should refer to 10 CFR part 430, subpart none of the exceptions identified in CX final rule, TSL 4. In reviewing E, and 10 CFR part 1003 for additional B5.1(b) apply. Therefore, DOE has made alternatives to the adopted rule, DOE details. a CX determination for this rulemaking, examined energy conservation and DOE does not need to prepare an C. Review Under the Paperwork standards set at higher and lower Environmental Assessment or Reduction Act efficiency levels; TSL 1, TSL 2, TSL 3, Environmental Impact Statement for and TSL 5. Manufacturers of ceiling fans must this rule. DOE’s CX determination for DOE considered TSL 5, but certify to DOE that their products this rule is available at http:// determined that the 86 percent increase comply with any applicable energy energy.gov/nepa/categorical-exclusion- in the energy savings and 66 percent conservation standards. In certifying cx-determinations-cx. increase in NPV compared to TSL 4 did compliance, manufacturers must test not justify the total industry conversion their products according to the DOE test E. Review Under Executive Order 13132 costs of $155.9 million, the potential procedures for ceiling fans, including Executive Order 13132, ‘‘Federalism,’’ loss of up to 23.5 percent of INPV, and any amendments adopted for those test 64 FR 43255 (Aug. 10, 1999) imposes
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certain requirements on Federal and general draftsmanship under any statement or analysis that accompanies agencies formulating and implementing guidelines issued by the Attorney the final rule. (2 U.S.C. 1532(c)) The policies or regulations that preempt General. Section 3(c) of Executive Order content requirements of section 202(b) State law or that have Federalism 12988 requires Executive agencies to of UMRA relevant to a private sector implications. The Executive Order review regulations in light of applicable mandate substantially overlap the requires agencies to examine the standards in section 3(a) and section economic analysis requirements that constitutional and statutory authority 3(b) to determine whether they are met apply under section 325(o) of EPCA and supporting any action that would limit or it is unreasonable to meet one or Executive Order 12866. The the policymaking discretion of the more of them. DOE has completed the SUPPLEMENTARY INFORMATION section of States and to carefully assess the required review and determined that, to this document and chapter 17 of the necessity for such actions. The the extent permitted by law, this final TSD for this final rule respond to those Executive Order also requires agencies rule meets the relevant standards of requirements. to have an accountable process to Executive Order 12988. ensure meaningful and timely input by Under section 205 of UMRA, the G. Review Under the Unfunded State and local officials in the Department is obligated to identify and Mandates Reform Act of 1995 development of regulatory policies that consider a reasonable number of have Federalism implications. On Title II of the Unfunded Mandates regulatory alternatives before March 14, 2000, DOE published a Reform Act of 1995 (UMRA) requires promulgating a rule for which a written statement of policy describing the each Federal agency to assess the effects statement under section 202 is required. intergovernmental consultation process of Federal regulatory actions on State, (2 U.S.C. 1535(a)) DOE is required to it will follow in the development of local, and Tribal governments and the select from those alternatives the most such regulations. 65 FR 13735. DOE has private sector. Public Law 104–4, sec. cost-effective and least burdensome examined this rule and has determined 201 (codified at 2 U.S.C. 1531). For a alternative that achieves the objectives that it would not have a substantial regulatory action likely to result in a of the rule unless DOE publishes an direct effect on the States, on the rule that may cause the expenditure by explanation for doing otherwise, or the relationship between the national State, local, and Tribal governments, in selection of such an alternative is government and the States, or on the the aggregate, or by the private sector of inconsistent with law. As required by 42 distribution of power and $100 million or more in any one year U.S.C. 6295(d), (f), and (o), 6313(e), and responsibilities among the various (adjusted annually for inflation), section 6316(a), In accordance with the levels of government. EPCA governs and 202 of UMRA requires a Federal agency statutory provisions discussed in this to publish a written statement that prescribes Federal preemption of State document, this final rule establishes estimates the resulting costs, benefits, regulations as to energy conservation for amended energy conservation standards and other effects on the national the products that are the subject of this for ceiling fans that are designed to economy. (2 U.S.C. 1532(a), (b)) The final rule. States can petition DOE for achieve the maximum improvement in exemption from such preemption to the UMRA also requires a Federal agency to develop an effective process to permit energy efficiency that DOE has extent, and based on criteria, set forth in determined to be both technologically EPCA. (42 U.S.C. 6297) Therefore, no timely input by elected officers of State, feasible and economically justified. A further action is required by Executive local, and Tribal governments on a full discussion of the alternatives Order 13132. ‘‘significant intergovernmental mandate,’’ and requires an agency plan considered by DOE is presented in F. Review Under Executive Order 12988 for giving notice and opportunity for chapter 17 of the TSD for this final rule. With respect to the review of existing timely input to potentially affected H. Review Under the Treasury and regulations and the promulgation of small governments before establishing General Government Appropriations new regulations, section 3(a) of any requirements that might Act, 1999 Executive Order 12988, ‘‘Civil Justice significantly or uniquely affect them. On Reform,’’ imposes on Federal agencies March 18, 1997, DOE published a Section 654 of the Treasury and the general duty to adhere to the statement of policy on its process for General Government Appropriations following requirements: (1) Eliminate intergovernmental consultation under Act, 1999 (Pub. L. 105–277) requires drafting errors and ambiguity, (2) write UMRA. 62 FR 12820. DOE’s policy Federal agencies to issue a Family regulations to minimize litigation, (3) statement is also available at http:// Policymaking Assessment for any rule provide a clear legal standard for energy.gov/sites/prod/files/gcprod/ that may affect family well-being. This _ affected conduct rather than a general documents/umra 97.pdf. rule would not have any impact on the standard, and (4) promote simplification DOE has concluded that this final rule autonomy or integrity of the family as and burden reduction. 61 FR 4729 (Feb. may require expenditures of $100 an institution. Accordingly, DOE has 7, 1996). Regarding the review required million or more in any one year by the concluded that it is not necessary to by section 3(a), section 3(b) of Executive private sector. Such expenditures may prepare a Family Policymaking Order 12988 specifically requires that include (1) investment in research and Assessment. Executive agencies make every development and in capital reasonable effort to ensure that the expenditures by ceiling fans I. Review Under Executive Order 12630 regulation (1) clearly specifies the manufacturers in the years between the preemptive effect, if any, (2) clearly final rule and the compliance date for Pursuant to Executive Order 12630, specifies any effect on existing Federal the new standards and (2) incremental ‘‘Governmental Actions and Interference law or regulation, (3) provides a clear additional expenditures by consumers with Constitutionally Protected Property legal standard for affected conduct to purchase higher-efficiency ceiling Rights,’’ 53 FR 8859 (March 18, 1988), while promoting simplification and fans, starting at the compliance date for DOE has determined that this rule burden reduction, (4) specifies the the applicable standard. would not result in any takings that retroactive effect, if any, (5) adequately Section 202 of UMRA authorizes a might require compensation under the defines key terms, and (6) addresses Federal agency to respond to the content Fifth Amendment to the U.S. other important issues affecting clarity requirements of UMRA in any other Constitution.
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J. Review Under the Treasury and establishes that certain scientific Issued in Washington, DC, on November General Government Appropriations information shall be peer reviewed by 21, 2016. Act, 2001 qualified specialists before it is David J. Friedman, Section 515 of the Treasury and disseminated by the Federal Acting Assistant Secretary, Energy Efficiency and Renewable Energy. General Government Appropriations Government, including influential Act, 2001 (44 U.S.C. 3516, note) scientific information related to agency For the reasons set forth in the provides for Federal agencies to review regulatory actions. The purpose of the preamble, DOE amends part 430 of most disseminations of information to bulletin is to enhance the quality and chapter II, subchapter D, of title 10 of the public under information quality credibility of the Government’s the Code of Federal Regulations, as set guidelines established by each agency scientific information. Under the forth below: pursuant to general guidelines issued by Bulletin, the energy conservation OMB. OMB’s guidelines were published standards rulemaking analyses are PART 430—ENERGY CONSERVATION at 67 FR 8452 (Feb. 22, 2002), and ‘‘influential scientific information,’’ PROGRAM FOR CONSUMER PRODUCTS DOE’s guidelines were published at 67 which the Bulletin defines as ‘‘scientific FR 62446 (Oct. 7, 2002). DOE has information the agency reasonably can ■ 1. The authority citation for part 430 reviewed this final rule under the OMB determine will have, or does have, a continues to read as follows: and DOE guidelines and has concluded clear and substantial impact on that it is consistent with applicable Authority: 42 U.S.C. 6291–6309; 28 U.S.C. important public policies or private 2461 note. policies in those guidelines. sector decisions.’’ Id at FR 2667. ■ K. Review Under Executive Order 13211 2. Section 430.32 is amended by: In response to OMB’s Bulletin, DOE ■ a. Redesignating paragraphs (s)(2), (3), Executive Order 13211, ‘‘Actions conducted formal in-progress peer (4) and (5) as (s)(3), (4), (5) and (6), Concerning Regulations That reviews of the energy conservation respectively; and Significantly Affect Energy Supply, standards development process and ■ b. Adding a new paragraph (s)(2) to Distribution, or Use,’’ 66 FR 28355 (May analyses and has prepared a Peer read as follows: 22, 2001), requires Federal agencies to Review Report pertaining to the energy prepare and submit to OIRA at OMB, a conservation standards rulemaking § 430.32 Energy and water conservation Statement of Energy Effects for any analyses. Generation of this report standards and their compliance dates. significant energy action. A ‘‘significant involved a rigorous, formal, and * * * * * energy action’’ is defined as any action documented evaluation using objective (s) * * * by an agency that promulgates or is criteria and qualified and independent (2)(i) Ceiling fans manufactured on or expected to lead to promulgation of a reviewers to make a judgment as to the after January 21, 2020 shall meet the final rule, and that (1) is a significant technical/scientific/business merit, the requirements shown in the table: regulatory action under Executive Order actual or anticipated results, and the 12866, or any successor order; and (2) Product class as de- Minimum efficiency productivity and management fined in Appendix U (CFM/W)1 is likely to have a significant adverse effectiveness of programs and/or effect on the supply, distribution, or use projects. The ‘‘Energy Conservation Very small-diameter D ≤ 12 in.: 21 of energy, or (3) is designated by the Standards Rulemaking Peer Review (VSD). D > 12 in.: 3.16 D Administrator of OIRA as a significant ¥17.04 Report’’ dated February 2007 has been energy action. For any significant energy Standard ...... 0.65 D + 38.03 disseminated and is available at the action, the agency must give a detailed Hugger ...... 0.29 D + 34.46 statement of any adverse effects on following Web site: www.energy.gov/ High-speed small-di- 4.16 D + 0.02 energy supply, distribution, or use eere/buildings/peer-review. ameter (HSSD). Large-diameter ...... 0.91 D¥30.00 should the proposal be implemented, M. Congressional Notification and of reasonable alternatives to the 1 D is the ceiling fan’s blade span, in inches, action and their expected benefits on As required by 5 U.S.C. 801, DOE will as determined in Appendix U of this part. energy supply, distribution, and use. report to Congress on the promulgation (ii) The provisions in this appendix DOE has concluded that this of this rule prior to its effective date. apply to ceiling fans except: regulatory action, which sets forth The report will state that it has been (A) Ceiling fans where the plane of amended energy conservation standards determined that the rule is a ‘‘major rotation of a ceiling fan’s blades is not for ceiling fans, is not a significant rule’’ as defined by 5 U.S.C. 804(2). less than or equal to 45 degrees from energy action because the standards are horizontal, or cannot be adjusted based VII. Approval of the Office of the not likely to have a significant adverse on the manufacturer’s specifications to Secretary effect on the supply, distribution, or use be less than or equal to 45 degrees from of energy, nor has it been designated as The Secretary of Energy has approved horizontal; such by the Administrator at OIRA. publication of this final rule. (B) Centrifugal ceiling fans, as defined Accordingly, DOE has not prepared a in Appendix U of this part; Statement of Energy Effects on this final List of Subjects in 10 CFR Part 430 (C) Belt-driven ceiling fans, as defined rule. in Appendix U of this part; Administrative practice and (D) Oscillating ceiling fans, as defined L. Review Under the Information procedure, Confidential business Quality Bulletin for Peer Review in Appendix U of this part; and information, Energy conservation, (E) Highly-decorative ceiling fans, as On December 16, 2004, OMB, in Household appliances, Imports, defined in Appendix U of this part. consultation with the Office of Science Intergovernmental relations, Reporting * * * * * and Technology Policy (OSTP), issued and recordkeeping requirements, and its Final Information Quality Bulletin Small businesses. Note: The following letter will not appear for Peer Review (the Bulletin). 70 FR in the Code of Federal Regulations. 2664 (Jan. 14, 2005). The Bulletin U.S. DEPARTMENT OF JUSTICE
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Antitrust Division: the impact of any lessening of competition 3, 2016, and have conducted interviews with William J. Baer, that is likely to result from the imposition of industry representatives. proposed energy conservation standards. The Based on the information currently Assistant Attorney General, Main Justice Attorney General’s responsibility for available, we do not believe that the Building, 950 Pennsylvania Avenue NW., responding to requests from other proposed energy conservation standards for Washington, DC 20530–0001, (202) 514– departments about the effect of a program on ceiling fans are likely to have a significant 2401/(202) 616–2645 (Fax). competition has been delegated to the adverse effect on competition. Our opinion is March 21, 2016 Assistant Attorney General for the Antitrust subject to some uncertainty, in part because Anne Harkavy, Division in 28 CFR 0.40(g). manufacturers indicated to us that they Deputy General Counsel for Litigation, In conducting its analysis, the Antitrust cannot reliably determine which of their Regulation and Enforcement U.S. Division examines whether a proposed products will be able to comply with the new Department of Energy, Washington, DC standard may lessen competition, for standards. The manufacturers understand 20585. example, by substantially limiting consumer that a new test procedure will likely be used choice or increasing industry concentration. to determine ceiling fan efficiency Dear Deputy General Counsel Harkavy: A lessening of competition could result in performance, and believe that there is I am responding to your January 21, 2016, higher prices to consumers. insufficient test data using this new test letter seeking the views of the Attorney We have reviewed the proposed standards procedure for the manufacturers to be able to General about the potential impact on contained in the Notice of Proposed predict their ceiling fans’ compliance with competition of proposed energy conservation Rulemaking (81 FR. 1688, January 13, 2016) the proposed standards, particularly in the standards for ceiling fans. and the related Technical Support Document. popular ‘‘Standard’’ and ‘‘Hugger’’ categories. Your request was submitted under Section We have also reviewed supplementary Sincerely, 325(o)(2)(B)(i)(V) of the Energy Policy and information submitted to the Attorney William J. Baer Conservation Act, as amended, 42 U.S.C. General by the Department of Energy, as well 6295(o)(2)(B)(i)(V), which requires the as materials presented at the public meeting [FR Doc. 2017–00474 Filed 1–18–17; 8:45 am] Attorney General to make a determination of held on the proposed standards on February BILLING CODE 6450–01–P
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